Tuesday, March 9, 2010
Rush Job
All you self-styled progressives who think - to stretch a term - that HCR is worse than nothing or that things must get worse before they get better or whatever - I bring you a fresh reason for calling your Congress-person to urge a yes vote in the House: Rush Limbaugh has promised to move to Costa Rica if it passes. MOVE ON. RUSH!
Almost All of the Financial Crisis in One Picture
For a summary lecture in my class "Understanding the Financial Crisis", I've prepared a graphic of the big picture. There wasn't enough space for every item, and the arrows need a lot of explanation, but here it is:
Note: Black indicates "economic" factors, green "cultural" and red (or plum) "political". These are loose distinctions, of course. Most of the boxes are self-explanatory, except for the following:
"From ISI to ELI" refers to the collapse of import-substituting industrialization and its replacement with export-led industrialization.
"Deproductivization" describes the erosion of productivist motives in US institutions and policies, including education, infrastructure, regional and industrial policy.
The "Finance Perspective" signifies both financialization as a conceptual framework and the ascendancy of financial interests in the political sphere.
There simply wasn't space for a box for trade liberalization, which is influenced by the IT revolution, US geopolitics and the finance perspective, and which encouraged the shift to ELI, while acquiring its distinctive characteristics in conjunction with (how do we show this?) deproductivization. It played a significant role, directly and indirectly, in the emergence of global imbalances.
Global financial integration was influenced by geopolitics and the finance perspective, took on its particular form as a result of the failure of risk management, facilitated domestic US financial excesses (and excesses in other deficit countries), and was a central conduit for the propagation of the crisis.
I need at least one more dimension to show all this.
Note: Black indicates "economic" factors, green "cultural" and red (or plum) "political". These are loose distinctions, of course. Most of the boxes are self-explanatory, except for the following:
"From ISI to ELI" refers to the collapse of import-substituting industrialization and its replacement with export-led industrialization.
"Deproductivization" describes the erosion of productivist motives in US institutions and policies, including education, infrastructure, regional and industrial policy.
The "Finance Perspective" signifies both financialization as a conceptual framework and the ascendancy of financial interests in the political sphere.
There simply wasn't space for a box for trade liberalization, which is influenced by the IT revolution, US geopolitics and the finance perspective, and which encouraged the shift to ELI, while acquiring its distinctive characteristics in conjunction with (how do we show this?) deproductivization. It played a significant role, directly and indirectly, in the emergence of global imbalances.
Global financial integration was influenced by geopolitics and the finance perspective, took on its particular form as a result of the failure of risk management, facilitated domestic US financial excesses (and excesses in other deficit countries), and was a central conduit for the propagation of the crisis.
I need at least one more dimension to show all this.
Monday, March 8, 2010
Enough Already: Venting Over Four Decades of Right-Wing Activism
Today, Richard Nixon would be considered a flaming liberal. In Nixon's day, Barack Obama would have passed as a typical conservative; except, if you remove considerations of civil rights from consideration, he might even be a fairly hard line conservative.
The Bill of Rights is pretty well shredded. Freedom of speech is fast becoming the special privilege of corporations. Economic pressures, fueled by greedy shareholders, have eviscerated the press, leaving freedom the press virtually meaningless.
The most important part of the Fifth Amendment is probably the takings clause, which is interpreted to restrict the right of the government to regulate property.
Perhaps, the Second Amendment is the most important amendment, giving people the right to arm themselves with anything short of a nuclear weapon.
All this right-wing nonsense might be somewhat understandable if it were necessary to provide for a good life; however, the economy is becoming as dysfunctional as the ridiculous political system.
Watching people rebel politically or in the streets in Iceland and Greece, while people in the United States express their frustrations with the tea party, makes me noxious. My problem with the tea party movement is one of political jealousy. Many of the participants share my frustration at the class bias of the system, but they seem confused, mistaking late capitalism or socialism. Sure, the tax system is rigged against ordinary people, but it works in favor of the same people who are running the tea party movement.
Unfortunately, the left (if there is such a thing) seems unable to articulate a strong call to action. Instead, our anger bubbles up periodically -- today, over the evisceration of education; tomorrow, over an escalation or extension of the war; or maybe even the promotion of a protest candidate, but a systematic program is nowhere to be found in the public dialogue.
What is to be done (but vent)? I hope not.
The Bill of Rights is pretty well shredded. Freedom of speech is fast becoming the special privilege of corporations. Economic pressures, fueled by greedy shareholders, have eviscerated the press, leaving freedom the press virtually meaningless.
The most important part of the Fifth Amendment is probably the takings clause, which is interpreted to restrict the right of the government to regulate property.
Perhaps, the Second Amendment is the most important amendment, giving people the right to arm themselves with anything short of a nuclear weapon.
All this right-wing nonsense might be somewhat understandable if it were necessary to provide for a good life; however, the economy is becoming as dysfunctional as the ridiculous political system.
Watching people rebel politically or in the streets in Iceland and Greece, while people in the United States express their frustrations with the tea party, makes me noxious. My problem with the tea party movement is one of political jealousy. Many of the participants share my frustration at the class bias of the system, but they seem confused, mistaking late capitalism or socialism. Sure, the tax system is rigged against ordinary people, but it works in favor of the same people who are running the tea party movement.
Unfortunately, the left (if there is such a thing) seems unable to articulate a strong call to action. Instead, our anger bubbles up periodically -- today, over the evisceration of education; tomorrow, over an escalation or extension of the war; or maybe even the promotion of a protest candidate, but a systematic program is nowhere to be found in the public dialogue.
What is to be done (but vent)? I hope not.
Sunday, March 7, 2010
VA Attorney General Ken Cuccinelli Is A Bigger Homophobic Bigot Than Governor McDonnell
While Virginia Governor Robert McDonnell recently undid a previously in place gubernatorial mandate to forbid discrmination in state employment against gays, his successor as Attorney General, Ken Cuccinelli, has done something he did not do as AG or since. He has written a letter to all the governing bodies of state universities and colleges informing that as the law does not prevent discrimination against gays in hiring, they should not be passing rules (as most have) to forbid such discrimination against gays in hiring. I have no comment on this other than to say that if there is a hell, Cuccinelli will be going there, much as he would claim just the opposite for this action.
Friday, March 5, 2010
Lobbyists and Crises
Is anyone familiar with this study?
"The International Monetary Fund recently found that banks that spent more to influence policy over the last decade were more likely to take more securitization risks, have larger loan defaults and experience sharper stock falls during crucial points of the crisis."
Cyran, Robert and James Pethokoukis. 2010. "Formidable Lobbyists." New York Times (3 March): p. B 2.
"The International Monetary Fund recently found that banks that spent more to influence policy over the last decade were more likely to take more securitization risks, have larger loan defaults and experience sharper stock falls during crucial points of the crisis."
Cyran, Robert and James Pethokoukis. 2010. "Formidable Lobbyists." New York Times (3 March): p. B 2.
Wednesday, March 3, 2010
We’re crying out here that there's something in our water
But it may already be in a place near you.
In June 2009 the World rainforest reported that a large global corporation called 'ArborGen' was planning to release genetically engineered tree products in the US and Brazil.
"This is a major step toward the unregulated commercial release of large-scale plantations of GE eucalyptus trees.[2]"
However, from the comments made by Dr Chris Hickey above, it looks like this disastrous genie is already out of the bag - whether the trees are genetically improved/engineered or not. Giant Eucalyptus (and other) monocultures have been planted across immeasurably huge land areas, particularly across the southern hemisphere. This has been organised and carried out by global 'forest' companies, in league with governments, over the last 15 years in particular.
The scale of these monocultures, is sufficient in itself, to generate unnatural buildup of toxins in the drinking water catchments where they have been planted.
(Morpheus, in Wachowski and Wachowski 1999)
REFERENCES
[1] Something In The Water Part 2 - Transcript
PROGRAM TRANSCRIPT: Monday, 22 February , 2010
http://www.abc.net.au/austory/content/2007/s2827178.htm
[2] Arborgen Seeks to Legalize GE Eucalyptus Trees in U.S. -Brazil is Not Far Behind
“Eucalyptus is the perfect neoliberal tree. It grows quickly, turns a quick profit in the global market and destroys the earth.”—Jaime Aviles, La Jornada
http://www.wrm.org.uy/bulletin/143/GE_Eucalyptus.html
"DR MARCUS SCAMMELL, MARINE ECOLOGIST: Every time we took a water sample test in that catchment the water came back toxic."
..."St Marys is surrounded by natural forest. And we’ve found no evidence of toxicity in the St Marys catchment. However in the St Helens catchment directly below this monoculture of plantation trees, we had permanently present toxin."
...."DR MARCUS SCAMMELL, MARINE ECOLOGIST: The timber companies themselves refer to these as genetically improved. They don’t say how they’re improved."
..."DR CHRIS HICKEY, NATIONAL INSTITUTE OF WATER AND ATMOSPHERIC RESEARCH,NZ: The Tasmanian trees generated a lot more foam and this foam was a lot more stable than the Victorian leaves. The significance of this is that... in that the toxin is carried in the foams - this is the mode by which the toxin can be transferred within the catchment and moved down the river system and into an estuarine environment."
...."DR CHRIS HICKEY, NATIONAL INSTITUTE OF WATER AND ATMOSPHERIC RESEARCH,NZ: We wouldn't see this necessarily in the laboratory or even expect to sort of look for this sort of effect. You're only going to see it once you get things on a very large scale monoculture. It's a classic case of potential unintended circumstances, unintended effects from something that’s on a large scale like plantation forestry. ..."
"....DR CHRIS HICKEY, NATIONAL INSTITUTE OF WATER AND ATMOSPHERIC RESEARCH,NZ: Since our original experiments we designed a second series of experiments whereby we would chemically analyse both leaf material from eucalyptus nitens and foam material, and then follow that up with bioassays with both our fresh water cladocerans and our blue mussels. So this is some sort of forensic toxicology work that we’re doing. What we’ve been able to do is come very close to showing that there’s a common chemical fraction in both the eucalyptus nitens leaves and in the toxicity in the foams. So from that we really feel we’re very close to being able to confirm that the eucalyptus nitens is the primary source of toxicity in the foams. We just haven’t been able to actually get down to the final fingerprinting and molecular weight determinations which will give us our final linkage to the eucalyptus nitens..."[1]
In June 2009 the World rainforest reported that a large global corporation called 'ArborGen' was planning to release genetically engineered tree products in the US and Brazil.
"This is a major step toward the unregulated commercial release of large-scale plantations of GE eucalyptus trees.[2]"
However, from the comments made by Dr Chris Hickey above, it looks like this disastrous genie is already out of the bag - whether the trees are genetically improved/engineered or not. Giant Eucalyptus (and other) monocultures have been planted across immeasurably huge land areas, particularly across the southern hemisphere. This has been organised and carried out by global 'forest' companies, in league with governments, over the last 15 years in particular.
The scale of these monocultures, is sufficient in itself, to generate unnatural buildup of toxins in the drinking water catchments where they have been planted.
Let me tell you why you are here. You are here because you know... that there’s something wrong with the world. You don’t know what it is, but it’s there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. [ ... ] The Matrix is a system, Neo. That system is our enemy.
(Morpheus, in Wachowski and Wachowski 1999)
REFERENCES
[1] Something In The Water Part 2 - Transcript
PROGRAM TRANSCRIPT: Monday, 22 February , 2010
http://www.abc.net.au/austory/content/2007/s2827178.htm
[2] Arborgen Seeks to Legalize GE Eucalyptus Trees in U.S. -Brazil is Not Far Behind
“Eucalyptus is the perfect neoliberal tree. It grows quickly, turns a quick profit in the global market and destroys the earth.”—Jaime Aviles, La Jornada
http://www.wrm.org.uy/bulletin/143/GE_Eucalyptus.html
Tuesday, March 2, 2010
Mr. Mankiw Meets The Post Keynesians
Greg Mankiw gave a presidential address at the Eastern Economic Association meetings in Philadelphia over the weekend on distribution effects of tax policy, pushing his height story. But that was less interesting than another session chaired by Mark Setterfield of Trinity College where Mankiw, author of the most widely used textbooks in undergrad macroeconomics, was in the audience for "Macroeconomic Theory and Macroeconomic Pedagogy: Rethinking Undergraduate Macroeconomics Instruction." Mark has coedited a volume with Giuseppe Fontana of the same title as the opening part of the session title, recently out from Routledge. While not everybody in the book is of the persuasion, most of the presenters were Post Keynesians, including Malcolm Sawyer of Leeds University and John Smithin of York University in Ontario, as well as several in the audience such as Tom Palley, who engaged in vigorous discussion.
Much of the book and the discussion focused on the so-called "new concensus" three equation model, which are an IS curve giving aggregate demand, a Phillips curve, and than a policy curve essentially implying a Taylor rule with the central bank setting nominal interest rates. This implies endogenous money, a concept much liked by many Post Keynesian economists, although many argue it holds more broadly than just when central banks exogenously set interest rates. Sawyer pursued the endogenous money argument further, and Smithin offered an alternative three equation model with the Phillips curve and the Taylor rule replaced by short and long run supplies of inflation equations. It was over whether the Post Keynesians had any alternatives to the new consensus model and also could explain hyperinflation where Mankiw stepped in to question. Smithin replied with his three equation model, although the equivalent of the IS curve seemed much more complicated than the usual variety, too much so for a Principles text anyway, if not perhaps a higher level one. Mankiw did not seem convinced.
A sub-text was that it is unclear if these Post Keynesian models did much better in explaining recent events than the now silly looking standard model. Most observers would say that the big winner in all this has been Hyman Minsky, generally labeled a Post Keynesian, although he did not particularly like the label (and Paul Davidson claims he was not one, or a proper one). A couple of the chapters in the book, if not the session, attempt to bring Minsky in, but it is unclear that all this has been resolved clearly. In another session at the conference, another author from the book, Marc Lavoie, agreed that in a world where central banks lose control of actual interest rates as they fall below corridor levels, the standard endogenous money model may be out the window along with the more conventional model. It is too bad that Minsky is no longer with us when we need him (and he used to be a regular attender of the EEA meetings, sigh... ).
Much of the book and the discussion focused on the so-called "new concensus" three equation model, which are an IS curve giving aggregate demand, a Phillips curve, and than a policy curve essentially implying a Taylor rule with the central bank setting nominal interest rates. This implies endogenous money, a concept much liked by many Post Keynesian economists, although many argue it holds more broadly than just when central banks exogenously set interest rates. Sawyer pursued the endogenous money argument further, and Smithin offered an alternative three equation model with the Phillips curve and the Taylor rule replaced by short and long run supplies of inflation equations. It was over whether the Post Keynesians had any alternatives to the new consensus model and also could explain hyperinflation where Mankiw stepped in to question. Smithin replied with his three equation model, although the equivalent of the IS curve seemed much more complicated than the usual variety, too much so for a Principles text anyway, if not perhaps a higher level one. Mankiw did not seem convinced.
A sub-text was that it is unclear if these Post Keynesian models did much better in explaining recent events than the now silly looking standard model. Most observers would say that the big winner in all this has been Hyman Minsky, generally labeled a Post Keynesian, although he did not particularly like the label (and Paul Davidson claims he was not one, or a proper one). A couple of the chapters in the book, if not the session, attempt to bring Minsky in, but it is unclear that all this has been resolved clearly. In another session at the conference, another author from the book, Marc Lavoie, agreed that in a world where central banks lose control of actual interest rates as they fall below corridor levels, the standard endogenous money model may be out the window along with the more conventional model. It is too bad that Minsky is no longer with us when we need him (and he used to be a regular attender of the EEA meetings, sigh... ).
1990: There is no such thing as a US economy anymore
“For the first time the world is functioning as a single economy…there is no such thing as a US economy.”
Those are the words written by John Naisbitt and Patricia Aburdene in their 1990 book entitled ‘Megatrends 2000 – The next ten years…major changes in your life and world.” [ 1]
The authors were attempting to explain why the then current hysteria being beat up by Wall Streeters about the US trade and budget deficit was a sham.
“It was said that these twin monsters would surely bring the most powerful economy to its knees, perhaps even lower, if something were not done.” [ 2]
However, the way in which the official national statistics were calculated ensured that the US twin deficits were largely a mirage.
Looking at the trade deficit Naisbitt and Aburdene write “the only things that are counted are what customs officals check off on their clipboards at ports of entry, the goods and tangibles of the industrial period. Non-tangibles such as book rights, royalties and fees were simply not counted. Further, the products of US companies who operated in foreign nations also didn’t count.
“In 1986 foreign branches of American companies sold $720 billion worth of goods overseas, seven times the so-called trade deficit for that year. Almost 20 percent of the merchandise imported into the United States is manufactured by foreign branches of American companies. The United States’ biggest import item by far is money. Its largest exports by far are bonds, stocks, and other financial instruments.” [ 3]
The authors rightly question why “commentators in the media and elsewhere …assess the health of the overall US economy by examining a single incomplete statistic.”
“There is a need for new concepts and new data if we are to understand the new global economy. Because they are using old concepts (eg, a collection of nation-states trading concrete goods) and old data, alarmists shout about perceived trade deficits and yell for protectionist measures borrowed from the old era. Much is made of the United States now being ‘the world’s largest debtor nation’. To begin with, half that so-called debt is in stock in US companies. In a truly global economy, does it really matter that ten shares of AT&T stock are now owned by an Englishman in Manchester rather than a banker in Wichita?” [ 4]
As if anticipating US citizen concern about foreign ownership of US corporations, the authors point out that
only 5 percent of the assets of the US economy are owned by foreigners. Readers are reassured that the truth is that America and Britain were buying up the world:
“So what if foreigners own 5 percent of American assets? Many of the purchasing corporations are owned by American and other people from all over the world. What’s foreign?” [ 5]
“The right course for a sophisticated country is to invest the money it earns in the most profitable way. That is what ‘deficit-ridden’ American and ‘deficit-ridden’ Britain have both done….The United States is buying more businesses overseas - $309 billion worth in 1987 – than all other countries together are buying in the United States. Furthermore, US assets abroad are grossly understated because Americans have been on the buying side for a long time, and the worth of those assets is carried at the original cost rather than current market value.” [ 6]
Megatrends 2000 quickly flips over the negative reports of rainforest depletion, increasing poverty, environmental pollution, corruption and exploitation. The book celebrates the passing of the year 1984, a year Naisbitt and Aburdene assert passed without the dehumanization of modern society prophesied by George Orwell.
Looking to the new millennium it is observed that:
“Wealth has not led to increased greed, as conventional cynicism would have us believe.” [ 7]
On the contrary
“Wealth is a great peacemaker” say the writers. [ 8]
This is a book that, on the one hand, takes great care to examine the fallibilities of the monetary accounting of a nation as well as the fast pace of change in the world’s economic system. But on the other hand the authors carelessly disregard the economic and social history of humanity in their declarations of simple truths.
The world has changed dramatically, indeed. The logic of the US and the UK funding their phantom ‘trade deficits’ by exploiting the wealth of other nations somehow eluded analysis. A mere ten years into our grand new Millennium the actions of the ‘leaders’ of the industrialized nations continue to be vastly destructive to the future of life on the planet. Despite the incredible financial wealth accumulated through stepped up global exploitation by these ‘successful’ corporations our ‘leaders’ are now implementing brutal austerity measures like gutting the already half-funded healthcare and aged pensions to bail them out. Yet again, and again.
REFERENCES:
[1] John Naisbitt and Patricia Aburdene. ‘Megatrends 2000 – The next ten years…major changes in your life and world.” Sidgwick and Jackson Limited London. 1990. ISBN 0 283 06016 6. Page 26.
[2] Ibid. Page 24.
[3] Ibid. Page 26.
[4] Ibid. Page 27.
[5] Ibid Page 29.
[6] Ibid. Page 28.
[7] Ibid. Page 288
[8] Ibid. Page 289
Friday, February 26, 2010
Clean Coal?
A company now plans to run nuclear power plants off the radioactive residue of coal ash.
Winning, David. 2009. "Out of the Ashes: A Small Mining Company Has Big Plans to Sell the Uranium Left Over When Coal Is Burned." Wall Street Journal (22 February): Journal Report.
Winning, David. 2009. "Out of the Ashes: A Small Mining Company Has Big Plans to Sell the Uranium Left Over When Coal Is Burned." Wall Street Journal (22 February): Journal Report.
Sparton Resources Inc., a small Toronto mining company, is betting that a global renaissance in nuclear power will create a market for an unlikely fuel source: waste coal ash. Natural coal contains trace amounts of uranium, and when it is burned to produce electricity, varying amounts of the radioactive element are left behind in the ash. Sparton has developed a method for recovering it and says a project under way at a coal-fired power station in southwestern China is yielding uranium that could be reused as a fuel for nuclear reactors.
Wednesday, February 24, 2010
The Ironies of Imperialism: Haiti vs. India
I first criticized the Green Revolution in
Perelman, Michael. 1971. "Second Thoughts on the Green Revolution." The New Republic, v. 165 (17 July): pp. 21-22; and then in a book, Farming for Profit in a Hungry World.
The Green Revolution was designed to promote capitalist development by changing class relationships in the countryside, making developing countries more dependent on imported inputs, while leaving the system susceptible to the environmental problems associated with intensive chemical agriculture.
The Wall Street Journal published an article describing the falling yields in India from the over-application of nitrogen fertilizer. A second article describes the heroic efforts of an agricultural operation funded in part by the wonderful Paul Farmer.
The articles offer a fascinating window into the contradictions of capitalist development, the unexplained damage done to Haiti by imperialism -- they do so without ever connecting the dots, but that is easy to do.
Anand, Geeta. 2010. "Green Revolution in India Wilts as Subsidies Backfire" Wall Street Journal (23 February): p. A 1.
"In the 1970s, India dramatically increased food production, finally allowing this giant country to feed itself. But government efforts to continue that miracle by encouraging farmers to use fertilizers have backfired, forcing the country to expand its reliance on imported food."
"India has been providing farmers with heavily subsidized fertilizer for more than three decades. The overuse of one type -- urea -- is so degrading the soil that yields on some crops are falling and import levels are rising. So are food prices, which jumped 19% last year. The country now produces less rice per hectare than its far poorer neighbors: Pakistan, Sri Lanka and Bangladesh."
"Agriculture's decline is emerging as one of the hottest political issues in the world's biggest democracy."
"On Thursday, Prime Minister Manmohan Singh's cabinet announced that India would adopt a new subsidy program in April, hoping to replenish the soil by giving farmers incentives to use a better mix of nutrients. But in a major compromise, the government left in place the old subsidy on urea -- meaning farmers will still have a big incentive to use too much of it."
"India spends almost twice as much on food imports today as it did in 2002, according to the Ministry of Agriculture. Wheat imports hit 1.7 million tons in 2008, up from about 1,300 tons in 2002. Food prices rose 19% last year. Mr. Singh's government, however, said it would continue to subsidize urea, although it would set the price 10% higher.
Mr. Awasti, the fertilizer cooperative head, says the continuing urea subsidy means that farmers likely will still use too much of it. "The government is opting, as with any very difficult change, to adopt it in phases," he says. He says he believes that the urea subsidy will be dropped altogether in a year."
Twenty-one percent of the urea, 67% of the phosphorus-based fertilizers and 100% of the potash-rich fertilizers sold in India in the fiscal year ended March 2009 were imported, according to a report this month from Fitch Ratings.
##
Dugan, Ianthe Jeanne. 2010. "Quake Has Haiti Relying on Agricultural Program in Countryside" Wall Street Journal (23 February): p. A 15.
"An agricultural program that helped inch people out of poverty and hunger in this village about 25 miles north of Port-au-Prince is racing to feed thousands who flocked here after the earthquake. The increased role of the program, called Zanmi Agrikol, shows the catastrophe's effects on the countryside, where an estimated half-million people fled from the capital. Since the mid-January disaster, the Haitian government has been trying to figure out how to provide food and jobs in rural areas neglected for decades. Zanmi Agrikol -- which means "Partners in Agriculture" in Creole -- is one model of how the agricultural industry and cottage businesses will help meet the challenge."
""Since this business started, we have been able to buy food and send our son to school," St. Jean Nadine Wadley said recently, as she walked home with her husband and son, after washing clothes and bathing in a nearby river. Through Zanmi Agrikol, the Wadleys and 240 other families receive seeds, farming equipment as well as trees for reforestation and food, including mango, citrus and banana trees. They are taught techniques such as planting, composting and terracing sloped yards. As a result, most families here are cultivating tiny plots of land at home, so they can grow their own food and sell a small surplus."
"Now, with refugees having more than doubled the size of the village, organizers and residents are racing to expand the program. "Now we have 10 new people in our house. And we don't have enough food," Mrs. Wadley says."
"An estimated 6,000 went to Grand-Anse. And at least 9,000 journeyed to the Central Plateau, where Corporant is located. This rare reverse urban migration is creating a crisis in rural areas that were relatively stable immediately after the earthquake. Many people are looking to agriculture to help solve the problem, though most caution that Haiti needs far more than agricultural programs to turn the country around."
"It's a very dangerous situation," says Johanna Mendelson Forman, a senior associate at the Center for Strategic and International Studies. "There is an urgency to take a serious look at expanding agricultural projects that had been in the works. The country needs to grow its own food. But it is not going to solve all the economic and socioeconomic issues." [She does not identify the "it."]
"Gillaine Warne, an Australian-born horticulturalist who runs Zanmi Agrikol.
Ms. Warne recently called an emergency meeting with 27 Haitians—agronomists, technicians, nursery men, tractor drivers, and gardeners—on the 80-acre farm where Zanmi Agrikol grows peanuts and other crops for a local nutrition program. They put together a long list of vegetables -- such as Haitian spinach, eggplant, sweet potatoes, beans, corn and peanuts -- that will grow quickly, between planting seasons, and can be harvested in three months."
"Ms. Warne, who started Zanmi Agrikol in 2004, splits her time between Haiti and Greenville, S.C. Funding for the program comes from Partners in Health, a Boston-based medical and social services organization that operates clinics and hospitals in Haiti, as well as from an Episcopal church in South Carolina and Rotary International."
"The goal is to make this region self-sufficient—"to move away from dependency on handouts," Ms. Warne said. "This is a rural country, and now it is coming back to its roots."
"Even before the earthquake, more than half of Haiti's population was undernourished. Now, food prices are too high for many people. For example, the price of a 55-pound bag of rice rose after the quake by roughly 40% to about $42, said Louise Ivers, a physician working for Partners in Health in Port-au-Prince."
"Haiti's agriculture sector accounts for 60% of the country's annual economic output, but is still sclerotic. Most land is broken into small and disorganized holdings. Haitian farmers have little access to capital, modern machinery, and marketing muscle. As a result, sectors such as the fruit industry have lagged behind those of the neighboring Dominican Republic."
Perelman, Michael. 1971. "Second Thoughts on the Green Revolution." The New Republic, v. 165 (17 July): pp. 21-22; and then in a book, Farming for Profit in a Hungry World.
The Green Revolution was designed to promote capitalist development by changing class relationships in the countryside, making developing countries more dependent on imported inputs, while leaving the system susceptible to the environmental problems associated with intensive chemical agriculture.
The Wall Street Journal published an article describing the falling yields in India from the over-application of nitrogen fertilizer. A second article describes the heroic efforts of an agricultural operation funded in part by the wonderful Paul Farmer.
The articles offer a fascinating window into the contradictions of capitalist development, the unexplained damage done to Haiti by imperialism -- they do so without ever connecting the dots, but that is easy to do.
Anand, Geeta. 2010. "Green Revolution in India Wilts as Subsidies Backfire" Wall Street Journal (23 February): p. A 1.
"In the 1970s, India dramatically increased food production, finally allowing this giant country to feed itself. But government efforts to continue that miracle by encouraging farmers to use fertilizers have backfired, forcing the country to expand its reliance on imported food."
"India has been providing farmers with heavily subsidized fertilizer for more than three decades. The overuse of one type -- urea -- is so degrading the soil that yields on some crops are falling and import levels are rising. So are food prices, which jumped 19% last year. The country now produces less rice per hectare than its far poorer neighbors: Pakistan, Sri Lanka and Bangladesh."
"Agriculture's decline is emerging as one of the hottest political issues in the world's biggest democracy."
"On Thursday, Prime Minister Manmohan Singh's cabinet announced that India would adopt a new subsidy program in April, hoping to replenish the soil by giving farmers incentives to use a better mix of nutrients. But in a major compromise, the government left in place the old subsidy on urea -- meaning farmers will still have a big incentive to use too much of it."
"India spends almost twice as much on food imports today as it did in 2002, according to the Ministry of Agriculture. Wheat imports hit 1.7 million tons in 2008, up from about 1,300 tons in 2002. Food prices rose 19% last year. Mr. Singh's government, however, said it would continue to subsidize urea, although it would set the price 10% higher.
Mr. Awasti, the fertilizer cooperative head, says the continuing urea subsidy means that farmers likely will still use too much of it. "The government is opting, as with any very difficult change, to adopt it in phases," he says. He says he believes that the urea subsidy will be dropped altogether in a year."
Twenty-one percent of the urea, 67% of the phosphorus-based fertilizers and 100% of the potash-rich fertilizers sold in India in the fiscal year ended March 2009 were imported, according to a report this month from Fitch Ratings.
##
Dugan, Ianthe Jeanne. 2010. "Quake Has Haiti Relying on Agricultural Program in Countryside" Wall Street Journal (23 February): p. A 15.
"An agricultural program that helped inch people out of poverty and hunger in this village about 25 miles north of Port-au-Prince is racing to feed thousands who flocked here after the earthquake. The increased role of the program, called Zanmi Agrikol, shows the catastrophe's effects on the countryside, where an estimated half-million people fled from the capital. Since the mid-January disaster, the Haitian government has been trying to figure out how to provide food and jobs in rural areas neglected for decades. Zanmi Agrikol -- which means "Partners in Agriculture" in Creole -- is one model of how the agricultural industry and cottage businesses will help meet the challenge."
""Since this business started, we have been able to buy food and send our son to school," St. Jean Nadine Wadley said recently, as she walked home with her husband and son, after washing clothes and bathing in a nearby river. Through Zanmi Agrikol, the Wadleys and 240 other families receive seeds, farming equipment as well as trees for reforestation and food, including mango, citrus and banana trees. They are taught techniques such as planting, composting and terracing sloped yards. As a result, most families here are cultivating tiny plots of land at home, so they can grow their own food and sell a small surplus."
"Now, with refugees having more than doubled the size of the village, organizers and residents are racing to expand the program. "Now we have 10 new people in our house. And we don't have enough food," Mrs. Wadley says."
"An estimated 6,000 went to Grand-Anse. And at least 9,000 journeyed to the Central Plateau, where Corporant is located. This rare reverse urban migration is creating a crisis in rural areas that were relatively stable immediately after the earthquake. Many people are looking to agriculture to help solve the problem, though most caution that Haiti needs far more than agricultural programs to turn the country around."
"It's a very dangerous situation," says Johanna Mendelson Forman, a senior associate at the Center for Strategic and International Studies. "There is an urgency to take a serious look at expanding agricultural projects that had been in the works. The country needs to grow its own food. But it is not going to solve all the economic and socioeconomic issues." [She does not identify the "it."]
"Gillaine Warne, an Australian-born horticulturalist who runs Zanmi Agrikol.
Ms. Warne recently called an emergency meeting with 27 Haitians—agronomists, technicians, nursery men, tractor drivers, and gardeners—on the 80-acre farm where Zanmi Agrikol grows peanuts and other crops for a local nutrition program. They put together a long list of vegetables -- such as Haitian spinach, eggplant, sweet potatoes, beans, corn and peanuts -- that will grow quickly, between planting seasons, and can be harvested in three months."
"Ms. Warne, who started Zanmi Agrikol in 2004, splits her time between Haiti and Greenville, S.C. Funding for the program comes from Partners in Health, a Boston-based medical and social services organization that operates clinics and hospitals in Haiti, as well as from an Episcopal church in South Carolina and Rotary International."
"The goal is to make this region self-sufficient—"to move away from dependency on handouts," Ms. Warne said. "This is a rural country, and now it is coming back to its roots."
"Even before the earthquake, more than half of Haiti's population was undernourished. Now, food prices are too high for many people. For example, the price of a 55-pound bag of rice rose after the quake by roughly 40% to about $42, said Louise Ivers, a physician working for Partners in Health in Port-au-Prince."
"Haiti's agriculture sector accounts for 60% of the country's annual economic output, but is still sclerotic. Most land is broken into small and disorganized holdings. Haitian farmers have little access to capital, modern machinery, and marketing muscle. As a result, sectors such as the fruit industry have lagged behind those of the neighboring Dominican Republic."
Will The EPA Drop The Ball On Regulating Carbon Emissions?
Mark Thoma at Economist's View links to a set of comments by Frank Ackerman on proposed regulations by the EPA to limit carbon emissions. Central to those regs are estimates of the social costs of carbon emissions, and Ackerman accurately points out that EPA economists seem to be leaning to pricing those costs at around $5-6 a ton, which would translate into about a nickel for a gallon of gas, pretty inconsequential. It would appear that these low numbers are due to their only looking at peer-reviewed articles for sources and thus not the Stern Report, using Nordhaus's old DICE model, using ridiculously high discount rates of around 3-5%, and all but ignoring the problem of catastrophic risk of runaway warming as argued by Martin Weitzman. This becomes unpleasantly important as it seems increasingly unlikely that the Senate will pass any sort of cap and trade bill on carbon emissions (or anything else related to climate change), leaving this action by the EPA that was mandated by court rulings as about all that may be done any time soon by the US government about this issue. What an embarrassing scandal. One does not know whether to laugh or cry (probably both).
Should Greece Take A "Euro-Holiday"?
Longtime critic of the euro since before it was adopted, Martin Feldstein, has suggested that Greece should take a "euro-holiday" and temporarily revert to its old drachma with a devaluation of that as a way to deal with its current budget and debt crises. This is sharply criticized by Richard Baldwin and Charles Wyplosz in a posting at VOX. I agree with their arguments, including that such a holiday would not be a temporary matter, but a permanent one, with the Greeks probably pathetically repegging to the euro soon after, but not able to get back in once out, quite aside from the possible more general unraveling of the Eurozone itself that would likely follow, much to the delight of such anti-euro folks as Feldstein.
In any case, I think it is worth considering whether or not it is better to be inside or outside the euro in Europe. Most of those outside and wanting to stay so have been higher income countries, Norway and Iceland and Switzerland (not even in the EU, although now-collapsed Iceland wishes it was all the way in), Sweden and Denmark and feisty UK, all in the EU. On the other side it seems that most poorer countries in Europe want in to both the EU and then into the euro as well. Is this wise, given the Greek experience, apparently partly due to overborrowing on the low interest rates available to those in the Eurozone? Mostly I would say yes. If one looks at what happened in Europe last year, the worst performing countries in terms of GDP were two transition countries in the EU, but not in the Eurozone, Latvia and Lithuania, both with around 18% declines in their GDPs. The second and third best performing (former?) transition economies were the two in the Eurozone, Slovenia and Slovakia, both of which experienced minimal declines in GDP. Many of those hurting badly, including Hungary, had borrowed lots of foreign currencies and then got in trouble.
However, I must note the exception. That would be the best performing economy in all of Europe, the only one to show positive GDP growth, Poland, an EU member but not in the Eurozone. However, I confess that I do not know how they pulled it off, and suspect that the Latvian-Lithuanian-Hungarian experience is the more likely and common for those who might choose to exit the Eurozone, even on a "holiday."
In any case, I think it is worth considering whether or not it is better to be inside or outside the euro in Europe. Most of those outside and wanting to stay so have been higher income countries, Norway and Iceland and Switzerland (not even in the EU, although now-collapsed Iceland wishes it was all the way in), Sweden and Denmark and feisty UK, all in the EU. On the other side it seems that most poorer countries in Europe want in to both the EU and then into the euro as well. Is this wise, given the Greek experience, apparently partly due to overborrowing on the low interest rates available to those in the Eurozone? Mostly I would say yes. If one looks at what happened in Europe last year, the worst performing countries in terms of GDP were two transition countries in the EU, but not in the Eurozone, Latvia and Lithuania, both with around 18% declines in their GDPs. The second and third best performing (former?) transition economies were the two in the Eurozone, Slovenia and Slovakia, both of which experienced minimal declines in GDP. Many of those hurting badly, including Hungary, had borrowed lots of foreign currencies and then got in trouble.
However, I must note the exception. That would be the best performing economy in all of Europe, the only one to show positive GDP growth, Poland, an EU member but not in the Eurozone. However, I confess that I do not know how they pulled it off, and suspect that the Latvian-Lithuanian-Hungarian experience is the more likely and common for those who might choose to exit the Eurozone, even on a "holiday."
Monday, February 22, 2010
Armageddon, or not?
Martin Weiss has written an article this week entitled 'Armageddon' in which he half-describes the absolutely horrific scenario about to play out for Americans as a consequence of the harsh 'medicine' - imminent and 'unavoidable' interest rates hikes - to fix the disease of American debt.
This analysis strikes me as all very strange. Weiss treats America’s debt problem as if –in the most critical sense - it mostly lives in a vacuum. But this is clearly not the reality. We live in a ‘globalised’ world and globalization is, after all, the process of America’s cultural, political, and economic integration of nation states throughout the world. Those ‘foreign investors’ who Weiss claims funds the American debt may not be so ‘foreign’ at all.
Weiss' article is notable for what is missing. I therefore list a few of my own observations and questions related to America’s debt crisis:
(i) What constitutes a ‘foreign’ investor? It has never been so important to identify who these people are. Who precisely is America is indebted to! Have they been the very recipients of US taxpayer-funded bailouts over the last year and (in fact) decades? Are they, for instance, the propped-up foreign subsidiaries and/or American ‘foreign’ investors in Goldman Sachs, Citigroup, Bank of America and other gigantic money center banks? Or American citizens invested in the foreign subsidiaries of other receivers of American generosity such as General Electric, AIG, General Motors and many others?
(ii) This is a time of extraordinary inequality. A disastrous economic and social outcome – ‘armagedon’ – would certainly come if even further rewards are given to the very tiny minority of individuals who already hold the vast majority of America’s financial wealth. In September 2008 it was noted by Forbes Magazine that the richest 400 Americans had a combined net worth last year of $1.57 trillion. “Less than 10 percent of this vast fortune could resolve the combined budget deficits of 46 states” said Tom Eley [2]. He added, “None of the states are planning increases in taxes on the wealthy.”
(iii) It is quite arguable that the crisis itself came about in the first instance through the process of Governments actively choosing winners and losers in the economy. The US Government, through the Federal Reserve and other agencies, has never imposed its economic discipline equally on everyone. Poorer nations, labor and small enterprises have been consistently scapegoated in one economic crisis after another. This led to the predicament of ‘too big to fail’ and things have clearly fallen apart from there.
(iv) The US Government sets global interest rates by virtue of its hegemonic position [3]. A rise in interest rates in America portends a rise in global rates. Mobile capital will always seek the place of highest return. How can the rest of the world finally disengage from the American governments fiscal and budgetary irresponsibility?
Martin Weiss concludes by urging Americans to ‘bite the bullet’ and accept the ‘sacrifices’. “Ultimately, there is NO choice” he says.
But there is a choice. America and the world can reform its monetary and economic system. It, and other governments, can stop picking the rich as the winners. Non-elected central banks and government agencies need to be required to work in the public and global interests. Elected representatives need to do their job and ensure that regulation and processes of accountability occur. This is a large topic. More on this later.
It is apt for governments to be required to enhance the economic prospects for the many rather than safeguard the accumulated wealth of a few.[4]
REFERENCES:
[1] Armageddon by Martin D. Weiss, Ph.D. 02-22-10
http://www.moneyandmarkets.com/armageddon-10-37926
[2] US states’ budget crisis sets stage for new attack on the working class
By Tom Eley. last update 29/06/2009 15:50
http://uruknet.com/?p=m55537&hd=&size=1&l=e
[3] A position America gained through its Wall Street banking cartel, its reserve currency status and through general cultural and military infiltration around the globe. This situation is changing but American dominance around the world remains in place.
[4] And how has much of that wealth been accumulated to begin with? Naked Capitalism has a revealing article posted this week describing the financial vulture behaviour of Goldman Sachs and its link to the sovereign debt crisis of Greece:
Auerback/Wray: Memo to Greece: Make War, Not Love, With Goldman Sachs
Monday, February 22, 2010
http://www.nakedcapitalism.com/2010/02/auerbackwray-memo-to-greece-make-war-not-love-with-goldman-sachs.html
"If you thought Wall Street’s debt crisis was traumatic, wait till you the see the consequences of Washington’s debt crisis! Never before in history has a world power like the U.S. been so utterly buried in debt! And never before has that debt been financed so massively by foreign investors![1]
This analysis strikes me as all very strange. Weiss treats America’s debt problem as if –in the most critical sense - it mostly lives in a vacuum. But this is clearly not the reality. We live in a ‘globalised’ world and globalization is, after all, the process of America’s cultural, political, and economic integration of nation states throughout the world. Those ‘foreign investors’ who Weiss claims funds the American debt may not be so ‘foreign’ at all.
Weiss' article is notable for what is missing. I therefore list a few of my own observations and questions related to America’s debt crisis:
(i) What constitutes a ‘foreign’ investor? It has never been so important to identify who these people are. Who precisely is America is indebted to! Have they been the very recipients of US taxpayer-funded bailouts over the last year and (in fact) decades? Are they, for instance, the propped-up foreign subsidiaries and/or American ‘foreign’ investors in Goldman Sachs, Citigroup, Bank of America and other gigantic money center banks? Or American citizens invested in the foreign subsidiaries of other receivers of American generosity such as General Electric, AIG, General Motors and many others?
(ii) This is a time of extraordinary inequality. A disastrous economic and social outcome – ‘armagedon’ – would certainly come if even further rewards are given to the very tiny minority of individuals who already hold the vast majority of America’s financial wealth. In September 2008 it was noted by Forbes Magazine that the richest 400 Americans had a combined net worth last year of $1.57 trillion. “Less than 10 percent of this vast fortune could resolve the combined budget deficits of 46 states” said Tom Eley [2]. He added, “None of the states are planning increases in taxes on the wealthy.”
(iii) It is quite arguable that the crisis itself came about in the first instance through the process of Governments actively choosing winners and losers in the economy. The US Government, through the Federal Reserve and other agencies, has never imposed its economic discipline equally on everyone. Poorer nations, labor and small enterprises have been consistently scapegoated in one economic crisis after another. This led to the predicament of ‘too big to fail’ and things have clearly fallen apart from there.
(iv) The US Government sets global interest rates by virtue of its hegemonic position [3]. A rise in interest rates in America portends a rise in global rates. Mobile capital will always seek the place of highest return. How can the rest of the world finally disengage from the American governments fiscal and budgetary irresponsibility?
Martin Weiss concludes by urging Americans to ‘bite the bullet’ and accept the ‘sacrifices’. “Ultimately, there is NO choice” he says.
“We must bite the bullet. We must make the sacrifices. Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences.”
But there is a choice. America and the world can reform its monetary and economic system. It, and other governments, can stop picking the rich as the winners. Non-elected central banks and government agencies need to be required to work in the public and global interests. Elected representatives need to do their job and ensure that regulation and processes of accountability occur. This is a large topic. More on this later.
It is apt for governments to be required to enhance the economic prospects for the many rather than safeguard the accumulated wealth of a few.[4]
“The Roots of Violence:Mohandas K. Gandhi
Wealth without work,
Pleasure without conscience,
Knowledge without character,
Commerce without morality,
Science without humanity,
Worship without sacrifice,
Politics without principles.”
REFERENCES:
[1] Armageddon by Martin D. Weiss, Ph.D. 02-22-10
http://www.moneyandmarkets.com/armageddon-10-37926
[2] US states’ budget crisis sets stage for new attack on the working class
By Tom Eley. last update 29/06/2009 15:50
http://uruknet.com/?p=m55537&hd=&size=1&l=e
[3] A position America gained through its Wall Street banking cartel, its reserve currency status and through general cultural and military infiltration around the globe. This situation is changing but American dominance around the world remains in place.
[4] And how has much of that wealth been accumulated to begin with? Naked Capitalism has a revealing article posted this week describing the financial vulture behaviour of Goldman Sachs and its link to the sovereign debt crisis of Greece:
Auerback/Wray: Memo to Greece: Make War, Not Love, With Goldman Sachs
Monday, February 22, 2010
http://www.nakedcapitalism.com/2010/02/auerbackwray-memo-to-greece-make-war-not-love-with-goldman-sachs.html
Virginia Delegate Marshall Completely Loses It
So, the process of cutting state budgets is going on in many places, and is especially grim here in Virginia, given that recently installed Governor Robert McDonnell has ruled out any tax increases to offset all the spending cuts, which are hitting hard in many areas, including education, social serives, and others, and federal stimulus funds for states look to be about to end. The legislature is not agreeing with all his proposals, but their proposed cuts are also deep into serious areas, and the pressure is bringing forth some strange comments.
In particular, Delegate Robert Marshall of Manassas appears to have gone off the deep end and taken the Pat Robertson looney religious right cake with his latest, reported in the Staunton News Leader. The article's headline reads, "Legislator: Disabled kids are God's punishment," and Marshall in opposing state funds for Planned Parenthood is quoted as saying, "Having disabled children is God's punishment to women who have aborted their first pregnancy." I note that the state is probably going to freeze eligibility for new applicants for medicaid for disabled children, so Marshall's comments are really outrageous, far worse than the usual dreck these clowns produce.
I also note that my local paper, the Harrisonburg Daily News Record, seems to be in love with Marshall, regularly printing favorable stories about his various statements with large headlines. Will be curious to see if they do it for this one, although I would not be surprised if they approve, as the Editorial Page Editor, Cort Kirkwood, has publicly stated that the atrocities at Abu Ghraib were caused by the feminist movement. So, this stuff is probably right up his alley.
In particular, Delegate Robert Marshall of Manassas appears to have gone off the deep end and taken the Pat Robertson looney religious right cake with his latest, reported in the Staunton News Leader. The article's headline reads, "Legislator: Disabled kids are God's punishment," and Marshall in opposing state funds for Planned Parenthood is quoted as saying, "Having disabled children is God's punishment to women who have aborted their first pregnancy." I note that the state is probably going to freeze eligibility for new applicants for medicaid for disabled children, so Marshall's comments are really outrageous, far worse than the usual dreck these clowns produce.
I also note that my local paper, the Harrisonburg Daily News Record, seems to be in love with Marshall, regularly printing favorable stories about his various statements with large headlines. Will be curious to see if they do it for this one, although I would not be surprised if they approve, as the Editorial Page Editor, Cort Kirkwood, has publicly stated that the atrocities at Abu Ghraib were caused by the feminist movement. So, this stuff is probably right up his alley.
Is The Fed Tightening Or Not?
The announcement that the Fed is raising the discount rate from 1/2% to 3/4% triggered a reaction in the financial markets with bond traders apparently expecting further tightening in the form of rising interest rates. Various people ranging from Mark Thoma to Jim Hamilton declaring that this is not a tightening but an adjustment to other changes such as their raising the amount they plan to pay on reserves banks park at the Fed, which is arguably a sort of tightening.
I agree that the discount rate is not a tightening and is not in itself a sign of likely more tightening per se. However, it is a fact that the Fed is in a gradually tightening scenario that it has announced for some time. This involves removing itself from the many special credit facilities that it put into place in the immediate wake of the crisis, several of which shut down as of Feb. 1, including the very crucial swap arrangements with the ECB and some other foreign central banks. Probably the most important one is the gradual unwinding of Fed support for the housing mortgage market through purchasing MBSs, which is supposed to end on (or about) March 25. That looms as a crucial date regarding the still rather weak recovery. It is not clear if Fannie Mae or Freddie Mac or anybody else is going to really step in and support those markets, and if they do not, we shall probably be in for a double dip in this recession.
I agree that the discount rate is not a tightening and is not in itself a sign of likely more tightening per se. However, it is a fact that the Fed is in a gradually tightening scenario that it has announced for some time. This involves removing itself from the many special credit facilities that it put into place in the immediate wake of the crisis, several of which shut down as of Feb. 1, including the very crucial swap arrangements with the ECB and some other foreign central banks. Probably the most important one is the gradual unwinding of Fed support for the housing mortgage market through purchasing MBSs, which is supposed to end on (or about) March 25. That looms as a crucial date regarding the still rather weak recovery. It is not clear if Fannie Mae or Freddie Mac or anybody else is going to really step in and support those markets, and if they do not, we shall probably be in for a double dip in this recession.
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