Urban Shield 2014

Urban Shield, a law enforcement conference that includes SWAT competitions, training exercises, briefings, and a large vendors show, is underway again in Oakland this year. The downtown Marriott hotel and conference center is packed with police officers and police-industrial contractors selling everything from machine guns to drones. Alyssa Figueroa of Alternet has a good story about Urban Shield and the protests against it this year, and Ali Winston and I wrote about the event last year.

I briefly walked through the conference this morning. What’s different this year is the size of the event. It feels bigger, and attendees said they thought there were more participants and vendors.

Here’s some photos from the vendors show.

Guns are a big deal at Urban Shield. Salesmen from Sig Sauer chat about rifles and pistols. Sig Sauer’s gun factory is located in New Hampshire.

A company named Execushield which claims to have been founded on September 11, 2001 shows off a video of its paramilitary security forces operating in Columbia. Based in San Francisco, Execushield specializes in providing security to high net worth individuals and Fortune 500 companies. A salesman manning Execushield’s booth said he could not talk specifics about clients.

Members of the Brazilian Police are attending Urban Shield this year. Here the Brazilians get a demonstration of a portable explosives detection device.

Drones are still in demand among law enforcement agencies, even though there has been significant public backlash. Here representatives of HaloDrop show off their drone aircraft which the company rents out as a service to government agencies.

The .50 caliber AW50, manufactured by Accuracy International, a British weapons maker that specializes in military sniper rifles. Mile High Shooting Accessories, a vendor attending Urban Shield and distributing these weapons, says the rifles are increasingly popular with U.S. police agencies. The Alameda County Sheriff has bought several of these AW50s (for about $5,000 a piece), and the Livermore police have bought other models made by Accuracy International.

A sales rep for Mile High Shooting Accessories of Colorado shows off various models of Accuracy International’s sniper rifles to Bay Area police.

Participating in this year’s Urban Shield tactical competitions, the U.S. Marines.

Arizona gun maker Patriot Ordnance Factory shows off its weapons at Urban Shield. Patriot sells weapons to the California Highway Patrol.

Patriot Ordnance Factory’s weapons include the words “God Bless America” inscribed below the chamber.

Comparing Bay Area Minimum Wage Increases

Berkeley and Richmond recently upped their minimum wages, and Oakland and San Francisco are also considering significant lifts for their lowest-wage workers. But each city’s minimum wage plan differs in significant ways. These differences reflect the balances of power between workers and employers, unions and business leagues, in each city.

In Oakland, labor and community organizations banded together as a coalition last year and decided to place an initiative directly on the ballot in time for the elections this November. That decision to circumvent the city council prevented what happened in Richmond and Berkeley. In Oakland’s neighbors to the north initial calls by grassroots activists for a $15 minimum wage were translated into a much smaller increase. Final legislation in these two cities was further watered down. Business lobbyists successfully argued that an immediate and significant hike in the minimum wage for all workers would cause unemployment, business closures, and a drain economic activity from these cities.

Berkeley’s minimum wage therefore isn’t very large, and it isn’t indexed to inflation, so it loses value quickly.

Richmond’s minimum wage, while larger on paper, may not impact very many workers in the city because of complicated exemptions that allow lots of employers to simply not pay the new municipal minimum wage, or to pay a lower “intermediate” amount.

In San Francisco the process has been legislative, like Richmond and Berkeley. But instead of starting from $15 and cutting downward, San Francisco’s board of supervisors appear headed toward $15 by 2018. If they pass the minimum wage legislation that was considered at today’s rules committee, San Francisco’s minimum wage will rise from it’s current $10.75 to $12.25 next year.

That would match the proposed increase that Oakland voters will consider in November. But then San Francisco’s minimum wage would jump another 75 cents in 2016, and then a dollar in 2017 and another dollar in 2018. Those increases significantly outpace the rate of inflation.

Here’s what the different enacted and proposed minimum wage increases in the Bay Area look like compared to one another.

In Oakland the “Lift Up Oakland” ballot initiative would raise the minimum wage for all employees in March 2015 to $12.25 and then increase this wage each year to prevent it from losing value from inflation. The Oakland Chamber of Commerce is attempting to place a competing measure on the ballot that would phase in a minimum wage increase, but the increases charted below for this proposal would not benefit all workers as the Chamber’s proposal carves out certain categories of employers and employees.

 

San Francisco’s proposed minimum wage would rise to $15 in 2018, possibly bringing pay just above the bare minimum considered a living wage.

 

Differences between Berkeley and Richmond’s recently passed minimum wage laws, and San Francisco and Oakland’s proposed minimum wages are larger than this graph would imply. In Richmond the number of workers excluded from the new minimum wage of $13 by 2018 is probably very large due to exemption of “small businesses” from having to comply, and a complicated provision that establishes an “intermediate” minimum wage halfway between the city and state minimum wages, allowing employers who obtain half their income from sales or services provided outside the city to pay this lesser wage.

 

 

Luxury Housing for the Top One Percent Booms While the Rest of the Housing Market Stagnates

A luxury house along “Billionaire’s Row” in San Francisco.

The failed economic policies of the Obama administration have been evident in measures of every important fundamental for six years now. Dismal job growth. High unemployment. Weak consumer demand, and so on. The biggest failure of the Obama administration was arguably the refusal to write down mortgage debt and force the top one percent of wealth holders to share some of the losses sustained during the housing market crash. While monetary policies pursued by the Fed, and a bailout of the secondary housing market with taxpayer dollars, temporarily provided a shot in the arm for housing prices, these gains were artificial. They weren’t based on genuine demand for housing by the majority of Americans. The result is that the top one percent of the U.S. housing market, the luxury segment, is booming, while the rest of Americans are having trouble affording homes. Now the housing market appears to be stalling out, except for luxury purchases by the elite whose wealth was protected by virtually every economic policy advanced through the financial crisis.

A single family home in Oakland.

Let’s review the problem. In the 2000s the U.S. housing market was flooded with cheap credit. Lenders extended giant loans, many of them sub-prime, and the prices of houses shot upward in a bubble. But stagnating wages for American workers meant that the prices of real estate diverged from the reality of the ability of the average household to safely repay these loans. When the financial system imploded, the price of housing collapsed, and it was the borrowers who sustained the brunt of losses in the form of equity. The debt remained to be repaid, however, because Obama and his economic advisers chose to protect the wealth of the top one percent.

As economists Atif Mian and Amir Sufi have pointed out in their book House of Debt, the federal government could have taken over as the servicer of mortgage-backed securities and renegotiated millions of loans, dropping interests rates and principal balances. Or the government could have allowed bankruptcy judges to reduce mortgage debt burdens. The few principal reduction programs there were, like the Home Affordable Modification Program, could have been pushed much further. As is, programs like HAMP served only a small fraction of distressed borrowers with underwater loans. HAMP and other loan modification programs did not meet their original numerical goals.

By not making creditors share the pain of the collapse of real estate prices, the Obama administration enforced a giant wealth transfer from the majority of Americans to a small minority, literally the one percent who own the majority of stocks and bonds, particularly stocks in banks and mortgage servicing companies, and bonds backed by residential mortgage debt.

But the wealthy also cache their fortunes in non-housing related stocks and bonds, and the Obama administration’s quantitative easing program has been good for supporting the value of these securities. So the wealthy never took the same kind of hit the average American did with housing price dips and job losses. Then the wealthy benefited from federal programs that jacked up asset prices.

Should we be surprised then to learn that the top one percent of the residential housing market is booming while sales of literally every home priced below a luxury-grade are dropping? This is one consequence of the Obama administration’s housing and economic policies.

A new batch of numbers from the real estate research firm Redfin illustrates the consequences of the Obama administration’s economic policies by comparing the very top of the American real estate market to everything else. “Sales of the priciest 1 percent of homes are up 21.1 percent so far this year, following a gain of 35.7 percent in 2013,” writes Troy Martin of Refin. “Meanwhile, in the other 99 percent of the market, home sales have fallen 7.6 percent in 2014.”

“For the top 1 percent, the housing market is still booming. But for the rest of the market, the recovery is running out of gas,” concludes Martin. “As home prices have risen, wage and job growth have failed to keep up.”

Redfin’s research shows that in virtually every major metropolitan region the luxury segment of the housing market, the top one percent of homes in price terms, are selling fast and at higher prices. Not surprisingly, there’s considerable regional variation, but it’s a nation-wide phenomenon.

The real estate market in the San Francisco Bay Area is perhaps the most unequal and driven by sales to the super-rich. Luxury home purchases are way up in Oakland, San Jose and San Francisco, with Oakland and San Jose experiencing a virtual doubling of the luxury market over the past year. The top one percent of the market for Oakland, San Jose and San Francisco combined is priced at an average of $3.7 million, but San Francisco has pulled ahead of the rest of the nation with an average home price of $5.35 million for the top one percent of its market. Some of this is likely due to the booming tech sector which is creating thousands of millionaires in the region.

For the majority of Americans the problem boils down to household debt. There’s still too much debt for the average household to sustain purchasing power that would drive an economic recovery, including a recovery in the housing market. From 2003 to the peak of the housing bubble in the third quarter of 2008, total household debt shot upward by about $5.4 trillion, according to data compiled by the Federal Reserve Bank of New York. From the peak of the housing bubble to the present, total household debt only decreased by $1.5 trillion. That means that about $3.9 trillion in debt piled onto U.S. households during the housing bubble is still weighing down family budgets. Most of this debt, about $2.89 trillion, was mortgage debt.

Over the same time period wages remained flat for most Americans. The median household incomes in the year 2000 was approximately $42,000. In 2012 it was about $51,000. Accounting for inflation, the real value of household income actually declined over this period by $5,000.

The income and wealth gains at the top of America’s economic pyramid over this same time frame should be familiar by now, as they have been extensively explained in recent research. What’s important to point out, however, is that the the average household, the median Americans whose incomes dropped by $5,000, took on significant mortgage debt during the 2000s, altogether in the trillions of dollars, and the lenders of this capital, ultimately, are the top one percent households.

So that’s why we see the luxury housing market booming while virtually 99 percent, the rest of America is stagnating.

What’s the Difference Between a $12.25 and $10.20 Minimum Wage?

The Oakland City Council has the power to raise the minimum wage paid by employers in the city. However, after years of not using this power to raise wages, a coalition of community organizations and labor unions is proposing to “lift up” Oakland’s minimum wage to $12.25 per hour through a popular vote.

In response to this coalition’s campaign, vice mayor Larry Reid is now also sponsoring a minimum wage ordinance to boost the bottom of Oakland’s wage scale to $10.20 an hour starting in 2015.

There are several key differences between Reid’s wage proposal and what the coalition is seeking at the ballot box.

Not surprisingly it’s the $2.05 difference between the two minimum wage proposals that creates the most contrast.

Consider the fact that there are currently very few occupations in Oakland that pay less than $10.20 an hour, but there are numerous jobs in the city that pay less than $12.25. The impact that Reid’s minimum wage would have on Oakland’s lowest paid workers would be incredibly small because few employees fall below his minimum mandated amount. Add just $2.05 more and the number of workers who will benefit leaps upward by perhaps an order of magnitude.

According to the Bureau of Labor Statistics’ most recent data for the Oakland-Fremont-Hayward metropolitan region only 0.6% of the workforce currently earns on average less than $10.20 an hour. But 6% of workers in the region earn less than $12.25 an hour.

That’s a major jump upward from a virtually insignificant number of workers to a small chunk of the total labor force. (I should note that the BLS statistics are for all of Alameda and Contra Costa counties, and here I’m assuming that Oakland roughly reflects the broader jobs picture in both counties.)

For the East Bay region, the BLS lists only 8 occupational categories in which the average worker earns below Reid’s wage proposal, but there are 39 occupational categories where average pay is below $12.25.

In other words, Reid’s minimum wage, if adopted, wouldn’t benefit most short order cooks, sewing machine operators, laundry and dry cleaning workers, child care workers, desk clerks, food preparation workers, personal care aides, waiters, and dishwashers.

Dianne Feinstein Mixes Money With Oakland Foreclosure Investor

Richard C. Blum and Dianne Feinstein enjoying a chuckle.

Last month I published an investigation examining the big corporate investors that have bought up the East Bay’s foreclosed homes, turning thousands of them into rental properties. Featured in the story was Cheri King, an Oakland resident who lost her house due to predatory bank lending and the foreclosure crisis. Now her home in East Oakland is owned by Colony Capital, a private equity firm from Santa Monica run by billionaire Thomas Barrack, Jr.

Last Friday it was announced that a hotel chain owned by Barrack, FRHI Hotels & Resorts, purchased Oakland’s Claremont Hotel. Joining Barrack in buying the Claremont is Richard Blum, husband of U.S. Senator Dianne Feinstein.

Here’s what the company’s press release said:

“FRHI Hotels & Resorts (FRHI), the parent company of luxury and upper upscale hotel brands Raffles Hotels & Resorts, Fairmont Hotels & Resorts and Swissôtel Hotels & Resorts, together with California financier Richard C. Blum and his family, have purchased the historic Claremont Hotel Club & Spa in Berkeley, California, it was announced today. FRHI and the Blum family are equal partners and terms were not disclosed.”

Whatever the specific terms were, the general gist is that Blum and Feinstein are now business partners with Barrack.

What does this mean for victims of the foreclosure crisis like Cheri King, and homeowners currently fighting to stop foreclosure? In her effort to stave off foreclosure by Wells Fargo, and win back her home from Colony Capital, King wrote to Senator Feinstein’s office last year. According to King, Feinstein’s staff were responsive and helpful, but ultimately nothing has come of her attempt to bring the California Senator’s attention to the problem of continuing bank foreclosures, dual tracking, and the investors like Colony Capital taking advantage of this situation.

Now that Feinstein is a business partner with one of the largest foreclosure investors in the nation, Colony Capital, will there be a push for more meaningful oversight of the banks that are creating the inventory of empty homes for buyers like Barrack to buy up?

What’s the Real Impact of a Minimum Wage?

In a recent profile story for the East Bay Express my colleagues Ali Winston, Elly Schmidt-Hopper, and I noted that Oakland mayoral candidate Bryan Parker doesn’t support a minimum wage measure that’s picking up lots of signatures, and which will likely be on the city’s ballot this fall. The measure would require all employers in the city of Oakland to pay their workers at least $12.25 per hour.

When we asked Parker about the minimum wage measure in an interview we weren’t surprised by his non-supportive answer. Parker is a business executive who ran a division of DaVita, a Fortune 500 healthcare company that pays many of its workers very low wages. Previously Parker worked at several investment banks, the sorts of places where conservative, anti-labor economic opinions are dominant.

But a few days ago on Twitter Parker claimed we misunderstood and mischaracterized his position on wages. He tweeted that he supports a “living wage.”

To clear up the record, here’s what Parker actually told us. We asked him, “do you support a $12.25 an hour minimum wage such as the ballot measure that will likely be put to voters?”

Parker didn’t respond with a “yes.” Parker told us that he supports the idea of a “living wage,” but that he isn’t sure “what the right number is.”

He then said something rather dismissive of the entire idea of using government to raise wages for the working poor. “What I want to think about instead [of a minimum wage] is more full employment,” concluded Parker.

The real value of the federal minimum wage has been made to decline since about 1968. This is one of the major causes of rising household income inequality in America. Ronald Reagan’s term in office coincided with the most consistent and effective attack on the minimum wage.

That’s supply-side economics at its most pure, and it’s also a talking point that has been used by opponents of minimum wages for decades. So to be really clear, when we asked about a minimum wage, we got an answer that wasn’t supportive, and that instead pointed towards a “rising tide lifts all boats” sort of plan.

Here’s the reason we likened Parker’s economic thinking to Ronald Reagan (see 1:33 mins in).

To be fair to Parker there’s some theoretical logic behind the full employment goal. In labor markets with lower unemployment rates companies have a harder time recruiting workers, even for the most unskilled of jobs. Tighter labor markets lead to rising wages as employers scramble to hire employees and retain them. Workers don’t fear quitting or losing jobs as they can just take another one. Wages tend to rise slightly during periods of low unemployment as workers have a smidgen of bargaining power.

Parker also told us he’s cautious about minimum wages because he believes they actually cause unemployment. “Employment would decrease,” said Parker. “Employers wont be able to afford as many employees. There’s extensive studies by economist showing that every time a minimum wage has been raised there’s been a deflationary impact on the overall jobs market.”

Again, that’s a very Reaganesque sort of statement. (See the above video link.)

Switching back into his business executive mode, Parker then told us that he’s a “data driven person.” This is why he doesn’t support a minimum wage and instead offers up the goal of growing jobs.

Problem is, a lot of the economic studies that claim to show a causal link between rising minimum wages and job losses are conducted by researchers working directly for pro-business, corporate-funded think tanks. When your paycheck comes from business interests who will profit from driving down wages, is it any surprise your findings are that higher wages for the lowest-paid workers are bad for the economy, even bad for those very workers?

For a recent example of this logic see Mark Wilson’s “The Negative Effects of Minimum Wage Laws.” Wilson’s consulting firm Applied Economic Strategies, LLC writes economic propaganda for the wealthy elite, attacking higher wages for workers, arguing that unions are obsolete, promoting tax cuts for the wealthy, among other policies that redistribute income and wealthy upward. Wilson was once employed by the Heritage Foundation, a think tank funded by ultra-conservatives like the Koch brothers and he served in George W. Bush’s administration. Oaklanders can probably expect some studies along these lines to be offered up this election season by local opponents of the minimum wage campaign.

The actual academic, peer-reviewed studies on the minimum wage don’t support Parker’s “data driven” opinions. Whether a higher minimum wage causes unemployment to rise at the bottom of the labor market is a controversial question that has been debated since Congress passed the first minimum wage law in the aftermath of the Great Depression, 1938. (It’s been debated alongside child labor laws — those opposing restrictions on using kids as workers in mines and factories were the same people opposed to mandated minimum wages.)

In fact, some studies show minimum wage increases actually bumped up employment rates.

Other state-level studies have shown that minimum wage hikes have led to job losses for low wage workers, but that the overall impact was still to redistribute hundreds of millions of dollars in income downward, even after accounting for lost income from fewer jobs, thereby improving the economic conditions of low-wage households.

A reason for the contradictory results, however, is that the minimum wage is an obviously political issue. It’s at the center of a power struggle between workers and businesses over the distribution of income from economic activity. Enacting minimum wage laws, or raising them on a statewide levels, or even in large metropolitan areas, causes the direct redistribution of millions in income from the top earners to the lowest paid workers. The net effect is probably to redistribute income from wealthy and middle class households to the poor, thereby lifting up the workers with the greatest needs. Many researchers who attempt to gauge the impact of the minimum wage on employment levels are already out to prove either the good or the bad in the policy. When researchers pick their methodological tools, data sets, and statistical formulas, it’s often the case that they’ve already subtly biased the outcome. The kinds of studies you trot out in support of your argument are just that; ammunition to support whether or not you’re for redistributing aggregate income downward via the minimum wage.

But overall the research —not just economic studies, also sociology, history, and not least the actual experiences of working poor families— is pretty clear. Minimum wages increase the overall share of income claimed by the bottom quartile or so of the workforce.

‘Where Are We Supposed to Go?’

Gavin Ames said he broke his leg on Oakland’s pothole filled Jackson Street. The health problem cost him his job, leading to homelessness. The city forced him to leave his camp site next to the Kaiser Auditorium today and trashed some of his belongings.

The city of Oakland ordered several dozen homeless residents to vacate their camp sites around the Henry J. Kaiser Convention Center today. A large crew of public works employees were ordered to dispose of tents, blankets, luggage, and other possessions. At least ten Oakland police officers were on scene also.

Pastor Preston Walker has lived in a tent under a buckeye tree near the Kaiser building for several months. He shared the spot with several other men. Their campsite is decorated with a flag of the United States, the words “no justice, no peace” written on it. An Oakland Athletics Baseball Club pennant hangs next to a sign reading “Occupy the Hood.”

Scrawled on the sign is a date; “January 28, 2012,” the day hundreds of Oaklanders attempted to take over the Kaiser building as a “community center.” Oakland’s mayor and city council authorized the police to use all means necessary to repel the march. Oakland police fired tear gas, rubber bullets, and threw stun grenades at the protesters. The building has sit empty since then.

“People are just gonna come right back here cause where are they going to go?,” said Walker. “Otherwise they’ll just squat somewhere else.”

Seven Oakland police officers chatted among themselves nearby, watching ducks and geese and a stray rooster pecking at the grass. The officers looked bored.

“I don’t think they want to be doing this, out here when there’s better things they should be doing,” said Walker.

On the other side of the building Gavin Ames is trying to figure out how to move his belongings before the city’s workers throw them away.

“I used to be a cashier at a Chevron station. I was living paycheck to paycheck,” said Ames. “Then this happened,” he said, pointing to the cast on his leg and foot.

“I fell in a hole in the street on Jackson, right here, downtown Oakland, broke my leg.”

Ames said he finds it ironic the city of Oakland’s public works employees are being told to remove him and other homeless residents. “They should be fixing the streets.”

City of Oakland staff, non-profit outreach workers, and Oakland police at the “clean up” of Kaiser Auditorium.

Joe Devries, a neighborhood services supervisor with the city of Oakland, said the city had reached out to those camped around the Kaiser building offering services since September. “This has been a long slow process, but we made it abundantly clear that people could not be camping here.”

Devries mentioned also that last week the building was broken into and copper was stolen. It’s not clear how that related to the homeless persons camped out nearby. Several of the homeless men called it just another excuse to remove them.

“People want to use this space as a park. The city has invested millions around the Lake here,” said Devries. “This is an area want to keep making beautiful.”

A large number of Oakland police officers watched over a public works crew as they removed a homeless encampment around the Kaiser Auditorium.

Oakland’s Vendor Pool to Complete the City’s “DAC” Mass Surveillance System Is Filled With Nuclear Weapons Contractors

Potential contractor to complete Phase 2 of Oakland’s DAC surveillance system, URS Corp is the largest nuclear weapons contractor for the United States. The company is so integrally involved that it’s “federal” web page includes a picture of a nuclear missile-armed submarine.

In March of 2013 the city of Oakland signed a contract with Science Applications International Corporation (SAIC) for design and construction of the first of two phases of a city-wide surveillance system called the Domain Awareness Center, or DAC. The basic infrastructure to link up cameras and sensors with servers running powerful software, hosted in several command rooms at the Port and in the city’s Emergency Operations Center, is now mostly complete. Oakland’s DAC surveillance system is not yet fully up and running, however, until Phase 2 work is completed. In July of 2013, against an outpouring of public protest against building the surveillance system, the Oakland city council approved a contract modification for SAIC to complete Phase 2.

Recently, however, the Oakland city council learned that its prime contractor for the project is involved in the U.S. nuclear weapons program, a fact that violates Measure T, a city voter proposition that makes Oakland a nuclear free zone. Measure T and Ordinance No. 11062 C.M.S. bar any contractor that is involved in nuclear weapons work from doing business with Oakland, and SAIC’s contributions to nuclear weapons are well-documented.

Oakland paused work on the project, and in October the city council authorized its administration to drop SAIC and return to the original pool of vendors who responded to the city’s first request for proposals (RFP) issued one year ago. The original pool of vendors who expressed interest in bidding on the surveillance project included 25 corporations, so surely another with a clean record could be found?

It appears, however, that SAIC’s ties to nuclear weapons aren’t unusual inside the industry that sells mass surveillance systems. Many of the contractors that specialize in building giant surveillance systems like the DAC also have nuclear weapons and other arms manufacturing contracts with the Pentagon. Mass surveillance and nuclear weapons appear to go hand in hand in the thinking of the executives who run these companies.

For example, engineers with URS Corp responded to Oakland’s original RFP for the DAC. URS Corp is a prime contractor for theU.S.nuclear weapons research, design and testing laboratories at Los Alamos, New Mexico and Livermore, California. URS is part of two for-profit limited liability corporations that manage theU.S.nuclear weapons labs for the National Nuclear Security Administration. URS also operates the salt mines in southern New Mexico where deadly radioactive waste from theU.S.nuclear weapons programs is buried.

Schneider Electric also responded to the original RFP and appears to be in the running to get the DAC Phase 2 contract. But again, like URS and SAIC, Schneider Electric has ties to nuclear weapons. In marketing materials Schneider lists Los Alamos National Laboratory, the nuclear weapons facility managed by URS, as one of its clients. Schneider Electric also lists the Pentagon, Lockheed Martin, and Wright Patterson Air Force Base as clients. Lockheed Martin has long been one of the prime nuclear weapons contractors for the United States government. Wright Patterson Air Force Base hosts several units that research and deploy nuclear weapons. Schneider Electric’s Pelco subsidiary has installed surveillance systems at the Navy’s Kings Bay Strategic Weapons Facility, a port that harbors nuclear armed submarines.

Marketing materials created by Kratos Defense and Security Solutions, Inc., another potential contractor that might build Phase 2 of Oakland’s Domain Awareness Center.

Another company in Oakland’s vendor pool that is being considered for Phase 2 of the DAC is Kratos Defense. Very much like SAIC, Kratos is another San Diego-headquartered arms merchant that thrives on Pentagon and Department of Homeland Security (DHS) contracts. In their most recent report to shareholders, Kratos’ executives straightforwardly describe their company as “a specialized security technology business,” whose “principal products and services are related to Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance (“C5ISR”).” Kratos’ major business segments include “Electronic Warfare/Attack,” drones, known in industry-speak as “Unmanned Aerial Vehicles,” and “Missile Range Operations.”

And Kratos has direct links to nuclear weapons too. Kratos designed, built, and manages a security system for the National Nuclear Security Administration’s use at the Nevada Test Site, a testing ground for nuclear weapons that in recent years has been considered as the site of a possible radioactive waste dump. Last year Kratos won a multi-million dollar contract from the U.S. Strategic Command (STRATCOM) to provide “worldwide Radio Frequency (RF) interference geolocation services” for the Pentagon’s use. Among other things, STRATCOM commands the nuclear weapons forces deployed by the Air Force and Navy, and Kratos’ contract relates to this nuclear mission.

The list of potential Oakland DAC contractors includes still more companies deeply involved in weapons manufacturing, including nuclear weapons.

Two representatives from Unicom Global attended the Port of Oakland’s October 22, 2013 pre-proposal meeting for the DAC. Unicom Global is owned by Beverly Hills entrepreneur Corry Hong, formerly a lead guitarist in a South Korean rock band who became a software designer after immigrating to the US. Unicom is a holding company owns several major federal technology contractors including GTSI. GTSI was suspended from doing business with the federal government in 2010 due to accusations the company was scamming the Department of Homeland Security. Hong and Unicom bought GTSI last year, and since then GTSI and Unicom have regained considerable business with the military and DHS.

Unicom’s GTSI has even contracted with the National Nuclear Security Administration. A 2009 brochure from GTSI that is available on Unicom’s web site discusses one such contract in which GTSI provided the U.S. nuclear weapons laboratories with “classified removable electronic media,” or CREMs. CREMs are storage devices which have been used to save nuclear weapons design information and testing data.

Oakland’s list of potential DAC Phase 2 contractors just keeps turning up companies with links to nuclear weapons. G4S Technology, part of the security company G4S, also responded to Oakland’s DAC RFP and attended to the mandatory pre-proposal contractor meetings. G4S Government Solutions has the prime contracts to guard most of the U.S. nuclear weapons complex across four states. G4S mercenaries are stationed at the Y-12 National Security Complex and Oak Ridge National Laboratory in Tennessee, the Savannah River Site in South Carolina, the Nevada Test Site, the Sandia National laboratory Tonopah Test Range, also in Nevada, and the Hanford Site in Washington state.

So can Oakland actually pick a contractor to complete its mass surveillance system who doesn’t violate the city’s anti-nuclear ordinance? Perhaps a more important question is the one being asked by a growing coalition of residents opposed to the project: should Oakland even build the DAC?

SAIC: Oakland’s Border Militarizing, Drone Flying, Nuclear Weapons Engineering Surveillance Contractor

Screenshot from SAIC’s jobs web site. SAIC develops surveillance technologies for many branches of the federal government, as well as local governments and police agencies.

In 1988 the Oakland city council passed the nation’s most ambitious anti-nuclear ordinance, banning any and all activities that would advance the development and deployment of nuclear weapons. It was a big deal, not like the previous mostly symbolic ordinances passed by other towns and cities far from the nation’s nuclear labs and military bases.

The city of Oakland lies just south of Berkeley where in the 1940s and 1950s much weapons research was conducted. Weapons and components were transported through Oakland’s Port and across roads and highways and rail road routes traversing the city. Atomic weapons that later decimated the environments of South Pacific islands, causing cancers among islanders and destroying their homes were shipped through Oakland. In the 1960s Berkeley’s research was consolidated at Lawrence Livermore Laboratory in southern Alameda County, but for decades Oakland was host to nuclear weapons contractors and federal offices involved in the design and deployment atomic weapons. (In fact this is true today, the subject of a future blog post perhaps.) The Navy sought to home port a nuclear-armed squadron in the Bay Area in the 1980s, and Oakland’s anti-nuclear ordinance was a direct effort to resist the further nuclearization of the region.

In 1990 a federal judge appointed by Ronald Reagan slapped down most of Oakland’s anti-nuclear law, calling it unconstitutional and claiming that it interfered with national security. However, one portion of the anti-nuclear ordinance stayed on the books. Oakland would continue to refuse to enter into contracts or otherwise spend city funds on work done by corporations involved in the US nuclear weapons program.

Both the spirit and letter of this law were thrown out three years ago when the Oakland city council summarily agreed to the massive port-city surveillance system called the Domain Awareness Center. The contractor building Oakland’s camera and sensor network is Science Applications International, a giant military-industrial corporation that has helped the US Defense Department develop, build, and deploy nuclear weapons, among many other killing technologies.

And the Oakland contract with SAIC would seem to violate the spirit of another city of Oakland resolution, the anti-SB 1070 law that was passed in 2010 to oppose Arizona’s anti-immigrant law. Oakland’s anti-SB 1070 resolution requires the city to boycott Arizona, and companies with headquarters in Arizona, due to the state’s racist and militarized immigration policies. SAIC has a major office in Arizona and has helped the federal government build a massive border wall and surveillance system.

A portion of the gigantic wall built by SAIC along the US-Mexico border, a portion of which spans Arizona.

SAIC’s anti-immigrant technologies probably don’t violate Oakland’s anti-SB 1070 ordinance because the company’s contracts are with the federal government, and not the state of Arizona. SAIC is headquartered in Virginia, and only has branch offices in Arizona. Nevertheless, SAIC is perhaps the single largest provider of border surveillance technology to the government. SAIC has multiple offices in Arizona where its assists the Department of Homeland Security in its historically unprecedented effort to wall off the US-Mexico border and deport millions of human beings.

On SAIC’s web site the company proudly advertises the 60-mile border wall it helped build for the Department of Homeland Security in Arizona.

SAIC has developed the major surveillance, biometric, and alarm systems used by the DHS along the US-Mexico border throughout Texas, Arizona, New Mexico, and California. SAIC claims to have executed at least $200 million in border security contracts in the last five years, work that includes developing the “Integrated Wide-Area Surveillance System,” or IWASS, which we are told, in promotional material on the company’s web site: “safeguards the homeland through an intelligence-based operational solution for border security.”

Screenshot taken from SAIC’s jobs web site. SAIC is hiring interrogation trainers to teach US military personnel how to interrogate captives and prisoners. The work is carried out at Fort Huachuca, an Arizona military base where SAIC also assists in drone training and operations.

SAIC has dozens of job openings at its Arizona offices currently. The company is hiring biometric technicians to develop camera-linked computer systems capable of discerning identity from facial recognition and body shapes. These technologies could someday be incorporated into Oakland’s Domain Awareness Center system, according to discussion between SAIC and city officials.

At its Fort Huachuca office SAIC is hiring staff for its “human intelligence” program, a major military contract to train interrogators and spies within the US military. SAIC is deeply integrated into the US military’s espionage and surveillance activities. Arizona is one of the major locations where SAIC and the Army develop these technologies.

Fort Huachuca, located in southern Arizona near the Mexico border, was founded in 1877 by the US Army during their war of extermination against the Apache nation, and other southwestern Indians. For Huachuca grew afterward as an outpost against Mexico from which the United States had seized a quarter of North America.

Today the desert outpost is also one of the US military’s major drone warfare bases. SAIC is one of the main contractors providing technology and training for Army and Navy drone weapons systems at Fort Huachuca, and drone surveillance systems based at Fort Huachuca are reportedly used in border patrol operations, but mostly in overseas theaters of war. As the LA Times reported in 2011, SAIC employees are part of the “kill chain” in drone warfare, carrying out crucial roles in the drone missions employed by the Obama administration to kill thousands in the Middle East and Central Asia. Just last month the military re-upped SAIC’s drone contract to assist Army personnel in operating and maintaining the new weapons.

Screenshot of SAIC’s jobs web site, advertising employment opportunities for drone operators. SAIC’s staff are in the “kill chain” of the US military’s controversial drone warfare programs.

SAIC’s nuclear weapons contracts are too numerous to try to list. SAIC has contracted with the US nuclear weapons complex since the mid-1980s. SAIC has taken billions in payments from the US Department of Energy and the National Nuclear Security Administration to conduct studies and carry out contract work for nuclear weapons development as well as lead up the government’s site planning and environmental compliance efforts at the major weapons labs in New Mexico and California. One of SAIC’s latest nuclear weapons-related contracts is a $228 million work order with Sandia National Laboratories in Albuquerque, New Mexico. In addition to designing and testing nuclear weapons, Sandia also develops weapons and surveillance technologies for the CIA, NSA, and other federal spy agencies.

SAIC also serves the military branches that deploy nuclear weapons. For example, in 2009 SAIC was paid $10 million to help the Air Force reorganize its nuclear weapons command structure.

Capital of Inequality

Part of San Francisco’s Union Square hyper-lux retail offerings, the De Beers store which features armed guards at the entrances. Ferrari recently opened a store a block away on Stockton Street. Haute Couture names obscure fill the district’s buildings offering items of conspicuous consumption.

Through the Financial Crisis and the Great Recession, inequality has intensified through income, housing, and public debt in the Bay Area. Black and Latino communities have lost wealth and power, while white and Asian communities have mostly to recovered. At the top, the wealthiest 5 to 10 percent, have made enormous gains.

Imagine a place where the hills are lined with the mansions of millionaire families, some of them billionaires. Their residences sit atop forested ridge lines with views of a peaceful ocean, or upon oak-studded peninsulas that jut into an azure bay. In this place they want for nothing. De Beers opened a retail store in one of their favorite shopping districts a few years ago, next to haute couture names like Bulgari, Cartier, and Gucci. An investment bank opened a “coffee shop” just a couple blocks from the headquarters of no less than seven Fortune 500 corporations, to catch their employees after work for talks over lattes about what to do with all that money crowding their bank accounts. Posh towers filled with luxury apartments sprout from the city center where multiple cranes seem to perpetually dot the skyline. iPhones pop from the palms of pedestrians like third hands, and newfangled apps like third eyes give them instantaneous information about the latest opulent consumer activities. Everything glows with money and power, a lot of it.

Below the hillsides glittering with wealth are even more expansive terrains of crumbling homes and apartment buildings —many foreclosed upon and awaiting some kind of financial death— packed with families that barely scrape together twenty thousand dollars a year to live on. Their views: smokestacks, port cranes, freeway overpasses, and scrap yards, or, sometimes on a clear day, if they ever think to pause from survival mode, they can see the hills, the mansions, the gleaming skyscrapers beyond reach, the towering campaniles of universities where they can never afford to send their children.

This place is characterized by the crowding of impoverished human beings, most of them of African and Latin American descent, into hollowed out industrial zones where factory buildings and abandoned warehouses echo the bustle of past decades. This economy of yesterday was exported to the new shop floors of China. Among the only things left are the toxic plumes of chemicals spreading slowly under fence lines. In this place entire generations face severe poverty and a decimated public sector – especially the schools. Tens of thousands of adults exist, persist, somehow without meaningful work or income. Tens of thousands of house-less persons —likely no longer even part of the statistical surveys used to calculate joblessness and income— wander the streets and sleep in the cracks of weathered concrete each night. Every few months the police slay a youngster under questionable circumstances. Crime is rampant. Violent crime is hard to avoid, part of the overall suffering.

The splendid heights and stratospheric wealth would not be so contemptible was it not hanging directly over such desperate poverty. Of course the two things are not unrelated.

Welcome to the San Francisco Bay Area, in the Golden State of California.

The West Coast financial center of the United States.

The epicenter of the tech industry.

The global vortex of venture capital.

One of the most brutally unequal places in America, indeed the world.

If measured by the same metrics that are used to gauge income inequality within nation states, the Bay Area’s internal divide between its rich and its poor would place San Francisco between China and the Dominican Republic, making it roughly the 30th most unequal state in the world. China is now the estimated home to 317 billionaires. California counts perhaps 90 billionaires. Half of these, mostly white men, live in San Francisco and Silicon Valley. The Census counted 4.2 million persons slipping below their definition of poverty last year in California.

In the distribution of income and wealth, California more resembles the neocolonial territories of rapacious resource extraction and maquiladora capitalism than it does Western Europe. Oakland is more El Salvador than it is EU. The Bay Area metropolis is more Bangladesh than Belgium.

California is just one of seven states that has the distinction of ranking higher than the national average on three basic metrics of income inequality, as measured by the Bureau of the Census. Its gini coefficient of income inequality was most recently measured at 0.47.

The ratio of income between the top 10 percent and the bottom ten percent, as well as the ratio of income between the top five percent and the bottom twenty percent show staggering divides in economic power that few other places in America, indeed the world, surpass.

Source: Weinberg, Daniel H., “U.S. Neighborhood Income Inequality in the 2005-2009 Period,” American Community Survey Reports, U.S. Census Bureau, October, 2011.

The only states that compare to California’s harsh inequalities are deep southern states structured by centuries of racist fortune building by pseudo-aristocratic ruling classes, and the East Coast capitals of the financial sector.

Source: Weinberg, Daniel H., “U.S. Neighborhood Income Inequality in the 2005-2009 Period,” American Community Survey Reports, U.S. Census Bureau, October, 2011.

The economies of Louisiana, Mississippi, and Alabama remain bound by racial inequalities founded in slavery and plantation agriculture; the wealthy elite of all three states remain a handful of white families who control the largest holdings of fertile land, and own the extractive mineral and timber industries, and the regional banks.

Texas, with its sprawling cities, global banks, energy corporations, universities, and tech companies, is more like California in that its extreme economic inequalities are as new as they are old. Stolen land and racial segregation combine with unworldly new fortunes built on the Internet and logistical revolutions in manufacturing and markets to manifest a gaping divide in power and wealth between the few and the many. The Texas border, like California’s, opens up vast pools of Mexican and immigrant labor for super-exploitation by agribusiness and industry.

The same goes for New York, Connecticut, and Washington D.C. the other most unequal places in the United States. New York and Connecticut, like California, have become societies divided by an upper stratum of financial-sector workers and corporate employees whose salaries and investments simply dwarf the bottom half of the population’s earnings, and unlike the South, this extreme level of inequality is rather new in its source of valorization. Washington D.C. is split between the federal haves, mostly fattened contractors who run the military, or who represent the interests of the billionaires in California and New York, and the have-nots, mostly Black and immigrant service sector workers who wait on these technocrats of empire.

It’s a strange club, the super-inequitable states of the U.S. This exclusive list pairs the bluest coastal enclaves of liberal power with the reddest Southern conservative states. In terms of wages and wealth these places have a lot in common.

San Francisco’s real estate roller coaster. The Financial Crisis cut 20% off home values in San Francisco, but the U.S. Federal Reserve’s bond buying program, coupled with broader tax and fiscal policies, has created a rally in securities markets, handing the wealthiest Americans enormous gains in net worth. These economic policies benefiting the rich are evident in San Francisco’s real estate prices. Secondarily is the Tech 2.0 boom in San Francisco and Silicon Valley, pulling in thousands of new residents to work in Internet, biotech, and other industries where six figure salaries are the norm.

In San Francisco homes now routinely sell for millions. Not mansions. Not even particularly large houses. Just simple homes built decades ago. In most other markets they would fetch the national median home price of about $170,000. San Francisco, which locals like to call “the City,” sees dozens of real estate deals every month in which a cool million or two pass hands, and afterward the new owner, usually someone with freshly minted tech or finance money, has the modest structure demolished and scraped away. The new thing is to build upward, and lavishly, from scratch. Heated stone bathroom floors and wine cellars are popular. Securing a pad in Noe Valley or Bernal Heights for a few million is seen as a reasonable way to spend money.

In San Francisco the western end of Broadway is known as “billionaire’s row.” Quite a few of the side streets and parallel avenues like Jackson, Pacific, and Washington are lined with estates that trade hands on occasion for a few tens of millions. No tear downs here. The villas and manors along these avenues were built by sugar barons and banking tycoons of centuries past. Silicon Valley’s most senior executives, and the City’s hedge fund managers, buyout barons, bankers, and a few celebrities make up most of the neighborhood’s owners. Their children attend exclusive private schools in Pacific Heights where they are preened for Stanford and Princeton.

It is becoming hard to identify any part of San Francisco as an “elite” enclave. Tech 2.0, as the Google and Facebook-led regional boom is being called now, has vested thousands of twenty somethings as well as senior executives with billions in IPO cash and billions more in salaries to hunt for real estate, and they have chosen San Francisco, nearly all of it, as their preferred stomping grounds. Maybe it will only be another decade until Broadway starts getting called trillionaire’s row.

Sea View Avenue, Piedmont, California. 71 percent white, only 5 percent of Piedmont’s population is Black or Latino. Median household income is $200,000, and wealth holdings are much more. Piedmont supports its own public schools, police force, parks, and libraries.

Across the Bay is a slightly more modest version of billionaire’s row, probably better called a millionaire’s row running across the ridge line from Oakland north to Kensington. In the middle of Oakland, in fact completely surrounded by the scrappy industrial city by the Bay, is the city of Piedmont. When it was founded in the 1920s its first residents gave it the nickname “city of millionaires.” They restricted housing to single family residential homes on large lots from the start to prevent Black and immigrant families from moving up the hillside. Sea View Avenue is where the big money that wants to show off buys real estate, but the entire city boast a median home price of $1.4 million. The Berkeley hills are similarly rich and populated by an unusually high number of lawyers.

Lawyers, especially tort defense, corporate, and tax lawyers who serve the wealthy and defend corporate America from labor unions, environmentalist, and consumer advocates, also love Marin County. Across the Golden Gate from San Francisco, Marin is not much more than a bedroom community for corporate lawyers and CEOs who want a little more room and sun than San Francisco provides. If Piedmont was a city shelter to exclude the working class, then Marin is similar, but on the level of a county. Despite growing pockets of Latino poverty in older towns like Novato and San Rafael, Marin remains one of the wealthiest counties in the U.S. on a per capita basis. Marin’s Black population is segregated into the tiny Marin City, one of the only places public housing was allowed to be built. Marin City’s residents work in the retail sector and some of the industry along San Rafael’s waterfront. They earn near the bottom of the region’s wage scale and subsist on a fraction of the income their wealthy neighbors take in each month.

Hagenberger Road, East Oakland. Oakland is over 50 percent Black and Latino. Sections of the city such as the area pictured above are 90 percent non-white. In the typical pattern of environmental racism, residential homes are in close proximity to major roadways, highways, rail lines, industrial facilities, scrap yards, and utilities.

Unemployment stalks the working poor of the Bay Area, threatening to force them into insolvency and bankruptcy, foreclosure and displacement. During the first Dot Com boom of the late 1990s unemployment was at five percent for white Bay Area residents. For those living along the billionaire’s and millionaire’s rows, unemployment is a meaningless concept. The capital invested by the rich, by their clever advisers who run the hedge funds and private equity shops, earns interests and returns on equity far larger than any years honest wage labor can eek out. The tax code provides for this with carried interest and the lowest personal income tax rates for top earners in many decades. Hordes of tax lawyers, many who live in Marin, the Oakland hills, and San Francisco, will eagerly structure a family’s investments and bills to minimize taxes, so long as they possess a minimum of $5 million in liquid assets – preferably more.

Black men in the Bay Area have consistently suffered an unemployment rate double that of white men. Through the entire George W. Bush presidency, a period characterized by an economic policy to benefit the wealthiest with low taxes and interest rates, Black men endured double digit unemployment rates, reaching about 13 percent when Obama took office. The Financial Crisis sent Black unemployment rates skyrocketing in San Francisco, Oakland, Richmond, and Vallejo, upwards of 22 percent in 2010.

Economic policies under Obama —both those he championed, and those he compromised on— have been very good for the wealthy, and that’s reflected best by the real estate and consumption bubbles frothing over places like San Francisco. The Federal Reserve Bank’s unprecedented purchases of bonds and its low lending rates have produced rallies in stock and debt markets which have greatly re-inflated the fortunes of the rich.

The Pew Research Center recently summed up this polarizing redistribution of wealth from the bottom to the top by noting simply that since 2009 the wealthiest 7 percent of Americans experienced an increase of 28% in their net worth, while the bottom 93 percent actually lost 4 percent of their savings.

The San Francisco Bay Area’s current tech boom is further dividing the wealthy few from the impoverished masses. Companies like Google, Apple, and Oracle are among the least diverse workplaces places where men outnumber women, and white and Asian employees dominate the ranks of lowly programmers and senior executives. The need to hire thousands of engineers is drawing waves of college graduates to Silicon Valley and San Francisco, and they’re washing over the current residents like a tide of suffocating oil. Some of the tech buses —private transit systems operated by Silicon Valley’s largest firms to shuttle employees from San Francisco to their suburban campuses in Santa Clara County— now run lines into Oakland and Hayward, a sign that their employees are increasingly colonizing formerly undesirable zones of real estate.

The drift apart between the pale wealthy few and the impoverished multitudes of darker-skinned peoples is evident on the level of whole cities. San Francisco enjoys robust public finances, high credit ratings, low per capita debt to income ratios, and many well funded public services. However, two decades of intense gentrification mean that this healthy public sector increasingly caters only to those “citizens” who can afford to live in San Francisco.

Pushed out of the region’s urban core, in the 1990s and 2000s Black, Latino, and some Asian immigrants found themselves in the affordable locales of Vallejo, Stockton, Richmond and Oakland. Further out towns like Antioch, Brentwood, and Pittsburg became increasingly non-white and working class. In the Financial Crisis these cities hemorrhaged residents and revenues due to some of the highest foreclosure rates in the nation. Vallejo and Stockton went bankrupt after slashing the most basic services. Vallejo is 75 percent non-white. Stockton is 80 percent non-white.

The wealthiest Bay Area communities, the “towns” of Hillsborough, Woodside, Atherton, Los Altos Hills, and the city of Piedmont are three quarters white with median incomes in the six figures. Public finances barely flinched during the Great Recession. A few of these local governments in fact have no outstanding public debt.

Atherton and Los Altos Hills have zero bonded public debt.

Oakland has almost a billion just in bonded debt.

In the tony Marin hamlet of Fairfax the public debt burden resting on each resident is about 1.7 percent of their annual income.

In Richmond the ratio of public debt to personal income for each resident is 16 percent.

Richmond, a quarter Black and a third Latino, is a tangle of oil and chemical refineries run primarily by Chevron. Not a year ago a massive fire at one of the company’s plants spewed toxic vapors and smoke into the sky, poisoning thousands of residents.

Chevron is headquartered in San Ramon, another exclusive, mostly white suburban environment with low municipal debt and a household median income of $121,000 a year.