Econ-Atrocity / Econ-Utopia

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2007-08-24T12:44:00.000-07:00

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Econ-Utopia: The Northeast’s Regional Greenhouse Gas Initiative

2007-02-09T12:00:00.000-08:00

Econ-Utopia: The Northeast’s Regional Greenhouse Gas Initiative
By Matthew Riddle, CPE Staff Economist

The Regional Greenhouse Gas Initiative, or RGGI, grabbed headlines in Massachusetts recently when Governor Deval Patrick signed onto it, committing Massachusetts to a cut in its emissions of greenhouse gasses from power plants, and reversing Mitt Romney’s decision to abandon the agreement. In addition to rejoining RGGI, Patrick also outlined some proposals for its implementation, which may prove to be even more significant than his decision to join.

But before going into the details, I should explain what RGGI is, how it came about, and why we should care. In 2003, the governors of nine northeastern states, from Delaware to Maine, got together to create a regional plan to reduce carbon dioxide emissions from power plants, in an effort to combat global climate change. They agreed on an approach often referred to as a ‘cap and trade’ system. Each state would set a cap on the total level of carbon emissions by releasing a fixed number of emission permits. Companies could then trade these permits to determine where the cuts would be made, but the total number of permits would not change.

This approach provides another solution to the problem raised in our last econ-utopia: that the market price of fossil fuels is too low because the costs of pollution and other ‘externalities’ are not taken into account. A cap and trade program would raise the cost of burning fossil fuels to bring it closer to its true level by forcing companies to pay for emission permits in addition to the price of the fuel.

The first use of a cap and trade system for controlling air pollution was introduced in the US as part of the Clean Air Act Amendments of 1990, where it was used to limit sulfur dioxide emissions from power plants. More recently, one of Europe’s key programs to meet its targets under the Kyoto Protocol is a cap and trade system for large emitters of carbon dioxide.

While these programs have been effective at cutting emissions, they suffer from one significant drawback: in the initial allocation, the emission permits were distributed to polluters at no cost. The result, which may sound surprising, is that electricity prices have been rising just as they would have if the emission permits were sold, and most of the additional revenue from these higher prices is captured by electricity generators as windfall profits. A recent study by IPA Energy Consulting found that under the European cap and trade system, companies in the UK would make £800 million ($1.4 billion) per year in additional profits beyond what they would have made with no restrictions. Meanwhile, consumers have to bear the cost, by paying higher prices for electricity.

On the other hand, if the permits were sold to polluters, this money could be collected for public use. It could support greater spending on energy efficiency and renewable energy, provide assistance to displaced workers, be redistributed to consumers, or any combination of these options. In one proposal, known as a ‘Sky Trust,’ the money would be evenly distributed to each person in the country. For the majority of the population, and especially for low income families, the payment would more than compensate for the higher energy prices.

The RGGI agreement among Northeastern states shows progress over these earlier programs: instead of giving all the permits away for free, the agreement requires that states auction at least 25% of the permits to polluters. In his announcement last month, Governor Patrick went farther, joining New York Governor Eliot Spitzer and the Vermont legislature in committing to auctioning not 25%, but 100% of the permits. The revenue from the auction in Massachusetts will be used to fund a new program promoting energy efficiency and the development of renewable energy, which would generate additional energy savings and help to reduce costs for consumers.

In addition to its direct benefit in the northeast, RGGI could also set an important precedent for the design of a nationwide system. If a nationwide cap and trade program were imposed that covered all US carbon emissions, the permits could be worth as much as $100 billion. If used effectively, this money could have an enormous positive impact. But if the permits are given away for free, the money would instead go to enhance the profits of polluters, and this opportunity would be lost.

Sources:

For an overview of RGGI, see

Marc Breslow (2006), “The Northeast’s Global Warming Plan: a Primer,” as well as other summary information from MCAN’s RGGI page
The official RGGI page at http://www.rggi.org/

For coverage of Governor Patrick’s recent announcement, see

Boston Globe, “Patrick Signs Regional Greenhouse Gas Initiative” 1/18/07

For more on the importance of auctioning permits, see

J. Andrew Hoerner, Redefining Progress, “Regional Initiatives to Reduce Greenhouse Gasses: The Crucial Importance of Auctioning Permits for Jobs, Competitiveness, and Equity” [pdf]
IPA Energy Consulting (2005) “Implications of the EU Emissions Trading Scheme for the UK Power Generation Sector” [pdf]

For information about the Sky Trust proposal, see

Peter Barnes (2001), “Who Owns the Sky? Our Common Assets and the Future of Capitalism,” Island Press.
Peter Barnes and Marc Breslow (2001), “Pie in the Sky? The Battle for Atmospheric Scarcity Rent,” [pdf] Political Economy Research Institute

© 2007 Center for Popular Economics

Econ-Atrocities and Econ-Utopias are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Mutually assured hypocrisy w/r/t Iran's nuclear weapons

2007-02-01T06:03:00.000-08:00

This morning's reports on French President Chirac's statement that, according to the NYTimes,

“what is dangerous about this situation [Iran acquiring a nuclear bomb] is not the fact of having a nuclear bomb,” he said. “Having one or perhaps a second bomb a little later, well, that’s not very dangerous.

“But what is very dangerous is proliferation. This means that if Iran continues in the direction it has taken and totally masters nuclear-generated electricity, the danger does not lie in the bomb it will have, and which will be of no use to it.”

Mr. Chirac said it would be an act of self-destruction for Iran to use a nuclear weapon against another country.

“Where will it drop it, this bomb? On Israel?” Mr. Chirac asked. “It would not have gone 200 meters into the atmosphere before Tehran would be razed.”

There's no doubt that this represents lame politics on Chirac's part, since, if this is his true belief, he shouldn't have been suggesting otherwise before now (or after, with his bungled attempts at retraction).

And it is worth noting that he does identify dangers that even he perceives as real, those of wider proliferation of nuclear weapons in the Middle East. So it's not as if he's encouraging Iran to get a nuclear bomb, just saying that he doesn't think that one or two Iranian nukes--in and of themselves--represent a marked increase in danger to the region or world. Instead, it's the secondary effects of proliferation, and the risks that come out of that of increased military tensions and rising risks of accidental usage, that are the main danger Chirac sees.

While I acknowledge in principal the arguments I've heard a few people make that either the world should be totally free of nuclear weapons or all countries should have the same right to acquire them if they deem them necessary for defense, it doesn't really cut the mustard for me. Nuclear weapons are, by definition, pure tools of terrorism. You cannot use a nuclear weapon without knowingly killing vast numbers of innocent bystanders (assuming any of your victims are so-called legitimate targets). To use a nuclear weapon is to commit the grossest act of terrorism possible; simply to posess nuclear weapons is to be terroristic of a sort since the mere existence of the weapon does what terrorism is all about--instill fear in a population as a way to force your political objectives onto them.

For that reason, I oppose any expansion of the world's nuclear arsenal either within any one country or to include previously non-nuclear countries. The need is for elimination of nuclear weapons, and narrow-minded strategic thinking about when this or that country might be served by gaining them miss the contextual point.

All that said, the hypocrisy that is being expressed in the "outrage" over Chirac's statements is annoying in its own right. ("Outlandishly insane"-Freedom's Zone; "This so clearly shows why the EU and 'Old Europe' cannot be trusted on Iran and other matters of security, I'm a little surprised the New York Times reported it."-Captain Ed [Ooooh, what a dig at the Ayatollah-loving NYTimes!]; "the French have had their heads in the sand so long that the sand is starting to work its way into their brains...so comments like this really shouldn't come as a big surprise"-Blogmeister USA.) To their credit, some of these folks try to argue that the Mutally Assured Destruction that was so loved by their hero Ronald Reagan (though created long before his presidency) doesn't apply to Iran, on the premise that the Iranian leaders want armageddon to happen as part of their messianic religious beliefs. Frankly, I don't buy it. The Iranian government behaves much too rationally to think that they have no cares for this earthly life. If they wanted armageddon, they could have triggered it long ago--for instance by launching an all-out war against U.S. troops in Iraq and simultaneously against Saudi Arabia. They don't need nuclear weapons for that.

The Second Best Theory of Tortilla Prices

2007-01-29T09:14:00.000-08:00

I don't think that Tim Haab at Environmental Economics subscribes to the Econ-Atrocities, but by happy coincidence he's written a blog post that would fit perfectly in the series. His topic is the Mexican government's response to serious inflation in the cost of tortillas, which are a primary staple of the Mexican diet, and poor Mexicans (of which there are plenty) are getting hit by these price hikes like a punch to the gut. Should the Mexican government pursue a policy of price caps for tortialls? The "Theory of the Second Best" offers an interesting angle of analysis. I'll let Tim explain it himself, but as a teaser here's a bit of his conclusion:

If the price cap is a response to another inefficient policy, then the price cap may actually improve efficiency. The first best solution would be to remove the policies creating the inefficiently high corn prices. The second best solution might be to create a new policy to counteract the effects of bad policy. That's the Theory of Second Best.

This all makes best sense as part of his full post, so go read it (it's not long, so it won't hurt).

Econ-Utopia: Greenbacks for Green Energy

2007-01-25T12:00:00.000-08:00

Econ-Utopia: Greenbacks for Green Energy
By Jonathan Teller-Elsberg, CPE Staff Economist

With Al Gore on Oprah giving his “inconvenient” PowerPoint presentation, new reports of melting ice sheets and rising sea levels, and the release of the British government’s Stern Review, which is the latest major estimate of the economic costs of climate change, the issue of global warming is becoming a part of mainstream politics and kitchen-table conversations. Since the burning of fossil fuels (oil, natural gas, and coal) is the main source of human-caused warming, the need for alternative forms of energy is clear.

Historically, low prices for fossil fuels have meant that renewable energy systems were rarely economically viable. With improvements in technology and production methods, renewable energy has been closing the gap over time. But one thing has almost always been left out of the equation: the long term, hidden costs of global warming from fossil fuel use. These costs might be financial (the cost of building new homes for people displaced by rising oceans), human (the trauma people experience when their way of life is ruined), or something else (the loss of millions of species of life than cannot survive a hotter planet).

In the language of economics, this is an example of a “negative externality,” a cost that is not included in the market price. As a result, the monetary price is “wrong”—in this case, the monetary price of fossil fuels is too low, and so people use more fossil fuel than they would if they knew the “true cost.”

Lately, some governments have taken the question of energy’s true cost to heart, and created incentive plans called “feed-in tariffs” to promote renewable energy. Germany has been at the forefront with its 2004 law, the “Renewable Energy Sources Act.” The law mandates that electric utilities must pay a guaranteed price to anyone who installs a renewable energy system, and that price is guaranteed for 20 years. The price the utility pays is much higher than the price the utility charges for fossil-fuel derived energy that it supplies.

For example, if you put a small photovoltaic (solar electricity) system on the roof of your home and connected it to the electric grid, the German utility must pay you just over 68 cents per kilowatt-hour (kWh) (calculated at the exchange rate on 12/14/2006). Meanwhile, the price you would pay for electricity you get from the utility would be around 20 cents/kWh.

The German government’s logic is that each bit of electricity that comes from a renewable source instead of a fossil fuel has long-term savings built in, because the renewable energy isn’t contributing to global warming. The law turns those long-term savings into cash up front that citizens can use for investing in green power.

As a result, there has been an explosion of interest in alternative energy in Germany. In 2005, some 635 megawatts (1 megawatt = 1,000 kilowatts) of new solar electric systems were installed—enough power to supply the needs of nearly 60,000 average American homes (and the average German home is almost surely more efficient). Spain, Italy, Greece, South Korea and France have all followed Germany’s lead and established their own feed-in tariff systems.

Starting in 2007, residents of California will enjoy a similar incentive to go green; the state’s feed-in tariff guarantees a five year contract paying 38 cents/kWh for newly installed photovoltaic systems. With all that valuable beachfront property to worry about, it’s no wonder that California is leading the way in the U.S. to avoid catastrophic global warming. But the only hope for sufficiently reducing greenhouse gas emissions to save Malibu is that the rest of the country (and world) follow a similar path to make fossil fuels the economic losers that they ought to be.

Sources and resources:

For a taste of the bad news on global warming, see

BBC News, “Gravity satellites see ice loss” 10/20/2006; “Climate change fight ‘can’t wait’” 10/31/2006; and “Sea-level rise ‘under-estimated’” 12/14/2006

Gerald Wynn, “Carbon Emissions up One-Quarter Since 1990” 12/8/2006

Jeremy Lovell, “2006 Set to be 6th Warmest Worldwide: UK Report,” Reuters (via Commondreams.org), 12/14/2006

For Al Gore’s An Inconvenient Truth

An Inconvenient Truth

Oprah, “Global Warming 101 with Al Gore” 12/5/2006

Pew Research Center for People and the Press, “Little Consensus on Global Warming” 7/12/2006

For information on photovoltaics, feed in tariffs, and electricity usage, see

Wikipedia, “Photovoltaics,” accessed 12/14/2006

Energy Information Administration, U.S. Department of Energy, “U.S. Household Electricity Report,” Table US-1, “Electricity Consumption by End Use in U.S. Households, 2001,” 7/14/2005 (accessed 12/14/2006

Craig D. Rose, “Solar energy’s day is dawning: State to embark on its biggest-ever photovoltaic project,” San Diego Union-Tribune, 12/10/2006

For an overview of renewable energy options for homeowners, small businesses, and communities, The Citizen-Powered Energy Handbook by Greg Pahl.

© 2007 Center for Popular Economics
Econ-Atrocities are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Econ-Atrocity: The 800-Pound Ronald McDonald in the Room

2007-01-04T12:00:00.000-08:00

Econ-Atrocity: The 800-Pound Ronald McDonald in the Room
By Helen Scharber, CPE Staff Economist
Jan. 4, 2007

When your child’s doctor gives you advice, you’re probably inclined to take it. And if 60,000 doctors gave you advice, ignoring it would be even more difficult to justify. Last month, the American Academy of Pediatrics (AAP) issued a policy statement advising us to limit advertising to children, citing its adverse effects on health. Yes, banning toy commercials might result in fewer headaches for parents (“Please, please, pleeeeeeease, can I have this new video game I just saw 10 commercials for????”), but the AAP is more concerned with other health issues, such as childhood obesity. Advertising in general – and to children specifically – has reached astonishingly high levels, and as a country, we’d be wise to take the doctors’ orders.

Advertising to kids is not a new phenomenon, but the intensity of it is. According to Juliet Schor, author of Born to Buy, companies spent around $100 million in 1983 on television advertising to kids. A little more than 20 years later, the amount earmarked for child-targeted ads in a variety of media has jumped to at least $12 billion annually. That’s over $150 per boy and girl in the U.S. And it’s not as though kids only see ads for action figures and sugary cereal; the other $240 billion spent on advertising each year ensures that they see ads for all kinds of products, everywhere they go. According to the AAP report, “the average young person views more than 3,000 ads per day on television, on the Internet, on billboards, and in magazines.” Ads are also creeping into schools, where marketers have cleverly placed them in “educational” posters, textbook covers, bathroom stalls, scoreboards, daily news programs, and bus radio programming.

If advertising to children is becoming increasingly ubiquitous, it’s probably because it’s becoming increasingly profitable. Once upon a time, kids didn’t have as much market power as they do today. The AAP report estimates that kids under 12 now spend $25 billion of their own money annually, teenagers spend another $155 billion, and both groups probably influence another $200 billion in parental spending. Not too surprising, considering that 62 percent of parents say their children “actively participate” in car-buying decisions, marketers are also becoming more aware of the long-term potential of advertising to children (see the “Car makers direct more ads at kids” link below). While they may not be the primary market now, they will be someday. And since researchers have found that kids as young as two can express preferences for specific brands, it’s practically never too early to begin instilling brand loyalty.

But while small children have an incredible memory for commercial messages, they may not have developed the cognitive skills necessary to be critical of them. In 2004, the American Psychological Association (APA) also called for setting limits on advertising to kids, citing research that “children under the age of eight are unable to critically comprehend televised advertising messages and are prone to accept advertiser messages as truthful, accurate and unbiased.” Many people take offense at the idea that we might be manipulated by marketing. Aren’t we, after all, intelligent enough to make up our own minds about what to buy? The research cited by the APA, however, shows that children are uniquely vulnerable to manipulation by advertising. Marketers therefore should not be allowed to prey on them in the name of free speech.

Such invasive advertising to children is not only an ethical problem. The American Academy of Pediatrics cited advertising’s effects on health through the promotion of unhealthy eating, drinking and smoking as the main motivation for setting limits. Children’s health issues certainly merit attention. The Center for Disease Control, for example, has found that the prevalence of overweight children (ages 6 to 11) increased from 7 percent in 1980 to about 19 percent in 2004, while the rate among adolescents (ages 12 to 19) jumped from 5 percent to 17 percent. In addition to physical health problems, Schor argues that extensive marketing has negative effects on children’s emotional well being. In her research for Born to Buy, Schor found links between immersion in consumer culture and depression, anxiety, low self esteem and conflicts with parents. The big push to consume can also lead to financial health problems, as many Americans know all too well, with credit card debt among 18- to 24-year-olds doubling over the past decade.

Not even the staunchest critics of marketing to children would argue that advertisements are completely at fault for these trends. Yet the commercialization of nearly everything is negatively affecting children’s well being in rather profound ways. Why, then, is hardly anyone paying attention to the 800-pound Ronald McDonald in the room? Perhaps it’s because advertising appears to be a necessary evil or a fair tradeoff – maybe little Emma’s school couldn’t afford a soccer team without Coke on the scoreboard, for example. Or perhaps some would argue that parents who don’t approve of the commercial culture should limit their kids’ exposure to it. (See the Kids and Commercialism link below for tips on parenting kids in a commercial culture.) Increasingly invasive marketing techniques make it practically impossible to simply opt out of commercial culture, though. Thus, decisions to limit marketing to children must be made by the country as a whole. Sweden, Norway, Greece, Denmark, and Belgium have already passed laws curbing kid-targeted advertising, and according to 60,000 pediatricians, if we care about the health of our kids, we should too.

Resources

American Association of Pediatrics, Policy Statement on Children, Adolescents, and Advertising, December 2006

American Psychological Association, “Television Advertising Leads to Unhealthy Habits in Childen, says APA Task Force,” February 2004

Jennifer Saranow, “Car makers direct more ads at kids,” Wall Street Journal, November 9, 2006

David Burke, “Two-year olds branded by TV advertising”

Center for a New American Dream, Kids and Commercialism

Juliet Schor, Born to Buy: The Commercialized Child and the New Consumer Culture (New York: Scribner, 2004).

Center for Disease Control – Facts about Childhood Overweight

© 2007 Center for Popular Economics
Econ-Atrocities are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

On Carter on Israel, Palestine, and Apartheid

2006-12-28T13:27:00.000-08:00

Any present or past President has got to be used to being scorned, so the hue and cry now erupting over Jimmy Carter's new book on the Israeli-Palestinian misery can't be terribly surprising for him. I haven't yet had a chance to read the book and so am not in a position to endorse or reject or somewhere-in-the-middle it. Still, some of the reaction is so clearly based on attacking Carter himself, rather than the content of his book--indeed it seems to be attacking Carter instead of attacking his arguments--and that's just plain wrong. An example.

Neal Sher's op-ed at the JTA: Global News Service of the Jewish People is a classic attempt at a hatchet job. Sher asserts (without a single example or refutation) that Carter bases his book, at least in part, on factual errors. But much more than that is the strained logic Sher uses to insinuate that Carter is a Nazi sympathizer--which is indeed exactly what he clearly implies. This is a very serious, even dangerous, implication, because exaggerated crying "wolf" over anti-Semitism results in people being likely to ignore true instances of that wretched prejudice.

In order to paint Carter as a Nazi sympathizer, Sher tells the story of the time he was working for the Office of Special Investigations, "the Justice Department's Nazi prosecution unit," on the case of a former Nazi SS officer, Martin Bartesch. (By the way, Sher would subsequently be disbarred from the District of Columbia bar for embezzling money from a Holocaust victims fund. Sher was never criminally charged, but apparently there was enough evidence to cause the DC bar to strip him of his lawyerly status.)

Sher writes that

Bartesch's family and 'supporters,' seeking special relief, launched a campaign to discredit OSI while trying to garner political support. Indeed, OSI received numerous inquiries from members of Congress who had been approached. After we explained the facts of the case, however, the matter inevitably was dropped; no one urged that Bartesch or his family be accorded any special treatment.

Sher makes no implication that these numerous members of Congress have a hidden pro-Nazi aggenda. Yet when Carter does essentially the exact same thing--merely forwarding a letter from Bartesch's daughter with a short added scribble urging OSI to allow for "humanitarian considerations"--somehow Carter is at minimum excessively naive or at most revealing some long-festering, pro-Nazi anti-Semitism.

In September 1987, after all of the gruesome details of the case had been made public and widely reported in the media, I received a letter sent by Bartesch's daughter to the former president.... I was ... taken aback by the personal, handwritten note Jimmy Carter sent to me seeking "special consideration" for this Nazi SS murderer. There on the upper-right corner of Bartesch's daughter's letter was a note to me in the former president's handwriting, and with his signature, urging that "in cases such as this, special consideration can be given to the families for humanitarian reasons."
...

As disturbing as I found Carter's plea, and although his attempted intervention has always gnawed at me, I chalked it up at the time to a certain naivete on the part of the former president. But now, in light of Carter's most recent writings and comments, I am left to wonder whether it was I who was naive simply to dismiss his knee-jerk appeal as the instinctive reaction of a well-meaning but misguided humanitarian.

...

The exposure of Carter's views on Israel and the Jewish lobby has shed a clearer light on his attempt to influence me in the Bartesch case. We know from his own confession that he has had lust in his heart. Unfortunately, he has given us ample reason to wonder what else is lurking there.

Apparently Sher wants you to believe that Carter day dreams of saluting "Sig Heil" and goose stepping through the nearest synagogue.

Sher does not say what he did in response to Carter's scribbled note on Bartesch's daughter's letter. While Sher apparently responded to the Congressional inquirers with explanations of why Bartesch's case required serious action, to which the Congress members responded with approval (or dropped the issue without response), did he reply to Carter and offer a similar explanation of OSI's position? If he did not, then doesn't that imply that at the time he didn't take Carter's interest to be serious, that perhaps he interpreted Carter as just doing a minor favor to molify a pleading woman? And if he did respond to Carter at the time, why doesn't he say so, and why doesn't he say what Carter's reaction was? Could it be that Carter accepted OSI's position once he was more fully informed--just as the Congressional interlopers did--but that Sher avoids mentioning this because that would undermine the odious view of Carter Sher is creating in this op-ed?

Either way, it seems that Sher is trying to make a racially-tinged tempest in a teapot in order to create a connection between an apparently offhanded action of Carters twenty years ago and Carter's efforts today to sway public opinion regarding the Israeli/Palestinian conflict. And what about all those other Congress people whom Sher seems to treat as fine and decent citizens despite their initial efforts on Bartesch's case? Is Sher simply waiting for any of them to write something critical of Israel, at which time he will accuse them of having been a stooge for the former Nazi?

Sher goes on to criticize the title of Carter's book. From what Christopher Hedges recently wrote in The Nation about the controversy over the book, Carter explicitly avoids describing Israel itself as an apartheid nation, and reserves the term only for the situation in the occupied territories. Frankly, the facts speak for themselves. Numerous observers of both South Africa and the territories have described the Palestinians as enduring something similar to, some say clearly worse than, the original Apartheid. And for that matter, while the conditions of forceful oppression are largely absent, the legal structure within Israel can--if one feels like doing so--quite reasonbly be described as apartheid-like: laws forbidding inter-religious marriages, laws forbidding ownership of land by non-Jews, laws forbidding many goverment benefits to non-Jews. So yeah, the title is confrontational, but it is not misleading and as for insulting, well, if the shoe fits...

Now, I think any critiques Sher makes must be judged on their merits (and I don't see much merit to those he lists in this op-ed), but for what it's worth, I'd also like to note that he is the former Executive Director of AIPAC, a group not generally viewed as moderate on issues of Israeli-Palestinian peace. In Hedge's Nation piece, he refers to former Israeli Prime Minister Yitzhak Rabin at the time that Rabin had realized that real efforts towards making peace were necessary. He describes Rabin's attitude towards the Jewish leadership in the U.S. as being expressly NOT supportive of Israel as a whole, but specifically supportive of Israel's hard right.

When Rabin, who had come to despise what the occupation was doing to the citizenry of his own country, was sworn in as prime minister, the leaders of these American Jewish organizations, along with their buffoonish supporters on the Christian right, were conspicuous by their absence. On one of Rabin's first visits to Washington after he assumed office, according to one of his aides, he was informed that a group of American Jewish leaders were available to meet him. The surly old general, whose gravelly cigarette voice seemed to rise up from below his feet, curtly refused. He told his entourage he did not have time to waste on 'scumbags.'

Sher was not at AIPAC at the time of this incident (he took the helm a year or two later), so perhaps Rabin would not have considered Sher a scumbag. Since Rabin was murdered by someone who shares the hard-right politics of people like Sher, we'll never know.

Regardless, since Sher refuses to debate with Carter on the substantive issues, will he devote himself fulltime to outing other Nazi sympathizers, like Desmond Tutu?

Econ-Atrocity: The High Cost of the Holidays

2006-12-20T12:00:00.000-08:00

Econ-Atrocity: The High Cost of the Holidays
By Helen Scharber, CPE Staff Economist
Dec. 21, 2006

Ahh, the holidays. So full of joy, laughter, good cheer… and contradictions. The holidays are all about spending time with loved ones. Or are they all about finding the perfect gift? They are a time of relaxation and spirituality. Or perhaps a time of stress and consumerism? According to a 2005 poll by the Center for a New American Dream, more than three in four Americans (78%) wished that holidays were less materialistic, yet shoppers around the country planned to spend an average of $907 on gifts this holiday season. Sixty percent of people polled anticipated spending less this year than last, but according to the National Retail Federation, holiday retail sales were forecasted to rise five percent to $457.4 billion. As Howard Dvorkin, founder of Consolidated Credit Counseling Services, Inc. (CCCS), observes, “It seems that consumers are trying to be more conservative with spending this year over last, but many of the best laid plans fall through when the pressures of advertisers and unrealistic holiday expectations hit a fever pitch of season overload.” The fast pace and high cost of the holidays can seem to be out of our control, but there are a number of good reasons to take the reindeer by the antlers and reign in holiday consumption.

Let’s return to this $457.4 billion holiday sales figure for a moment. According to the National Retail Federation, this was the amount of anticipated retail sales in the U.S. for November and December 2006, and it constitutes one-fifth of total sales for the year. To put this number in perspective, only 26 countries have a yearly income above the $457.4 billion mark (that means at least 166 countries are below it), and it is roughly equal to the national income of the Philippines. According to the World Bank, the additional expenditure needed to achieve universal access to safe water and sanitation is around $30 billion. The list could go on, but you get the point: Americans spend a lot of money during the holiday season.

Perhaps spending 15 times the cost of safe drinking water and sanitation for everyone in the world could be justified if it were really making people happy. And we certainly shouldn’t underestimate the cultural importance of the holiday gift exchange, or the genuine satisfaction that can come from giving a particularly thoughtful gift. Yet, as a country, we don’t seem to be getting $457.4 billion worth of happiness out of the holidays. It is cliché by now to talk about holiday stress, and newspapers and magazines often print helpful tips this time of year for dealing with it. The National Mental Health Association even has a webpage devoted to coping with the “holiday blues,” which they say can be brought on by “unrealistic expectations, over-commercialization, financial constraints” and other pressures. Thanks to credit cards, financial constraints may not exactly be binding, but then, a poll conducted by CCCS in November found that 46 percent of all respondents were still paying off debt from last holiday season.

So spending the equivalent of the Philippine’s yearly income over the holidays seems to have bought us quite a bit of extra anxiety and debt. As you might imagine, $457.4 billion worth of stuff also represents a great deal of resource use and manufacturing pollution. Furthermore, all the packaging, wrapping paper, and items made redundant by gifts create a lot of waste. According to the EPA, the amount of household garbage in the U.S. generally increases by around 25 percent in the period between Thanksgiving and New Year’s Day. And the U.S. already leads the industrialized world in municipal solid waste generation, with each average American producing twice as much waste as the average German. Apparently holiday consumption isn’t great for mental or planetary health.

Isn’t there any good news? Here’s some: plenty of people have simplified their holidays by agreeing to cut back on gift-buying, or giving “alternative” gifts like donations to charitable organizations or gifts of time. You can too. For help, refer to the “Holiday Survival Kit” linked below or to your own ideas of what the perfect holiday might include (or not include).

Social and familial expectations can be powerful reasons to stick with the high-spending status quo, but listed above are some equally compelling reasons to challenge the norm. Perhaps you’re convinced, or maybe you didn’t need convincing in the first place. Still, you might be thinking, doesn’t the country need to keep consumer spending high for the health of the economy? Aha! Another contradiction to add to the list. It would be good if everyone cut back on holiday spending, but you’re worried the economy will collapse. Don’t worry too much. Consumption patterns don’t change overnight, and if (or when) Americans do trade in their thousand-dollar holidays for low-budget affairs, the economy will adjust just as it has adjusted to structural changes throughout history. And if there seems to be a contradiction between the well-being of the country and the health of the economy, we should be asking—what’s the economy for, anyway?

Resources:

A “Holiday Survival Kit” and tips to simplify the holidays from the Center for a New American Dream
Coping with Stress and Depression During the Holidays – a factsheet from the National Mental Health Association

Statistics on holiday spending:

American Research Group – 2006 Holiday Survey
Center for a New American Dream – 2005 Holiday Poll
Consolidated Credit Counseling Services, Inc. – 2006 Holiday Poll
National Retail Federation – 2006 Holiday Forecast

© 2006 Center for Popular Economics

Econ-Atrocities are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Econ-Atrocity: Can enlightened capitalism save health care?

2006-12-01T12:00:00.000-08:00

Can enlightened capitalism save health care?
By Gerald Friedman, CPE Staff Economist
Dec. 1, 2006

A recent article in the New York Times (October 25, 2006) entitled “Hospitals Try Free Basic Care for Uninsured” raises an intriguing possibility. The Times reports how some local governments and hospitals have found that by providing primary care, supportive services, and preventive care for the uninsured they can save money by avoiding higher costs when conditions worsen down the road. Following the experience of a diabetic patient at Seton, a Roman Catholic hospital network in Texas, the Times shows how preventive care reduced “costs for the hospital” by helping the woman avoid expensive emergency room visits. By improving her health, preventive care cut her medical bills nearly in half. “The money we save,” Dr. Melissa Smith, medical director of three Seton clinics, “money that is not hemorrhaging through the I.C.U., is money we can do so much more with to help her upfront.”

We could all hope that there will be enlightened insurers who will respond to these stories. The Times is certainly hoping to promote a free-market win-win where the poor will receive care that will help them stay healthy, and health insurers and providers will increase their profits by reducing total expenditures. But this worthy goal misses the fundamental flaw of for-profit health insurance: Capitalist businesses, including America’s health insurers, are not eleemosynary institutions. They do not set out to produce useful things. Instead, they seek to create profits; any social value or use is purely coincidental. In the specific case here, our capitalist health care industry is organized to produce profits; any quality health care that it provides is a desirable, but secondary, product.

As a for-profit enterprise, our health care system has been fabulously successful; and never more so than in the last 6 years. Since 2000, profits for health insurers have risen at double-digit rates for a total increase of over 120% on revenue increases of 21 percent. “They're making boatloads of money,” said Tom Boldt, a senior health-benefits consultant quoted in Investor’s Business Daily. The health insurers have shared some of their profits with their CEOs. Average pay for the five top executives at 16 of the largest health insurers is now over $3 million a year. John Rowe of Aetna was paid $22 million in 2005; and Larry Glasscock at Anthem, was paid $25 million in 2003. Both pay packages are dwarfed by the $125 million received in 2005 by Dr. William J. McGuire of UnitedHealthGroup.

Even with these generous CEO pay packages, investors have done well. The stock price for the 17 largest health insurers has almost tripled since the beginning of 2000. Aetna stock, for example, has gone from barely $7/share to over $40/share today, giving an annual return of over 30%. Profits for companies providing health insurance have risen at the same time that more Americans are losing health insurance and a smaller share of premiums is going towards health care. This coincidence is no accident but is the result of carefully calibrated company policy to reduce coverage for sick people. Aetna, for example, has pushed up its stock while cutting its rolls to 13 million down from 21 million at the end of 1999. Despite a one-third fall in revenues, profits rose nearly eight-fold, to $934 million from $127 million. Company spokesman Fred Laberge explained that “We focused on profitable [emphasis added] growth rather than growth at any cost.” He added, “We lost a lot of membership, but we're OK with that.”

The key to increasing profitability at Aetna and in the healthcare industry in general is the ever-rising administrative burden and the 80:20 rule. The empirical generalization that 80% of health care costs are associated with 20% of the population means that you can dramatically lower costs if you can identify the sickly 20% and get them out of your insurance pool. Insurers have learned that they can achieve these dramatic cost reductions even without directly denying coverage to the sick by discouraging them from remaining in the system by harassing them with bureaucratic regulations, pointless paperwork, and by refusing coverage for particular procedures or drugs. Refusing coverage contradicts the enlightened approach recommended by the Times. But while helping people remain healthy may lower costs somewhat, getting rid of the sick is guaranteed to lower costs dramatically. By reducing expenditures, a policy of harassment probably beats one of enlightened care in the short-run; and it certainly trumps enlightened care in the long run by driving the sickly 20% out of a health plan and discouraging other sick people from joining.

That is why health insurers have been adding staff even while reducing coverage. Extra layers of bureaucracy are wasteful from a social perspective - we would prefer those resources be spent on health care rather than administration. But bureaucrats make money for health insurers; through zealous oversight and by harassing sickly clients they drive away people prone to ill health, precisely the people that no private insurer wants to insure but who most need health care. The Times is absolutely right that an enlightened policy of promoting primary and supportive care would make Americans healthier and could save money. But we will never see such a policy so long as we treat health care as a profit-center rather than a social right.

Sources:
“Hospitals Try Free Basic Care for Uninsured,” New York Times (October 24, 2006). By Erik Eckholm.

“Health insurers getting bigger cut of medical dollars,” Investor’s Business Daily (October 15, 2004). By Russ Britt.

“1 in 5 Health Care Dollars Used for Insurance Paperwork,” Physicians for a National Health Program (November 10, 2005).

© 2006 Center for Popular Economics

Econ-Atrocities are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Polanyi's labor market blastocyst

2006-11-20T19:50:00.000-08:00

Over at the Boston Review, Michael Piore and Andrew Schrank’s recent article (“Trading Up: An embryonic model for easing the human costs of free markets”) on labor in Latin America offers a spot of good news. They’ve been studying labor inspections throughout the region, from the Dominican Republic to Mexico to Brazil and Chile, and say they’ve found “an emergent model for reconciling market and social forces.”

Some background—and it’s the background they offer that got me interested in their article in the first place. Piore and Schrank are looking at Latin America through the lens of early-mid 20th century economist Karl Polanyi ideas expressed in his classic book The Great Transformation. I’ve been a fan of that book for years and recommend it highly. And while Polanyi still has decent name recognition among economists, there aren’t that many who rely on his ideas to guide their work. As P & S sum The Great Transformation up,

Polanyi described the economic policies of industrial society as the product of a “double movement.” The first movement is toward a free market, particularly in labor and land, and also in international trade. But free markets generate enormous pressures for the continual redeployment of resources, especially human resources. So Polanyi’s second movement is a response, an attempt to protect society from these pressures. While the movement toward the market is guided and directed by a coherent theory and the ideology of political and economic liberalism (the Washington Consensus is but its most recent expression), the second movement is visceral, an instinctive effort to rescue society from the ravages of unfettered economic competition and the constant redeployment of resources that destroys the context in which people understand themselves and create meaning and purpose in their lives.

P & S say that in today’s world, there’s no coherent ideology that promises to reconcile the two forces driving, on the one hand towards unfettered markets and on the other hand back towards the social meaning and cohesion that people rely on. Marxism, fascism, even Keynesianism have all been largely discredited throughout much of the world, and so can’t do the trick.

Now I’d like to throw in religious movements here as a possible candidate for playing the role of a Polanyi-esque ideology. In the U.S. in the last half-century or so, it seems that fundamentalist Christianity has served, for a significant fraction of the population, to help people accept the social disruptions that come with a market economy (particularly the markets for human labor, for jobs). While their economic fortunes have waned, the turn to a strong religion has helped them preserve a connection to the past (real or imagined) and to a community of peers. Similar arguments have been made for the rise of fundamentalism in the Muslim world as well.

Anyhow, P & S suggest that if there’s no ideology from above, as it were, for dislocated social movements to gravitate towards, maybe we can learn a new ideology from the actions of the social movements themselves.

In this unprecedented intellectual vacuum, one way to begin creating a coherent alternative would be to try to construct such a vision inductively, working from the changes that are actually happening on the ground. In studying what people are already doing locally in response to the conflict between market and social forces and identifying the particular institutions that are emerging in that process, we might find a way of working those institutions into the broader structure of the economy, using them as the starting point for an alternative model of social and economic organization.

And that’s what they report finding in Latin America, following Polanyi’s lead, in the realm of labor law and enforcement. There has been a strong increase in labor law enforcement in Latin America, they say, and the Latin American model of labor law enforcement (which, of course is not identical or consistently maintained throughout the entire region, but which shares some broad commonalities) is serving as a piece of the social struggle to protect people from being nothing more than wage slaves.

Furthermore,

the Latin approach to labor-market regulation is not only distinct from the prevailing U.S. approach but is also better able to reconcile the need for regulation with the exigencies of economic efficiency. Indeed, it offers the possibility for a country to shift from a strategy of competing in world markets through cost-cutting and labor exploitation to a strategy of upgrading business practices to raise productivity, reduce inventory levels, and improve quality.

Ironically, while they see advantages to the Latin American model, one of the positive features they profile has been funded by the U.S. Department of Labor—the Regional Center for Occupational Safety and Health (Centro Regional de Seguridad y Salud Occupacional, or CERSSO), which is active in eight Central American and Caribbean countries (but not the U.S.).

A recent study of garment factories in El Salvador, Guatemala, and Nicaragua, for example, found that returns on safety and health investments engendered by the program [CERSSO] ranged from four to eight times the costs of the initial interventions.

Well, there’s no need for me to summarize their entire article, but I will leave off with another tidbit of theirs on just why this kind of intervention is necessary.

Price signals alone will not lead employers to protect their workers. Nor will altruism. In the absence of meaningful government intervention, ignorance, self-interest, and short-term thinking will rule the day. And professional labor inspectors are therefore needed not only to block the low road but to pave the high road as well.

Ah, the beauty of a win-win situation. Okay, so Latin American garment factories are still a long shot from being rose gardens, so all this rose-colored glasses stuff has got to be taken with a grain of salt. But still, if there is some progress being made it’s worth acknowledging and understanding. And if the progress is uselessly incremental, we ought to try to know that as well. Anyway, do read on; after all, I haven’t touched on how P & S see that

This last step crosses the threshold from a conception of labor inspection narrowly focused upon work standards to a notion of labor inspection as a much broader approach to social and economic policy. The agency then becomes a bridge between economic and social forces, at least one piece of an alternative to the Washington Consensus, or rather to the vacuum in which the reaction to the Washington Consensus is emerging....

Some thoughts on 2006

2006-11-12T17:07:00.000-08:00

The 2006 Election(s)
By
John J. Fitzgerald

The 2006 Election cycle has come and gone. Just like the 2006 Hurricane season it has not performed exactly as predicted, but it has left some changes in its wake. We might actually have experienced several different elections rather than just one. A lot of decision-making got formalized on the 7th of November.

Here are some of the highlights:

Deval Patrick became the first African-American elected Governor of Massachusetts. He is only the second black to win a Governorship in American history. L.Douglas Wilder of Virginia was the first in 1989. Massachusetts is a liberal state, but it has had its share of racism in the near and distant past. Patrick’s win represents the triumph of organizing welded to progressive idealism. He represents a break with traditional Democratic politics. Translation: A network of good old boys largely out of Boston and other cities of Irish and Roman Catholic background. Their politics is and was the politics of patronage and cronyism. Patrick did well in the cities, but his real core support came from college-educated voters in the suburbs. A good number of his key workers were veterans of the civil rights/anti-war movements of the 1960’s.

Nancy Pelosi of California became the first woman to be Speaker of the House of Representatives. She is now 3rd in line to become President after the Vice President in succession. More importantly she will now serve as a serious check on the Bush administration’s policy positions. With her Democratic majority and her election as Speaker comes a new set of committee chairmanships that will tilt the House more towards the liberal side. This is especially important in setting up Congressional investigations of Bush policies. Pelosi will be joined by at least 70 other women in the House, a new record.

The Senate will be under Democratic control by a margin of 51 to 49. In the 100-member Senate, Democratic women scored victories in Missouri and Minnesota, pushing the total number of female senators to 16, the most ever. Hillary Clinton’s re-election and her husband’s work for a number of Democratic candidates give her extra credentials for a future Presidential run. (Hillary Clinton is not a progressive and only barely a moderate.)

The number of black and Hispanic members will stay the same in the new Congress. There will continue to be 40 black House members and one black senator - Democrat Barack Obama of Illinois. The number of Hispanic House members will stay at 23 and the number of Hispanic senators will remain at three.

Hispanics are the fastest growing demographic group in America, making up nearly 15 percent of the population, but they account for only 5 percent of Congress. Blacks make up a little more than 13 percent of the population, but just 8 percent of Congress.

The old House was: Democratic = 203 Republican = 232
The new House is: Democratic = 229 Republican = 196

The old Senate was: Democratic = 45 Republican = 55
The new Senate is: Democratic = 51 Republican = 49

Returns are still being counted but across the nation the number of blacks, Hispanics and women holding elective office has increased. This is the ongoing result of the civil rights movements of the 1960’s.

Voters have returned to a concern about economic issues. They do not trust the Republicans to handle the economy. This reflected in the total number of new Democratic candidates elected to the House and Senate. Not one new Republican was elected to the House or Senate. Some incumbent Republicans were re-elected.

Karl Rove’s reputation as a Wizard of politics is seriously diminished. Many of his Get Out The Vote (GOTV) tactics were adopted by Democratic campaigns with considerable success across the country.

The role of the Internet in electioneering is continuing to grow. Moveon.org and similar organizations played a major role in contacting and motivating voters to turn out. E-mail and cell phone message traffic was at a fever pitch in the weeks and days leading up to the election. Television ads played a role, but money did not trump political organization in 2006. Several millionaire candidates with big TV budgets, but no field organizations, saw their campaigns wither and die. Providing us all with a reminder that some people have too much money!

The war in Iraq was a factor in 2006. The firing of Rumsfeld is testimony to this.
But the policy has not changed, and it will probably not change unless the Democrats give it a major shove in a more peaceful direction. Committee interrogation of Gates and the power of the purse will enable anti-war Democrats to get their message across. Conservatives like Joe Lieberman and Hillary Clinton will be obstacles to peace. McNamara stepped down in 1968, but the war in Vietnam went on until 1975.

One major casualty of the election cycle is John F. Kerry. His stupid and inept performance terminated any chance of another run by him for the White House. Who wants to listen to yet another explanation from him about what he really meant? His flip-flop image will haunt him to the grave, as it should. His career was built on his anti-war image of 1971 and he threw that away with his vote for Bush’s war in 2002. He will have a challenge for his Senate re-election in 2008. He might survive, if the Republicans of Massachusetts file for bankruptcy

The power of the Christian right was seriously damaged and diminished by the actions of 2006. Corruption and sexual hypocrisy cost a good number of Republicans their seats. A large number of working people started thinking about economics instead of the Second Coming in 2006!

In many ways, 2006 was a perfect storm of a campaign year. Corporate corruption from Enron and Hewlett-Packard to political corruption from Jack Abramoff to Tom Delay got mixed into sexual hypocrisy and misconduct in the case of Foley. This provided the set up. The Republican Party looked and acted like they were the party of sleaze. The war in Iraq had been disintegrating into a civil war with no end in sight and George Bush appeared every day, and in every way, to be more clueless than he was the day before.

Increasing the pressure on this brimming toilet of excrement and foul bodily fluids (Stirring it, if you will!) was the superb use of new campaign techniques to identify and target voters. These techniques largely came from the Dean campaign of 2004. They basically involved computers, the Internet and cell phones. The computers generated master lists of potential voters with phone numbers and the cell phones allowed “phone banks” to be set up in any house or home.

Targeting potential voters and identifying supportive voters, precinct by precinct, gave the advantage to a number of Democratic candidates on Election Day.

If they learned nothing else in 2006, a number of Democratic organizers and voters re-learned how to play the game of politics. This time the good guys won!

And now it is on to 2008!

Happy Days are here again ….

Annals of unexpected consequences: gay escort to halt global warming?

2006-11-04T21:37:00.000-08:00

For all that social sciences are able to figure out patterns of behavior, there's one thing that guarantees a continuing need for old fashioned history analysis: the existence of totally unpredictable twists and turns in culture and politics.

Now I can't say with any confidence that the recent fall from grace of Rev. Ted Haggard, until this past Thursday the president of the huge and hugely influential National Association of Evangelicals and leader of a megachurch in Colorado Springs, will be one of those surprisingly pivotal events. But there's a distinct possibility that his outing as a repeat customer of male prostitution could lead to major changes in US policy and cultural attention towards global warming.

Here's the historical review of the situation that I'm imagining might be done twenty years from now.

1) Haggard has been president of the NAE.
2) Recently, the NAE has been having internal debates over what the official evangelical response should be to evidence of global warming.
3) Many evangelical leaders, like the Rev. Richard Cizik (vice president for governmental affairs of the NAE), have realized that global warming is for real and that they should get off the sidelines (or the status quo defense) and on the side of "creation care." (Cizik is profiled in the recently released movie The Great Warming.)
4) But these "green" evangelicals couldn't persuade the overall NAE leadership to endorse their petition calling for strong action to halt global warming.
5) With Haggard now resigned because he was hot to trot, the possibility exists that someone like Cizik might end up as the new NAE president; and if that happens, then some of the evangelical energy currently expended on sexual politics hot-air might be shifted to a higher calling--in lay minister Matthew Sleeth's words, serving God through saving the planet.

At this point there's no way to know if this is how our near future will play out, but my fingers are crossed, so to speak.

[Conflict-of-interest alert: I mentioned Matthew Sleeth and link to his book's website. I work at the publishing company that put out the hardcover edition of his book. The plain fact is that without my having worked with him and his book, I wouldn't have been as aware of the NAE and Cizik's role in the greening of Christianity.]

Econ-Atrocity: Will it matter if the Democrats win?

2006-11-03T12:00:00.000-08:00

Will it matter if the Democrats win?
By Gerald Friedman, CPE Staff Economist

As I write this, it appears likely that after 12 years in the wilderness, the Democrats will capture a majority in the House of Representatives and will make substantial gains in the Senate. (My favorite objective source, http://www.electoral-vote.com/, gives the Democrats a 225-208 lead in the House and a gain of 4 Senate seats to move to 49-51 in the upper body.) After 6 years of almost uninterrupted one-party rule, and the worst government this country has endured since the 1850s, we can only rejoice at Democratic gains as, if nothing else, a sign of a return to sanity after the trauma of September 11, 2001. But, beyond this, what can we expect from the Democrats? Can we anticipate a reversal of Bushism, and a renewed push for social progress?

Alas, the short answer is ‘no’. That said, we should all hope for a Democratic win. A Democratic victory would bring welcome changes in Congress. A Democratic majority would install John Conyers of Michigan as chair of the House Judiciary Committee. Sponsor of a Bush impeachment resolution, a dedicated opponent of the use of torture, and a defender of civil rights and civil liberties, Conyers would replace the reprehensible F. James Sensenbrenner. Charles Rangel of New York, a liberal with a nearly perfect labor voting record, would become chair of the House Committee on Ways and Means, replacing William (Cal) Thomas, a dedicated opponent of social security and progressive income taxation whose lifetime AFL-CIO voting record is 12% right, 88% wrong. Holocaust-survivor and Iraq-war critic Tom Lantos would replace right-wing ideologue Henry Hyde at International Relations. Without exception, a Democratic majority would install committee chairs preferable to the Republicans’; and we can confidently anticipate that with the new committee structure, the new Democratic majority would not endorse torture, repeal Habeas Corpus, tie a minimum-wage increase to repeal of the Estate Tax, or privatize social security. And there may even be more to gain from a Democratic victory. After six years of virtual free ride, the Bush-Cheney Administration will finally be subject to meaningful oversight. And Bush’s reign of error provides abundant opportunities for serious investigation!

Still, even if the Democrats capture control of the Senate as well as the House, we should not expect that the new Democratic majority will be able to do much more than to limit the damage that Bush-Cheney can do. The structures of government power will still largely be in Republican hands. First, the Republicans will retain the White House, of course, with all of its newly accrued power, control of the Federal bureaucracy, the right to interpret and reinterpret legislation, and the power to veto congressional legislation. Republican minorities in Congress will fight the Democrats at every turn. And, outside of Congress, the Republicans retain the infrastructure of the Conservative Revolution, including an arsenal of right-wing think tanks, media outlets, and corporate funding. Nor have the Democrats prepared the ground to reverse Bush-Cheney. Instead of campaigning to win a mandate for economic renewal and a reborn democracy, they have fought to attract moderate and conservative voters by emphasizing the Administration’s failures of execution, such as its mismanagement of the Iraq war and the Federal deficit. To show their moderation, Democrats have emphasized their military links, the large number of Iraq-war veterans they have nominated. As a result, any Democratic majority will be installed by the election of relatively conservative Democrats from districts with a history of supporting Bush and other Republicans. As if to seal the deal with conservatives and to slam the door on significant social reform, the Democrats have nominated for the Virginia Senate seat a life-long Republican, Jim Webb, Naval Academy graduate, Marine Corps veteran of the Vietnam War, and Assistant Secretary of Defense under Ronald Reagan. Corporations have understood the message the Democrats have been sending; the New York Times reports (October 28, 2006) that rather than donating more to the Republicans to try to stop a Democratic victory they have been shifting their campaign contributions dramatically towards the Democrats to ensure continued access to congressional leadership.

Without a mandate for single-payer health insurance, for renewed regulation, for new environmental initiatives, or even for a withdrawal from Iraq, it is hard to see how a new Democratic Congressional majority will be able to do much more than to slow the bleeding. This is a worthwhile goal. More, it is just about all that we could ever expect from political action by itself. Every major legislative reform - from slave emancipation in the 1860s through the anti-trust activity of the Progressive Era, the New Deal’s Social Security Act, and the Civil Rights legislation of the 1960s - was the result of popular pressure from below. In each case, politicians voted social reforms to catch up with popular pressure and to appease militants. Congress did not create the Civil Rights movement by passing the Civil Rights Acts of 1964 and 1965; instead, those acts ratified and institutionalized the gains made by the popular movements of the 1950s and 1960s.

Whatever happens on November 7, our task is clear: to build a popular democratic movement that will not only slow Bush-Cheney but will reverse their works and rollback the neoliberal program of the 1980s and 1990s. Our model should be successful movements like the New Deal, the Civil Rights campaign, and the Conservatives of the 1970s and 1980s: each built from the ground up, beginning with an ideological campaign both to critique the prevailing wisdom and to support a new vision. Each of these campaigns was helped by friendly politicians; but they learned that the best way to make political friends is to build people power. We should remember that as we head to the polls to vote Democratic November 7.

Sources:

Irving Bernstein, Turbulent Years: A History of the American Worker, 1933-1941. Boston, Houghton Mifflin, 1970.
Frances Fox Piven and Richard Cloward, Poor People’s Movements: Why they Succeed, how they Fail. New York, Vintage, 1979.

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Congress Fails to Investigate or Punish War Profiteering

2006-10-25T13:41:00.000-07:00

The following post is the text of a radio commentary I (Mike Meeropol) delivered over WAMC radio in early October.

Did you know that the US Congress has rejected efforts to punish, investigate and criminalize war profiteering?

Yes, that’s right. This past February, the House on a mostly party-line vote rejected an effort to forbid expenditures from going to any contractor, “…if the Defense contractor audit agency has determined that more than $100,000.000 of the contractor’s costs involving work in Iraq … were unreasonable.”[1]

Meanwhile, the Senate on an equally party-line vote, rejected an amendment to an appropriation bill “to prohibit profiteering and fraud relating to military action, relief and reconstruction…”[2]

What’s going on here?

The key to understanding this issue is in attempting to define the term “war profiteering.” Can we be precise or must we accept an “I know it when I see it” position as did former Supreme Court Justice Potter Stewart, about pornography?[3]

Whenever a nation goes to war and buys supplies and equipment from private businesses, unless the government forces businesses to sell at a loss, the deal will lead to increased profits. But profiteering and merely profiting are different concepts. Profiteering implies that profits are too high. But how is that possible? How can a price voluntarily arrived at between two parties – one party the US government – be too high?

Well – one way is if the business fails to deliver the product promised. The business gets its money and the government gets little or nothing of what was promised. Anecdotal evidence abounds in any war -- [4]

This is clearly fraud – and should be punished severely.

But what if the product paid for is actually delivered – how do we define war profiteering then? The only economic argument would be that the price charged and the profit earned is much higher than the price and profit that would have been high enough to induce the business to supply the particular product --- In other words, if there were no war, the business would be satisfied to get, say, a 20 % profit – but now they’re getting 40%.[5]

Why does a business gets such a great deal? Because there’s little or no competition – and because the government is very anxious to get production started quickly. Because the stakes in wartime are so high, these extra costs don’t seem to matter at the time – But of course they do.

The House Bill proposed to allow the Pentagon’s own internal audit agency to investigate whether any defense contractor was either padding costs in order to commit fraud or overcharging in other ways. Note that each contractor under that proposed bill would have $99 million in “wiggle room” --- only “unreasonable” charges over $100 million would trigger sanctions.

During the Korean War Congress decided that all businesses were probably going to earn quite high profits and an excess profits tax was imposed. They didn’t even bother to discriminate between unreasonably high profits and just high profits. That made some sense because it is difficult to prove that a specific cost charged is “unreasonable…” Such an allegation would certainly be contested and the time it would take to settle the matter would be time wasted and remember there’s a war on![6]

So there was an excess profits tax during the Korean War. By the way, this very high tax did not interfere with procurement – there is no evidence that Korean War soldiers were short on equipment.

Given the Bush Administration’s unwillingness to support any tax increase, the Korean War solution was never an option during this war. So why weren’t the proposals aimed at punishing and investigating specific acts of war profiteering unanimously approved? -- Why were they defeated in partisan votes?

The answer lies in the difficulty of proving the existence of war profiteering. What Republicans probably feared was that efforts to punish war profiteers would degenerate into a partisan effort to make the President and his big business buddies look bad – with lots of charges and no real resolution of the problem. An effort ostensibly to pursue war profiteers would in the end contribute to reducing the public’s support for Bush’s war.

I would guess that’s why Republicans including NY State Republicans voted against it.[7]

[1] The references is to an amendment to a Defense Appropriations bill. The bill was H.R. 4939. The amendment was H.AMDT.746: The amendment called for inserting the following: \ SEC. __. None of the funds appropriated or otherwise made available by this Act shall be obligated or expended by the Secretary of the Army or his designee to award a contract to any contractor if the Defense Contract Audit Agency has determined that more than $100,000,000 of the contractor's costs for contracts involving work in Iraq under one or more Army contracts were unreasonable.

[2] Even more significantly, a proposal by Senator Byron Dorgan of North Dakota to establish a system for investigating fraud and abuse has never even made it out of committee. (S. 2361)

[3] One can find the quote at the BrainyQuote web site:
The actual full quote is “I shall not today attempt to define this kind of material but I know it when I see it.”
For a full background discussion see Movie Day at the Supreme Court or "I Know It When I See It": A History of the Definition of Obscenity by Judith Silver at http://library.findlaw.com/2003/May/15/132747.html#Scene_1
[4] During World War II, a Senator from Missouri, Harry S. Truman made a name for himself by driving, “…thousands of miles around the country going from one defense plant to another documenting waste and fraud. [Truman] then headed the Senate Special Committee to Investigate the National Defense Program -- the Truman committee, for short. The process saved American taxpayers $15 billion (in 1940s dollars). And by uncovering faulty military equipment, he prevented the deaths of hundreds if not thousands of U.S. soldiers.” The quote is from an OP-ED piece in the St. Louis Post-Dispatch entitled Fighting War Profiteering, Truman Style by Sarah Williams posted on the AlterNet web site on March 6, 2006March 6, 2006http://www.alternet.org/story/33131/ Unfortunately, there is much evidence that a lot of the same is happening in Ira q. The article goes on to mention a few examples. For more details, there is a new documentary by Robert Greenwald called IRAQ FOR SALE. At their web site, iraqforsale.org there are a number of links and a number of references to books that specifically relate to war profiteering in the current war.

[5]Economists call this return “rent.” For economists rent is not what you pay the landlord. Instead it is a payment over and above the payment that would induce you to sell a product or provide a service. Imagine you own a house on a small (1/2 acre) piece of land overlooking the ocean and you want to sell it. You bought it ten years ago for $200,000 and if you had invested the $200,000 in the stock market you would have averaged a rate of return of, say, 10% a year. That would have doubled the value of your $200,000 investment. One might say that any payment above $400,000 (let’s fix on $420,000) for that piece of land would be sufficiently high enough to induce you to sell. However, this year, there are 3 or 4 millionaires anxious to buy that house. You know if because a house right next door to you sold for $1 million. So you get them bidding against each other and you end up getting $1.2 million. The difference between the $420,000 you would have been willing to sell for and the $1.2 million you received is called “rent.” It is a pure return to scarcity and does not reflect what economists call the opportunity cost of the land and house. In the case of military contracting – the company would make a fine profit at a much lower price but the government is in a hurry and does not carefully scrutinize the details of the bid and does not put enough fine print in their to control the behavior of the military contractor and the result is that the government pays much more than it had to pay and the company makes more than the product is actually worth in terms of real costs.

[6] The Korean War began in the summer of 1950. During the fiscal year 1951, individual income tax revenues rose from 15.8 to 21.6 billion dollars while corporation income tax revenues rose from 10.4 to 14.1 billion. Total federal receipts rose from 14.4 percent of GDP in fiscla 1950 to 16.1 percent in fiscal 1951 to 19.0 percent in fiscal 1952. In fiscal 1953 which was the year of prolonged negotiations till the armistice was signed that summer, receipts fell to 18.7 percent of GDP. The tax increases were so significant that in fiscal 1951, even though defense expenditures rose from 5 to 7.4% of GDP the budget went from a small deficit (-1.1% of GDP) to a small surplus (1.9% of GDP). [See Economic Report of the President (any year) Tables B-79 and B-80.]

[7]You can inspect the votes of Representatives at the following site: http://home.ourfuture.org/straighttalklive/war-profiteers_house.html
A quick check shows one NY State Republican, Representative John Sweeney as not voting. The New Hampshire Republicans split with Jeb Bradley voting yes and Charles Bass voting no. New Jersey members of Congress split perfectly along party lines while Rob Simmons was the only Connecticut Republican to vote yes.

Angry response to Kerry Healey's exploitation of racism in her attack ads on Deval Patrick

2006-10-25T13:31:00.000-07:00

Dear Readers -- the following is an email message I sent to all fellow faculty at Western New England College where I teach. I am including it here based on an invitation I received to share it with all readers of this Blog. I am reproducing it here without editing.

Mike Meeropol (econ Prof, Western New England College, Springfield, MA)

I am writing this e-mail because I am thoroughly disgusted with the effort to “Willie Horton” the candidacy of Deval Patrick for Governor of Massachusetts. I hope some of you inclined not to read this will force yourself to do so … Even people who were not inclined to support Mr. Patrick for Governor should respond to the vicious advertising campaign.

First some background. In 1988, when Michael Dukakis was running for President, his opponents made a big deal out of the fact that a prisoner on furlough while serving a sentence in Massachusetts raped someone. The fact that this prisoner was on furlough from a Massachusetts prison was evidence that Michael Dukakis was “soft on crime.” Oh, I forgot to mention that Horton was black and the public knew it.

That campaign worked – Dukakis never recovered from being carefully, successfully painted as a “liberal” who would let the criminals out of jail.

Fast forward to 2006. Deval Patrick had a commanding lead over Kerry Healey after his impressive primary victory. Let’s go to the tried and true method of demonizing someone as a dangerous “liberal” who will let the criminals out of jail. This time, the criminals don’t have to be black because the candidate himself is black.

The Healey campaign has created two vicious advertisements which if carried to their logical conclusion want people to believe that Deval Patrick is a friend of cop-killers and rapists. Let’s start with the cop killer. The following is shamelessly cribbed from a Newsweek article:

Carl Ray Songer: Songer was convicted of murdering a Florida state trooper in 1973. Patrick handled the 1985 appeal as a lawyer with the NAACP’s Legal Defense and Educational Fund Inc. (He argued that, in the penalty phase of the trial, the jury didn’t hear crucial arguments before it issued a death sentence.) The appeal was successful; Songer is serving a life term. This seems to be a clear-cut case of Patrick doing his job—and doing it well. Still, an ad for Healey confuses. Its tag line is: “While lawyers have a right to defend admitted cop killers, do we really want one as governor?” Grammarians will note the ambiguity of “one,” which makes it unclear whether the lawyer or the cop-killer is running for governor.

End of quote.

I hope you won’t mind my didactic pedantic addition to this discussion. The point is not that LAWYERS have a right to defend cop-killers. All accused AND convicted individuals have a RIGHT to an attorney – and thus lawyers have a DUTY to defend people – even convicted cop-killers. Does any sane person in the commonwealth or anywhere else think that because Deval Patrick (when he was working as an attorney for an organization) helped get a convicted murderer’s sentence reduced from the Death Penalty to life imprisonment he is a FRIEND of murderers?

Let’s move on to the newest Healey ad where Deval Patrick is seen on television complimenting a man who (at the time) he believed to be innocent of the rape charge for which he was convicted. The ad ends with a statement, “Has a woman ever complimented her rapist?” Again, we turn to Newsweek:

Benjamin LaGuer: LaGuer was a young, black man of Hispanic origin convicted in 1984 of raping a 59-year-old woman for more than eight hours. In calls and letters to prominent civic leaders and journalists, he said he was a victim of mistaken identity. Nobel Peace Prize winner Elie Wiesel rallied to the cause, as did John Silber, then president of Boston University. Patrick wound up writing letters on LaGuer’s behalf to the Massachusetts Parole Board. And he wrote a check to help secure a DNA test for LaGuer (which confirmed his guilt). But when reporters asked about it, Patrick’s memory became hazy and he recalled writing only a single letter. A TV ad asks: “What kind of person defends a brutal rapist?” Patrick told reporters the attack was a “cheap shot”—but apologized at a campaign appearance “to anyone who feels we didn’t come forward with all the facts” about his efforts on LaGeur’s behalf.

End of Newsweek quote…

I actually find this a bit refreshing. Patrick didn’t try to stonewall on the fact that when first questioned about his work on behalf of this prisoner he stated he only wrote one letter when in fact he had written more. The most important point is, what was the substance of Patrick’s involvement in the case? He thought the man might have been a victim of mistaken identity. There are a number of tragic examples of rape victims absolutely certain that they have made accurate identifications and the charged individual is convicted. In the end, often years later, DNA tests have exonerated the convicted individual to the everlasting chagrin of the victim who knows two things – her mistake cost an innocent person years of his life and the real rapist went free perhaps to rape again. These things have happened and with the advent of DNA testing, we hope they will not happen again. [Please note – I am not talking about false accusations – I’m talking about good faith identifications by true victims.] So Patrick joined with others in advocating a DNA test for this convicted individual – and the test proved him guilty. Patrick ceased his involvement in this case immediately.

Let’s ask ourselves something. Didn’t Patrick provide a public service. Yes he initially thought this guy might be innocent. But he made money available to prove it one way or the other. Now we know for sure the guy is guilty and the possibility of nagging doubt hanging over the case – perhaps disturbing the victim and her family – can be finally put to rest. Kerry Healey’s ad is garbled. Does she want us to believe that Patrick thinks rapists are nice people in general? Does any sane person believe that Patrick will open the prisons and pardon every convicted rapist?

Third and final installment of the “Willie Horton, Mark II” campaign. Again, Newsweek

Bernard Sigh: The Boston Herald reported last Friday [Friday the 13^th] that in 1993 Patrick’s brother-in-law, Sigh, was convicted of raping his wife, Patrick’s sister, and was now an unregistered sex offender living in Massachusetts. The story is true: Sigh served a short prison sentence, reconciled with his wife and moved to Massachusetts. Patrick told reporters the couple are now deacons in their church and counsel other couples. Most distressingly for the family, Patrick said, their two young children were unaware of their parents’ history. The Healey campaign denies having any hand in the story.

End of Newsweek quote.

You know what? I believe that neither Kerry Healey nor any official in her campaign planted the story. But someone who wants Kerry Healey to win planted that story. And it’s disgusting politics.

I am sorry to have bored you with this nonsense. As a pedantic economist I would be much happier arguing about the merits of income taxation vs. property taxation, charter schools vs. public schools, etc. etc. However, I think it is essential that the residents of Massachusetts send a very clear message that such campaign tactics will not work. I not only am going to vote for Deval Patrick (I did in the primary) but I’m going to work at persuading others to do it (which I wasn’t planning to do) because I am so angry and disgusted at the effort to pander to the ignorance and racism that infects and frightens too many of our fellow citizens.

I particularly want to urge independents and Republicans who might be reading this (and I urge Democrats who share these arguments with acquaintances and family members who are independents or Republicans) to call the Healey campaign and tell them you are turned off by their disgusting campaign. That would be a great public service.

[Even if in the end you want to vote for Healey because you support her policies it would a good thing to call and complain about the campaign – though I personally think the best way to punish her campaign is to vote against her – vote for one of the other candidates if you still don’t want Patrick…]

Thanks for reading – again my apologies for the length of this post

Mike

How to vote early and often -- legally!

2006-10-23T08:58:00.000-07:00

My Recommendations for Election 2006
By John J. Fitzgerald

One of the most patriotic things that anyone, who loves this country, can do in the next few weeks has to be focused on voting. (I know that voting is not the only road for activists, but it does have some value.)

I would like to make a few recommendations to enlarge the effect of voting in 2006.

I make them because I believe that 2006 is a crucial election that will determine whether this country slides further down the slope toward fascism and authoritarian rule under Bush and his clique, or whether we give him a vote of no confidence that sends him trembling to the basement of the White House for the next 2 years.

We need to send a message to our fellow citizens, to the world and to Bush.

The message is simple.

“We are a democratic country and we are disgusted with the lies and the violence of this Republican administration. We are opposed to this immoral and dishonest war in Iraq. We are voting for a Democratic Senate and a Democratic House in order to preserve our democracy.”

In order to get the message across, I have a few recommendations.

First,
Arrange to take Election Day off from work. Call in sick or else take a personal day. You are going to volunteer to help elect Democrats on Election Day. Spend part of the day offering and giving rides to the polls to elderly family members or neighbors. Make sure they know what the issues are before offering them a ride.

Second,
Vote by absentee ballot as soon as possible. Absentee ballots are paper and they can’t be “lost.” You can vote in person at your town hall or city hall. This will free you for campaign work on Election Day. We need a massive turnout to defeat the Republicans. They will be using negative campaigns to attack the Democratic candidate and, more importantly, to lower voter participation. They want to sicken people about politics, so they can govern by a minority. This is their very real strategy. Smear tactics and character assassination offend people and sensitive people do not vote as a result. This is a Karl Rove tactic. Anyone who tells you not to vote is probably an agent of Karl Rove.

Third,
Make a modest financial contribution to your local candidates. Volunteer to help hold signs, make phone calls or whatever. Contact Council for a Livable World or the American Friends Service Committee (FCNL) for advice on specific candidates. If you are a labor union member make sure that you know whom your union has endorsed.

Fourth,
Contact all your friends on the Internet and urge them to vote. Do some research and find the candidates who support your values. Most of the candidates will be Democrats, if you are opposed to Bush and his war in Iraq. If you live in Connecticut, do not vote for Lieberman. Vote for Lamont. In Vermont, vote for Bernie Sanders for Senate. The name of the game is take control of Congress away from Bush and the Republicans.

Fifth,
On the weekend before the election, make up some flyers and/or leaflets and distribute at least 25 of them to the people on your street. (You can download a lot of them from the Internet.) Better yet! Make up your own! Knock on the door of your neighbor and introduce yourself, hand them the leaflet and urge them to vote. Try to get into a conversation with them. We need to break down the barriers that cut us off from each other. This simple face-to-face work will win votes and help you to meet your neighbors.

If you do all of these things, then we will win on the 7th of November. If you don’t do any of this good stuff, we might win anyway, but it will be a bit harder to do so.

The Unbearable Lightness of YouTubing

2006-10-14T20:32:00.000-07:00

Google buys YouTube. This was an opportunity for Adam Hanft over at Marketplace to think about the question: just why are these open-posting video sites so popular? For viewers they're popular because (if) there are enough interesting videos to watch to make it worth a waste of some time. But what's in it for the people uploading the videos? Adam's answer is interesting.

In a curious inversion of Marxism, the millions of people who upload videos to YouTube haven't thrown off their chains, they've embraced them.
People are positively jubilant about spending time and effort to create videos or discover them, and then post them for free.
But why? There's no economic benefit to them. And that defies classic economic theory that says we are all rational beings and act only in our own self-interest.
YouTubers do what they do because it's a form of uncensored self-expression. They circulate elements of themselves, put those personal fragments out into the world, and that exhibitionism becomes a signifier of their very being.
In short, YouTube-ing serves a powerful need.
Putting up a video of their cat swimming is clearly not in the economic self-interest of the person who does it. But it's clearly in their emotional self-interest.

I think he's pretty much right, so far. Like he says, there's no rational economic (what he really means is "monetary") benefit to posting a video of yourself picking your nose, but people must get some kind of kick out of it or they'd be unlikely to bother doing it. But then he goes on to wax philosophic about the sociology of the situation, and here I think he reaches too far.

Those who argued that the Internet is an isolating phenomenon completely misread the latent powers of connection it represents.
You see, those who upload videos are offering a part of themselves to the world. And they're "selling" their self-identity by doing so.... So the genius of YouTube was that it recognized the hunger to be visible, the stem-cell of all this user-generated content.

He seems to think that all those lonely people are solving their anomie, their post-modern, post-industrial, post-nuclear family, end-of-history existential loneliness by connecting with strangers near and far through the videonet. If people see you picking your nose, and you see videos of them eating a Twix, then somehow you are a little more connected to the world, a little less lonely.

Yeah... I don't think so. The thrill of it all, the newness of it all probably works for some people, but there's no way that being an exhibitionist is going to solve problems of loneliness for very many folks. (It's worth noting that probably most of those posting videos to YouTube are not doing it out of some sort of unconscious loneliness thing.)

First of all, this idea suggests something pretty sad about our culture, if Hanft if right. It means that the only way people can feel like they matter, like they exist, is if they are known by millions of strangers. Having family and friends and neighbors isn't enough; it's either be a movie star or disappear. That's pretty stark. I sure hope he's wrong about that. But even if he's right, there's no way that posting your little videos to YouTube will give you the existence you might be craving. It might seem so for a while, as long as the newness factor hasn't worn off. But pretty soon it'll be old hat. Your uncle will have posted videos, your mom, your math teacher--everyone who is and isn't cool. And on top of that, you'll start realizing that, well, even after they've seen your movie, none of those strangers staring at their screens knows anything meaningful about you. They're not your friends and they won't be there to say, "you matter," when you are feeling down in the dumps. If people have a problem with social connections, if they're having an existential crisis, YouTube and it's clones ain't gonna do them no good. Frankly, when it comes to existential crises, I think I'm with the luddites. Them and Victor Frankl.

Econ-Atrocity: Why the Euro is wrong for Europe, and America

2006-10-06T12:00:00.000-07:00

Why the Euro is wrong for Europe, and America
By Gerald Friedman, CPE Staff Economist
October 6, 2006

I still have some old French Francs floating around my desk drawers, but their only value these days is as souvenirs, an English word of French origin meaning a “token of remembrance,” a “momento,” “of sentimental value.” Instead of national currencies like the Franc, since January 2002 a new currency has circulated in 12 European countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain). (Three EU members, Denmark, Sweden, and the United Kingdom, remain outside the Eurozone; the 10 new members admitted in May 2004 are all scheduled to adopt the Euro in the next few years.)

Since the end of February 2002, the old national currencies have been demonetized. But I am not alone in holding onto old Francs. Many of my friends and neighbors in Paris this summer admitted holding onto Francs, and people still give prices in Francs. I suspect that much of the affection for the old currency reflects deep disappointment with the Euro; and I fear that this is spreading into disenchantment with the entire European project. There are many small problems with the Euro: unattractive bills, a general shortage of small denomination coins (‘monnaie’), and a widespread perception that when prices were converted from national currencies to the Euro the conversion rate was rounded up to give a boost to profit margins. But the real problem is that the Euro was sold to Europeans under false pretenses. It was presented to the European public as a painless way to raise productivity, reduce unemployment and promote growth. But it has done none of these; on the contrary monetary integration has come with slow growth and persistently high unemployment. Today, it appears that the Euro’s promises were never serious; instead, from the beginning, the Euro was a weapon in an ongoing attack on the European welfare state.

Proponents promised that replacing national currencies with the Euro would raise productivity by reducing the costs of changing money and allowing businesses to market their goods more efficiently in foreign countries. No one should be surprised that these specious promises have not been realized. Money changing remains a large business in European tourist destinations, with stands changing dollars, yen, and other currencies into Euros instead of into Francs. The money-changing business is declining, but this is due more to the ATM and the use of credit cards than to the Euro. As for the trouble businesses have with multiple currencies, the invention of the pocket calculator and computer spreadsheet, not to mention the nearly universal use of the United States dollar, has virtually eliminated the cost of calculating foreign exchange rates as a business consideration.

While the Euro has done little, or nothing, to raise productivity, it has had great economic significance. By preventing countries from balancing their international accounts through changing currency values, the Euro forces all of Europe to adopt a uniform economic policy regardless of different national needs. Worse, the rules and treaties behind the Euro give this uniform policy a strong deflationary bias, tying the hands of European governments and preventing labor and socialist administrations from taking effective action against rising unemployment and stagnant real wages. With different currencies, countries could maintain different growth rates while devaluing their currency to balance any differences in national inflation rates. But countries with a common currency are driven to a uniform growth rate because faster growth and a higher rate of inflation will lead to an exodus of business and jobs to a country’s slower growing trading partners. Logically, uniformity could come with all countries growing faster and driving down their unemployment rates even at the risk of somewhat more inflation. But the rules of the common currency were written to prevent this. The 1992 Maastricht Treaty that established the European Monetary Union leading to the Euro, established stringent conditions for countries entering the monetary union including limits on the use of fiscal stimulus to reduce unemployment and an explicit requirement that monetary convergence be on the basis of lowering inflation to a common, low level. Furthermore, authority over monetary policy was given to an appointed and undemocratic Frankfurt-based European Central Bank charged with holding down inflation but with no official responsibility for reducing unemployment or maintaining high growth rates. And, through practice and design, the dominant role in Europe’s new uniform monetary policy went to the Continent’s strongest economy, Germany, a country that entered the Euro with an undervalued currency. Now, Germany has a $200 billion trade surplus and its strong export industries are pulling up the value of the Euro which has risen by 60% against the dollar since 1998. Germany’s bankers and wealthy cash holders applaud the rising value of the Euro; but by lowering the cost of imports and driving up the price paid for Europe’s exports, the rising Euro value has been a dead weight around the neck of European industries, contributing to high unemployment throughout the Eurozone.

In the Euro we see the designs of a new economic order intended to undo a century’s social progress. Democratic politics has brought into place welfare states that redistribute income from rich to poor, from lucky to less fortunate. By cushioning citizens and workers from economic misfortune, by limiting the burden of unemployment, welfare policies have promoted democracy by limiting the power of wealth and control over access to the means of production. From the beginning, by promoting free trade ahead of political union, the European Common Market was founded on a contrary principle to free market exchanges from the ‘burden’ of state regulation. Now, the Euro brings recession, unemployment and slow growth to a continent without effective democratic political institutions able to regulate continent-wide markets and monetary institutions. As a result, instead of national or super-national Keynesian growth policies, Euro-zone politicians can only try to alleviate unemployment by driving down wages and reducing taxes in a beggar-thy-neighbor attempt to attract the favor of bond markets and footloose capital.

The petty problems of the Euro will be fixed. More coins will be minted and I suspect that artists, scientists, and humanitarians will find their way onto the bills. Maybe they will even replace the silly bridges pictured on the bills with examples of Europe’s great architecture. But the real problems will be harder to fix because they require changing the very direction of European integration and the Community’s vision of freedom. So far, integration has been an economic affair; in practice, it has been concerned with freeing capital from local and state regulation rather than freeing citizens by giving them the opportunity to regulate capital through democratic action. On its current path, the Community has become a battering ram, breaking down democratic regulation, and the dream of European integration has been hijacked to become a weapon in the class struggle against labor and the welfare state. Meaningful change will require restoring democracy to Europe.

Sources:
* Bernard Moss, Monetary Union in Crisis: The European Union as a Neo-Liberal Construction (London, 2005).
* Joerq Bibow, “How the Maastricht Regime Fosters Divergence as Well as Fragility,” Levy Economics Institute of Bard College, Working Paper 460 (July 2006).

© 2006 Center for Popular Economics

Econ-Utopia: Particpatory, Community-Managed Water Systems

2006-09-08T12:00:00.001-07:00

Particpatory, Community-Managed Water Systems
By Amit Basole, CPE Staff Economist

The Devil and the Deep-Blue Sea

“After the Water War...What?" This piece of graffiti from Cochabamba, Bolivia, the scene of a famous struggle against water privatization, poses the question that many ongoing struggles for water will ask themselves in the years to come. On the one hand, many communities, all over the world, are fighting desperately against privatization of water services and resources; privatization that has put this already scarce and very vital resource even more out of their reach. On the other hand, there are also many instances of failure on the part of state, local or municipal governments in many countries to provide cheap and clean water, in particular to the marginalized or poorer sections of society. Even though the municipal utilities are publicly-owned in theory, often the non-participatory and non-transparent nature of their functioning defeats their purpose. In fact, it is by pointing to such public-sector failures, that the World Bank first pushed for privatization. It has also been argued that corruption and powerful interest groups can ensure that the water subsidies are wasted where they are not needed. However, the Bank's argument that privatization would remove public-sector inefficiencies has also been shown to be riddled with problems, as the Bank itself has also acknowledged. Privatization, at least the way it has been implemented thus far, has proved largely incapable of delivering water where it is truly scarce. Further, excessive ground-water usage by bottled-water companies has resulted in artificial drought-like conditions and ecological degradation. No wonder then that over 80% of the populations in the US and the EU are still served by public operators. The bitter medicine of privatization, it seems, is meant only for "developing" countries.

What alternatives exist to failing state-run bureaucracies and large multinationals? Here we take a look at some successful experiments in community-based, participatory management of water services occurring more or less in the framework of existing municipal or local self-governments.

Public water in Bolivia and Brazil

Port Alegre in Brazil has the highest human development index of any state capital, and is considered to have the highest quality of life. It has also run a successful public water and sanitation utility throughout Brazil's macroeconomic turmoil of the 1980s and 1990s, which saw soaring inflation and currency fluctuations. Porto Alegre's water utility company, the DMAE, is financially and administratively independent of city hall. It follows a participatory budget cycle wherein every consumer can voice an opinion on next year's spending. Further, DMAE's water tariff structure is based on cross-subsidies. This means that people who use water only for basic needs (consuming up to 20 cubic meters per month) are strongly subsidized by those who use between 20 and 1000 cubic meters per month. Beyond this, tariffs become very expensive and large consumers like industries pay much larger amounts. In addition to implementing participatory water management, DMAE has also been at the forefront of the struggle against water privatization in Brazil, successfully resisting pressure from the Inter-American Development Bank (IDB) to privatize, while still retaining its loans.

Similarly, the city of Santa Cruz de la Sierra in Bolivia has had a cooperative for drinking water and sanitation services since 1979. Everyone with a water connection is a member of the co-op and has voting rights. Since its goal is the well-being of its members and not profit, the co-op has a socially conscious tariff structure with different prices for home consumption and commercial or industrial use. Tariffs are also "progressive" such that those who consume more pay more per cubic meter than those who consume less. This Bolivian co-op has achieved 96% access to drinking water in its area, in stark contrast to the "achievements" of Bechtel Corporation in Cochabamba where Bolivians earning $100 a month were asked to pay $30 a month for water.

People's initiative in water management: Kerala, India

Piped water is provided by the state of Kerala, India to over 60% of the population, but coverage is uneven and in the early 1990s the village of Olavanna saw drinking water shortages for almost 70% of its households. Although many elections were fought on the issue of drinking water, no effective solutions were found. However, Kerala is known for its participatory local government system (panchayats) and finally, responding to popular pressure, the Kerala state government implemented a People's Plan Campaign which involved the devolution of 35-40% of state funding to the local governments. Under this scheme, each water-provisioning project is under the supervision of a beneficiary committee drawn from the people of the village. This committee even repairs and maintains the delivery systems and has so far not needed any technical or expert help for its work. Of the 60 new drinking water schemes in Olavanna, 26 are entirely people's initiatives. Management costs in Olavanna have proved to be far less than state-run mega projects. People taking ownership of the projects has led to a greater willingness to monitor and maintain the systems. The resulting empowerment has also made the people better equipped to fight private water exploiters. The Olavanna example has also been used by Left parties in India to show that people’s initiatives can work, to the extent that even World Bank projects have been modeled along similar lines.

Challenges to participatory, community-managed water

Despite an increasing number of such examples, formidable challenges remain in the battle for community-managed, public water. Fighting the persistent threat of large, private corporations is one of these challenges. Co-option of successful models by international funding agencies such as the World Bank, which tend to take control and initiative away from those affected, is another. Even where states are not under pressure to withdraw from the provisioning of social services, state bureaucracies can themselves be suspicious of peoples' initiatives and be reluctant to devolve funds to local governments. Nevertheless many such experiments are going on. As more and more people-centered and participatory water management projects deliver cheap, clean water where other models have failed, their presence can be used as ammunition for further struggles.

Sources and resources:

Reclaiming Public Water: Achievements, struggles and visions from around the world, Corporate Europe Observatory, January 2005. Full-text available online at http://www.tni.org/books/publicwater.htm.

Bolivia's War over Water, The Democracy Center, http://www.democracyctr.org/waterwar/#11

Econ-Atrocity: "No Matter What the Cost" Iraqi Oil Workers Fight Privatisation

2006-08-23T12:00:00.001-07:00

"No Matter What the Cost" Iraqi Oil Workers Fight Privatisation
By Andy Barenberg, CPE Staff Economist

In Iraq a new battle is about is about to begin. On one side is the Iraqi Government, backed not only by occupation forces but also by Prime Minister Nouri al-Maliki’s secretive and deadly Badr Corps militia. On the other side stand 23,000 workers in Iraq’s General Union of Oil Employees (GEOU). The stakes: one of the greatest prizes of natural resources on the planet.

The June appointment of the respected Dr. Hussein Shahristani to the position of Oil Minister gave the union hope; but all signs now indicate he was brought in to give political cover to the signing of a new energy law that would effectively end Iraq’s public control and ownership over the oil fields. On July first GEOU held an emergency strategy meeting with the Iraqi Freedom Congress. The union swore to stop the new law “no matter what the cost.”

The Government of Iraq can’t take such things lightly. The union has proven before it can stop the flow of oil, but has never done so for more than a day or two—the indefinite strike now threatened promises to be the occupation’s gravest political crisis since Grand Ayatollah Ali al-Sistani’s massive rallies demanding elections. The Iraqi Government has moved to neutralize the union’s power by seizing its bank accounts. (The union is illegal after all; Saddam Hussein’s Public Law 150, which banned public sector unions, was the one law Paul Bremmer, the former U.S. Administrator of Iraq, didn’t believe he had authority to override.) And so now the battle begins.

Although the actual content of the law has been withheld from the public, it is almost sure to authorize the use of production sharing agreements (PSAs) as proposed by the US State Department’s pre-war “Future of Iraq Project.” Under a PSA, an oil field is technically not privatized. Instead a corporation receives exclusive rights to the oil field and it gets complete control over the revenue up to the cost of its investment. After costs are covered, the revenue is split between the company and the government in some predetermined rate, most likely to be 50/50 in Iraq.

Such agreements are popular in areas where oil is difficult to get to—such as offshore or deep in a jungle—and where the amount of oil is uncertain. Under a PSA in such conditions, the government avoids paying the risky cost of trying to develop the oil field. Compared to service contracts traditionally used in Iraq and the Middle East where the corporation receives a set fee for work done, a PSA promises windfall profits for the corporation should they happen to strike oil.

Of course in Iraq, where oil can practically be found by stubbing your toe on the ground, a PSA represents one of the greatest give-aways in history. More importantly, should a future Iraqi Governments try to change the agreement the company can sue for expropriation. According to the US State Department’s pre-war planning, “the most important feature from the perspective of private oil companies is that the government take is defined in the terms of the [PSA] and the oil companies are therefore protected under a PSA from future adverse legislation.” Not surprisingly, the US and British are pushing hard for these agreements to be signed while they have near total control over the Iraqi government.

Greg Muttitt of the oil watchdog group PLATFORM, using conservative assumptions, estimates that a PSA program in Iraq means oil companies can expect “annual rates of return ranging from 42% to 62% for a small field, or 98% to 162% for a large field” and that this will “cost Iraq between $74 billion and $194 billion in lost revenue, compared to keeping oil development in public hands.” Just how conservative is this estimate? Well, he was using the assumption that the cost of oil would stay at $40 a barrel over the next 40 years; just changing the assumption to the current price of roughly $75 a barrel almost doubles the estimates.

The wealth of Iraqi oil can play a role in creating a future Iraq where the needs of the people are met, but only if the General Union of Oil Employees succeeds in keeping control of oil in Iraqi hands.

Sources and resources:

Antonia Juhasz, The Bush Agenda: Invading the World One Economy at a Time. New York: Harper Collins, 2006.
Greg Muttitt, Crude Designs: The rip-off of Iraq's oil wealth. London: PLATFORM, 2005. www.crudedesigns.org.
To find out more about the GEOU and actions of solidarity see www.basraoilunion.org.

(c) 2006 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics.They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Econ-Atrocity: Health Care on a Wing and a Prayer

2006-08-09T12:00:00.001-07:00

Health Care on a Wing and a Prayer
By Jonathan Teller-Elsberg, CPE Staff Economist

Millions of employed Americans who are offered health insurance through their jobs are turning down the benefit because of high costs. This has been a tragic fact for many years, but the situation is only getting worse.

According to a recent report from the Robert Wood Johnson Foundation, the number of workers who declined to accept health insurance when it was offered by their employer increased by three million between 1998 and 2003. All told, some 12 million workers eligible for work-based health insurance turned it down in 2003.

Over the years of the study, the average annual cost to the worker to accept employer-supplied insurance went up by over $1,000, a 42% jump. It hardly needs mentioning that average wages have not kept pace.

Rising costs are not necessarily the reason that all of those 12 million workers declined the offered coverage—some workers turn down the health insurance from their own job because they are better off being covered as part of a family member’s work-based insurance.

Still, cost is the reason that most uninsured people lack coverage. Insurance costs have been rising for workers and employers alike. In both 1998 and 2003, employers who offered health insurance to their workers covered an average of 82% of the premiums. This means that employers also faced a 42% increase in their costs of providing health benefits. A predictable result is that more and more employers decide not to offer health insurance even as an option.

Altogether, 34% of full-time workers in private industry were not covered by employer-provided health insurance in 2004. Even those lucky enough to have insurance as an option, and lucky enough to be able to afford their share of the premium, have faced rising healthcare costs that take a toll. Rising deductibles, capped coverage, and other aspects of miserly insurance plans leave working people facing terrible financial risks. In 2001, half of Americans filing for personal bankruptcy cited medical expenses as helping to push them over the line. Of those, three quarters had health insurance when their illness or injury struck.

Clearly, the health care system in America is out of whack. When millions of workers can’t afford coverage, and many who have coverage are still driven to bankruptcy because their insurance is so stingy, we need real alternatives.

The simplest solution is a national health plan that provides universal coverage. From Canada to New Zealand, all the other economically advanced countries of the world offer examples of health care systems that care for peoples’ health instead of insurance and pharmaceutical corporation profits.

Until citizen pressure drags such a solution out of a resistant government, people can band together to create insurance alternatives. A leader in this type of grassroots movement is the Ithaca Health Alliance health care co-op, which provides a wide range of services for only $100 per year.

Sources and resources:

Washington Post, “FINDINGS: More Are Opting Out of Employers' Insurance,” 5/5/06, p. A9, http://www.washingtonpost.com/wp-dyn/content/article/2006/05/04/AR2006050401708.html.
Robert Wood Johnson Foundation, “Report Shows Decline in Employees Accepting Health Insurance, Rising Insurance Premiums Across Nation,” 5/4/06, http://www.rwjf.org/newsroom/newsreleasesdetail.jsp?id=10408.
Jonathan Teller-Elsberg, Nancy Folbre, and James Heintz, Field Guide to the U.S. Economy (Revised and Expanded), pp. 27 and 122, New York: The New Press, 2006. http://www.fguide.org/.
Ithaca Health Alliance, http://www.ithacahealth.org.
Physicians for a National Health Plan, http://www.pnhp.org.

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Econ-Utopia: Celebrating TINA's Demise

2006-07-20T12:00:00.000-07:00

Celebrating TINA's Demise
By Emily Kawano, CPE Staff Economist

TINA is dead – let us rejoice. In the early 1980s British Prime Minister Margaret Thatcher famously declared, “There Is No Alternative” meaning that there is no alternative to capitalism. In the following years it certainly seemed that the capitalist juggernaut was on a roll. By the 1990s, Communism in the Soviet bloc had fallen and neo-liberalism, a particularly pro-corporate and anti-government brand of capitalism, had been enthroned throughout most of the world, enforced by the International Monetary Fund (IMF), the World Bank and the World Trade Organization. TINA ruled, unchallenged by clear evidence that a viable alternative existed.

And yet, the steady encroachment of neo-liberalism, accompanied by growing inequality and immiseration for many throughout the world, may have seeded TINA’s demise. The critique of neo-liberalism has been well honed by the ever-growing global justice movement that has focused a spotlight on the failure of the neo-liberal model in terms of growth, equity and sustainability. In Brazil, Venezuela, Chile, Argentina, Uruguay and Bolivia left-leaning governments have been swept to power under the banner of anti-neo-liberalism. The World Social Forum, the largest and most significant gathering of social movements in the world, is united by an opposition to neo-liberalism and a belief that ‘Another World is Possible.’

At the same time, many people and communities, moved by desperation, practicality, values, or vision, have become involved in concrete economic alternatives. A sample includes:

Cooperatives, which are businesses that are owned and run by the workers, consumers or members, are seeing new life. According to the International Cooperative Alliance, co-operatives provide over 100 million jobs around the world-- 20% more than multinational enterprises.
Co-housing promotes a sense of community involvement and responsibility. Housing is private, but there are communal spaces and buildings, including for example, a common dining area, kitchen, childcare space, meeting rooms, and recreation space. Real estate speculation on the housing is prohibited and land is held in common.
Local currency, in which people and businesses use locally printed money, aims to stimulate and support the local economy by keeping money circulating in the local economy rather than ‘leaking’ outside.
Community supported agriculture supports local farmers by creating dependable demand for their produce. People pay for a seasonal or yearly subscription, which entitles them to a share of whatever is produced. In the U.S., 25,000 people participate in more than 500 CSA projects across the country, while in Japan, where it has been around since the 1960s, 5,000,000 families participate in CSA.
Participatory budgeting serves to democratize the process of governmental budgeting by giving local residents an official say in where public money should go. The most prominent example of Participatory Budgeting has been in Porto Alegre, Brazil where communities have been involved in city budgeting since 1989. The model has spread to cities in Canada, India, Ireland, Uganda and South Africa.
The squatters movement works to take over abandoned or unused land or structures and then secure permanent rights to the property; improve the quality of housing, sanitation, and access to clean water; and empower the poor to come up with their own solutions. Given that nearly half the population of cities in Asia, Africa and Latin America are squatters living in illegal settlements, the challenge and need for this work is very great.

Do these examples offer a serious challenge to neo-liberal capitalism? The potential is there, but particularly in the U.S., this potential will remain unrealized unless there is greater coherency among the various strands and a connection with the larger social movements. Otherwise these practices run the risk of remaining worthy but isolated endeavors, struggling for their individual survival, and cloaked in invisibility.

Shedding the cloak of invisibility is an important step in the development of greater coherency as well as legitimizing the importance of economic alternatives. For example, the European Union (EU) has officially recognized the social economy which includes significant segments of the alternative economy such as:

Cooperatives: housing, credit unions, coop banks, producer & consumer coops.
Social enterprises: businesses that put social aims at the core of their operation. There are many forms of social enterprises, including: enterprises that seek to create employment for marginalized populations such as people with disabilities, or community businesses that contribute a percentage of profits to a community fund and include community members on the board.
Mutuals: non-profits that exist for the benefit of their members, providing services such as insurance, mortgage and savings plans.

The EU has recognized the value and importance of the social economy both as a significant sector of the economy as well as its role in fulfilling social needs. EU governments are required to earmark a percentage of their budgets to promote the social economy.

Ultimately, it will take this kind of policy, financial and institutional support to develop the many inspiring economic alternatives into a viable economic system grounded in economic justice and sustainability. TINA is dead. The task now is to realize the transformative potential of the many alternatives that are already a reality.

Sources and resources:

International Cooperative Alliance, Statistics
Co-housing
“The Potential of Local Currency,” Susan Meeker-Lowry, Z Magazine, July/Aug 1995
Community Supported Agriculture
Participatory budgeting resources
Squatters movement
EU Social Economy

© 2006 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Econ-Atrocity: Ten Reasons Why You Should Never Accept a Diamond Ring from Anyone, Under Any Circumstances, Even If They Really Want to Give You One

2002-02-14T12:00:00.000-08:00

Ten Reasons Why You Should Never Accept a Diamond Ring from Anyone, Under Any Circumstances, Even If They Really Want to Give You One
By Liz Stanton, CPE Staff Economist

You've Been Psychologically Conditioned To Want a Diamond. The diamond engagement ring is a 63-year-old invention of N.W.Ayer advertising agency. The De Beers diamond cartel contracted N.W.Ayer to create a demand for what are, essentially, useless hunks of rock.

Diamonds are Priced Well Above Their Value. The De Beers cartel has systematically held diamond prices at levels far greater than their abundance would generate under anything even remotely resembling perfect competition. All diamonds not already under its control are bought by the cartel, and then the De Beers cartel carefully managed world diamond supply in order to keep prices steadily high.

Diamonds Have No Resale or Investment Value. Any diamond that you buy or receive will indeed be yours forever: De Beers’ advertising deliberately brain-washed women not to sell; the steady price is a tool to prevent speculation in diamonds; and no dealer will buy a diamond from you. You can only sell it at a diamond purchasing center or a pawn shop where you will receive a tiny fraction of its original "value."

Diamond Miners are Disproportionately Exposed to HIV/AIDS. Many diamond mining camps enforce all-male, no-family rules. Men contract HIV/AIDS from camp sex-workers, while women married to miners have no access to employment, no income outside of their husbands and no bargaining power for negotiating safe sex, and thus are at extremely high risk of contracting HIV.

Open-Pit Diamond Mines Pose Environmental Threats. Diamond mines are open pits where salts, heavy minerals, organisms, oil, and chemicals from mining equipment freely leach into ground-water, endangering people in nearby mining camps and villages, as well as downstream plants and animals.

Diamond Mine-Owners Violate Indigenous People's Rights. Diamond mines in Australia, Canada, India and many countries in Africa are situated on lands traditionally associated with indigenous peoples. Many of these communities have been displaced, while others remain, often at great cost to their health, livelihoods and traditional cultures.

Slave Laborers Cut and Polish Diamonds. More than one-half of the world's diamonds are processed in India where many of the cutters and polishers are bonded child laborers. Bonded children work to pay off the debts of their relatives, often unsuccessfully. When they reach adulthood their debt is passed on to their younger siblings or to their own children.

Conflict Diamonds Fund Civil Wars in Africa. There is no reliable way to insure that your diamond was not mined or stolen by government or rebel military forces in order to finance civil conflict. Conflict diamonds are traded either for guns or for cash to pay and feed soldiers.

Diamond Wars are Fought Using Child Warriors. Many diamond producing governments and rebel forces use children as soldiers, laborers in military camps, and sex slaves. Child soldiers are given drugs to overcome their fear and reluctance to participate in atrocities.

Small Arms Trade is Intimately Related to Diamond Smuggling. Illicit diamonds inflame the clandestine trade of small arms. There are 500 million small arms in the world today which are used to kill 500,000 people annually, the vast majority of whom are non-combatants.

References:

Collier, Paul, "Economic Causes of Civil Conflict and Their Implications for Policy," World Bank, June 15, 2000.

Epstein, Edward Jay, "Have You Ever Tried to Sell a Diamond?", The Atlantic Monthly, February 1982.

Global Witness, "Conflict Diamonds: Possibilities for the Identification, Certification and Control of Diamonds," A Briefing Document, June 2000.

Human Rights Watch/Asia, "The Small Hands of Slavery: Bonded Child Labor In India," Human Rights Watch Children's Rights Project.

Human Rights Watch, "Children’s Rights: Stop the Use of Child Soldiers."

Kerlin, Katherine "Diamonds Aren’t Forever: Environmental Degradation and Civil War in the Gem Trade," E: The Environment Magazine.

Le Billon, Philippe, "Angola’s Political Economy of War: The Role of Oil and Diamonds, 1975-2000," African Affairs, (2001), 100, p.55-80

Mines and Communities, "The Mining Curse: The roles of mining in ‘underdeveloped’ economies," Minewatch Asia Pacific/Nostromo Briefing Paper, February 1999.

Other Facets, Number 1, April 2001; Number 2, June 2001; Number 3, October 2001, www.partnershipafricacanada.org/hsdp/of.html [dead link]

© 2002 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.