Archive for the ‘ Economy ’ Category

Made in China–ahem, Italy

The tragic fire at a factory on Sunday, December 1st, 2013, which cost 7 employees their lives, has barely begun to shed light on the industry’s illegal insurgence and Italy’s lack of capacity to do much about it.


Pronto moda is a case of what The Economist tags as “reverse globalization.” Cheap materials are shipped from China to Italy–as are the workers, as are the sweatshop concept and conditions. One city, Prato, just northwest of Florence, plays host to over 5,000 factories like the one that burned down on Sunday and some 50,000 Chinese workers buried in 16 hour work-days. Faux-designer products are pumped out at superhuman rates with the facade of labels from designer brands (although the “Made in Italy” label remaining true) and are sold for extremely cheap prices to locals and tourists. Before Italian taxes can even make their claim, more than half of the $2.7 billion profits find their way back to China undeclared.

Chinese utilitarianism and black labor practices are brought to Italy to take advantage of the necessarily perfect combination of an apt market for the pronto moda scheme and weak rule of law in Prato (as what may be an indication of the weaknesses sustained at the national level; consider Rule of Law 1 and Rule of Law 2 to observe Italy’s troubles). Workers, essentially indentured servants, are likely to be left with their promises of a return back to China unfulfilled as they work, bathe, eat, and sleep (in cardboard accommodations as was the case for the victims) within the same few square meters.

The devastating event made headlines in international media; however, the problem for Italian officials isn’t anything new to them. Roberto Cenni, Prato’s mayor, claims that they investigate hundreds of the 3,000+ illegal business every year. The proliferation is too much to handle, he claims, and the operations that Italy is able to shut down only sprout back up the next year. As China merely renders, capitalizes, and improves on what domestic organized crime has done in the country for so long, Italy is forced to drastically improve from the inside-out if it is to have any chance at beginning to address the complicated issues at hand in Prato.

U.S. “social netting” lacks and inequitably distributes

In the middle of a series of articles titled “The High Cost of Low Taxes” for Moyers and Company, Josh Holland challenges the stigma of higher taxes and exposes the issue in its proper context. Whereas compares the United States to 11 of the top performing Organization for Economic Co-operation and Development (OECD) countries, Holland includes all 37 OECD countries for his series. Simultaneously dispelling myths and reconstructing the argument in the terms we should have been using all along, Holland evaluates whether the U.S.’ tax system is equitable, efficient, effective, or enough.


Holland raises the argument that we should be comparing how much we spend (publicly and privately) on social costs and what kind of “social netting” we get as the product for our expenditures. Noting that since the U.S. public and private sectors combined social spending is comparable to the OECD average (29% to 32%, respectively), U.S. quality of social netting should also be proportionate. However, this is hardly the case. In his second article, he tackles specifically the issue of health care, revealing through a World Health Organization report and a compilation of statistics at Bloomberg just how poorly the U.S. health care system performs (in many cases close to last and others dead last) compared to its most relevant peers. Here, then, is Holland’s reasoning: if we are paying nearly the same social costs, why is there such a discrepancy in the quality of the results?

The discrepancy begins in the imbalance between public and private spending on social costs. According to the statistics, OECD countries that delegate social spending to the public sector provide better social netting for its citizens. Health care, as established above, is one dynamic example of how the U.S. has been short-changed; the U.S. tax systems is yet another.

Americans’ heavy reliance on the private sector to provide social goods and services doesn’t only result in us paying a lot and getting a lot less for it, compared to other wealthy countries. It also makes the financing of our entire social welfare system far less fair. It’s a great deal for the wealthiest, and a huge rip-off for the rest of us.

Holland introduces his third installment with this remark and proceeds to discuss that the tax system is not only unequally weighted, but also that there are hidden implications. For example, federal taxes might seem more progressive, but the distribution of state taxes is the antithesis of progressive. In fact, the weight of taxes is nearly level, but the bottom-most quintile provides for 11.1% of state tax revenue. As the quintile groups ascend by earning, the percentage by which they’re taxed descends with the largest earning quintile being taxed 7.5%.

Taken from: Rip-off: High Out-of-Pocket Social Costs are a Stealth Tax on the Middle Class and the Poor,

Still, even within the federal tax system, examples of regressive taxes thrive. Holland discloses that payroll taxes that provide for social security and Medicare are a flat tax with those making $20,000 a year paying 6.2% just like those who make up to $113,000.

We may deduct from Holland regarding social netting that those who need it and pay for it the most–whether by the unfair tax system or by out-of-pocket costs they can hardly afford–receive the least from it, especially when compared to the social nettings of the best performing OECD countries.

Holland has two more installments yet to come in the series to be published at in the next few weeks.

Citigroup writes bill and history (which is now set to repeat itself)

Credit: Silver linings are only hard to come by depending on which side of the spectrum you’re on.

After passing Dodd-Frank in 2010 and letting Wall Street go with a mere slap on the hand and a “Don’t you ever do that again,” United States Congress passed a bill to enable Wall Street to do just that: repeat history and endanger us with another crisis due to egregious financial management.

Passing  292-122 votes, the Swaps Regulatory Improvement Act reverses the portion in the 2010 agreement that restricted Federal Deposit Insurance Corporation (FDIC)-insured funds from being invested in high-risk “swaps” also known as derivatives, the same type of investments that brought down banking giants like Bear Stearns, AIG, Lehman Brothers, Washington Mutual, Wachovia, and countless others. Aptly interpreted by, this means that, “In short, this bill socializes risk (we all pay for their gambles if they fail) and privatizes profit (they gain a whole lot with very little risk because of your guarantee).”

To ask, “How does Congress get the nerve to write such a bill?” would be an inaccurate question. Citigroup, in fact, is responsible for having written 70 out of the 85 lines in the bill. The financial giant is again able to afford such extracurricular activity on Capitol Hill thanks to a $45 billion dollar bail out after the first go-’round. Still, Congress summoned the courage it takes to copy and paste (changing merely two words from singular to plural in two of the most essential paragraphs) during the writing process and voted for it, indeed, overwhelmingly so!

Nearly six times as much money, $22.5 million to $3.8 million dollars, were given to members who voted for the Act according to a Maplight report. History is poised to repeat itself should Too-Big-To-Fail again be tested. And why shouldn’t it? It’s not their risk that is at stake, only our risk for their gain.

Measuring development and subjective well-being: Human Development Index vs. World Happiness Report

Can measuring “happiness” be a science? Doesn’t the meaning vary too much from person to person and culture to culture? The squishiness of happiness has not prevented researchers from trying to measure it and make it relevant for public policy.

With studies tracing in the paths of what the Human Development Report started over two decades ago, the OECD’s Better Life Index, the OECD’s Guidelines on Measuring Subjective Well-Being, the Happy Planet Index, and the U.S.-focused Gallup-Healthways Well-Being Index (with an international report from 2010) have aimed to perfect the science of quantifying subjective well-being and demonstrate the relatively fresh attention the subject has elicited. Most recently, the United Nations Sustainable Development Solutions Network has released its first World Happiness Report last year.

Subjective Well-Being Indices Rankings-page-001

According to the above table, rankings for well-being become pretty varied. Different indices use and weigh different indicators in different ways. The most exceptional example in this case is the Happy Planet Index which places an immense amount of weight on its indicator, “Ecological footprint” in order to emphasize the importance of environmental sustainability.

But let’s direct our attention to the first two: the United Nations Development Programme’s Human Development Index (HDI) 2013 and the United Nations Sustainable Development Solutions Network’s World Happiness Report (WHR) 2013. The HDI has been a pioneer, and has long considered the index to be one of if not the authoritative voice on quality of life, achieving results profoundly more telling than the traditional GDP/capita. The WHR has developed under the influence of the HDI, yet it has come up with different results contrasting most significantly as it relates to and the countries studied. Fortunately, the WHR dedicated an entire chapter (Chapter 8) to compare its system to the HDI.

Are more developed countries happier?

Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it.
-Economist Amartya Sen on the capabilities approach and what it means to defining subjective well-being

The objective of Chapter 8 in the WHR is to observe the relationship between human development and life satisfaction, that is to say in certain terms the HDI and the WHR. The chapter discusses at great length the different approaches (human development vs. capabilities) to define and measure development, satisfaction, happiness, and subjective well-being. Chapter 8 asks how positive is the relation between the HDI and life evaluation of well-being? For the intents and purposes of the HDI and WHR reports in the scope of the 150+ countries surveyed, very positive. Chapter 8 dissects individual indicators of the HDI like life expectancy, years of expected education, actual years of schooling, and GNI/capita with positive life satisfaction and concludes with correlative coefficients of 0.70, 0.69, 0.63, 0.73, and 0.78. Finally, HDI (overall score) shares a correlative coefficient of 0.77 with life satisfaction.

While this is good news in determining that the gap between measurements of human development and subjective well-being is closing thanks to an increased focus and research on the subject, our more narrow scope concerning the gap among the 12 countries studied at disappointingly still lacks explanation.There are 33 places between the systems’ rank for Japan, 20 places for Germany and Italy, and 14 places for the U.S. and Denmark (which the WHR has at 1st). The correlative coefficient is either not strong enough at 0.77 or not relevant enough with the 12 countries on which we focus.

The Crisis of the Anthropocene: Part 2

Continued from The Crisis of the Anthropocene: Part 1.

by Dr. Sherman Lewis, Professor Emeritus Political Science, California State University East Bay

Cheap fossils

Peak oil refers to the gradual increase in the cost of extracting fossil fuels causing higher prices, decreasing demand, and declining production. As peak oil is reached, the volume of extraction declines. Peak oil was reached years ago in the US. In 2010 the International Energy Association announced that peak oil may have occurred internationally in 2006. The price of gasoline has been erratically ratcheting up. Conventional petroleum is probably less available at the same time that rapidly growing economies demand more oil. Most Americans are likely to continue to buy gas as if there were no tomorrow and blame politics, oil companies, and speculators for a problem inherent in the earth’s crust. The timing of the ratchet is unpredictable. has excellent data on the past, but less certain projections for the future.


Unfortunately, the benefit peak oil might provide to reduce global warming is being more than offset by other fossils, which seem well short of any peak. Higher oil prices so far only serve to stimulate more extraction of oil from risky deep ocean platforms, coal, dirty oil from shale and sand, and natural gas from fracking, which pollutes huge volumes of clean water. Fossil fuels are still in under-priced over-abundance and consumption is even increasing. The earth’s crust appears sufficiently generous in fossils to assure the demise of the climate that supported human development. However great for the money economy, it is not sustainable in the whole economy.

Under-pricing reduces the viability of non-fossil alternatives—solar wind, photovoltaic and thermal energy, energy efficiency, conservation, non-auto modes, and efficient land use.


Humans appropriate more than half the world’s fresh water. Ancient aquifers in the world’s bread baskets, including the Ogallala in the Great Plains, are being drained. California has diverted so much water from the Bay Delta system that its historic ecology has collapsed. The salmon, steelhead, and striped bass are mostly gone, leaving the tiny Delta Smelt as the remaining indicator species. Water shortages are increasing. A federal court recently ordered water released into the Klamath River to prevent fish kills, at the expense of farmers who wanted the water. The San Joaquin Valley has sunk many feet in some places due to over-pumping of ground water.

In December 2012, the Interior Department said by mid-century the Colorado River will not support demand from the seven states it supplies, including California. The main reason is expected population growth in the region from 40 million to as many as 76 million people. “Phoenix continues to grow at one of the highest rates in the country,” said Jerry Karnas, population and sustainability director of the Center for Biological Diversity. “There is no discussion about what the future Phoenix is going to do when the Colorado River is done.”

As rains diminish and the climate dries in some areas, increased pumping from falling aquifers becomes more expensive due to the cost of electricity, itself dependent on water supplies and fossils. As diets improve, demand for food higher up the food chain requires more water. Only 2 percent of major U.S. rivers run unimpeded to the sea. California’s Sacramento-San Joaquin River Delta has been entirely re-engineered. The last time the Colorado River reached the Sea of Cortez was in 1998. The Nile, Indus and Ganges rivers have been reduced to a trickle. (See for information on the most pertinent international water issue.)




Pollution of water, air, and land comes from burning fossils, hazardous chemicals, excess nutrients, and solid waste. Small amounts of a chemical can devastate amphibians and bees. Residues from 100 million tons of synthetic chemical compounds produced each year commonly appear in polar bear tissues, whale blubber, and human breast milk and umbilical cords. Nitrogen can be a fertilizer; the excess is a problem. Human activity surpasses nature as a source of nitrogen emissions, altering the planet’s nitrogen cycle.

Radioactivity has been an evolutionary background reality and a minor pollutant since the Strontium 90 scares of the 1950s, but is now looming much larger as radioactivity from the Japanese Fukushima Daiichi Reactor melt-down drifts across the Pacific Ocean to the West Coast of North America. Radioactivity has proven deadly from the earliest research to the bombing of two Japanese cities. In theory and most practice radioactivity is one of the most strictly regulated pollutants, but the difficulty of failsafe nuclear energy and the possibility of nuclear war and nuclear terrorism are still there.

Bioengineering is not usually thought of as a pollutant, but at the micro-scale of DNA it could be considered to be one, much like an invasive species in a habitat. So far, research and industry safeguards have prevented acute problems, but secrecy about Genetically Modified Organisms, lack of consumer choice, and industry assurances motivated in part by profit-seeking do not inspire confidence. Wind-blown GMO seeds have already contaminated some organic crops. We are still learning the most basic things about DNA, let alone how it can safely be manipulated.

California has eight of the 10 most air-polluted cities in the country and 725 metric tons of solid waste are washing up on our coast each year.

Higher, higher still Credit:



Humans have converted more than 40 percent of the earth’s land, usually the most biologically productive land, to cities and farms. Urbanization often destroys prime farmland. Roads and structures fragment the habitat of much of the rest. The increasing need for food and decreasing yields due to climate change, salinization, soil erosion, soil depletion, and conversion to other uses have led to converting more marginal, unfarmed land to crops. Farms and logging are big sources of deforestation and also causes greenhouse gases and loss of sequestration of atmospheric carbon.


A third of world fisheries are exhausted or degraded. Forty percent of coral reefs and a third of mangroves have been destroyed or degraded. Most species of the great predator fish are in decline. Ocean acidification, a product of fossil fuel burning, is dissolving calcifying plankton at the base of the food chain. Coral reefs are disappearing as warming, over-fishing, and pollutants cause massive bleaching, i.e., the ejection by the coral of the algae it needs to grow. Less life in the oceans reduces sequestration of carbon. A garbage gyre at least twice the size of Texas swirls in the Pacific Ocean. “We can’t just continue dumping nitrogen into the ocean at the same rate and expect everything to be fine,” Santa Clara University’s Marvier said.


The world is rapidly increasing the number and use of cars, while other, healthier, modes of transportation, especially walking, are shrinking in proportion. Underpricing of fossil fuel drives land use dispersion, resulting in a suburban system which makes other modes uneconomic and unavailable. Californians own 32 million registered vehicles for 29 million people aged 16 and older.


The problem is not consumption as understood by economists, but rather the over-consumption of some things due to their under-pricing which fails to consider full economic cost and allows externalization of costs, degrading the whole economy: “problem consumption.” The whole economy includes values of obvious economic worth that are not reflected in prices. We cannot conceive a sustainable economy because it is too complex, but we can have policies which push us towards one, with sustainable consumption replacing the unsustainable over time, and an improving status of women reducing population growth.

There is no “birth dearth,” at least, not yet. World fertility rates have fallen from 4.9 births per woman in the 1960s to the current 2.6, still too high. The rate in about half the world—Japan, Western Europe, China, Vietnam, Brazil, Iran, Thailand, and other emerging economies—is below the 2.1 births per woman needed for zero growth. The United States, the world’s third-largest country behind China and India, and the only rich country still growing, nevertheless recently saw its birth rate fall to 1.9.

The improvement in the status of women has driven birth rates down through education, economic opportunity, legal protections, family planning, and, to a small extent, therapeutic abortion. Across cultures, women choose to provide a better life for fewer children.

The revolution, however, is incomplete because high economic costs are still imposed on most women who choose to have children. Historically, the duties of child-rearing have been assumed by women, but, with improved status and given a choice, women reduce the burden. Once a developed country chooses to tax itself to ease the cost, women, if need be, are ready, willing, and able to have more children, because few things in life are more fulfilling.

While the population gets older, the ratio of dependent seniors on younger workers does not tell us what we need to know. The ratio is less relevant, possibly irrelevant, because health is increasing faster than age, and many older people want to work at work they choose. Also, if there are tax penalties, like loss of retirement income if one works, people will work less for money and more at other things. I retired to avoid tax penalties and to work voluntarily on sustainability analysis and advocacy. My wife retired and is almost fulltime at granddaughter care so that our kids can work for money. Rebalancing incentives for having children and for older working can solve problems, if they occur.

Major source: Carolyn Lochhead, San Francisco Chronicle Washington correspondent, SF Chronicle, Sept. 3, 2013.

The Crisis of the Anthropocene: Part 1

by Dr. Sherman Lewis, Professor Emeritus Political Science, California State University East Bay


Science, though often behind the actual pace of change, is still our best source of information. For the first time in the history of the earth, a species by its own conscious decisions is ending one geological epoch, the Holocene, and starting another, the Anthropocene.

credit: Planet Under Pressure

For decades, scientists have been discovering and warning about a series of interconnected threats to human welfare. In May 2013, the Millennium Alliance for Humanity and the Biosphere, consisting of more than 1,000 scientists, signed a consensus report at Stanford University that “Earth is reaching a tipping point.” “The evidence that humans are damaging their ecological life-support system is overwhelming,” said the report. “By the time today’s children reach middle age, it is extremely likely that the Earth’s life-support systems, critical for human prosperity and existence, will be irretrievably damaged.” Michele Marvier, chair of environmental studies at Santa Clara University, says that “humans dominate every flux and cycle of the planet’s ecology and geochemistry.”

A recent article in Nature stated “Localized ecological systems are known to shift abruptly and irreversibly, from one state to another when they are forced across critical thresholds. Here we review evidence that the global ecosystem as a whole can react in the same way and is approaching a planetary critical transition as a result of human influence.” Human “ ‘forcings’ far exceed, in both rate and magnitude, the forcing evident at the most recent global scale state shift, the last glacial-interglacial transition.” (Be sure to read the David Roberts and David Perlman articles from which the above quotes have been taken.)


From 1950 to 2012 world population tripled, to 7.1 billion, and continues to climb by more than 1.5 million people a week. The world population is expected to reach 9.6 billion by 2050. Joseph Speidel, a professor at UCSF’s Bixby Center on Global Reproductive Health, says, “The annual increment is rising quite dramatically. …We are still adding about 84 million people a year to the planet.” The addition in just 62 years will be greater than the human population growth for thousands of years to 1950. The World Resources Institute, an environmental think tank, estimates that by mid-century the world will need 70 percent more food, because as people grow wealthier they eat more meat, requiring more grain to feed livestock.

Falling birth rates do not quickly translate into falling growth rates because of “demographic momentum.” The absolute numbers keep rising for decades due to births to the large number of people in their child-bearing years. It took 12 years to add the last billion by 2011 and will take 14 more years to add the next billion, a slow decline in rate allowing a huge increase in numbers.

In developed countries falling birthrates are outweighed by the impacts of increased “problem consumption” per capita. Problem consumption refers to consumption which places the most stress on the earth. The United States is expected to grow from 313 million people to 400 million. California has 38 million people, including 10 million immigrants, and has grown 10 percent in the last decade. By 2050, projections show 51 million people living in the state, more than twice as many as in 1980.

In many less developed countries high population growth is being reduced somewhat by famine, hunger, disease, civil violence, and war. At least 2 billion people are malnourished, which increases death rates and reduces birth rates. Also, given lack of family planning, about half of unplanned pregnancies end in unsafe abortion. Nevertheless, in sub-Saharan Africa, Afghanistan and Yemen birth rates are exceptionally high. In 2012 U.N. demographers sharply raised their population projections, adding another billion people by 2100, reaching nearly 11 billion. African fertility rates have peaked at more than five births per woman. From now until 2050, poor countries will add the equivalent of a city of 1 million people every five days, said a report last year by the Royal Society, a top British scientific organization.

The Guttmacher Institute, a family planning research group, said more than 40 percent of the world’s 208 million pregnancies each year are unplanned. Half of U.S. pregnancies, about 3 million a year, are unintended, according to the National Campaign to Prevent Teen and Unplanned Pregnancy, a Washington advocacy group.

Population growth is primarily caused by the low status of poor women, especially in less-developed countries. Low status refers to a number of related problems—poverty, low education, lack of legal protections, lack of jobs, lack of health care and family planning, and abuse by dominant males. Rising status always lowers birth rates, regardless of ethnicity, religion, or culture.

The Guttmacher Institute said it would cost $4.1 billion a year in the $3.8 trillion U.S. budget to provide family planning for the 222 million women in the world who lack access to family health services. Republicans in the US Congress oppose funding that would allow poor women to choose how many children they have. In 2013 a House Appropriations panel again slashed money for family planning aid.


As human population waxes, the population of species in nature wanes. Scientists have identified the Anthropocene as the sixth mass extinction in the earth’s 540 million-year history. A quarter of known mammal species, 43 percent of amphibians, 29 percent of reptiles and 14 percent of birds are threatened. African elephants may be extinct within a decade.

Biodiversity is collapsing because of appropriation of biomass, habitat fragmentation, dewatering of rivers and wetlands, land conversion, pollution, invasive species, over-hunting, and over-fishing. Each year, humans appropriate up to 40 percent of the earth’s biomass, the product of photosynthesis, earth’s basic energy conversion necessary to all life. “Even in poorer nations that don’t have the impact that the average American has on the planet, population as it grows squeezes out other species because people need space to live, and the other species need space to live,” said Jeffrey McKee, an anthropologist at Ohio State University. Other wealthy countries have similar impacts, but less per capita.

California alone has 157 known endangered or threatened species.


People have altered the composition of the atmosphere by burning fossil fuels and causing emissions of other global warming gases like methane. Atmospheric carbon dioxide has increased from about 250 parts per million to about 400, and continues to rise. As the atmosphere holds more heat, temperatures rise, especially at the poles. The seasons move “pole-ward,” with earlier springs and later falls. Increased evaporation leads to more precipitation. On equatorial and temperate land masses, which have little water, droughts are increasing, as in the African Sahel. Increased heat energy in the ocean and atmosphere increases the intensity of extreme weather events. Glaciers, the Greenland Ice Cap, and the poles are melting. The permafrost is melting. More flooding occurs from precipitation, thermal expansion of the ocean, melt water from land-based glaciers, rising oceans, and extreme storms. Many species are affected, moving pole-ward if they can. Some species depend on altitude and run out of up. In the Monteverde Cloud Forest of Costa Rica, the golden toad ran out of mountain and was extirpated. Less sea ice is reducing polar bear population, which depend on it to hunt seals. Climate change reduces yields by decreasing rainfall in many large farming areas. Forest fires are increasing in extent and frequency.


To be covered in Part 2 on Thursday: Cheap Fossils to Auto-dependency and Misconceptions

US joins 90 other Arms Trade Treaty signatories

Making news last week directly affecting research on, the U.S. became the 91st signatory of the international Arms Trade Treaty (ATT) which regulates illicit arms trade–everything from helicopters and tanks to small and light arms–among countries in order to prevent weapons being sold to countries involved in human rights violations. Secretary of State John Kerry signed the treaty on President Barak Obama’s behalf much to the chagrin of the National Rifle Association and U.S. conservatives. Kerry has assured that “… we would never think about supporting a treaty that is inconsistent with the rights of Americans, the rights of American citizens, to be able to exercise their guaranteed rights under our Constitution.” The Bureau of Alcohol, Tobacco and Firearms already regulates that which is required by the ATT and no supplemental enforcement or legislation is required to support it. Kerry further guaranteed that the treaty still allows “the ability of both individuals and states to obtain, possess, and use arms for legit purposes,” and that their 2nd Amendment rights had no reason for concern.

As extensively reviewed on, the U.S. has left many forefront international treaties unsigned (official endorsement from the head of state) and still more unratified (official endorsement from the legislature). Many of the snubs are absolutely confounding. Organizations like Amnesty International, who have pushed for such an agreement for the past 20+ years, are rightfully celebrating this achievement as potential progress on cracking down on international arms trade. Since the U.S. signing, 21 more nation states have signed the treaty and ratifications have almost doubled from 4 to 7.