The Progressive Ensign

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Category: Opioid Crisis

Midwest Hit With Tariffs & Shutdown Adds to Years of Recession – Needs A Heartland Venture Marshall Plan

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: heartlandhospice.com

Midwest farmers are declaring bankruptcy at a rate not seen since the Great Recession.  As prices for corn, soybeans, milk and corn decline to decade lows, the Minneapolis Federal Reserve reports that Chapter 12 bankruptcy filings in 5 states of the Ninth District.

Sources: United States Courts – Fed Ninth District, Federal Reserve Ninth District, FedGazette – 11/14/18

The Federal Reserve notes that based on the level of bankruptcies and the trajectory of the increase that bankruptcies will only increase. The government shutdown is exacerbating farmland pain.  The Trump administration announced last summer $12 billion in farmer subsidies.  But, because of the shutdown many farmers applying for subsidies and loans to plan for spring planting are not receiving the money they need. Many farmers and agriculture businesses are affected by the Department of Agriculture shutdown versus coastal states as shown below.

Source: Axios – 1/12/19

China turned to Russia and Brazil for soybeans in particular in the 4th Qtr of last year.  US sales to China dropped to almost zero. As a negotiating tactic, China last week did pledge to buy more soybeans as traders in Chicago noted last week an increase in sales orders. However, when China switched purchases to major suppliers last year it will be difficult for US farmers to unhook those deals already in place. As one farm owner noted, “ it just seems like it’s one thing after another, over and over.”

Heartland challenges have actually been going on for years even before the Great Recession with the loss of millions of manufacturing jobs since China joined the WTO in 2000.  The rural regions of the country have seen their wages grow at half the rate of metro areas.  The opioid epidemic has cost thousands of young workers future careers, unemployment is twice what it is in the East and West. The digital internet infrastructure in rural areas is quite often at analog rates 4 times slower than broad band.  Companies are at a disadvantage versus their metro competitors with slow bandwidth.  Rural region hospitals are closing at an increasing rate leaving many rural people with hundred mile or more drives to the nearest emergency room. Life expectancy in Mississippi is the same as Libya.  Heartland America has been left out the metro mainstream economy for the past 20 years. Our post – The Hallowing Out of Heartland America shows how rural regions have fallen behind in many infrastructure areas including: healthcare, Internet bandwidth, jobs, education with limited upward mobility for young people.

Next Steps:

The Heartland Venture Marshall Plan is similar in concept as the Marshall Plan deployed by the U.S. to rebuild the infrastructure of Europe after WWII, but instead of a government bureaucracy the Silicon Valley style innovation venture model is used.  Venture development is designed to start small, build on successful prototypes and use multiple sources of funding to gain as much support as fast as possible to make the venture a success.  Failure is part of the success fast, try several prototypes, do it, tweak it, try it again until it works or achieves the goals we set for the venture.

Here is a summary of the idea from our post of September 2017:

We propose building a startup non-government organization. We are recommending a different approach by the Federal government to act as an investor in a non-government organization called a Heartland Development Center.  An HDC acts as a central hub of critical services and infrastructure development while providing a continuous innovation system. The Heartland Development Center acts as a catalyst creating an innovation ecosystem to jumpstart local economics and social structures. HDCs would focus on all the key issues that a region needs to address to rebuild their economy and people’s lives: business formation, education and training, digital infrastructure, affordable housing, engaged local innovation media and health care.

The Federal government would seed the financing of these NGOs in key regions with additional funding from local and state governments, and major corporations who would benefit from the newly available job force tuned to their needs. HDCs would be ‘startup’ organizations installed at Land Grant universities bringing in leaders in their respective fields – ie. business formation – Y Incubator, preventive health – Cleveland Clinic, or training – Opportunity@Work as contractors to the HDC.  These NGOs would establish continuously renewing innovation processes to stay in touch with their citizen – customers and businesses. Administration services would all be contracted using cloud software services for HR, Payroll, Training, Benefits and other internal systems to keep costs down. The HDC startups would be piloted in 3 non metro areas, where they would tune their business and socio economic models for maximum impact, then use those working models to implement HDCs in 25 or more other key regions for 5 – 10 years.”

Economists see the opportunity to invest in rural regions to jump start a part of the economy in innovative ways. Joseph Stiglitz, nobel prize winning economist for example advocates turning blue collar rural areas into ‘green collar’ hubs focused on developing innovative environmental technologies, systems and services.

Congress sees the need as well, as Congressman Ro Khanna – D-17 California is working on legislation patterned after the land grant college Morrell Act of 1862 to make an investment in technology job development in rural sections of the U.S. Khanna has supported computer programming training in West Virginia and toured the Midwest with Silicon Valley executives and venture capitalists to encourage investments in the Heartland. He points out that there is no need to send jobs to China, Brazil or India when there are people in our Heartland who can do those jobs well and at lower cost than expensive coastal regions.

There is one indicator of the desperation that many rural people feel is the fact that the opioid epidemic has a 50 % greater incidence in the Heartland than in our metro or coastal cities. We need to be building bridges through programs like the Heartland Venture Marshall Plan between our coasts and the inland empire to bring together our people developing consensus and shared experiences. Each HDC would be staffed by a equal mix of apprentice and college graduates from local rural education systems and metro university graduates. They would comprise a ‘Heartland Service Corp’ modeled on the AmeriCorp program with a benefit of complete forgiveness of student debt for two to four years of service depending on the debt balance. We would be building shared experiences of our young people to bridge the gap between inland and coastal cultures. These young people can innovate new opportunities to create an economic future that works for all.

Recovery Friendly Companies Rebuild Labor Force

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: mswcareers.com

One of the major challenges today in building our labor force participation rate is the millions of young people we are losing to drug addiction.  New Hampshire is leading the way with 70 recovery friendly companies  participating in a program for recovering drug and alcohol addicts to begin working by receiving training and then a job with decent pay. These workplaces are willing to accept employment gaps and brushes with the law.  The firms view addiction as a medical problem – like maternity or surgery.  Their work environment openly encourages discussion of addiction and paths toward recovery offering mutual support for recovering employees.

Work provides a sense of self-worth and self-respect to people on a recovery path.  Plus, addicts join a community, ending the isolation they feel from their substance abuse.  In a supportive community they can stay sober and learn about the lifestyle changes they need to make to stay sober. There are about 22 million Americans in recovery according to U.S government data.  Yet, with a low 3.7 % unemployment rates 9.2 % of workers in recovery are involuntarily unemployed notes theRecovery Research Institute at Massachusetts General Hospital.

New Hampshire experienced the third highest rate of overdose deaths in the U.S. in 2016.  Taking the challenge of recovery head on, the state now has over 60,000 recovering addicts working and a state unemployment rate of 2.7%.

“Most thoughtful business leaders want to do the right thing by their employees when it comes to addiction, and to [addiction in] their families,” observed KeithFlynn, the spokesman for the New Hampshire Business and Industry Association. The idea for the came from Gov. Chris Sununu when he was operating a ski resort where one of his employees had an addiction problem.  Instead of viewing the addiction as a reason to fire the employee, he developed a program of recovery and continued work. When Sununu become governor in 2016 he set about developing the program now in place.  The program helps 60,000 recovering substance abuse users and their families, while opening up a new group of prospective workers to New Hampshire businesses.  It is time that we looked at addiction as a medical problem instead of a criminal one, and developed programs nationwide to turn the lives of addicts around while increasing the labor force participation rate.

David Sawyer, a PersianGulf War veteran, summed up his experience at a New Hampshire recovery friendly company this way,

“Is it finding work through recovery, or finding recovery through work?” he posed a question, continued by noting “I don’t think recovery would have been so successful if I hadn’t been working.”

Building the Economic Power of Youth

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: opportunityinsights.org

Last week a non-profit research and policy organization, Opportunity Insights published a startling map and database linking the success of children in poverty to their neighborhood to climb out of poverty.  A key finding is that children growing up in neighborhoods where there is low income continue to live in poverty as adults.  Though of more interest is that all factors being equal children where there where two parents in the household did significantly better than children in one parent households.  Family structure made a significant difference.

Source: Opportunity Insights – 10/4/18  (areas in blue, children who grew up in low income areas tended to make more money, children in dark red far less)

Certainly, households with just one bread winner, generally automatically means that there  is less income in that household.  Opportunity Insights notes that often single parent communities do not have the same ‘social capital’ as two parent communities.  In terms of parents that can support their children, tutoring after school, going to after school activities and a father who is there to provide support to the mother.  Particularly, for boys having a father in the household seemed to be determinative in future opportunities boys enjoyed in adult life.  Key to forming the right skills for a higher income is an example of a mother or father working a job, focusing on nurturing their children’s skills and being an advocate for the child in the school system.

John Hope Bryant, CEO of Operation Hope, a for purpose non-profit group helping low income people through financial coaching and skills development to build a secure economic future. Bryant notes that 63 % of middle income Americans cannot afford a $500 car repair or $1000 in emergency health care. Without financial independence, people cannot protect themselves from social injustice, economic manipulation and profiling, People need to learn how to build personal ‘capital’ to dig out of the community that keeps them in poverty. He observes growing up in Compton, a California low income community, that children in the neighborhood grew up with no positive aspirations.  They continue to be surrounded by negative roles models: drug dealers, loan sharks, and criminals who have the economic power.  Yet, they don’t have the ‘capital’ or knowledge on how build wealth in a positive way and key relationships.  A person with no hope is a dangerous person, who becomes angry, vengeful and desperate. Bryant says there are three types of issues for children in poverty neighborhoods:  low aspiration and few opportunities for 25 % of the problem, poor role models and a negative family and community environment for another 25 % and finally low confidence and self-esteem for 50 %.

Next Steps:

The Labor Force Participation Rate for  adults ages 24 – 54 is 82.5 % is at a new low, and has been declining since the Great Recession. The opioid crisis, a symptom of the hopelessness that many of our young people feel today is causing millions of otherwise productive people to not join the labor force.  Deutsche Bank completed an analysis of how the opioid epidemic is hurting labor participation in many states.

Sources: OECD, Deutsche Bank Research – 9/10/18

Researchers found that states in the South (overlays the poverty areas in the neighborhoods map above) Alabama, Mississippi, Arkansas and East Central – West Virginia there is a high correlation of opioid prescriptions and labor force rate.

It clear from a moral, ethical and economic standpoint we need as a country to invest in our young people who face increasing challenges in becoming upwardly mobile.  How do we do it?

John Hope Bryant is investing in people in these neighborhoods by providing families and individuals with tutoring to increase credit scores (maps of FICO scores of under 500 map into the above areas too) and how to get low cost loans.  Bryant sees developing entrepreneurial skills in starting new businesses as a way to move economically ahead as well.  More important is learning how high income people became wealthy through building relationships and developing the courage and skills to start a new business.  As he notes, moving from one failure to the next to learn and see trial and error as a necessary part of the path toward creating a product or service of value. The entrepreneurial process builds self-esteem and confidence so crucial in transforming lives and creating opportunities.

Opportunity@Work, a non-profit group originated in the Obama White House, then spun off is tackling the education issue head on with training focused on helping those outside of the economic mainstream to get jobs in the new economy. The group helps candidates get the skills they need in high tech, then making the connection between employers and workers with a non-traditional resume.  In addition, they are pioneering new ways to finance education so that students will not be saddled with thousands of dollars of education debt when they start their careers.  Opportunity@Work is targeting assistance for 1 million people to get hired in the next decade.

We have proposed that a Marshall Plan-like initiative with an entrepreneurial approach be led by the federal government, venture capitalists, corporations, health providers, non-profits and universities to gain a beachhead in many low income communities particularly in rural areas of the Midwest and South. The Heartland Initiative brings key leaders in many fields to focus with high impact on enabling a community and its people to join the economic mainstream from upgrading Internet speeds to providing local access to affordable health care and counseling for mental health issues.  It is a multi-faceted project because there are connected issues, it is one thing to provide a young person with training, but if they are still taking opioids they will fail a drug test by a hiring firm.  Details about the Heartland Initiative are in our post, calling for a new approach to social programs using an entrepreneurial model with seed financing and cooperative groups to spring into action.

We need to bring those that have been on the economic sidelines back into the mainstream of our economy if we are to make any progress as a nation on building an economy that works for all.  With mounting national debt in the trillions of dollars, student debt at $1.5 trillion and opioid deaths at epidemic levels we need to see building the economic power of our youth as one solution to our economic challenges.

Phoenix Gyms Backed By Koch Brothers Help Addicts Become Sober

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: npr.org

The opioid crisis is continuing to grow worse with deaths from fatal drug overdoses up 10 % this past year reports the U.S. Centers for Disease Control.  The opioid crisis targets mostly young people in city centers and many rural regions across the country.  The wave of addictions through our working age people is damaging our ability to grow our work force to support a robust economy.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/19/18

The Koch Brothers, known for their backing conservative candidates and policy programs have a foundation arm called Stand Together which has invested $2 million to $3 million in “The Phoenix” gyms of Denver.  Recovering addicts can come to the gym free, to work out, receive coaching and support during their recovery.  Peter Thanos, an addiction researcher at the University of Buffalo, told the Wall Street Journal that persistent exercise has shown to be effective in drug rehabilitation. Drugs hijack the reward system in the brain, Thanos observed. Physical exercise can re direct that reward system.  He commented ‘in theory, you should be able to have an effect on drug-seeking” through exercise.

The political advocacy arm of the Koch network, Americans for Prosperity, is working to cut the funding for Medicaid in Utah and Nebraska.  Yet, Medicaid is the main source of mental health services funding in the U.S.

We applaud the support of the Koch brothers through their foundation of this innovative effort to attack the opioid crisis.  It seems that they need to look at what their advocacy group is doing to undermine the work of the foundation.  Does it not make sense to invest in returning thousands of our young people to become sober, taking jobs, raising families, buying houses and buying or using Koch brothers company products?  Let’s think about the opioid crisis from a long range point of view by investing in addicted people, bringing them back to productive lives.  It does not make sense to hurt this effort, instead we should all be working together to solve all facets of this problem resulting in a higher quality of life and a thriving economy.  We need all the workers we can get to be productive in the declining labor force 25- 55 year age group, otherwise we shall go deeper into debt to support our seniors.

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