Features

Illustration by Ken Orvidas

Like so many others here and abroad, I sleep a little easier knowing that you are at the helm. Each week that passes you demonstrate a keen understanding of the challenges our country faces and the competence, pragmatism, and cool to effectively address them. The challenges are daunting and the list is alarmingly long--global warming, our dependence on oil, two wars, al-Queda and radical Islam, crumbling infrastructure, a broken financial system, crises in healthcare, immigration, education, social security, and medicare, and, of course, the sharp downturn in the U.S. and global economy.

Fiscal policy--government spending and taxation--is crucial for addressing the country's long-term economic and social problems. Many of the challenges listed above--except the economic downturn--are such problems. However, capitalist economies inevitably undergo periods of expansion followed by contraction and fiscal policy is all but impotent in stopping the short-term ebb and flow of the economy.

As such, your proposal for short-term fiscal stimulus to "fix the economy," and "create 3-4 million jobs," overplays what fiscal policy can do. For sure, government has an ethical responsibility to help families cope with the hardships of the downturn with increased spending on unemployment insurance, healthcare, education, and housing. But, by focusing on "short-term stimulus," you sacrifice this spending in favor of $300 billion of tax cuts, which will increase the national debt rather than save the economy from recession.

Your focus on stimulus also implies a smaller effort at tackling our long-term challenges. It also runs the risk of a future policy crisis in the likely event that the recession will last years, not months, regardless of whether a $1 trillion fiscal package is quickly passed.

In these difficult times, the American people need a helping hand. We are also hungry to dream again in grand long-term achievements. In the 1960s, we shot for the moon and the elimination of poverty. Today we need to kick the carbon habit and develop health care and education systems that work for everyone. Mr. President-elect, drop the emphasis on short-term stimulus and let us dream again.

The current recession has most of us uneasy about the economy and, more immediately, our own financial security. However, while most suffer during recessions, some prosper. While the housing market founders, auctioneers find more work, and while upscale retail stores' sales decline, discount stores' sales increase.

So too with environmental concerns. The high price of gasoline of just a few months ago has dropped more than 50 percent. While that provides relief at the pump, it also removes some of the incentive to develop fossil fuel alternatives which might have less impact on the environment. It also reduces the impetus to conserve fuel by driving less.

With reduced income or fear of reduced income, consumers--whose purchases account for about two-thirds of U.S. gross domestic product--cut back on spending. Some environmentalists might argue that this slower growth is better for the Earth, with less pollution and resource depletion. But for every "Made in China" product not purchased in the United States, less production occurs in China. And, since fewer products are sent to the United States, less packaging is needed. So the shiploads of recycled paper that not long ago were being shipped to Asia to be made into packaging, aren't.

Ultimately, reduced output means less demand for inputs, which has contributed to wholesale collapse of the market for recycled materials in New Hampshire and elsewhere. The price of one staple, OCC (old corrugated cardboard), dropped from about $115 a ton in September 2008 to $25 a ton in December; the price of metals dropped from about $469 a ton in July to $5 a ton in November. Towns now pay to recycle some materials which not long ago generated revenue. And so, while towns may still promote recycling to reduce disposal costs or for moral reasons, the revenues from recycling have declined precipitously. End result? Towns have to either tighten their belts or raise taxes to cover the shortfall.

And so it goes. For every action there is a reaction, and ultimately the recession will have both positive and negative effects on environmental quality and policy.

As the economic problems of the past year draw parallels to the Great Depression, governments around the world have responded with huge bailout programs designed to save the financial system and shore up the global economy. In a period of months, trillions of dollars have been committed to what is widely seen as a major global problem, despite lingering uncertainties over the depth of the problem and how best to address it. As many ordinary citizens watch these events in awe, and ask where their bailout is, I am forced to wonder where the "environmental bailout" is. The environment is of critical global significance, and arguably far worse off than the economy. As a result of human activities, some 50 percent of the Earth's surface has been transformed by human action, we are in the sixth mass extinction in Earth's history, and atmospheric greenhouse gas concentrations are increasing and greater than at any time in the last 700,000 years or longer and are already altering climate and everything on which it depends. The massive global response to world's current economic problems is impressive in its size, speed, and international coordination. But in the scheme of things, it lacks perspective and relevancy for perhaps the biggest challenge of our time--sustainability. Previous civilizations (and their economies) have collapsed because of environmental and resource mismanagement. What the world really needs to be contemplating now are huge investments and initiatives designed to research and address all of the major challenges of sustainability. If done well, these efforts are likely to save money and shore up the economy for the long run. Talk of a large "green" stimulus plan in the United States is a step in the right direction and will be a good way to begin the new year. This and other equally bold initiatives are needed around the world to shore up the global environment.

Migration fueled most of New Hampshire's recent population gain allowing it to grow while much of New England experienced migration losses and little population increase. Since 2000, the state gained 80,000 residents and has an estimated population of 1,316,000. This gain of 6.5 percent is nearly twice that of any other Northeastern state.

New Hampshire's dependence on domestic migration --more people moving in than out from other states---makes it particularly sensitive to changes in the economy and housing market. New Hampshire's population is among the most mobile in the country. Fewer than half the people living in the state were born here. The Boston metropolitan area provides the most migrants, with additional gains from the Northeast and migration losses to the South and West.

The impact of the economic downturn and a slowing housing market are already evident. New Hampshire growth has slowed dramatically. Between July of 2007 and July of 2008, the state grew by only 3,600, compared to an average annual gain of 12,000 earlier in the decade. This slowdown results from migration losses. Nearly 2,500 more people left New Hampshire for other U.S. destinations then moved into state last year. The state grew only because there were 4,200 more births than deaths and because of modest immigration.

The migration loss occurred because the number of people moving to New Hampshire declined sharply, while the number of people leaving the state diminished only slightly. This pattern is consistent with that in other states (Arizona, Florida and Nevada) that depend on domestic migration for growth. Migration has slowed because it is now difficult for people to sell existing homes and move to new areas. An economic recession tends to exacerbate this by encouraging people to stay put.

Continued migration losses could have significant implications for the state. The largest groups of migrants to New Hampshire are family households headed by a 30-49 year old and households near retirement age. Both these groups bring considerable economic, social and intellectual capital to the state. Thus, if the recession and housing market problems are resolved quickly, their demographic impact will be modest. However, if the problems are prolonged, the implications for New Hampshire demographic future could be quite significant.

Chemistry is often called the "central science" because it connects physics and mathematics with the life sciences, medicine, engineering and, more recently, nanotechnology. Chemistry drives the world's economic engine through the production of essential materials such as fuels, pharmaceuticals, pesticides and polymers.

In the 21st century, our world faces enormous challenges. Financial markets have plummeted; our economy is in recession. Chemistry can't solve those economic problems but it is central to a bigger one: energy. Energy production, climate change and global economics are intimately linked. The petroleum era has left us melting ice caps and a lingering addiction to cheap energy. Huge stores of fossil fuels may remain but we can't burn them without catastrophic results. During the mid 1800's, kerosene replaced whale oil as the preferred source of lighting fuel. I believe we have only a decade or two to make a massive switch to home-grown "green" fuel technologies.

Chemistry is central in this race to create renewable fuels. Some early solutions - for example, mandates to ferment ethanol from corn - are silly because the energy gain is negligible, but the field is evolving quickly. In principle, almost anything we grow, from algae to zinnias, can be converted into fuels. Cellulosic ethanol, biodiesel, biogas and even biogasoline are under intensive development. The first biodiesel fueling station in New Hampshire opened recently.

Of course, fuels are only part of the new economy. Chemists are also developing photovoltaic materials for better solar cells, new batteries and fuel-cells, and antibiotics to help us stay ahead of evolving "superbugs". Material science and nanotechnology are yielding "smart" polymers and electronic devices, storage materials for hydrogen, another important fuel, and advances in medical diagnostics and treatment. UNH has a major NSF-funded effort in nanotechnology (see http://www.nano.unh.edu/). One of the best new companies I have seen is Nanocomp Technologies Inc., (http://www.nanocomptech.com/) a New Hampshire company that creates carbon nanotube based materials. We have seen the future and it is... high-tech and green.

* A DuPont advertising slogan from 1935 through 1982

Ebenezer Scrooge should never have listened to Marley's ghost. All along he had been a miser, gleefully counting up his gold and locking it away. Then those blasted spirits convinced him to be a kind, forgiving, charitable, pleasant person. They said gift-giving and benevolence would lighten his heart. They said mankind was his business!

First he went on a spending spree, buying that big turkey dinner for Bob Cratchet, giving out Christmas presents, running up huge bills for geese, poultry, sucking pigs, mince pies, plum puddings, red-hot chestnuts and seething bowls of punch. He should never have let the Ghost of Christmas Present organize that corporate junket.

Then he sold his gloomy suite of rooms in that lowering pile of a building and bought a big cheerful house in Knightsbridge; how else was he supposed to throw big Christmas parties? Who knew the interest rate would triple?

Next he got involved with that charity hospital for crippled orphans, which invested all its funds with Henry Jekyll, who had a great reputation but, it turned out, had something to hide. When he had to borrow a little from foreign investors, he went for the oldest and most reputable firm. But that Count Dracula ended up being a real bloodsucker, and worse, his whole financial operation turned to dust when they exposed it to the light of day.

If only he could go back to being a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner! But he had sworn to honor Christmas in his heart, and try to keep it all the year.

Maybe he and Tiny Tim could get a bailout from the government. God bless us, every one!

Analysts often attribute the current economic downturn to the subprime mortgage crisis. Many of the mortgages issued in recent years were subprime, meaning that they were issued with little or no down payments to households with poor credit histories and low incomes. These mortgages typically had interest rates that were initially quite attractive but subject to readjustment in accordance with broader market conditions after a fixed period (i.e., adjustable-rate mortgages). Of course, any mortgage that introduces the possibility of increased monthly payments presents a risk of financial hardship to borrowers. From the perspective of a social psychologist, two interesting questions arise. Why did borrowers think they should take out these loans? Why did they think they could?

Borrowers may have thought that they should take out risky loans because obtaining status symbols such as a nice home are aspects of the "American Dream." As it is a consensually agreed upon status symbol, owning a nice home may become a "self-standard" - what we would ideally like to be or what we think we should be. Anxiety and despair often arise when we fall short of these self-standards and contentment and elation are produced when we surpass them. Moreover, people engage in social comparison with others, and these comparisons produce negative emotions when they yield the conclusion that others are faring better than us, and positive emotions when they suggest that we are doing well relative to others. Many people may have thought that they should obtain these homes because, through internalizing social ideals and comparing themselves to others in regard to material possessions, they may have (consciously or unconsciously) anticipated positive emotional outcomes.

One might think that a realistic assessment of finances would have prevented these people from believing they could have these homes. However, social psychology is replete with evidence suggesting that this may not be so common. First, people may have focused their attention on the attractive introductory rates without giving much thought to the possibility of rate increases in the future. Indeed, rewards and costs have greater impacts on decision-making when they are in the near-present relative to when they are in the distant-future. Second, even if they had focused their attention on the future possibilities, they very likely made overly positive estimates of those possibilities and their capacity to handle them. In fact, some of the most replicated findings in social psychology suggest that people have positive illusions about their own abilities, and unrealistic optimism and a sense of control over future events, all of which usually enhance coping and positive emotions. Third, even if people came to the conclusion that they would not be able to afford these homes in the future, their desires for immediate gratification, often thought to be a means of regulating positive emotions, may have took precedence over rational decision-making. In short, one of the reasons why we had a subprime mortgage crisis may be because the "heart" (emotions) triumphed over the "head" (logic).

In the spring of 1837, the worst financial crisis in the first century of U.S. history destroyed credit markets, banks, home values and jobs. In what has become a familiar pattern, the panic began in the international trade centers of London and New York. Soon the economic woes spread to all of the nation's main streets.

People everywhere struggled to understand how a decade of prosperity could crumble in a few short months. They had worked hard for their economic growth, but the crisis seemed to be controlled by an inhuman force. Was the economic devastation the devil's doing?

Then as now, panicked people wanted someone, human or divine, to blame for their failure. People pointed fingers at President Martin Van Buren, the treasury secretary, banks, foreign investors and dastardly con men. As unemployment escalated and investments vanished, individuals turned on one another. Creditors sued debtors; debtors absconded. Husbands chastised wives' consumerism. Wives blamed husbands for risking their families' futures. Starving workers rioted in New York City. Caught between bad luck and bad choices, Americans craved hope--not unlike today.

Sensing an opportunity to redeem souls, ministers preached a revival of faith. But in New Hampshire, a Unitarian minister professed his confidence not in the divine but in capitalism. On May 15, 1837, as banks throughout the nation shut their doors, the Rev. Andrew Peabody exhorted his parishioners in Portsmouth's South Church to renew their confidence in each other. Peabody's "breath of fraternal sympathy and honesty" thawed his town's frigid atmosphere. He published his sermon with the hope that a revival of trust would spread nationally to counter the doubts that fueled the economic crisis.

Peabody's hoped-for revival of trust did not end the crisis in 1837--it took five years for the economy to rebound. Meanwhile, individuals overcame their panic, although not exactly as Peabody had expected. While some channeled their frustration into defeating Van Buren in 1840, others voted with their feet by heading west. Nevertheless, most Americans learned a lesson that bears remembering today: although no single individual can control the economy, everyone can choose to live economically.