Investment and Insulated Exploitation

Few Christians I know would shake down or extort their fellow believers. They wouldn't threaten to cut their utilities or drive them from their homes if they didn't fork over money to them. Would they?

But actually they do. However it is done by means of proxies and thus they insulate themselves from the dirty side of things.

For example in our area the electric company, a subsidiary of First Energy is doing very well. I watch their stock in the paper and they're running about a 20% growth rate. That's a nice return on investment.

Additionally they, like many other utility companies have received a boost as the bond market has suddenly turned rather shaky and investors are looking for something solid to sink their money into. Utility companies have been doing well and so they're benefitting from more investment and as a consequence even higher stock prices.

But why are they doing well? Undoubtedly there's a great demand for energy and the stock prices are riding a wave of speculation. But also they've raised their rates and painfully at that. I, along with some others I know are in a near state of despair regarding our electric bills. It's not helped by the fact that when we moved into our present house electric prices were low, gas prices were high and due to the logistics of our house we ended up utilising mostly electric appliances.

Years later the situation has reversed and we wish we had a gas hot water heater and perhaps even a gas stove. With the size of my family we use a fair bit of hot water for laundry and showers. We keep our heat low, I often take camp-style showers, we use the clothesline in the summer, drying racks in the winter, our incandescent bulbs are all gone and over the years we've had to replace some appliances as they typically don't last very long anymore. Everything we install is more efficient and yet our bill just continues to climb... and radically at times. I've pulled out old bill notebooks from fifteen years ago and our electric bill is about eight times what it was then. That's not just inflation, that's profiteering. This is while the electric company's service has continued to go through a downgrade.

Power surges and outages are regular in our rural area. I know one businessman who is at his wits end and has purchased a battery backup and surge protection system that cost him thousands of dollars. He's tired of crashed computers and the hours lost in trying to recover data, not to mention the lost retail profits in dealing with it while his store is effectively inoperable.

We've lost a furnace and some other things to the surges as well. Our area is so rural and so heavily forested that the costs of keeping up the infrastructure aren't worth the return they're getting. This was the basis for the universal service charges we all pay on our utility bills. The companies get extra money every month (by means of the charge or fee) but then have a mandate to provide universal coverage, even in the areas where the infrastructure and maintenance costs exceed the generated revenue, usually due to low populations.

By letting things go to the point of near collapse they also save money. Shoddy service is a grief to the residents but a means of increased profits for the company. If the utility board doesn't hold them accountable, which it doesn't, they can push the envelope a bit and they do. When people complain, they appeal to the high costs and demand a rate increase which they usually get.

Don't feel sorry for them. There are many subsidies they're able to get. Of course these subsidies are marketed as programmes to help the poor, but what they really do is pour tax money into the coffers of the utility and the utility (via state board collaboration) is allowed to keep the prices artificially inflated. People will pay and those that can't, the state will subsidise the costs if they will often sign up for the programmes. If the utility company actually had to operate via the market they would have to charge lower prices but even then they would lose many customers who would drop off unable to pay.

For many reasons the state doesn't want this to happen and so they've come up with the present maddening system. I know we can complain to the utility board about the problems but given that it's a kangaroo committee made up of industry connected persons and political appointees it's a waste of time. The assistance programmes are also a boondoggle as they are invasive, time consuming and effectively operate as a means to force open your home to other subsidised programmes for weatherisation and the like. It's literally a case of programmes driving programmes. I know some of the guys who do this work and many years ago I worked for a general contractor who bid on a similar type of these grant funded jobs.

If it were truly a publically owned utility the onus would fall upon the politicians who would (at least hypothetically) risk being forced out if they didn't perform and bring about some accountability and change. In the American system, the political side of things is too removed and too corrupt to change anything.

Now, I understand the world is broken and this is how the system works. But at the end of the day, if I don't pay my exploitative (almost extortionist) bill, I get shut off and in many municipalities your house will be either condemned or lose its occupancy certificate in short order. I live in the hinterland where there are far fewer regulations and ordinances and so I know of people who have lost their electric. I see their generators in the driveway which they run for a few hours a day while they rush to take care of laundry, keep a freezer going or whatever else. Unfortunately some folks who don't seem to understand about exhaust and issues associated with extension cords have as a result burned their houses down or in other cases asphyxiated their families. It's a sad situation.

But in terms of the business model, it's all a racket and the price hikes are part of it.

But what about the investors profiting from this? Aren't they part of this same racket? Of course they are but they don't feel themselves to be part of it because they're hands off. They operate through a financial advisor who operates through a broker and then of course the money passes to the company and its financial departments. And the number crunchers aren't part of the executive boards setting policy, nor are they part of the collections department. And they're certainly far removed from the linemen and metre readers who will actually turn off your electricity or shut off your water.

And yet the stockholders aren't off the hook. In many ways they're driving the practices and policies. Profits are supreme and if you're not gaining, you're losing, because someone else might be gaining faster than you are, and so there's an endless (and often destructive) impulse to seek profits above all else. Of course the stockholders love it. They don't see the human costs, they just reap the benefits.

There are others who feel the pressure. In recent years deregulation has allowed utility companies to open up a new profit loophole... subcontracting.

Now we see vans and lift-trucks driving around with a cheap magnetic sign stuck on to the door. It's the name of the private company with the name of the utility inscribed underneath. In other words it's a subcontractor working for the utility. Why would this be appealing? It circumvents unions and labour contracts. Labour costs plummet and liability is dumped on to the subcontractor. Often these subcontractors will utilise their own version of the loophole and treat their own employees as 'subcontractors' and thus be off the hook in terms of payroll taxes, workers compensation premiums and even liability insurance. Of course if something goes wrong the insurance companies and lawyers can get ugly in trying to suss out liability.

One night I had a conversation with a young lineman who works for the utility company. A professing Christian he made a point to stop and talk to me in my front yard. Everyone knows us as 'the homeschooling family' and apparently so did he. While the conversation was in some respects a blessing, in terms of employment and finances he's not seeing the big picture. He's just out climbing poles, running cable and making connections. But the subcontracting (and predatory capitalist model his church advocates) actually puts his job at risk because it means the main power company won't need to employ as many full time 'employee' lineman. They'll always keep some around. They're not going to put all their trust in the hands of subcontractors but a lot of the 'grunt' work can be outsourced. The lineman might actually like the change. They can focus on the more technical and probably enjoyable work while the rote tasks can fall on the subcontractors.

But that would be shortsighted.

The same trend is taking place in the realm of metre reading. Subcontractors are utilised which is interesting because in the past such workers were trained and more attentive. I've recently encountered many electric services that are in a state of disrepair or degradation. I'm referring to aerial entrances not the underground systems that are increasingly common in urban areas and new construction.

What am I seeing? The weatherhead or service-entrance cable has come off the house because the brackets or straps have broken. In some cases the outer insulation has (usually due to age) completely deteriorated leaving the inner wires and grounding strands fully exposed to the weather. In the past these services would have been 'tagged' as dangerous and a notice would have been sent out. But these days, the subcontracting metre readers either don't know to look at such things or don't care or have no means of 'tagging' such dangerous situations and so nothing happens. In that case the homeowner probably is relieved as replacing a service can easily cost a $1000. And yet you cannot help but shake your head. If the house burns, the insurance companies and trial lawyers will have even more people to pursue. And of course there are (as a consequence) not a few people living in potentially dangerous situations and yet have no idea, no cognisance of the situation.

Technology is also playing a role as remote transmitting and smart metres are coming on line. Some metres send out a signal and the reader doesn't even get out of the car anymore. But soon it will all be done via cellular towers and metre readers will be completely obsolete. Another huge savings and more jobs eliminated. The investors certainly like that.

As mentioned previously these companies rely on subsidies and yet most Right-wing types decry this, even while they profit from the stocks, the actual investments in the company. If it really bothered you in principle, you shouldn't invest in such companies.

But again given that most hand over their portfolios to an advisor, their control and influence is limited. An advisor is going to look at a stock that's growing 20% over the year and to him it would be 'unethical' not to invest in it. Ethics can be a funny thing.

Of course LIHEAP (Low-Income Home Energy Assistance Program) disperses subsidies to help people pay their utility bills, especially during the winter. While this programme provides some help to those who sign up, it usually amounts to paying only a small portion of your bill. In the Northeast where I live, a great deal of this money benefits the natural gas companies and in the rural areas, the many propane suppliers benefit from it.

Some people use pellet stoves and there are several plants that manufacture the pellets from the sawdust and remnants of the lumber industry which flourishes in my area. We have lots of sawmills, both large and small, from commercial operations to tiny Amish mills producing rough-cut 'wet' lumber. The local hardware stores sell the pellets which usually come in 40lb (18kg) bags which homeowners pour into the stove's hopper. LIHEAP issues vouchers for people that have these stoves to purchase the bags. The store turns in the vouchers and is reimbursed.

I know of one store owner who is about as Right-wing as they come and he grumbles and complains about all the programmes including LIHEAP, but he still takes the vouchers when people buy his bags of pellets. He doesn't have to take the vouchers but he doesn't want to lose the business.

When the rubber meets the road I find many principles are jettisoned if personal profit comes into question.

Returning to First Energy, this same utility company also owns several nuclear power plants, and they too are the recipients of vast subsidies. The infamous (perhaps notorious) Three Mile Island plant near Harrisburg is currently in the process of being decommissioned and the company is due to receive millions of dollars in aid from the government. The company could reduce its profits and foot the bill or finance it but then the stockholders wouldn't receive the dividends.

So in other words because the company mismanaged their operations which resulted in a catastrophe.... an economic catastrophe for the sake of this discussion (we'll leave the other more salient issues aside), they receive taxpayer subsidies. They adhere strictly to private enterprise when it comes to the profits but they are quick to socialise the losses.

Where's the sink or swim accountability the Right always touts? Shouldn't the company have to face the consequences of their mismanagement, lack of planning and lack of insurance coverage?

Not when it comes to Wall Street, let alone when it comes to strategic infrastructure.

But then how can someone who is in principle opposed to government intervention and subsidies take profits from such a business model? I don't see how someone who purports to be a principled market capitalist can invest in such a utility company. The truth is for all their talk most of these people are in the end pragmatists and selfish, even sociopathic in their ethics. What they demand of everyone else, doesn't apply to them. They condemn the poor for taking subsidies even while they profit from them... albeit through an insulated model that removes the realities from them... so they don't have to think about it.

The whole thing is rotten. Given the nature of nuclear power, obviously profits have to take a 'back seat' to other more pressing issues. There's an additional ethical calculation that comes into play... public safety, viability for future generations and things like that.

But my painful ever escalating bill doesn't come into play.

While I think it's worthwhile to expose the mismanagement and the flawed nature of the system, on another level I'm not actually complaining about the model. There's no point. It's corrupt but so is the whole system. It's what I expect and I know it isn't going to change. I'm banking on the fact that it can only go so far before there's a reaction, a course correction or some other kind of adjustment. The change is inevitable. I'm not going to let it bother me, though I must say there are times when the bill generates a great deal of angst and frustration. I tremble when the new bill arrives in the mail, hoping it hasn't gone up again.

But I do take great umbrage and offense at Christians who are profiting from the bill, this bill that causes me pain. And its escalation is due to increased costs? Is it justifiable? Everyone's costs go up but this is something more. This is avarice. This is a profit frenzy driven by speculation and by exploitation. It's actually a form of usury or least that's what the term used to mean.

Is this an ethical investment? Is it ethical to work for such companies? How about for the financial industry that makes it all happen, that drives this system into being what it is?

You be the judge.

I can't be your conscience but we each will give an account for what we've done and that judgment in part will be based on the knowledge we possessed.

But something is wrong when you go to church and the 'respectable' retired guy who has a nice pension (with and dependent on investments of course), who worked thirty years for one of these companies, is held in high esteem and is looked to as a leader. In the meantime the poor and struggling people are viewed as ethically dubious because if they were smart and hard working they would have attained middle class status. If that isn't the world and its thinking reigning in the Church, I don't what is. James certainly thought so but of course our modern Western eyes find ways to read the passage and make it say something else. The sell-outs and compromisers are deemed wise and the faithful are viewed as fools.