Reports from the Economic Front

by Martin Hart-Landsberg

Archive for December, 2009

Obama’s Afghanistan Surge

without comments

The President has committed 30,000 more troops to Afghanistan at an officially estimated cost of $30 billion.  Obviously we do have some real money when it comes to things considered “important.” Too bad health care has not made it to the list.

Of course, that $30 billion is far from the full total—it doesn’t include the cost of any new base construction or private contractors required to support the new troops.

Total Afghanistan war spending in 2010 (including existing and new forces) will likely be over $100 billion, more than twice what was spent for the fighting in 2008.

The new troops are being sent as part of a plan to end the war there.  What is this new plan?

Thanks to the work of  Richard Engel, an NBC news correspondent, we have a little window on what the Joint Chiefs of Staff are thinking.  Below is an illustration taken from a non-classified report that discusses the military’s new counterinsurgency (or COIN) strategy.  It provides a visual picture of the strategy—including expected challenges and responses.

It is a pretty complicated illustration so please click on it for a larger view.  Then, study it carefully—this is what our money is helping to underwrite.  Feel better?

afghanistan-13001.jpg

Written by marty

December 27th, 2009 at 5:27 pm

Sign of The Times: “My advice, as a Christian priest, is to shoplift.”

without comments

As reported by the DailyMail:

Poor people who are desperate for cash have been advised to go forth and shoplift from major stores – by an Anglican priest.

The Rev Tim Jones said in his Sunday sermon that stealing from successful shops was preferable to burglary, robbery or prostitution.

He told parishioners it would not break the eighth commandment ‘thou shalt not steal’ because it ‘is permissible for those who are in desperate situations to take food that they might not starve’. . . .

‘My advice, as a Christian priest, is to shoplift,’ he told his stunned congregation at St Lawrence and St Hilda in York.

‘I do not offer such advice because I think that stealing is a good thing, or because I think it is harmless, for it is neither.

‘I would ask that they do not steal from small family businesses, but from large national businesses, knowing that the costs are ultimately passed on to the rest of us in the form of higher prices.

‘I would ask them not to take any more than they need. I offer the advice with a heavy heart. Let my words not be misrepresented as a simplistic call for people to shoplift.

‘The observation that shoplifting is the best option that some people are left with is a grim indictment of who we are.

‘Rather, this is a call for our society no longer to treat its most vulnerable people with indifference and contempt.

‘When people are released from prison, or find themselves suddenly without work or family support, then to leave them for weeks with inadequate or clumsy social support is monumental, catastrophic folly.

‘We create a situation which leaves some people little option but crime.’

The father of two, whose parish has a wide mix of social conditions, said his advice to people in dire circumstances is that ‘they should not hurt anybody and cope as best they can’.

He added: ‘The strong temptation is to burgle or rob people – family, friends, neighbours, strangers.

‘Others are tempted towards prostitution, a nightmare world of degradation and abuse for all concerned. Others are tempted towards suicide. Instead, I would rather that they shoplift.

‘The life of the poor in modern Britain is a constant struggle, a minefield of competing opportunities, competing responsibilities, obligations and requirements, a constant effort to achieve the impossible.

‘For many at the bottom of our social ladder, lawful, honest life can sometimes seem to be an apparent impossibility.’ . . .

father-tim-jones.jpg

The full transcript of the sermon given by Father Tim Jones (left) can be found here.  Read about the response by Supermarket giant Asda (owned by Walmart) here and Father Jones’s come-back here.

Written by marty

December 23rd, 2009 at 2:14 pm

Economics and the Environment: What is Wrong with Cap and Trade

without comments

It doesnt look like much is going to happen in Copenhagen at the Climate Conference.  The developed countries do not appear interested in negotiating a binding treaty with meaningful carbon reduction.   The police are out in force to make sure that the protesters don’t complicate things, as the picture below  illustrates.

cop15-reclaim-power-activ-001.jpg

Riot Police handcuff activists of the Reclaim Power demonstration near the Bella Center in Copenhagen, Denmark

But just in case environmental catastrophes do finally force a serious discussion of solutions,  it is worth examining the preferred mainstream response to the challenge of reducing greenhouse gas emissions: cap and trade.

Here is a ten minute fun film that presents and critiques cap and trade–it is called The Story of Cap-and-Trade.

And there are things to read here and here if you want to learn more about why it is not the best response.

Oh yes, the US proposal for Copenhagen–while the science and most of the third world calls for reducing greenhouse gas emissions by 40 percent by 2020 compared with 1990 levels, the US is proposing cuts of 17 percent by 2020 relative to 2005 levels.  Put in terms of 1990 standards, the US is proposing a 4 percent reduction.   The Europeans are willing to go as high as 20 percent.

Most importantly the US and the EU are pushing to break the tie between the current talks and the 1997 Kyoto process.   The reason is that Kyoto involved a legally binding treaty and most scientists and third world countries want to extend that treaty though the current negotiations and have it include sanctions for countries that fall short in meeting their emission reduction obligations.   The US and the EU, on the other hand, want an agreement that is largely voluntary.

To be clear, when the US and the EU make their proposals it is not out of ignorance of the consequences.  As the New York Times reported:

environmentalists alerted reporters to the existence of a six-page document, dated Dec. 15, that appeared to be a detailed compilation by the U.N. office managing the talks of all the major countries’ pledges and plans for curbing their emissions, along with a calculation suggesting that they would not hold the global temperature rise under the goal of 2 degrees Celsius goal that world leaders have set.

Without stronger action both before and after 2020, “global emissions will remain on an unsustainable pathway,” the document read, “with the related temperature raise around 3 degrees C.”

People involved in the climate talks confirmed the authenticity of the document

Written by marty

December 18th, 2009 at 12:30 pm

Posted in Environment

The Jobs Crisis

without comments

The lack of jobs has finally become a political issue.  The president even had a jobs conference.

The problem with job discussions to this point is that the experts talk as if the fundamentals of our economy are sound and all we need are some short-term interventions (tax cuts, business subsidies, etc.) to tide us over until things get moving.

This is a problem because if we are talking about job creation (rather than profit creation) the fundamentals of our economy are not sound.  To be blunt, private profit-making activity is increasingly not job creating activity.

As Business Week points out: during the 1970s and 1980s it generally took less than 10 months after the end of a recession to add back the jobs lost during the recession.  It took 23 months after the end of the recession that ended in 1991.  And it took 39 months after the recession that ended in 2001.  Many experts are predicting it could take as long as 60 months to add back the more than 8 million jobs lost during this (recently ended?) recession.  And that does little to employ those entering the market now.

popup_21riseofjoblessrecovery.gif

If we are serious about job creation we need to begin talking about how best to directly create jobs, and jobs that allow people to earn a living wage producing (in a sustainable manner) the goods and services that we actually need.  It is either that or resign ourselves to ever growing structural unemployment and the associated negative consequences (or collateral damage as we now tend to say).

The Copenhagen Climate Fiasco

without comments

We face not just an economic disaster but also an ecological one.  So, how are we doing on the latter?  Unfortunately, not very well.  And the reason is that those with power appear determined to block any solutions that threaten their power, regardless of the broader consequences.

Developments at the Copenhagen climate conference are telling.

While we in the US are reading the story in the New York Times about Danish police seizing protest equipment, people in other countries are reading about a very different protest.

For example, the Guardian newspaper reports:

The UN Copenhagen climate talks are in disarray today after developing countries reacted furiously to leaked documents that show world leaders will next week be asked to sign an agreement that hands more power to rich countries and sidelines the UN’s role in all future climate change negotiations.

The document is also being interpreted by developing countries as setting unequal limits on per capita carbon emissions for developed and developing countries in 2050; meaning that people in rich countries would be permitted to emit nearly twice as much under the proposals.

The so-called Danish text, a secret draft agreement worked on by a group of individuals known as “the circle of commitment” – but understood to include the UK, US and Denmark – has only been shown to a handful of countries since it was finalised this week.

The agreement, leaked to the Guardian, is a departure from the Kyoto protocol’s principle that rich nations, which have emitted the bulk of the CO2, should take on firm and binding commitments to reduce greenhouse gases, while poorer nations were not compelled to act. The draft hands effective control of climate change finance to the World Bank; would abandon the Kyoto protocol – the only legally binding treaty that the world has on emissions reductions; and would make any money to help poor countries adapt to climate change dependent on them taking a range of actions.

The document was described last night by one senior diplomat as “a very dangerous document for developing countries. It is a fundamental reworking of the UN balance of obligations. It is to be superimposed without discussion on the talks”.

Read the rest of the article here.

Here is the Sydney Morning Herald’s report on the Chinese negotiator’s response to the document:

Angry developing countries said the document was the work of rich nations who wanted to abandon the existing Kyoto Protocol, which is not mentioned in the draft, and its principle of only industrialised nations taking on emissions targets due to their historic responsibility for climate change.

It prompted a furious rebuke to rich nations from China. In a surreal press conference in a cramped room next to the Chinese delegation office, chief negotiator Su Wei claimed he was unaware of the leaked Danish proposal that had hijacked the mood of the convention centre while attacking the European Union, Japan and the US for claiming they were acting on climate change while doing very little.

In a detailed analysis of the flaws of rich nations’ 2020 targets, he said Europe had already done more to limit emissions under the flawed Kyoto Protocol than it proposed to do under a Copenhagen pact, Japan’s proposed 25 per cent cut was meaningless because it had set conditions that would never be met and the US had promised a “remarkable and notable” emissions target but proposed only a provisional 1 per cent cut below 1990 levels.

“I’m not very good at English, but I doubt whether just a 1 per cent reduction can be described as remarkable or notable,” he said.

He said the $US10 billion annual green fund, that has won wide support at the conference and is included in the draft Danish agreement, worked out to just $2 per person across the planet – not enough to buy a coffee in Copenhagen, or a coffin.

“Climate change is a life and death issue,” he said.

Read the full article here.

Written by marty

December 9th, 2009 at 10:48 am

The Prison-Industrial Complex

without comments

There is growing talk about the need for a jobs program involving significant government spending to hire people to produce the goods and services communities need.  Many who opposed such a program argue against it by claiming that the government doesn’t have the money and more public debt would be harmful.

This raises the question of our current public priorities—in other words, where is our money now going?

To shed some light on this important question I draw on the article “The Penal State in an Age of Crisis,” by Hanna Holleman, Robert W. McChesney, John Bellamy Foster, and R. Jamil Jonna. The charts below come from this article.

The authors argue that corporate interests make it difficult if not impossible for government spending to dramatically grow as a share of GDP, unless that spending is for the military.  In fact, they find that non-defense government spending has generally remained at approximately 14% of GDP for the past forty years.

Chart 1. Non-defense government (federal, state, and local) consumption and gross investment as percentage of GDP, 1929-2008 090601-hmfj-chart-11.jpg

They also argue that an ever larger share of that non-defense spending is going to activities that serve interests very similar to that of the military: “public order and safety” or more specifically, the police, courts, prisons, and jails.

Public order and safety has nearly doubled as a percentage of civilian government spending over the past fifty years and now stands at 15 percent of the latter. “Because total civilian government spending stayed pretty constant as a portion of GDP, this sharp increase in penal state spending has had the effect of crowding out other forms of civilian government spending.”

Chart 2. Public safety as a percentage of civilian government spending090601-hmfj-chart-2.jpg

Oh yes, at the same time as spending on the prison industrial complex has soared, “the crime rate per 100,000 population — calculated in the official series based on property and violent crimes, taken as indices of crime in general — peaked some two decades ago.”

Chart 3.  Crime rate per 100,000 population since 1960
090601-hmfj-chart-51.jpg

In short, our public spending is increasingly been driven by a military-industrial complex and a prison-industrial complex, with one tending to reinforce the other.  No wonder we have no money for basic and critical social needs.   Other interests are being served.

Written by marty

December 5th, 2009 at 9:38 pm

International Inequality–We Are Number 1

without comments

Written by marty

December 1st, 2009 at 6:06 pm

Posted in Inequality