Socialism in One City

Opening the Seattle Times this morning, I was surprised to see a photo of Seattle’s new Socialist Councilmember, Kshama Sawant, standing alongside the City’s new Mayor, Ed Murray, who was announcing the formation of a new Income Inequality Committee.  The Committee will consider minimum wage legislation, which Ms. Sawant would like to set at $15/hour, the level recently adopted through initiative by the City of SeaTac.

The paths leading to a more Egalitarian Seattle are cluttered with obstacles.  A former UW political scientist, Paul Peterson, insists that egalitarian initiatives, "redistribution" in Peterson's jargon, are pursued more effectively by countries than cities.  The title of Peterson’s book, “City Limits,” captures the main idea, which is that businesses and well-to-do residents aren’t trapped within the City’s boundaries; they can relocate to more “hospitable” jurisdictions, as Boeing is threatening to do.

In a more perfect world, minimum wages would be raised in concert nationwide (or worldwide), we’d have a more progressive tax code, and there would be better educational opportunities for less advantaged citizens.  But we don’t live in an ideal world, and so Seattle must seek out the next best alternatives.

There are some egalitarian policies Seattle can pursue without running up against the “city limits.”  Ms. Sawant isn’t the first Socialist elected to the Seattle City Council.  A hundred years ago, the Socialist Party was an active participant in the political battle to create Seattle City Light.  At the time, the existing electric utility was owned by a Boston syndicate and charged 20 cents/kWh.  When City Light started delivering power, it charged 8 cents/kWh, forcing its private competitor to reduce its rate to 8.5 cents/kWh. Now that's public power!

But I digress.  Today, Seattle has a chance to follow the excellent lead of B.C. Hydro, British Columbia’s publicly-owned electric utility.  B.C. Hydro charges its larger customers a carefully designed electric rate that doubles the financial incentive to conserve.  Each customer receives a block of low-cost power based on their past consumption, but pays a much higher rate for additional consumption.  In the long run, this electric rate alternative will reduce total energy costs, which are borne disproportionately by low-income households.  Perhaps our new Socialist Councilmember can nudge Seattle City Light in this progressive direction.

Here’s another question for Ms. Sawant: Do you approve of the City’s Retirement System's plan to triple its investment in Private Equity?  Thanks to the so-called “carried interest” tax loophole, Private Equity owners (remember Mitt Romney) pay a lower tax rate than most City Employees.  Seattle’s Liberal Councilmembers seem content to allow the City’s Private Equity holdings to be sharply increased, even though Private Equity lobbying groups are now pressuring Congress to maintain a tax loophole that benefits the highest echelons of the top 1%.  Surely a Socialist can’t support such investments!

Since I’m gathering up my holiday spirit, let me express the hope that our new Socialist Councilmember will bring the Liberal members of the City Council to their senses on these issues.  More efficient and environmentally-friendly utility pricing used to be a Liberal battle cry in Seattle, and the argument that it won’t work, or will drive business away, holds no water in light of B.C. Hydro’s success.  And if our Liberal Councilmembers can’t be persuaded to halt the City’s indirect support of Private Equity’s “carried interest” tax break, then perhaps their new Socialist comrade will occasionally remind them about the City’s $20 million investment in a Cayman Islands private equity firm, which is now worthless.

Note: This is my first post on this new blog.  Shortly I'll write a general introductory post about the point of "Socialism in Seattle."  Suggestions welcome.