With video archives already available, and open media in full bloom, the recent GoingGreen 2008 conference in Sausalito can now be viewed for free by anyone.  GoingGreen was produced by AlwaysOn, a conference company founded in 2002 by Red Herring founder Tony Perkins, now going into its 7th year of dreaming up and successfully producing terrific, elite events that cater to private sector entrepreneurs and investors.  Up until 2007 AlwaysOn had not done an event in the cleantech sector.  In early 2007 Perkins asked us, EcoWorld, to design a program for GoingGreen, based on our long-standing status as an online environmental publication aimed at an audience of consumers and businesspeople, with a consistently optimistic editorial position that adheres to free-market, libertarian, technocratic ideals at least as much as collectivist ideals.

There was too much good, too much substance, too many clean technology options presented at GoingGreen in Sausalito last week to summarize here.  The panels spanned the gamut of clean technology applications, and some of them were mesmerizing.  This conference was a conversation about clean technology - and every company CEO there was creating a clean technology application. But what were the reactions to GoingGreen in the blogosphere?

Like AlwaysOn, the position of EcoWorld is to encourage open media.  For example, during the entire GoingGreen conference, there were two large projection screens above the stage, they were about 10′x10′ each, in a relatively small main room that only held about 200 people.  One screen showed closeups of the panelists, the other showed whatever comments were being posted by the audience via the internet.  Some panelists are not used to this - and more to the point - AlwaysOn has never held events that went into as many controversial areas as GoingGreen goes.  Green and clean technology are leading the high-tech world into a hopefully benign if not synergistic collision with two huge forces; the biggest industries on earth, and the environmentalist community.

So here are a few reactions in the blogosphere to GoingGreen:  From Stowe Boyd’s influential journal /Ground, in a post entitled “GoingGreen Sounds A Bit Off,” “My sense is that GoingGreen is motivated by some deeply wrongheaded principles, and while they may not be shared by all the speakers, choosing someone like Ed Ring to moderate confirms that Tony Perkins is somewhere to the right of Dick Chaney.”

Stowe did a little checking on EcoWorld and apparently was put off by my use of the term “global warming alarmists,” in the recent post “Is the Earth Warming or Not?”  He might have considered more the entirety of this post, where (1) we are reacting to yet another attack by an organization tasked to demonize “deniers” on the internet, and (2) the data in this post regarding climate trends, from the gentleman who had just been attacked, atmospheric scientist Dr. Roger Pielke Sr., which deserve serious reporting and peer review.  In any event, we welcome the opportunity to use a more acceptable term than “alarmist.”

On another post on the respected blog EcoLocalizer, in a post entitled “Venture Capital Meets Green Technology at Going Green Conference,” Keith Rockmael writes “What the heck are these guys making up this [the agricultural] Green panel anyway? We might as well had four guys from Monsanto up there uttering the benefits of GMOs and how much benefit they bring farmers. Ceres and Mendel Biotechnology who made the Going Green Top 100 companies have investers/partnerships with, among others, Monsanto.  Oops did someone not do their green due diligence homework? Maybe they could add Exxon-Mobil as a top green company for next years conference.”

Only private companies are eligible for the GoingGreen 100, but we did try to get Exxon-Mobil to attend this year; their top executives were all booked up.  And we are looking for people who are inventing or implementing clean technology applications, not the “sustainability outreach manager” that the mega-corporations tend to still try to shuffle out to any “green” conference.  So when big companies present at GoingGreen, it will be so we can take a look at their technology, whether it is desalination or water reuse or microbial processes or any other fascinating innovation.

Why the negative tone to these two reports?  If EcoWorld wants to publish material prepared by “global warming deniers,” it is a matter of open media principle.  Our goal as well is to always respect divergent points of view.  Isn’t that a good thing?  If a global warming “alarmist” has something valuable to contribute to the conversation then we encourage their comments.  As for plant genomics, why the selectivity?  Scientists are genetically engineering everything today, from human chromosomes to enzymes that eat waste and excrete fuel.  Why is the plant genomics conversation taboo?  As a conversation about technology, GoingGreen was a great success, but we also need a conversation about the conversation.

Credibility is earned from examining the content of an argument, not by denying the right to argue or even converse.  Why is global warming skepticism - whatever that is supposed to mean - sufficient reason to excommunicate an environmentalist from the fold?  Because we value a continued conversation on topics ranging from global warming to genomics to “smart growth” somehow means we don’t agree on any other environmentalist values?  Isn’t such dogmatic dismissal of a heretic the same behavior as the clerics of old?  Isn’t to declare the scientific explanations for any phenomenon as beyond debate to deny the conversation that defines science? How is this indictment any different from that famous line, “you’re either with us or your with the terrorists?”  And what of the conversation among journalists - the decorum, the dialogue?  Is journalism green, yellow, red, blue, or truly transchromatic?

The conversation about what is clean and green and what we ought to do about that as a people is long and nuanced, as is the conversation about climate trends and what we ought to do about them.  Our goal isn’t to fight fire with fire; nor will we ever waver from our committment to open media.  But with open media comes responsibilities similar to those we hold as citizens of a democracy; to be civil, to recognize complexity, to rely on intellectually honest arguments, to avoid certainty, to encourage debate, to commit to earning credibility.  It is too bad when all credibility often requires is an opinion, a judgement, instead of due diligence.  Perhaps we are all guilty of this at times.

An example of a journalist who did provide a service, instead of a sermon, while covering GoingGreen 2008, is the diligent Katie Fehrenbacher, writing for the excellent website earth2tech, who in her post “How to Invest in Clean Abundant Water“ has rendered a professional report on Christopher Gasson’s (Editor-in-Chief of Global Water Intelligence) introductory remarks before he moderated GoingGreen’s water panel.  And here are Gasson’s seven areas of innovation in water that investors should be interested in funding - if you’re still with me, courtesy of a blogger who saw some of GoingGreen’s technological content, rather than framing the ideological context, and furthered a conversation worth having:

Christopher Gasson’s Seven Water Innovations 2008
1 Scalable solar desalination
2 Cheap clean water for agriculture
3 Lower energy salt separation
4 Value In Wastewater
5 Sludge Management
6 Real-time water quality monitoring
7 Distribution solutions for drinking and wastewater

(Pavo cristatus)

From the DOE online reference, CO2 Emissions Report, Table 1, you will see that in 1999 in the USA there were nearly 1.8 million metric tons of CO2 emissions from the burning of coal to create electricity, which yielded nearly 1.9 million kilowatt-hours of power.  This means in that year in the USA, for each megawatt-hour of coal-fired electric power, there were .95 tons of CO2 ejected into the atmosphere.  It is likely the global efficiency of coal-fired electricity plants in the USA in 2008 exceeds this standard, but for the sake of a numerically clear argument suppose for every megawatt-hour of coal-fired power, 1.0 ton of CO2 enters the atmosphere.

Currently the United States emits about 6.0 billion tons of CO2 into the atmosphere each year, and about 50% of that, about 3.0 billion tons, comes from coal-fired electricity plants.  In the entire world, annual CO2 emissions approach 30 billion tons per year, and it is safe to say about half of these emissions come from coal, although worldwide, coal is used at scale for a variety of fueling applications and not just for electricity.  So how much would it cost the USA or the world to replace every megawatt-hour of coal fired electricity with solar electricity, and how much does today’s global installed base of roughly 10 gigawatts of photovoltaic array cut into the annual worldwide CO2 emissions from coal?
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Ameren’s Sioux Unit 1, with the first in-furnace control technology, achieving NOx emissions below 0.15 pounds per million Btu on a coal-fired cyclone boiler. (Photo: DOE)

Assuming photovoltaic (or solar thermal, where the global installed base is beginning to matter as they approach their first gigawatt) has a yield of 25 percent - which corresponds to about six hours of full-sun-equivalent daily light on the collectors - 10 gigawatts installed equates to 2.5 gigawatt-years of electricity annually.  In turn this means solar power produces about 21.9 million megawatt-hours of electricity per year, and at 1.0 ton of CO2 per megawatt-hour of power, this means solar power offsets not quite 22 million tons of CO2 emissions from coal power per year. 

What this all means is inspiring insofar as it presents solar as an opportunity that is truly in its infancy, despite some arguably overvalued stocks among photovoltaic companies.  The issue isn’t these companies running out of customers.  The issue is they will have to continue to double their output year upon year in an environment of continuously improving technologies and relentlessly lower prices - a challenge that can slow any company’s growth.  The solar power sector is in its infancy because as the fully amortized price for solar energy already approaches parity with coal, solar power still offsets only about 0.7% of CO2 emissions for coal-fired electricity. 

The solar power sector would have to grow by 684 times before it would offset the CO2 emissions attributable to coal, more specifically, to offset 15.0 billion tons of CO2 emissions annually based on 1.0 ton of CO2 per 1.0 megawatt-hour of coal-fired electricity.  Given the miniscule accomplishments of solar energy so far in the global power equation, and given that global energy output has to double as soon as possible, if the price keeps coming down solar energy as a sector has the potential to experience 50%+ annual growth for a very long time.  How much would it cost today to install enough solar energy to offset 15 billion tons of CO2 emissions?

An all-in installed price of $5.00 per watt is still low by today’s standards, but probably represents the high end of eventual costs as technology and productivity improves in the solar sector.  Increasing the 10 gigawatts of installed solar power worldwide by 684 times means installing a 6.8 terawatt distributed array producing 15 million gigawatt-hours of power per year, which at $5.00 per watt would cost 34 trillion dollars.  For the perhaps 1.0 billion lucky residents of the fully developed, industrialized world to pay for this via offset fees and taxes and the like over 20 years, zero interest, would amount to $1,700 per household per year.  Adding the grid and storage infrastructure should easily raise that price to $2,000 each - something like $7,500 per average household per year.  And this sort of accomplishment is a vital pillar of Gore’s pledge.  No more coal - twenty years.  Shave a few more points on future cost and call it twenty years, twenty trillion, a trillion per year.  Using these same assumptions, it would cost America $6.8 trillion to replace 100% of coal fired electricity with solar power, or about $23,000 for every person in the country.

Shaving costs any further on the future price of solar is a dangerous assumption, however.  Even at a cost of $34 trillion to replace coal worldwide with solar, our calculations are based on a collection of very optimistic givens; $5.00 per watt installed including storage and distribution upgrades, a 25% yield, and 20 year zero-interest financing; resulting in $2.3 billion per gigawatt-hour or 2.3 cents per kilowatt-hour for future solar.  We are nowhere near this, yet to precipitously phase out coal or to participate in a doubling of global energy production, or both, this is probably what the solar sector is going to have to do.

In a story today in the Los Angeles Times entitled “To slow global warming, install white roofs,” author Margot Roosevelt reports on a recent study that concludes, if you take it at face value, that all we have to do is paint all of our urban rooftops and pavements white and “the global cooling effect would be massive.”

“According to Hashem Akbari, a physicist with the Lawrence Berkeley National Laboratory, a 1,000-square-foot roof — the average size on an American home — offsets 10 metric tons of planet-heating carbon dioxide emissions in the atmosphere if dark-colored shingles or coatings are replaced with white material…  Globally, roofs account for 25% of the surface of most cities, and pavement accounts for about 35%. If all were switched to reflective material in 100 major urban areas, it would offset 44 metric gigatons of greenhouse gases.”

It would be interesting to understand exactly what Akbari means by this.  Is this 44 metric gigatons per year?  If not, over what period of time would reflective roofs collectively offset these 44 gigatons?  Considering all the nations of the world combined are still emitting somewhat less than 30 gigatons per year, this is a very impressive statistic, no matter how you slice it.

Dr. Akbari’s study isn’t what one should necessarily question, however.  We have always insisted the role of land use changes are greatly underestimated when assessing regional climate trends; from tropical deforestation to enhanced thermal absorption due to aquifer depletion to urban heat islands.  More pertinent is why the role of urban heat islands - dismissed by the press as a Crichtonian fabrication - has never had credibility, but suddenly the global cooling potential of urban cold islands is cause to legislate?  Read the IPCC’s 4th Summary for Policymakers (watch out, it’s 3.6 MB) - you will note the role of land use in causing global warming is minimized, and the role of urban heat islands is negligible.  Can you have it both ways?

Another interesting paradox here is the following statement from the report ”Globally, roofs account for 25% of the surface of most cities, and pavement accounts for about 35%.”  Well maybe if we let people have yards again instead of cramming them into cluster homes, there would be enough land for people to plant trees and create an urban canopy.  And if our cars are all soon to run on wind and solar power, maybe we should quit trying to force people out of them and into government operated light rail, busses, and “jitneys.”

The real take-away here is, once again, that there is very little certainty regarding the causes, the severity, or even the direction of climate change.  The rhetoric and the conventional wisdom is way behind the latest science and observational data.  The policymakers and pundits who have ridiculed the notion of an urban heat island are the same people who are uncritically reporting we must now make every road and roof reflective to mitigate this heat island.  There’s nothing wrong with making rooftops reflective to save energy - but does every sensible green product have to incorporate avoiding doomsday in their marketing and lobbying strategy?

Climate change is not a trivial issue.  Concern about climate change is nothing to be mocked.  But if you removed from the alarmist coalition the people who condone this alarm because they like the side effects - bigger government, more funds for environmental groups, nonprofits and academia, more taxes so the public sector can avoid fiscal reform, more subsidies and regulations so large corporations can crush emerging corporations, and greater energy independence - the only good side effect on that list - you aren’t left with much.  At the least, journalists and scientists should recover their innate skepticism, the lifeblood of their professions, and not abdicate their responsibility to point out this contradiction - the IPCC dismisses the heat island effect, yet today’s latest scientific study claims if we made our cities reflective “the global cooling effect would be massive.”

Even if California “only” ends up with 25% renewable electricity within the next decade or two, there is going to be a staggering amount of investment pouring into wind and solar power, and with intermittant sources of energy, massive storage infrastructure is just as necessary as the generating infrastructure. In our analysis of Prop. 7, California’s Proposition 7, the initiative that calls for 50% renewable energy by 2025, we estimated compliance would require about 500 gigawatt-hours of renewable electricity generating capacity per day. For wind power, based on installation costs of $2.5 million per megawatt ($2.5 billion per gigawatt), and yields of 17.5%, this would require a total investment of nearly $300 billion. The estimated total cost for solar, at today’s prices, was considerably higher than this (bear in mind the cost for solar energy is going to drop faster and further than the cost for wind energy in the coming years).  But what about the cost for storage infrastructure?

California’s wind-rich areas

In a perfect world, parked electric cars will harvest intermittant energy - wind at night, solar during mid-day, and release that energy during the demand peak. 

In a perfect world, 2nd and 3rd generation smart metering systems at homes will allow everyone’s car to act as a micro utility, an automated fiduciary, purchasing power when the spot price is low and selling power when the spot price is high. 

In a perfect world, cars that store 10-50 kilowatt-hours of electricity will buffer intermittant sources, and storage infrastructure requirements will be reduced.  Will electric cars proliferate as fast as intermittant generators?  Will they always be parked and collecting power at the right times?  Apart from electric cars performing this function, how much storage capacity are we going to need?

In California the demand peak is around 50 gigawatts, and the off-peak minimum can get as low as 20 gigawatts.  The time of peak demand is between 5 p.m. and 10 p.m., when appliances are operating along with flat screen TVs and PCs.  During this period, when the sun is down and the wind yields aren’t yet at maximum output, at least 25% of California’s daily electricity draw is consumed, about 250 gigawatt-hours.  It is reasonable to assume most of the renewable energy used to fulfill this demand will have to come from stored wind, and stored solar.  So what would it cost to store 100 gigawatt-hours of energy?

The sodium-sulphur battery

Yesterday we had the opportunity to speak briefly with David MacMillan, CEO of Megawatt Storage Farms, Inc., a company that is developing large scale electricity storage using NAS (sodium-sulphur) batteries.  He claims that “not including site acquisition and preparation,” storage technology using NAS batteries would come to about $350,000 per megawatt-hour.  This means the cost to load balance California’s grid, should 50% of her energy come from solar or wind sources, would probably run about $35 billion dollars.  This figure doesn’t include transmission upgrades, nor does it include site acquisition and preparation, but it also doesn’t take into account the potential of electric vehicles (or other private decentralized storage solutions) to absorb some of the required storage capacity.  Objections to renewable energy in general, and proposition 7 in particular, probably cannot rest on the storage and load balancing challenges, insofar as they only represent about 10% of the required investment.

For more information about utility scale electricity storage technologies, reference our posts Utility Electricity Storage, General Compression, Solar Thermal Storage, and Gridpoint’s Storage+, to name a few.  For more information about sodium sulphur batteries, visit the technical specifications page for NAS Batteries on the website of NGK Insulators, Ltd., a major manufacturer of these batteries.  For more information on how these batteries work, and where they are being deployed, read About Sodium-Sulfur (NaS) Batteries, on the excellent Fraser Domain Energy Blog (where have you gone?), or the USA Today report New battery packs powerful punch.

In a post last week entitled “Debate vs. Demonization“ we questioned the tendency on the part of global warming alarmists to demonize anyone who wishes to question the reality, the scope, the causes, or the prescriptions for global warming.  We referenced one recent exchange between Dr. Roger Pielke Sr., a renowned climatologist who has raised such questions, and one of his detractors.  In this exchange, the person who had attacked Pielke made the following statement:

“At the risk of talking science, Dr. Pielke takes specific exception to my reporting of the average global temperature over the past 10 years. I hate to get into duelling graphics, in part because it would encourage people to think that Pielke’s choice of graphs is relevant, but here is the UK MET office Hadley Centre’s most recent record of global average temperature. To the degree that this might be considered a discussion about science, I stand my ground.”

What if the earth is cooling, and we are planning for warming?

If you click on this link, the graph you see is not terribly ambivalent.  Temperatures are shown to be rising, and if all you knew was how to read a bar graph, and had no reason to doubt the veracity of the data, it would be alarming.  So I asked Dr. Pielke to provide background on the Hadley Centre’s data, and here is his response:

On the data plotted at the UK MET office Hadley Centre; they present land surface data back to 1850 with all of the problems (including warm biases) with such information as we summarized, for example, in our JGR paper, Pielke Sr., R.A., C. Davey, D. Niyogi, S. Fall, J. Steinweg-Woods, K. Hubbard, X. Lin, M. Cai, Y.-K. Lim, H. Li, J. Nielsen-Gammon, K. Gallo, R. Hale, R. Mahmood, S. Foster, R.T. McNider, and P. Blanken, 2007:
Unresolved issues with the assessment of multi-decadal global land surface temperature trends.
J. Geophys. Res., 112, D24S08, doi:10.1029/2006JD008229.

Also refer to our GRL paper, Lin, X., R.A. Pielke Sr., K.G. Hubbard, K.C. Crawford, M. A. Shafer, and T. Matsui, 2007: An examination of 1997-2007 surface layer temperature trends at two heights in Oklahoma.
Geophys. Res. Letts., 34, L24705, doi:10.1029/2007GL031652.

On the ocean surface temperatures, there are also a set of problems as reported recently, for example, by David Thompson and in the CCSP report on surface and tropospheric temperature trends.

More importantly for your discussion, is the absence of further temperature increase (even with the warm biases with the surface data) in the last 7 years.

A more robust data set is:
http://www.ssmi.com/msu/msu_data_description.html
[Figure 7] which accurately diagnoses the tropospheric temperatures back to 1979. In Figure 7 see, for example, the plot for TLT where there is even a global cooling recently.

Anyone who thinks the truth about climate change matters should take a look at sources Pielke references; especially the data on the SSMI website (above), Figure 7 in particular, which will appear if you scroll about 3/4 of the way to the bottom of the page.  In Figure 7 there are four graphs of temperature data, each of them corresponding to a given altitude, including a trend line for each.  The first two graphs depict temperature sensor data for the Lower Troposphere (altitudes up to 5,000 meters) and Middle Troposphere (5,000 to 10,000 meters), and show a warming trend of .169 C/decade and .096 C/decade, respectively.  This equates to a 1.0 C temperature rise every 60 years in the lower troposphere and every 104 years in the middle troposphere.  But both of these graphs show a significant drop in temperatures in the last few years.

The next two graphs depict temperature data and trend lines for the lower stratosphere (15,000 to 25,000 meters) and the troposphere/stratosphere (10,000 to 15,000 meters).  The graph for the lower stratosphere shows a cooling trend of -.019 C/decade, and the graph for the troposphere/stratosphere shows a cooling trend of -.334 C/decade.  Returning to Pielke’s response:

The discussions of the global surface temperature trend issue by Roger Pielke Jr. are also insightful:

Visually Pleasing Temperature Adjustments

Real Climate on Meaningless Temperature Adjustments

Does the IPCC Main Conclusion Need to be Revisited?

See also the discussions of this issue at:

Do IPCC Projections Falsify?, and

IPCC Central Tendency of 2C/century: Still rejected

as well as Lucia’a other postings on this on her website:
http://rankexploits.com/musings/.

The question is, will anyone read this material if they already have made up their minds?

At the risk, yet again, at incurring the wrath of the true believers, it is time to continue the debate regarding the cause of climate trends, and indeed, the direction of the trends themselves.  But conducting a debate on this most sensitive issue invites more than civil debate.  The issue of climate change has been succesfully framed as a moral issue, and debate is no longer politically correct.  To persist in debating this issue, despite mounting evidence - both scientific and economic - that debate is vital, is to risk being marginalized and demonized. 

Our favorite climate website, www.climatesci.org, is operated by Dr. Roger Pielke, Sr., a climatologist at the University of Colorado.  We highly recommend anyone who wants to see just how little we still know about climate to visit this website regularly.  Pielke asserts climate change is real, but mostly regional in nature, and anthropogenic influences such as aerosol emissions and changes in land use, if anything, are more significant than CO2 emissions.

Pielke’s main conclusions, might be summarized as follows:

1 - Climate change study should focus more on regional and local scales.

2 - Global surface temperature trend assessments are flawed.

3 - Global warming is not the equivalent to climate change.

4 - Ocean heat content change is the most significant factor in diagnosing and monitoring global warming and cooling.

5 - The role of CO2 in climate change is overstated.

6 - Global climate models have not made accurate predictions to-date.

7 - Controlling CO2 is an inadequate policy to influence regional climate trends.

This is a crude distillation of Pielke’s conclusions and one should read his website and read the more detailed summaries he has compiled to make a fair assessment of his position.  But if you study his conclusions, and follow his updates, it is clear this is the work of someone who is both highly qualified and nuanced in his outlook.  But qualified and nuanced isn’t enough for the true believers.
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Questioning the role of anthropogenic CO2 in climate change has nothing to do with whether or not one cares deeply about environmental values.

For his refusal to simply adhere to global warming alarmism, Pielke has now earned the ire of desmogblog, a website that states “we’re here to clear the pollution that clouds the science on climate change.”  In their post criticizing Pielke, entitled Roger Pielke Sr. Attacks Messenger, Injures Self, author Richard Littlemore takes issue with a recent post on Climate Science where Pielke criticizes reporting on hurricanes.  In this post, entitled ”Hurricanes and Global Warming - A Disconnect,” Pielke cites a recent example to illustrate his point that mainstream media tends to reinforce the perception that hurricane intensity is on the rise because of rising global temperatures.

It is interesting to read the exchanges between DeSmogBlog & Pielke.  We’re well familiar with these guys because they decided to launch an assault on EcoWorld a few months ago entitled “EcoWorld - A Website Officially Unconcerned with Accuracy.”  In this masterful hit piece, Littlemore highlights a disclaimer we include on EcoWorld - a disclaimer that is standard issue for any website that includes in their content financial analysis, and makes this disclaimer the centerpiece of their attack.  Without going into the details of their attack, nor our response, it is obvious Littlemore and his colleagues at DeSmogBlog are skilled professionals.  As Littlemore states in his recent exchanges with Pielke:

“The DeSmogBlog has only a passing interest in science and (as previously demonstrated, sometimes painfully) no avowed scientific expertise. Our interest AND our expertise is in public relations - particularly in the manipulation of the public climate change argument by people who have abandoned science in favour of advocacy…”

We are not interested in attacking DeSmogBlog.  But we are interested in defending people like Dr. Pielke Sr., who themselves, in our view, are challenging bias with at least as much integrity as Mr. Littlemore.  It is time for people to look for hidden agendas on both sides of this debate over climate change; the scope, the causes, and the proposed policies we support as a result.  And it is time to stop demonizing people who are willing to question the conventional wisdom; time to stop saying “the debate is over.”

There are environmental challenges of undeniable urgency - dead zones along our coastlines, tropical deforestation, depleted aquifers, collapsing fisheries; the list goes on.  And this focus on reducing CO2 emissions, which may well have nothing to do with anything, will almost certainly take the spotlight away from these other environmental issues.  And to attempt to marginalize the work of Roger Pielke Sr., who is uncovering valuable information about various causes of regional climate change, is counterproductive, to put it mildly.

Does that get your attention?  It should, because when that happens, the Silicon Valley will become the sister city of Detroit, with the only difference being Detroit gave way to union power fifty years earlier, and is still paying the price.  Silicon Valley is a meritocracy, and as long as it stays that way it has a chance to maintain its high-tech dominance.

Unions in 21st Century America are not nearly the same creature they were fifty years ago.  Back then unions legitimately fought for rights and benefits that have now largely become institutionalized - safe workplaces, reasonable work hours, competitive pay.  Back then American heavy industry enjoyed nearly a monopoly position, and as a result businesses such as the Detroit automakers could afford to grant generous concessions to unions - including pension benefits whose financial sustainability relied on the assumption Detroit’s factories would always be hiring more people than they were retiring.  When the world caught up with America, and the big three automakers no longer could experience annual growth in revenue and employees, the cost of these pensions became burdens that crippled them. 

The only true monopoly left in America today, however, is in the government.  In the public sector there is no global competition, and there is no problem growing revenues, since all you have to do is increase taxes and fees to increase revenue.  As a result, unions who had ruinously wrung every dime out of America’s automakers, nearly killing them in the process, and who saw no percentage in trying to organize, say, Walmart employees, have taken over the public sector.  And the pension debt now carried by public entities is the biggest liability, by far, most of them will ever face.  Any politician who questions this reality is crushed by public sector unions, who collect mostly mandatory dues from millions of public employees and deploy this money to exercise nearly absolute control over elections at the state and local level.

At the same time as union power has shifted to the public sector from private industry - because, sadly, it is easier for unions to control the public sector - the financial epicenter of union power has become those pension funds who manage all the wealth they have confiscated from taxpayers (who have to retire on social security in their 60’s), to provide to unionized public sector workers who retire in their 50’s.  These public employee pensions have become so generous, in most cases a private worker would have to have saved over a million dollars in their personal retirement fund for the annual interest during retirement to match the pension of even the lowest echelon of workers in the public sector.  Since unionized public employees make far more in base pay than globalized private sector workers, amassing that million or more is problematic for most taxpayers, to put it mildly.

It is in this context that CALPRS, the retirement fund that manages pensions for California’s workers, and AFSCME, the American Federation of State, County and Municipal Employees, have launched a public relations assault on Larry Ellison, CEO of Oracle.  Unlike ordinary workers in the public sector, Ellison didn’t simply show up four days per week for 25-30 years so he could retire a millionaire.  Ellison’s billions were earned because he rose to the top in the business ecosystem of the Silicon Valley, a place where merit still counts for something.  A place where if an employee is productive they are rewarded, and if they are incompetent, they’re fired.  A place wholly dissimilar to the unionized public workplace where the only way you can get fired is by being politically incorrect, and job security is furthered if you never solve problems.

CALPRS, along with other pension funds fueled by our taxes, have taken huge stakes in companies like Ellison’s Oracle, and, as reported yesterday in the Los Angeles Times, have suggested it is time for Oracle’s board to adopt a “say on pay” plan, wherein Ellison, a hero who has helped keep America competitive and created jobs for over 84,000 people, will have to periodically justify his compensation package.

This is not a moral crusade, or even a genuine initiative; it is a public relations stunt, part of an ongoing attempt to keep voters focused on the ultra-high pay of a handful of extremely successful private sector executives, instead of on the obscenely inflated pay and benefits of literally tens of millions of unionized public employees. This sort of propaganda is infantile, playing to emotions of resentment and envy, and relying on the utter financial ignorance of most journalists as well as the general population.  The venal reality is public sector workers usually make 2-4x what private sector workers make, their retirement benefits are totally unsustainable, and instead of merging funds like CALPRS with Social Security, which would benefit the U.S. economy and protect the interests of ALL workers, they point the finger at people like Larry Ellison to cloud the issue.

Ultimately, public employee unions and their pension fund managers such as CALPRS, will hopefully be smart enough to leave Oracle alone.  After all, by investing in the globalized private sector, public employee pensions have a better chance - still remote - of remaining solvent.  But voters and investors should understand that public employee pension fund influence on the boards of major corporations represents union influence - and once they control the boards they will control the company.  Instead of organizing from the bottom up, Silicon Valley risks becoming unionized from the top down.

For more read posts in our Public Sector Reform section. Also recommended is the website Pension Tsunami.