Security Council Reform: Big Five Are The Heart Of The Problem – OpEd

 December 31, 2022

By IPS

By James Paul*

The UN Charter mandates the Security Council to maintain international peace, but wars rage on and nations arm themselves with ever more lethal weapons. No wonder that the Council’s critics are so many and calls for its reform so urgent.

On December 11, 1992, with post-Cold War optimism, the UN General Assembly voted to gather comments from member states on Council reform. Eighty governments made submissions, many sharply critical. 

In the thirty years since, there have been endless meetings and initiatives. Year after year, governments, scholars, NGOs, and citizen movements have advanced proposals for Council renovation. In all that time, little progress has been made.

The Council’s five Permanent Members (the P-5) are the heart of the problem. Armed with vetoes, never-ending Council membership, and many other special privileges, they perpetuate their power, protect their global interests and shield their incessant war making. 

They shape international law to suit themselves. The United States, the global giant, has by far the most dominant role in the Council. But it is adverse to following the rules itself and rarely inclined towards peaceful conflict solutions. Many ask: should the foxes guard the global chicken coop?

Various powers outside the P-5 want to be elevated to the highest rank. Brazil, India, Japan and Germany have long announced that they want to join the Permanent club. They argue that they would bring fresh ideas to better “represent” world regions and promote world peace. 

Nigeria, South Africa and Egypt want to belong to the exclusive club too, bringing (they say) an African voice. But (to use an African metaphor) would these new crocodiles protect the world’s little fish? It seems unlikely!

Other reformers insist on more seats (and longer terms) for the Elected Members of the Council, presently ten in number. Smaller members are very vulnerable to pressure, threats and bribes from the P-5. Further, these lesser countries manage to have only the slightest influence on the Council’s proceedings. 

They are, said the exasperated Singapore ambassador, “like short-term commuters on a long-distance passenger train.” So, a simple increase in Elected Members would not be a sure bet. 

Limiting the veto or abolishing it entirely would have a very positive result but, needless to say, the P-5 fiercely oppose it. Reformers have also pressed for fairer membership elections and more frequent open public meetings. 

Yet (with the exception of cosmetic tweaks) the reform process constantly runs up against P-5 blocking power. Their veto can stop any reform proposal dead in its tracks. But we should not forget that the world is changing and that autocratic power in history never lasts forever! 

All reform proposals reflect an idealistic notion that the Council can be changed to restrain the enormous power, appetite and influence of the strongest and richest nations. This idea is rooted in the dream of democratic institutions within nation states, that rich and poor can elect representatives and determine policy in what passes for the general interest. 

Difficult as it is at the national level, how could it possibly work in the war-torn world of global politics? Might one day the P-5 Ancien Regime collapse in a great crisis, under desperate pressure from a global citizens’ movement? What would it take to set such a process in motion? It may seem impossible, but so was the French revolution. We can be skeptical, but if we want peace we must press for change. 

So, watch out, P-5 autocrats! Change is coming!

*The writer is former Executive Director, Global Policy Forum and author of “Of Foxes and Chickens”—Oligarchy and Global Power in the UN Security Council.

United Nations Security Council Chamber in New York City. Photo by Neptuul, Wikipedia Commons.

IPS

IPS is a communication institution with a global news agency at its core.

IPS raises the voices of the South and civil society. Articles here are reprinted with permission.

UK Labour Has 26-Point Lead Over Sunak’s Tories in Latest Poll

Joe Mayes, Bloomberg News   Dec 30, 2022

Keir Starmer, leader of the Labour Party, delivers a speech at the Trades Union Congress (TUC) in Brighton, UK, on Thursday, Oct. 20, 2022. Trade unions have called on millions of workers to protest against any return to austerity after Britain’s new chancellor of the Exchequer warned that “some areas of spending will need to be cut.” , Bloomberg

(Bloomberg) -- The UK Labour Party has a 26-point lead over Rishi Sunak’s ruling Conservatives, according to a poll that highlights the magnitude of the task facing Britain’s new prime minister as he seeks to restore his party’s fortunes.

Support for Labour is at 45%, compared to 19% for the Tories, according to the survey of 1,169 adults conducted by People Polling for the broadcaster GB News. The polling company’s previous survey on Dec. 23 gave Labour a 24-point lead.

The figures are the latest sign of the uphill struggle facing Sunak as his party starts to gear up for the next general election, expected to be held in 2024 — although he can call a vote as late as January 2025. While Tory prospects have picked up since the record 39-point deficit they suffered in one poll during the disastrous 7-week tenure of Sunak’s predecessor, Liz Truss, current polling still puts Labour on course for a majority in the House of Commons.

“Whatever Rishi Sunak does next, he’d better do it quick,” said Matthew Goodwin, professor of politics at the University of Kent, in a statement accompanying the poll. “The clock is now ticking, and he and his party are well behind.”

SMART MOVE
Petrobras Critic Named Chief of Brazil’s State-Run Oil Giant

Mariana Durao and Peter Millard
Fri, December 30, 2022 

(Bloomberg) -- President-elect Luiz Inacio Lula da Silva has selected a senator and former Petrobras official to lead Brazil’s state-controlled oil giant with the aim of turning it into a renewable energy powerhouse.

Jean Paul Prates, a senator for Lula’s Workers’ Party, confirmed Lula’s invitation in a note sent from his press office. Moments later, Lula congratulated Prates on Twitter, emphasizing that he’s an “expert in the energy sector.”

He will take over a company that’s been criticized for showering investors with record dividends while failing to invest enough in oil refining, wind and solar. Prates has said Petrobras’s current management is steering the company “off a cliff” by narrowly focusing on oil and gas and neglecting the energy transition.

Prates is viewed as a moderate member of the left-wing Workers’ Party, and his career in the senate will help him manage an oil company that regularly comes under political pressure to contain fuel prices and create jobs.

In recent years Petrobras has won praise from investors for focusing on its most profitable oil projects in deepwater of the South Atlantic, while selling off lower-margin assets such as pipelines, refineries and mature oil fields on land. The strategy has allowed it to slash its debt and ramp up dividend payments. Financial markets are concerned profits will plummet under Lula as he directs the company to invest in other areas more aligned with his wider industrial policies.

“All oil companies are turning into energy companies, and it isn’t just talk,” Prates said at a press conference earlier this month. “None of this is happening at the right scale at Petrobras.”

Prates was a point person on Lula’s energy team during the campaign and was in charge of talking to investors about oil and energy. He worked in Petrobras’s international division in the 1980s, then became an oil consultant and helped draft legislation in 1997 that removed Petrobras’s monopoly on exploration.

In an August interview, Prates said Petrobras under Lula would reverse years of cost cuts and spend big on refining and renewables, and also rebuild international operations that were curtailed in recent years. Within 30 years he sees the company investing as much in clean energy as it does in fossil fuels.

Lula is also expected to revamp local content rules, or the percentage of goods and services for oil projects that need to be sourced from Brazil in order to boost domestic employment. Any increase in that percentage would be a concern for the oil industry because similar policies have led to cost inflation in the past.

“We must go back to being the great Petrobras we used to be,” Prates said in August. “It needs to transform itself into a global player in the energy transition.”

In a statement, Petrobras said that the company had not been formally notified about Prates’s appointment and emphasized that Lula’s nominee is subject to internal governance procedures and the approval of the board.

CRIMINAL CAPITALI$M; UNION BUSTING
Starbucks illegally terminated union leader, U.S. officials say

Dec. 30, 2022 
By Josh Eidelson
Bloomberg

US labor board prosecutors have concluded that Starbucks illegally forced out a New York barista who has been a key architect of the union campaign that swept through hundreds of its cafes this year.

The union leader, Jaz Brisack, resigned her Starbucks position in September, alleging that the company had pushed her out by changing its scheduling policies and applying them to her in a discriminatory way. After an investigation, the labor board’s Buffalo, New York, regional director determined that Starbucks illegally terminated the barista in retaliation for her activism, agency spokesperson Kayla Blado said Friday. Unless the company settles, the regional director will issue a complaint on behalf of the labor board’s general counsel, Blado said in an email.

Starbucks denied wrongdoing. “The facts do not support these claims, and we are confident this will be dismissed when the full legal process has run its course,” spokesperson Rachel Wall said in an emailed statement. The company has said repeatedly that it adheres to labor laws and that all claims of anti-union activity are “categorically false.”

Brisack, a Rhodes Scholar who got hired at a Buffalo Starbucks in hopes of unionizing it, has been a prominent face of the labor campaign, which notched a landmark victory at her store in December 2021 and has since won elections at around 270 more across the US. Brisack has been employed as the organizing director for Workers United’s upstate New York region since October 2020, a couple of months before she went to work at Starbucks.

NLRB regional directors around the country have issued dozens of pending complaints accusing Starbucks of breaking the law in its efforts to defeat the union, including by threatening workers and retaliating against activists. Such complaints are considered by agency judges, whose rulings can be appealed to the NLRB members in Washington, and then to federal court, a process that can drag on for years.

The labor board has the authority to order companies to reinstate terminated workers and provide back pay, but generally can’t hold executives personally liable for alleged wrongdoing or issue any punitive damages. Agency judges this fall ordered Starbucks to reinstate fired activists in Michigan and Kansas, and a federal judge in August ordered the reinstatement of seven union supporters at a Memphis, Tennessee, store.

The pace of Starbucks unionization victories has slowed significantly since earlier this year, and none of the unionized stores has gotten close to reaching a collective bargaining agreement with the company. In an interview, Brisack said retaliation against activists has “stopped countless stores from organizing that otherwise would have,” and that winning reinstatement for those fired or forced out of the company would reassure employees that it’s safe to get involved.

Brisack said legal complaints alone won’t be enough to change the company’s behavior. “It’s going to take a lot more public pressure on Starbucks to get them to fundamentally change their strategy,” she said.

RELATED 

Starbucks illegally refused to bargain with WA and OR stores, NLRB says (Dec. 28)

Starbucks illegally refused to negotiate with union, NLRB rules (Nov. 30)

At 1st anniversary, Starbucks, union workers face reality check

Starbucks unionization efforts brewing success thanks to a Rhodes scholar (June 26)

Big Banks Will Show Fintech Who’s the Big Boss

Analysis by Paul J. Davies | Bloomberg
December 30, 2022

What to Expect in 2023:The health of borrowers is the key concern for all of finance in the coming year. An optimistic view would be that inflation is quickly brought under control without interest rates rising too much higher; and any recessions will be short and shallow. In that world, only the riskiest borrowers will likely get into trouble. That, however, still spells losses and it’s the optimistic view!

The biggest banks with the strongest balance sheets — such as JPMorgan Chase & Co., Bank of America Corp., or BNP Paribas SA — should be able to take this scenario in stride. But even in this scenario, many of the younger fintechs that have expanded rapidly into consumer lending are likely to be in for a rough ride due to their greater concentration in riskier, now overextended borrowers.

It’s not only companies specializing in Buy-Now-Pay-Later lending, like Klarna AB, that look to have grown their businesses and staff too ambitiously over the past few years. Job cuts and collapsing valuations have spread throughout the fintech sector, including larger payments companies like Stripe Inc. A proper shakeout in fintech is coming and big banks that are still making billions of dollars of investments in technology will be in a strong position to reassert their power over their upstart competitors — that could be through takeovers, or just by winning back customers who have strayed.

From the Year Behind Us:No, Credit Suisse Isn’t on the Brink: The Swiss bank had a shocking 2022, to follow its terrible 2021. It lost its still-new chairman, Antonio Horta-Osorio in January, sacked its chief executive Thomas Gottstein in the summer and finally launched a radical restructuring that is worringly high-risk and low-return. It also shed plenty of senior bankers, assets and clients along the way. But despite its billions in financial losses, its state of perma-scandal and total share price collapse, a social media driven panic that Credit Suisse would fail in days was wide of the mark.

Jamie Dimon’s UK Startup Is Really a Global Story: It was hard to understand why JPMorgan would bother launching a small digital bank in Britain’s competitive market until you realized that it was a proving ground for technology to be used around the globe. It is also part of Chief Executive Officer Dimon’s aggressive tech-driven ambitions for the US bank. Its huge investment budget is more than most American banks’ revenue.

Why Wall Street Can’t Escape the Culture Wars: Social conservatives love to attack anyone they deem as “woke” and US banks were pilloried over guns, fossil fuels, Covid vaccines and abortion. Some like Citigroup sought the publicity that made them a target and this column looked at a commercial explanation for the strategy. Big names like Goldman Sachs are still moving people and operations to red states and that could dilute the culture wars in the future.

The $24 trillion Treasury Market Needs More Than Just Clearing: It’s the most important market in the world helping to set the price for almost everything else in finance — but it’s too big to trade and liquidity is getting worse. Since this column came out, US authorities have signaled support for the idea that allowing many more banks, investors and market makers to trade Treasuries directly could help make it more resilient.

I Can’t Be The Only One Who Doesn’t Want to WFH: I like the office, what can I say?! The restrictions of the Covid pandemic showed us how technology allows information workers — like myself — to do our jobs from anywhere, technically anyway. It could mean that financial centers like London and New York are becoming obsolete. But people are social and there’s still a lot to be said for doing work in the flesh.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.

More stories like this are available on bloomberg.com/opinion

Beware Crypto Billionaires Boasting of Audits

Analysis by Lionel Laurent | Bloomberg
December 30, 2022

“Where were the lawyers and accountants?” That was the withering assessment of one US judge after years of fraud and deception went undetected during the 1980s savings and loan crisis, despite a well-stocked entourage of audit, legal and compliance professionals who might have been expected to raise the alarm.

It’s a relevant question once more as watchdogs try to crack down on a largely offshore and patchily-regulated cryptocurrency industry — worth $3 trillion at the peak — and as Binance and other platforms try to draw a line under the FTX scandal by appealing to the credibility of outside advisors. Wall Street’s top regulator is warning investors to be “wary” of how crypto firms promote the often narrow work done by accounting firms and is considering enforcement actions, according to the WSJ.


Auditors and attorneys are viewed as important “gatekeepers” by regulators with responsibilities to fight fraud and money laundering, yet it’s clear that they — like others — missed a bewildering number of red flags at bankrupt exchange FTX. Ex-billionaire founder Sam Bankman-Fried last year showed off his clean bill of health from auditors, tweeting that FTX and its US arm had “passed US GAAP audits,” even as he and his inner circle allegedly engaged in elaborate fraud and misuse of customer funds.

There’s no suggestion gatekeepers took part in wrongdoing. But no alarm bells went off despite FTX’s total lack of internal controls, its misleading communications about the insurance status of customer funds, a string of acquisitions reportedly “for regulatory purposes,” and a far-from-watertight separation between FTX US and the Bahamas-based firm where most of the alleged swindle took place.

FTX US auditor Armanino LLP has told the Financial Times it stands by its work, saying the requirements of a private-firm audit don’t include reviewing internal controls. But there have been repeated warnings that crypto’s lack of oversight and limited accounting guidance bring risks of material misstatements, fraud and money laundering. Weeks before FTX’s collapse, EY parted ways with crypto mining firm Core Scientific over poor internal controls. It’s late in the day for accounting firms to only now be labeling crypto clients as “high-risk” or halting crypto work.

Legal advice may be more nuanced and less formalistic than accounting, but it’s notable that only when FTX was teetering on the brink did most of its legal and compliance team (apparently about 100 people) quit. FTX US’s general counsel, Ryne Miller, reportedly told staff via Slack: “I have very limited transparency and more is not possible without full cooperation from the founders.” If the apparent freezing-out of top lawyers was the norm at FTX, that in itself looks like a red flag. Bankman-Fried was certainly less shy about using Miller’s contacts with former regulators to schmooze with officials, according to the LA Times.

There’s an urgent need to ensure these patterns aren’t repeated as Binance and others try to fill the gap left by FTX while touting external seals of approval of their own opaque operations. When accounting firm Mazars produced a “proof-of-reserves” report for Binance — little more than a few lines showing a snapshot of its Bitcoin assets — the exchange’s boss Changpeng Zhao held it up earlier this month as something much bigger: “Audited proof of reserves. Transparency.” Mazars has since suspended all crypto work.

Regulatory scrutiny will help, as will tougher standards. The SEC said this summer it would take “a hard look” at accountants and attorneys to ensure they were fulfilling their responsibilities. Former SEC Commissioner Allison Herren Lee suggested earlier this year that minimum standards of professional conduct for lawyers should be designed and enforced, including the obligation to report red flags. She acknowledged there was no magic bullet but cited crypto as one example where failure to comply with “well-known principles” of securities law had been costly.

Enforcement actions will also offer a deterrent effect. The SEC sanctioned individual auditors and attorneys last year in relation to fraud cases, which were not limited to publicly-listed companies. The UK Solicitors Regulation Authority is also on a path to being able to issue “unlimited fines” for certain economic crimes. Lily Fang, Dean of Research at business school INSEAD, says past scandals like the Wirecard collapse show the need to prevent standards loosening during times of market optimism.

For now, the focus is rightly on Bankman-Fried and his inner circle — with two of his former associates pleading guilty to fraud charges. But as the dust settles on years of speculative crypto euphoria and with bankruptcies still piling up, the old question of where the lawyers and accountants were will be asked again.


This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.


More stories like this are available on bloomberg.com/opinion


©2022 Bloomberg L.P.

mRNA
Cancer Vaccine Hunt Makes Progress, Finally

Analysis by Lisa Jarvis | Bloomberg
December 30, 2022

The long-awaited cancer vaccine revolution is getting a little closer to reality. New data from Moderna Inc. and Merck & Co. suggest that after decades of failures, researchers are finally figuring out the right way to design a vaccine that can teach immune cells how to recognize and combat tumors.

Earlier this month, the companies said that when used in concert with Merck’s cancer immunotherapy Keytruda, Moderna’s mRNA cancer vaccine reduced the risk of certain skin cancers from returning or patient deaths by 44% compared with Keytruda alone.

That number justly generated a lot of excitement. It’s the first time an mRNA-based cancer vaccine has proven itself in a randomized study, and with an unambiguously positive outcome. If that result holds up in larger trials, it would be a huge advance both for the mRNA technology behind Covid vaccines and for the field of cancer vaccines in general.

But there are a lot of steps between achieving early, positive data for a subset of melanoma patients and developing a widely accessible, cost-effective treatment. Among the more daunting challenges: The vaccine needs to be tailored to the genetic makeup of an individual patient’s tumors.

The study was small, enrolling just 157 people at high risk of their late-stage skin cancer returning. (Moderna and Merck have yet to make available the full dataset, though they plan to do so at an upcoming conference.) Still, even if the results are slightly less dramatic in a bigger study, the vaccine could make a difference for patients. “That would be a substantial change,” translating into long-term remissions, says Julie Bauman, director of the George Washington University Cancer Center. Bauman led an earlier study of Moderna’s cancer vaccine.

The study enrolled melanoma patients who had undergone surgery to remove any signs of their cancer. Unlike vaccines the public is used to taking — mass-produced shots that aim to prevent people from catching a contagious disease like the flu or polio, Moderna’s cancer vaccine instead is intended to keep the disease from returning. It does that by training immune cells to recognize as dangerous proteins found on a patient’s own tumor cells.

The hope was that the vaccine would amplify the already substantial benefit of Keytruda, which blocks a method that cancer cells use to hide from the immune system. Amazingly, the combination worked.

Moderna already demonstrated its capacity for developing and manufacturing mRNA vaccines. It had been working on vaccines for cancer and infectious diseases for more than a decade when the coronavirus pandemic hit, prompting the company to pivot to developing a Covid shot that, along with a similar one developed by Pfizer Inc. and BioNTech, became the first widespread commercial application of mRNA technology.

Building a successful cancer vaccine will be much more difficult. Moderna starts with a biopsy of a patient’s tumor, which it then sequences and uses artificial intelligence to pick out the mutations likely allowing the cancer to thrive. Then, mRNAs encoded for the most relevant cancer-driving proteins are packed inside a delivery system called a lipid nanoparticle, the same kind of delivery method used in Covid vaccines.

From tumor biopsy to first vaccine dose, the process can take between eight and 10 weeks, says Moderna Chief Medical Officer Paul Burton. Repeating this over and over for each patient enrolled in the clinical trial was a major undertaking, he adds.

Now imagine doing that for a commercial drug earmarked for thousands rather than for a few hundred people in a controlled study. There are nearly 100,000 cases of melanoma annually in the US, according to the American Cancer Society. While most cases are curable when detected early, more than 7,500 people die every year of the disease.

Bringing down the “needle-to-needle” time between biopsy and immunization will be critical to ensuring the treatment isn’t just promising, but practical and accessible to anyone who might benefit from it. One way to speed things up would be to establish regional hubs to quickly process biopsies.

Another measure that eventually could accelerate the development of the melanoma vaccine would be to simplify the vaccine’s components. Currently, the vaccine targets a laundry list of 34 mutated proteins to garner the full effect. It would be worth figuring out whether returns start to diminish after, say, 15 or 20 proteins.

Researchers also would like to understand whether certain types of tumors rely on common drivers that, if discovered, could be the foundation for a more broadly designed vaccine that could have some tailor-made components sprinkled in.

Burton says that Moderna so far hasn’t seen any common drivers that could help generalize components of the vaccine, but that data are limited — and the hope is that some clues might emerge as the vaccine is used over the long term and many more people are treated.

Scientists also still need to study the best way to use this vaccine for long-term suppression of cancer, considering, for example, whether people need to continue taking it every three weeks for life, or if they can get by with a periodic boost. And if someone’s disease progresses, does the vaccine itself need to be retooled to match new mutations that might have cropped up?

Perhaps the biggest question right now is whether the effect seen in melanoma can be extended to other types of cancer. Moderna Chief Executive Officer Stephane Bancel told CNBC recently that the company is moving aggressively into Phase 3 studies with the belief that “anywhere Keytruda works, this should work.”

Keytruda, meanwhile, is approved to treat a long list of cancers beyond melanoma—so many, in fact, that it’s expected to bring in more than $24 billion in sales in 2023. Bancel suggested that the vaccine might even make possible responses in tumors where Keytruda has failed, either on its own or by acting synergistically with Merck’s drug.

That’s an optimistic claim—worth studying, but a feat that has eluded other cancer immunotherapies. Melanoma is what’s known as a “hot” tumor, or one that features many mutations and has plenty of immune cells milling about, ready to be pushed into doing their cancer-killing job. It’s reasonable to be hopeful that Moderna’s vaccine could extend Keytruda’s benefits in other hot tumors, such as those found in lung cancer.

But “cold” tumors, or ones without that crowd of immune cells ready to be activated, are a much tougher proposition. In an earlier small study of the Moderna vaccine in solid tumors, for example, none of the patients with colon cancer — a notoriously “cold” tumor — responded, Bauman says.

Another immense challenge is the very high likely cost of a personalized therapy on top of Keytruda, which on its own carries a list price of around $185,000 per year. The only upside to that hefty price tag is that the companies will be motivated to answer these questions as quickly as possible. Indeed, Bancel has said that Moderna plans to aggressively invest in cancer.

All that money flowing into Moderna’s cancer vaccine will teach the field not just about that one product, but how to design, test and use other ones. Let’s hope that’s the catalyst for the true cancer vaccine revolution, one that could convert cancer from a potentially lethal illness into a chronic, stable disease.

Southwest’s Biggest Mistake Was Forgetting Its Own Culture

December 30, 2022 by Stewart

Commentary

Four days before Christmas, Southwest Airlines Co. Vice President of Ground Operations Chris Johnson sent an urgent memo to Denver airport employees. Declaring a “state of operational emergency,” Johnson said the airline had received an unusually high number of absences among some workers and would require employees “claiming illness” to provide a doctor’s note on their first day back. A note from a telehealth visit would not be enough, and the mandatory overtime would go into effect as well. Failure to comply would be considered insubordination and would result in termination.

The collapse at Southwest that the memo heralded (more than 15,000 of its flights canceled since Dec. 22) stunned industry insiders. But so would the memo itself.

“When I read it, I couldn’t believe it was written by Southwest,” airline analyst Henry Harteveldt told me. “It absolutely goes against everything that Southwestern culture stands for.”

Industry consultant Robert Mann called it “draconian” and a “cultural failure”. “They just have a bigger stick,” he said. “They didn’t offer any carrots.”

In fact, it was a remarkable turnaround for Southwest. In an industry known for its acrimonious management-worker relations, the budget airline built its reputation around being a fun and harmonious workplace. That was the case for a long time despite being the most unionized of the big American carriers.

But the mood has changed in the last year or so. Unions representing its pilots and crews have become more vocal, publicly complaining about brutal and erratic schedules and high levels of fatigue as the industry grapples with the same staffing issues as other industries. Both the pilots’ and flight attendants’ unions have called for federal mediators to intervene in their multi-year contract negotiations with management. And earlier this month, Southwest pilots picketed the New York Stock Exchange on the company’s investor day.

In contrast, when the company’s legendary co-founder, the late Herb Kelleher, announced his retirement amid contract negotiations, the pilots’ union ran a full-page ad in USA Today thanking him for his service.

When Southwest executives and industry watchers do their post-mortem on what caused this week’s chaos, they’ll talk about bad weather, outdated technology and Southwest’s core model of flying directly from city to city instead of going in and leave the centers. But an apparent breakdown of its famous “people first” culture has to be at the top of that list.

When Kelleher launched Southwest some five decades ago, he sought to build not just a different kind of airline, but also a different kind of company. Southwest never had layoffs, handed out generous stock options and, unlike many of its competitors, never filed for bankruptcy. Building trust and goodwill with employees was ultimately a business decision: happier pilots and crews meant a more efficient and productive airline.

“You have to treat your employees like your customers,” Kelleher once said. “When you treat them well, they will treat your external customers well. That has been a powerful competitive weapon for us. You have to take the time to listen to people’s ideas.”

It’s clear that more recently the company hasn’t been listening. Executives have recognized that the airline needs to invest in and upgrade its IT systems. But for years, Southwest pilots and crew say they have sounded the alarm about the carrier’s outdated technology, making it difficult to get its people to the right places when weather events strike.

The warnings grew louder after Southwest suffered crippling problems last fall, and union leaders predicted they would only get worse. They weren’t wrong. Amid the mass cancellations this week, employees said they were on hold for hours with their own airline as they tried to get their marching orders.

With this most recent crisis, the pressure is now more intense for management to resolve its negotiations with the various unions that represent its employees, especially after rival Delta and its pilots earlier this month reached a preliminary agreement to increase wages by 34% over the next month. few years.

That kind of increase would be hard for a budget airline like Southwest to swallow. To do so, management would have to summon the same kind of creativity that Kelleher did when he decided to fly only one type of plane and have flight crews help clean the plane to keep fares lower than some competitors. Executives might also consider taking their founder’s advice and listening to employees’ ideas on how to improve operations. If they don’t, they risk becoming like every other airline, an outcome that nobody wants.

The US Can Solve Its Housing Crisis. 

It Just Needs to Start Building

Analysis by The Editors | Bloomberg

December 31, 2022 

For all its complexities, America’s nationwide housing crisis boils down to a problem of supply and demand: The country needs a lot more homes than it has, yet even ambitious reforms won’t provide developers with enough incentive to bridge the gap. Addressing this dilemma could well be the defining public-policy challenge of the next few decades.

The problem is enormous: To close an accumulated shortfall estimated at 3.8 million units, the pace of housing construction would need to be about 50% higher over the next decade. Liberalized zoning and other regulatory reforms can certainly help improve this picture, especially if they spread to more places and types of housing, simplify building codes and speed up approvals. But they’re not sufficient to ensure adequate supply. Even in Los Angeles, where a new state law has engendered a boom in “granny flats” and other so-called accessory dwelling units, the effect on overall housing supply has been minimal.

Policymakers need to think more creatively.

One promising option is manufactured housing, which can be produced much more quickly and at much lower cost than traditional homes constructed stick by stick onsite. It comes in two main forms: “mobile” homes, built to a federal code and delivered complete with metal chassis, and modular or panelized homes, assembled onsite from factory-made components. As recently as the late 1960s, it accounted for more than half of new single-family housing. Whole neighborhoods of Sears kit homes from the 1910s survive to this day.

Yet even as manufactured homes have improved immensely in design and quality, they’ve fallen out of favor. Many residential districts have banned mobile homes, which must typically be financed like automobiles with relatively expensive “chattel” loans. As of 2021, they accounted for just 10% of single-family production. To at least partially reverse this decline, government-controlled mortgage giants Fannie Mae and Freddie Mac should improve financing options by purchasing and securitizing chattel loans, and legislators should consider reducing cost and complication by eliminating the unnecessary chassis requirement (the homes tend to stay where they’re installed).

Modular homes have even greater potential. They offer consumers plenty of options, and once installed they look no different — and sometimes a lot better — than the typical stick-built home. By moving much of the construction process into factories, they can cut costs and project timelines by more than 20% — revolutionizing an industry than has seen no significant productivity gains in decades. Yet they must contend with a tangle of local building codes, which prevent producers from reaching profitable scale: As of 2021, they accounted for just 2% of new single-family homes.  

California’s housing reforms point the way to a possible solution. Recognizing the suitability of modular homes for accessory dwelling units, as well as ample interest among potential homeowners, Los Angeles has pre-approved a list of standardized building plans. The more localities adopt such standards, the more manufacturers will be able to scale up, further reducing the cost of quality housing.

Taxation is another area that deserves attention. Most local governments tax buildings at the same rate as land, an approach that unduly favors landowners and inhibits development. If, by contrast, they taxed land at a higher rate, they could encourage developers to put it to its best use — for example, by building apartments on expensive plots near job centers. Ample research suggests that nudging municipalities to adopt such a split-rate tax would boost local economies and reduce urban sprawl. The experience of Pittsburgh, which increased its tax rate on land to more than five times the rate on buildings, demonstrates the possibilities: Building permits boomed, even amid declines elsewhere in the state, and helped kick off the city’s decades-long revival.

No doubt, such initiatives will face plenty of opposition. One must hope that the urgent need for more housing will prevail. Few challenges will be harder for the US to confront in the 21st century — or more rewarding to solve.

Tribes get advisory role in New Mexico utility regulation
By SUSAN MONTOYA BRYAN

today

 Re-elected New Mexico Gov. Michelle Lujan Grisham speaks to supporters during the celebration party in Albuquerque, N.M., Tuesday, Nov. 8, 2022. Grisham has appointed a former state lawmaker and two policy experts to a powerful regulatory commission whose decisions have direct economic and environmental consequences for utility customers around the state. She announced her picks for the Public Regulation Commission on Friday, Dec. 30, 2022. (AP Photo/Andres Leighton, File)

ALBUQUERQUE, N.M. (AP) — Gov. Michelle Lujan Grisham appointed a former state lawmaker and two energy policy experts on Friday to a powerful regulatory commission whose decisions have direct economic and environmental consequences for the state’s utility customers.

Brian Moore, Patrick O’Connell and Gabriel Aguilera start work Jan. 1 on the Public Regulation Commission under a voter-approved overhaul that changed the commission from a five-member elected body to one appointed by the governor after a monthslong nominating process.

The New Mexico Senate will confirm the governor’s choices during the upcoming legislative session.

“These appointees are experienced professionals who have the skills needed to oversee an energy transition that is affordable, effective and equitable for every New Mexico community,” said Lujan Grisham, a Democrat who is embarking on her second term following a hard-fought reelection bid.

A nominating committee had sent Lujan Grisham a list of nine finalists, most of whom were from New Mexico’s most populated areas. That prompted criticism from some lawmakers and advocacy groups about the lack of representation for Native Americans and northwestern New Mexico, where one coal-fired power plant and an adjacent mine were recently shuttered, taking with them hundreds of jobs and tax revenue.

Seeking to address the concerns, Lujan Grisham signed an executive order Friday creating a Tribal Advisory Council to provide input to the commission. It will be made up of one representative from the eight northern pueblos, one from the 10 southern pueblos, one from the Apache tribes and one from the Navajo Nation.

In the executive order, the governor encourages the PRC to meet with the advisory council on a regular basis and consult with its leadership at commission meetings.

“It’s extremely important that we ensure tribal voices are heard on issues before the PRC, regardless of who is appointed to the commission now and into the future,” Lujan Grisham said. She noted that regulators will have more important decisions to make as the state continues to implement the 2019 Energy Transition Act.

The commission will play a role in ensuring new renewable energy resources and battery storage projects being brought online can meet customer demands as more coal-fired plants close in the coming years. They also will be tasked with keeping rates affordable in a state where many families are at or near the poverty line.

The commissioners also must decide a billion-dollar rate case involving New Mexico’s largest electric provider — Public Service Co. of New Mexico, and they may have to revisit a contested merger between PNM and Avangrid, a U.S. subsidiary of global energy giant Iberdrola.

O’Connell, an engineer with more than two decades of experience, previously worked for PNM as the utility’s director of planning and resources before becoming the interim clean energy director at Western Resource Advocates. His term on the commission will be six years.

O’Connell has said that he applied to be a commissioner because he thinks he can continue to make a difference in the fight against climate change while regulating essential services that New Mexicans use every day.

Western Resources Advocates, the state attorney general’s office and others were among those who supported the proposed PNM-Avangrid merger when it came before the commission in 2021. The companies filed an appeal with the New Mexico Supreme Court after the elected commissioners decided the deal did not offer adequate protections for customers.

Moore, a Republican, represented several eastern New Mexico counties during his term as a state lawmaker and is now president and CEO of Ranch Market supermarket in Clayton. He previously served as the legislative team leader for the New Mexico Association of Counties and was on the Renewable Energy Transmission Authority board.

Moore also was a member of Lujan Grisham’s Economic Recovery Council. His appointment will last two years.

A graduate of New Mexico State University, Aguilera has worked for the Federal Energy Regulatory Commission since 2007. He most recently served as a senior policy advisor for FERC’s Office of Energy Market Regulation. His appointment is for four years.