I have learned that several of you have decided to, or are strongly inclined to, approve another 30-year franchise agreement with FPL. Through this letter I express my strongest possible disagreement with such a decision. I have already spoken at one public forum. This letter, however, allows me the space to better explain why I think such agreement is detrimental for Sarasota and many other communities.
Provided the length of the letter, I must assume some of you will not have the energy or time to read it all. Hence, I offer an executive summary in the next paragraph. I follow up with a lengthier explanation. I apologize for its length, but after all, as an academic I do not think that simple explanations are always the best.
Executive Summary: By providing FPL a 30-year franchise agreement, we are agreeing to send local money as profits to external investors’ portfolios that are not necessarily invested in our community. We are actively supporting a failed business model, one that refuses to invest in truly innovative technology because such approach does not offer quick and large returns. We actively discourage the innovation inherent in competitive capitalism, and hence, our capacity to compete with new innovations that are growing fast in nations like Germany, China, India, and Brazil. We actively discourage small and medium local entrepreneurs from developing and bringing to the market the kinds of ideas that corporate America refutes. Yet these are the kinds of ideas that strengthen both the local and national economies. Because this affects local economies, it is as much the duty of city elected representatives, as it is of state and federal representatives to find the means to enhance our economy. This is a case where local communities have the necessary capacity for change, the change that state and federal authorities cannot impose on localities. The choice to renew the franchise also illustrates that our elected officials are uncomfortable challenging the status quo, and hence, disinclined to changing the road that is leading the United States to become a second-tier economy.
Having said the above, allow me to share the information that informs such view.
Many times, a focus on the immediate does not allow us to see the lessons to be learned from other contexts. As such, I bring to your attention some of the most current research in Development Studies (A course I currently teach at the undergraduate level). At the risk of not providing the full picture, I share with you information that is most relevant to Sarasota’s relationship with FPL and hence, an explanation for why I think a 30-year agreement to a near monopoly is not advisable.
As you know, China (in conjunction with India, Brazil, and Russia – a group known as BRIC) is considered an emerging economy, one that already has surpassed Japan’s GDP. China’s growth has been based on the opening of its economy to the global market and on significant (but not total) privatization of state-owned enterprises. Its ability to attract investment from abroad has been based on the low wages offered to its workers. This has permitted China to become an important exporter of manufactured goods. The United States carries a large trade deficit, being a very large consumer of China’s low-cost manufactured goods. In the United States, this has allowed us to afford the declining real value of workers’ wages. Since the 1970s, U.S. workers’ wages, when controlled for inflation, have been declining. Cheaper products from China allow workers to consume while earning less. Simultaneously, however, our nation has been disinvesting in research, technology, and education. At the same time, China (among other nations) has been investing in such fields. Some scholars anticipate that as China grows, its wages will grow as well. This will make Chinese products more expensive. People in the United States, therefore, will find it more difficult to afford such products. At that point, they will need to turn inward for internal production. Yet, given the internal disinvestment, we will be less able to have our economy grow. It is therefore, imperative that we reawaken our innovative and creative capacities, as well as our willingness to take the risks necessary for such innovation and growth.
It is also worth noting that U.S. news currently cover the financial crises in Greece and Britain. Yet, they have not covered the growing strength of Germany. Germany is making its money, in part, through the sale of the machines that allow the production of the goods that are manufactured in China. This is done through medium size and small producers, not the large multinational corporations. These companies do not offer large returns on investment, yet, together have sustained Germany’s economic strength. Both, Germany and China are investing tremendously in research on ways to transfer renewable energy into useful sources (electric, heating, etc.). The United States has lagged behind.
There are many reasons the U.S. has lagged behind. An important one has been the comfort and narrow-mindedness of corporate leaders. Regardless of what the news try to tell us, neither GM nor Chrysler went bankrupt because labor costs were too high. It was not because workers were making too much, or because they were insisting on too many benefits (Opel in Germany was the strongest profiting branch of GM, their workers are not cheaper than American ones). It was rather the short sightedness of business leaders. A simple example is the fact that CEOs of the Big Three chose to dedicate millions of dollars to lobbying efforts to avoid implementation of low-emission policies. While they were spending millions fighting the infiltration of government into the economy, the Japanese were investing in alternative technology. US executives came up with all kinds of excuses for their unwillingness to invest in such research. They sought quick, large returns on their investments, in response to investors’ desires. The result has been that Toyota captured the hybrid market quickly. We continue to lag behind. China is in fact moving fast forward with car models and alternative energy. Yet, corporate America has not changed its ways. They continue to push for the same economic strategies that have been proven untenable and ineffective in the long-run.
FPL, in my view, is no different. I gather – but do not know the details- they have promised many things, including making Sarasota the front-runner in alternative technology. Yet. I should point out that their approach continues to be one of large corporate control. They seem to view the users of electricity as potential competitors because if we invest in photovoltaic systems on our roofs, they lose business. In response, they dissuade people from feeding power into the grid by arguing that they will use cleaner energy, like their solar power plant in Arcadia. In the long run, however, turning agricultural land or green areas into vast spaces filled with solar panels will not contribute as much to the protection of our environment, as having the panels on the roofs of homes. Furthermore, not unlike the findings by journalists of the Sarasota Herald Tribune regarding reinsurance corporations, the profits gained from FPL’s clients in Sarasota will not be reinvested in the community. Instead, these are profits going to external investors, who reinvest in other venues, unknown to us.
The best way to sustain local financial resources locally is to send more of the profits to the people who live here. Therefore, if there were stronger programs to enhance citizens’ investment in photovoltaic systems, their savings would give them more income to invest locally. They are more likely to use their increased income to engage in the local economy, visit local theaters, restaurants, beaches, remodel their homes using local construction workers, etc.
It is well-known that when the state supports the development of monopolies, as in import substitution economic strategies, even transnational corporations become comfortable with low-quality products. It is our responsibility as citizens to create the incentives for companies that are innovative, that are willing to take the necessary risks to open new venues for business and, ultimately, develop the products and mechanisms that allow us to become energy-independent and active in sustainable development. By agreeing to a 30-year contract, we are agreeing to offer a monopoly market, a system of disincentives for citizen empowerment, and disincentives for investment in true innovation. Hence, our local decisions have larger consequences.
It is only through local willingness to challenge the status quo that the United States will regain and maintain its global economic strength. No matter how much we wish to dismiss China’s achievements, the reality is that China will be able to surpass us and eventually will become a more open political system. China, as noted above is not the only existing model of development among the emerging economies. Brazil, while much smaller than China, has a consistently growing economy, but is doing so with efforts for strengthening its middle class and reduction of internal inequality. Germany also offers some good models. We will not strengthen our middle class unless we change the way corporations continue to dominate our economy. For Sarasota, this is the historical moment to embark into programs for greater competitive capitalism, one that strengthens local businesses, as well as local citizens’ power (both political and economic). We do not need a franchise agreement in order to get electricity. I believe U.S. citizens can be as daring as the mayor of Bogota, Colombia – Antanas Mockus- has been. I encourage you to view this video regarding how the mayor of Bogota turned his city around:
http://www.youtube.com/watch?v=fX7HBxLBZ28 (minute 30:48 is the item on taxes)
There are things we can learn from his strategy. If the mayor of Bogota – one of the biggest urban disaster zones in the world just a few years back — was able to gain sufficient voluntary payment of taxes, we too can find an alternative means to transfer the 5 million dollars from the citizens to the city. The fact is, that if you, as my representatives in government, do not stand against FPL’s imposition of a 30-year contract, no one will; and we all will play our role in permitting the economic decline of our nation. Without exaggeration, for the sake of the people in Sarasota, for the sake of Florida’s emerging businesses, for the sake of Florida’s economy, and for the sake of the U.S. economy, you should reject a 30-year franchise agreement with FPL, leaving the door open for our creative capacities and true local economic growth.