How Cities Breed Poverty

Richard Florida’s The Rise of the Creative Class posited that the clustering of knowledge-based, or “creative” occupations in cities and metropolitan areas drives urban economic growth. Florida now says, though, that such clustering also “generates distinct winners and losers both across and within cities and metros.” This is the central takeaway of the recently published study that Florida conducted in collaboration with Roger Martin, Melissa Pogue, and Charlotta Mellander, his colleagues at the Martin Prosperity Institute.

Florida’s work distinguishes between knowledge-based occupations in science, technology, and design and “routine” occupations in the manufacturing and the service industries. This most-recent study combines that approach with the work of Michael Porter, author of the landmark work The Competitive Advantage of Nations, published 25 years ago. Porter’s work, which looked at the role of industrial clustering in economic development, distinguishes between locally-oriented industries and traded industries—those that export goods beyond their immediate geographical areas. Florida and his colleagues at MPI have synthesized these two approaches to generate four occupational-industrial categories–creative-in-traded, creative-in-local, routine-in-traded, and routine-in-local. By analyzing data across 260 metropolitan areas comprising three quarters of the U.S. population, they have shed light on the role these four types play in innovation, economic growth, and inequality.

Proud, Distorted, Dream Job via photopin (license)
Proud, Distorted, Dream Job via photopin (license)

 

What They Found

There is a clear connection between traded and creative industries. 45 percent of those working in the traded industries are in creative occupations, compared with 36 percent in local industries. “Not surprising,” says Florida, “as traded industries compete on innovation and creativity.” These creative-in-traded jobs are distributed very unevenly around the country, with high concentrations, or geographical spikes, in a few cities, with the highest concentrations on the East and West Coasts. Creative-in-traded employment is a key driver of both innovation and economic growth and has the most positive association with higher wages. Of the four categories, creative-in-traded occupations have the highest wages by far, with average wages 31% higher than than the next highest category, creative-in-local, and 182% higher than the bottom category, routine-in-local—which makes up 45% of all workers. Both routine-in-local and routine-in-traded occupations fall below average wages, and the wage gap between creative and routine workers has grown over time.

What troubles Florida and his colleagues is the strong link between a concentration of creative-in-traded employment and economic disparity. The higher a metro region’s share of overall creative-in-traded jobs, the greater the income inequality. While all four categories see higher wages on average in metros with a higher proportion of creative-in-traded occupations, routine occupations do not see wage increases high enough to make up for the higher housing costs driven by a city’s desirability among those in higher-paying creative occupations. As a result, those in routine occupations, especially routine-in-local, are pushed to less advantaged metros with fewer high-paying jobs, creating a vicious cycle in which the disadvantaged sink lower and lower into poverty.

Tightly Packed Moving Truck
All my worldly possessions… via photopin (license)

 

What can be done?

The most difficult challenge, according to Florida, is that there are simply not enough creative jobs to go around. The proportion of creative jobs is increasing, but only very slowly—at about 1.4 percent per year. The solution, says Florida, is the conversion of routine occupations to creative occupations. He calls on business and industry to lead this transformation “by increasing the creative content of what is currently routine work,” and says that there is much to be gained in doing so in terms of productivity, customer service, and quality. Those cities that are able to convert more of their workforce from routine to creative occupations, he says, will be more competitive.

The economist Henry George noted this puzzling phenomenon over a hundred years ago. He asked why it was that as production and density increases so, too, does poverty. You would think that as society is able to produce more wealth in cities there would be more wealth to go around. However, it is precisely because certain people earn more that landlords are able to charge more rent.

 

A traditionally working-class neighborhood
The calm before the storm via photopin (license)

 

Unlike creative ventures, which require innovation and risk-taking, owning a vacant lot in the middle of a city requires relatively no effort or risk, as land values in these areas are continuously going up in value. If an urban property owner waits long enough, they can realize an enormous return without lifting a finger. The creative industries popping up around their rental properties will enable the slumlord to charge much higher rents. This slumlord needs neither assume the financial risk of building a new structure to house more of the new creative industry workers nor continue to house the routine workers. Rather, the slumlord will often just charge increasingly exorbitant rents to the routine workers, effectively forcing them out, and then house the creative workers in the same conditions for higher rents. The creatives are willing to pay these rents due to the desireable location and the short supply of rental units. Supply is suppressed because other landlords are also complacent and prefer to avoid the risk of developing their land to its highest and best use. Some will just knock down the buildings altogether to lower their property tax bills.

If, however, landlords were taxed on the basis of the value of their land, they would be incentivized to provide more housing units in order to pay the tax and make a profit. People would still move around based on the demand for particular locations, but there would be more housing for everyone. Thus, all things being equal, rent would be lower overall. What we think of as the peripheral areas of the cities, where the routine workers can afford the rent, would likely be twice as close to the city center as the areas they can currently afford to live in. We would not need other taxes if all or most revenue was coming from land. If we scrapped all of the taxes on routine workers’ wages, food, transportation, etc., these things would become more affordable, too, dramatically increasing creative employment and reducing poverty in cities. To see what that would look like, you can read our article Visualizing Earth Sharing.

 

Cover Image: gentrification, void places via photopin (license)

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McDonald’s Violates EU Anti-trust Laws

McDonalds Dominates a City Block

Consumer groups in Italy have banded together to file an anti-trust complaint against McDonald’s with the EU’s executive commission. The complaint alleges that McDonald’s has used its current strength in the market to gouge franchisees and, ultimately, consumers. The fast food giant is reportedly charging rents to franchisees that are ten times normal market rates. Additionally, they set 20-year franchise contracts with non-compete clauses that all but force the franchisees to stay with the brand.

The coalition claims that these practices violate EU anti-trust rules. According to a December 8 statement by the EC regarding an anti-trust complaint against Qualcomm, “Under EU anti-trust rules, dominant companies have a responsibility not to abuse their powerful market position by restricting competition.”

These monopolistic business practices are nothing new. Common consensus holds that McDonald’s financial success stems not from its food service business but rather land speculation. The corporation’s founder, Ray Kroc, once said, “Ladies and gentlemen, I’m not in the hamburger business. My business is real estate.” 

McDonalds in a Prime Location
Posh McDonald’s? via photopin (license)

Through its vast real estate fortune, McDonald’s has been able to leverage its formidable power. They can literally crowd out competitors from the physical landscape via their ownership and wasteful use of prime locations. More on that later.

Because of both the high rents it charges its franchisees and the restrictive contract terms, says the EC complaint, franchisees are forced to charge consumers inflated prices. In Bologna, 97% of menu items at McDonald’s franchise stores are priced higher than at corporate-owned ones. This figure is 68% in Rome and 71% in Paris. As for how much higher the prices are, the complaint cites the price of a small order of fries as 64% higher in Paris, 72% more in Marseille, and 25% more in Lyon.

In a joint statement, the groups said, “We urge the Commission to examine McDonald’s franchising system in detail, and take all appropriate action to ensure that the unfair burdens on the company’s franchisees end, and can no longer harm consumers.”

In response to the allegations, McDonald’s claims that the arrangements have worked well for both parties for many years and that they are transparent when it comes to the costs that are associated with being a franchisee, including the investment for equipment, signage, seating, décor, and rent as well as royalties for using the brand.

McDonald's workers on strike
Fight for 15 Los Angeles via photopin (license)

The complaint has drawn support from the Service Employees International Union, which has over 2 million members in Canada and the United States and is currently backing a campaign for raising the US federal minimum wage to $15 per hour. Scott Courtney, the organizing director for the SEUI, says McDonald’s abuse of its powerful position in the market hurts consumers and franchisees as well as workers. Several American fast food workers travelled to Brussels for the dual purposes of putting pressure on the European Commission to investigate the anti-trust complaint and to publicize their movement for increased wages for US fast food workers.

Currently, the European Commission is investigating McDonald’s tax arrangements in Luxembourg. The commission also believes that the US-based company may have avoided paying taxes in both the US and Europe on royalty profits from franchises in Russia and Europe.

The most expedient remedy for making sure that McDonald’s pays its fair share of taxes is to tax the value of its land holdings. This would make it very hard for McDonald’s to avoid the tax. If the company’s income is taxed, they can simply hide it in offshore accounts. Taxing the value of the land, however, would hit McDonald’s where it hurts and force them to give up some of their giant parking lots to accommodate competitors. These competitors would offer better deals for franchisees, employees, and consumers alike.

Cover Image: McDonald’s outlet at night via photopin (license)

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On National Sovereignty

by Lindy Davies

It’s become a convention, on the news, to refer to the Jihadist force that’s been gaining ground in Iraq and Syria as the “so-called” Islamic State. This seems to be a requirement. Sure, they call themselves a state — but they’re not! States are sovereign. They have governments, and ambassadors and such; they have seats in the UN General Assembly — like Syria, for example.

What is it, really, that constitutes a sovereign nation?

To begin with, it has to do with authority and control; we think of it as “where the buck stops.” It may be comforting to think of this as an absolute thing (i.e., Israel absolutely has it; the Palestinians absolutely don’t). But it is not all-or-nothing, of course; there are degrees. The “national sovereignty” of a place like “The Republic of South Vietnam” (or post-Dubya Iraq) is an evanescent thing, crafted on the fly to suit the interests of a larger power. Nevertheless, international diplomacy rests, however shakily, on the concept of national sovereignty. So far in human history, is nations that make and enforce laws. International law is an ad hoc matter. It is enacted by means of treaties, and only enforced at the national level, if nations choose to do so. (Has the International Criminal Court ever compelled the United States to do anything?)

Nations have various degrees of power, and various degrees, alas, of legitimacy. If the nation is not powerful enough, it may fall to conquest by external powers. But what if it is not legitimate enough? The (so-called!) Islamic State’s legitimacy is bestowed by Allah — the same Deity that confers legitimacy, via the Queen, to land tenure in Great Britain. (It has to be the same Deity: both faiths believe there is only one.) The classical Chinese concept of national legitimacy was called “The Mandate of Heaven.” It was thought possible for a ruling dynasty to lose this, become illegitimate, and become deposed. If a nation is not legitimate enough, therefore, it may succumb to internal revolutionary forces.

Eventually, Divine bestowal of sovereign power came to be vested in hereditary monarchs. In the minds of the Enlightenment philosophers, however, sovereignty came to rest in the incontestable, and infallible, will of the people. Thomas Jefferson, for example, wrote that governments are instituted to secure the people’s inalienable rights, and that their powers — if they are just — are derived from the consent of the governed.

This raises questions. Who are “the governed”? How is their consent ascertained? How, and where, and in what ways are they to be “governed” — presumably through the exercise of the sovereign powers of a “government” which the people have chosen? According to Jefferson, a governments just powers are derived from the consent of the governed — and it wields those powers through the process of creating and enforcing laws. Does this mean that if a majority of a nation’s citizens decide, through some representative process, that slavery is OK, then slavery is OK? Well, it’s legal, anyway; fee-simple private ownership of human beings was legal in the United States for 75 years.

verb
“Nation is a verb.”

Furthermore, the idea of government cannot be separated from the question of jurisdiction. Over what area does sovereign control extend? There is no global government. Our concept of sovereignty is inextricably bound up with the idea of nationhood. Now, sometimes we might speak of a “nation” in spiritual or cultural terms — a holy covenant? a community brought together by its victimhood? a romantic generational consciousness, such as the “Woodstock Nation”? But, in stark political terms, such notions are frivolous. In the “real world,” nationhood is a matter of jurisdiction over a defined portion of the planet: a territory — a piece of land.

Job #1 for any nation is the administration of its territory: its boundaries and their defense; the duties and prerogatives of states, municipalities and other lesser jurisdictions; and — most important — what people can do with that territory: what rights they have to its possession and use. This has obvious economic implications, because all economic activity must use land in some way. It is incumbent upon a sovereign nation to set rules concerning how people use the land: to make stuff, to live on, and to dump their garbage in.

Fine, OK — all of this sounds so commonplace as to hardly be worth mentioning. But, when we start to think about how these issues play out, we find some astounding breaches of logic.

Many smart people have told us that international trade agreements, such as the Trans-Pacific Partnership, or TPP, dangerously erode national sovereignty. Democratic societies have repeatedly chosen to implement regulations deemed necessary to protect health, safety and the environment. Pacts like the TPP seem to be taking these powers away from governments.  I wonder how many citizens in struggling, export-dependent poor countries have any inkling what prerogatives their “sovereign governments” have given away in order to stave off trade sanctions.

But it’s not just the poor countries that are “yielding up their sovereignty” to multinational corporations — oh, no! Lots of people in the Great and Powerful USA are exercised about the increasing ease with which corporations reconfigure their profits into other jurisdictions to avoid paying “their fair share” of US taxes. Have the governed given their consent to that? Perhaps not, but the Emperor, in any case, has made it legal.

If Job #1 of a nation is to administer its territory, what can we say of a country that allows private investors to hold hundreds of thousands of hectares of that territory entirely idle, while its people have no place to make a living? Hasn’t that nation’s sovereignty been seriously degraded?

Furthermore, if a corporation is making “obscene” levels of profit in the United States and then paperworking them into another country to avoid taxes, well — did it not need land, locations and natural resources, to undertake the activities that created those profits? Did it fully compensate the community for the privilege of using that land?

Questions like these have a way of making one’s head swim. They seem to sudden, too sweeping. One is tempted to back-track to see whether some key factor has been left out. That impulse is both understandable and necessary — because in today’s discussions of economic policy a key factor is left out.

So let’s back-track. We’ve said that the most vital task of a nation is the administration of its territory. It defends against invasion, creates and enforces laws, and provides all kinds of infrastructure, both civil and physical. To the extent that nations do these things effectively, they become pleasant and prosperous places to live and do business. And to the extent that they become pleasant and prosperous places, the land in them — most of which is held in fee simple by private interests — increases in value.

land

Any nation that allows fee-simple ownership of land has already — long since — yielded up its sovereignty to private interests. These recent “sovereign giveaways” are just minor embellishments. We can close the barn door if we like, but the horse is long gone.

One of the many things this means is that, while the TPP will exacerbate a number of problems, the solution to those problems is not to be found in protectionism. “Local self-sufficiency” will only make the local landlords a bit less rich.

There was a West African nation that took a series of effective steps to assert its own rightful sovereignty — have you heard of it? It began with a military coup — nothing very noteworthy in that; there are lots of military coups — but this one set out to implement a novel program of reform. The country defaulted on its foreign debt. It proceeded to abolish all income taxes, VATs and tariffs, and to collect the value of land for its public revenue. And what happened? It no longer needed exports, or foreign loans, because its domestic markets were strong, its employment full. The most serious policy problem it had to deal with was the large numbers of people who wanted to immigrate. This country’s name is Alodia — but, alas, it is fictional. So far.

 

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Marie Howland, 19th Century Gender Equality Pioneer

Howard H Aiken, a pioneer in computer engineering, has famously urged others to “[not] worry about people stealing [your] idea. If it’s original, you will have to ram it down their throats.”

Such reminders are especially useful when considering the various reasons that groundbreaking ideas don’t always achieve notoriety in history textbooks or mainstream culture. Marie Howland, a passionate advocate of women’s economic independence in the nineteenth century, is an apt exemplar of Aiken’s claim, for although she was a woman of revolutionary ideas, she is hardly a household name. As a white working-class woman, Howland was among the first of her class and gender to publish a novel in America and to participate in the women’s rights movement, challenging fundamental social conventions that limited the influence of women to domestic sphere. In alignment with authors like Jane Austen, Howland was deeply troubled by the way social conventions served to reinforce the systemic economic dependence of women on men. This has hardly been resolved: “equal pay for equal work,” one of the cornerstones of Hillary Clinton’s current presidential campaign, is merely one example of the work that remains to be done towards Howland’s goal of achieving economic equality among genders. What is most compelling about Howland, then, is how relevant her ideas for the economic equality of women continue to be today.

A concise summation of Howard’s worldview would be to say that she wished to see opportunities for women to achieve financial independence; this idea, however, necessarily challenged traditional boundaries separating the domestic and public spheres. Whereas a man might have many opportunities for different kinds of paid work outside of the household, a woman’s work was restrained to the household, where economic value was not so easily quantified. It was this distinction that, early on, led Howland to embrace the writings of French intellectual Charles Fourier. She admired Fourier’s idea that women ought to be empowered to select their work – primarily in a communal setting (phalanx) with other women – and be materially compensated. It is important to distinguish here that while many women in working-class families were, in fact, compensated for employment outside of the household, Howland recognized that this did not absolve them of traditional household duties; women, in many cases, worked a “second shift” on the home front and remained relatively imprisoned by this economic and social model. As Cliff Cobb states in his introduction to a special issue on Marie Howland in The American Journal of Economics and Sociology, “The only way to let women out of [their domestic] prison[s] was to knock down the walls that have separated the oikos (household) from the polis (public arena), the domestic and the non-domestic spheres” (74.5, 859).

 

Woman @orking at Texaco Refinery
Port Arthur refinery, The Texas Company via photopin (license)

 

The Fourierist model remains relatively obscure when compared to other alternatives to capitalism, such as Marxism, and might best be characterized as the combination of the communal elements of socialism with a view of humanity as an evolving subject striving towards a state of universal harmony in accordance to God’s will. Fourier believed that the divine model for social evolution required a move toward communal living, reducing the inefficiencies of individual households by consolidating and redistributing the work required by the community. Notably, domestic work such as cooking, cleaning, and childcare was included in this model. By normalizing domestic work within the community marketplace, Fourier’s plan for community living also implies a redistribution of power that has traditionally separated the genders, privileging white males above everyone else. It was Fourier’s hope that, by altering domestic work and power in this way, it would facilitate the sharing of power in other spheres.

Late in life, Howland would reside in the Georgist community of Fairhope, Alabama, which was founded on the ideas of American political economist Henry George. These ideas, implemented both in the United States as well as abroad, have yielded enormous economic opportunities. Not surprisingly, Howland found these ideas compelling and even necessary for realizing a more egalitarian world.

 

Fairhope, Albama.
Fairhope, Albama. By Stratosphere (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 4.0-3.0-2.5-2.0-1.0 (http://creativecommons.org/licenses/by-sa/4.0-3.0-2.5-2.0-1.0)], via Wikimedia Commons

To be clear, none of this demonstrates that the core of Howland’s vision regarding the economic liberation of women cannot be better adopted by our contemporary society. If Aiken’s words are to be believed, we might argue that Howland’s ideas continue to pose challenges so significant that they are resisted by mainstream culture. The virtues of Howland’s ideas lay principally within the uncomfortable questions they pose. It is interesting, for example, to consider the widespread negative perceptions that persist regarding “feminism” as a disruptive – rather than restorative – social influence. The myth of an America offering equal opportunity to all regardless of gender, race, and other disadvantaged identities persists. Should continuing inequality be recognized, which groups stand to lose ground, and what type of social and economic justice, as envisioned by Howland, ought to be pursued? The idea of great disparity as a necessary evil (social Darwinism) remains an economic theory so deeply ingrained in our national narrative that it is often revered as unassailable, forestalling conversations that might otherwise pose promising alternatives but that have the potential to revise our current economic paradigms.

If there is anything we can learn from Howland’s ideas, it’s that justice in work relations cannot be achieved within the current capitalist system, nor can they be achieved by simply redistributing property. To secure a just system for women, said Howland said, the caretaking duties that women are often burdened with also need to be redistributed.

Cover Image: Ironing Day- vintage stereoscope card via photopin (license)

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The Global Vacuum Cleaner: how we suck the wealth out of poor nations

 

Introduction

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Srinivasa Ramanujan was one of the greatest mathematical geniuses in history. He was born in a small village in rural India. But his village was very poor. He was often unable to afford food, and finally died at the age of just 33, from a disease associated with dirty water. His death could have been easily prevented, but Ramanujan could not afford a doctor. (source)

That was a hundred years ago. Today, India still produces great thinkers. Take Amit Garg for example. He recently broke the world record for dividing a ten digit number by a five digit number, all in his head. But to find the best funded universities, Amit had to move to America.

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How can India be so rich in people, yet so poor in money? How can it still be poor after a hundred years of investment and progress? Indians work just as hard as people in richer nations; heir nation has democracy, trade, and natural resources. Yet, the average Indian wage is still a tiny fraction of the average American wage. Why?

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(source)

This problem is repeated in many developing nations. Why?

Whenever rich nations and poor nations both exist, the money is often sucked from the poor into the rich. Differences in income act like a gigantic global vacuum cleaner.

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This is true no matter how clever or hard working the poor people are, and no matter how much the rich try to send aid. This essay looks at why.

Summary

The border between rich and poor nations acts as a Global Vacuum Cleaner. Rich individuals’ greater buying power means that things of value will tend to be sucked out of poor nations into rich nations, leaving poverty behind.

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This is not the only economic force at work of course. There are other major forces, such as where the rent goes on land, establishing overseas factories, charitable giving, etc. Some of these can be used to counteract the vacuum. But this essay is a reminder that the natural effect of inequality is to suck wealth from the poor to the rich. This effect is so fundamental, so constant, that it dwarfs any aid budget.

Ironically the GVC even hurts rich nations. Without the vacuum, poor people could create more wealth, then both nations would benefit far more from trade and faster scientific advances.

 

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The problem

Imagine two nations:

Tenland, where people earn ten dollars per hour.

And Oneland, where people earn one dollar per hour.

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Both nations make products that take an hour to manufacture. So a product from Oneland costs one dollar. But a product from Tenland costs ten dollars.

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Imagine you live in Tenland. Obviously you will buy your products from Oneland, because they only cost one dollar instead of ten.

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But if you live in Oneland and need something from Tenland (as you will from time to time), then you have to pay ten dollars. You have to work ten times longer than if you bought something locally.

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Thus, work goes from Oneland to Tenland at a rate ten times faster than it goes the other way. The border becomes a Global Vacuum Cleaner (GVC), sucking the work out of Oneland. Eventually, Oneland gets in debt to Tenland, and has to sell its natural resources in a haste just to pay the bills.

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Onelanders have to work longer and longer hours. Few can afford to save for retirement, so they have more children instead: your children look after you in old age. But more mouths to feed means more work to be done: so even the children have to work.

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Tenland not only sucks out products and natural resources, it sucks out the best brains as well. Tenland welcomes anyone who can create a lot of wealth. But ordinary Onelanders don’t get visas: Tenlanders are afraid of their own wages going down.

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It gets worse

One way out is for Oneland to increase the value of what it sells. Oneland could buy Tenland machines and starts manufacturing more advanced goods. The machines would be expensive: Oneland would need to sell everything it had, but these Tenland machines mean it can compete like Tenland, right?

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Wrong. Tenland virtually always has better machines. It uses Oneland’s cheap raw materials (e.g. Congolese Coltan for electronics), and can thus make products for a similar price. However, Tenland has more machines and can offer a much better choice, enabling Tenland to sell for more.

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The GVC gives so much power to one side that trade rules themselves are written to favor the rich countries. When international rules are decided, Tenland will specify things that only it can produce. All in the name of quality and safety, of course.

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The GVC gets a further boost from the “race to the bottom”: some parts of Oneland will be so poor that the people will do absolutely anything to get money. So anyone from Oneland who charges more cannot sell.

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What can we do?

What if the people of Oneland close their borders? Then the GVC stalls. But Oneland is hindered from improving its condition without machines from Tenland. Oneland needs to buy from Tenland. So, they need Tenland dollars. To get them, they need to sell things to Tenland. This starts the GVC up again.

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What if compassionate Tenland customers just pay extra, so Oneland suppliers can be paid more? This does not change the underlying mathematics of the vacuum. Money will be sucked back into the rich nation.

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A better future

Many people think the global vacuum can never change, because Tenland relies on Oneland for cheap resources.

Yet the opposite is true: if we get rid of cheap labor, the rich actually become richer. This is why:

Consider a world like today, where Tenland sucks value out of Oneland.

vacuum3.jpg

This means Oneland schools do not have many books and Oneland farmers cannot invest for the future. So despite being smart and hard working, Oneland workers and farmers cannot do what Tenlanders do.

So not only does Tenland produce the best value added goods, it also produces some of the best workers and best crops. Tenland even grows its own wood, because Tenlanders like to walk through beautiful forests.

So if we add up all the sources of Tenland wealth, Oneland is a very small part.

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With more recycling, Tenland would rely on Oneland for even less.

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But if Tenland can make money on its own, so can Oneland. If Onelanders were paid as much as Tenlanders, and used the same self-sufficient methods, they would create the same wealth as Tenland.

But what of Tenland’s small reliance on cheap Oneland materials? Yes, each would pay more for that small amount. But each would gain a greater profit due to increased trade.

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For a real world example, compare how much the USA gained from Japan before and after Japan became wealthy. Cheap rice is nice, but better cars and better software are much more useful.

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When two nations are wealthy they both make more money. Because they have more choice, and faster scientific progress.

Imagine a world with no more Onelands. No more desperate people to support terrorism or cut down rain forests just to survive. More inventions and artists. And the side effect of more recycling means the planet is safe for the next ten thousand years.

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Conclusions

  1. The Global Vacuum Cleaner (GVC) is a natural result of unequal wages.
  2. So for every dollar we give in aid, tens or hundreds of dollars come in the other direction.
  3. But if the poor are paid more, then the rich would make even more money.
  4. Shutting down the GVC also creates peace and a better environment.

What to do?

How do we create a world where the poor are paid more? We need two changes:

  1. Create more wealth and more jobs, so we no longer fear immigration.
  2. How do we do that? We need to remove artificial shortages, i.e. the hoarding of natural resources domestically. This will enable us to no longer rely on stripping poor nations of their natural resources.

Postscript

This essay was inspired by an article from Oxfam in the 1980s. It calculated that for every dollar given in aid, ten dollars or more comes back in the form of lower prices for raw materials.

That fact changed my life. It led me on a quest to understand the economics of poverty and wealth. I try to avoid relying on statistics, as these can be endlessly interpreted. Where possible I want to understand the underlying logic, and the logic behind the logic. Hence my own web site, AnswersAnswers.com.

Thanks for reading.

Chris Tolworthy, February 2015

References

Ramanujan image:
Oberwolfach Photo Collection, Creative Commons License: Attribution-Share Alike 2.0 Germany, via.Wikimedia.

Ramanujan biography:
Robert Kanigel (1991), “The Man Who Knew Infinity: a Life of the Genius Ramanujan.” New York: Charles Scribner’s Sons. ISBN 0-684-19259-4.)

Amit Garg facts:
From the Tribune of India, 23 April 2012. http://www.tribuneindia.com/2012/20120424/main4.htm)

GDP per capita:
World Bank, 2013 figures

Henry George Photo
Copyright expired image, via “Henry George: 100 Years Later”

Ethical trade statistics:
Peter Griffiths (2011), “Ethical objections to Fairtrade.” The Journal of Business Ethics July 2011. Online copy: http://www.griffithsspeaker.com/Fairtrade/Ethical%20Objections%20to%20Fairtrade%20web.pdf

All other art by the author.

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Nobody’s Neutral about the Net

-Lindy Davies

The Internet is, like, the coolest thing ever. My kids, aged 17 and 14, can’t conceive of life without it. Back in the day, it used to be called “The Information Superhighway” — but it’s more than that, now. It’s become almost a sort of worldwide collective mind, connecting us in ways what evolve faster than they can be interpreted. Back in 1990, I organized a free public seminar, an introduction to the Internet. It was held in a room that seated 50 people, and about 150 showed up. People stayed to stand in the hallway, almost entirely out of earshot of the speakers, trying to glean whatever they could. We all want to be connected. Perhaps we all need to be connected. How It All Started The Internet started out as, arguably, the single most important by-product of US military spending: the ARPAnet, whose original mission was to provide an invulnerable command-and-control network. The basic idea was to break messages up into packets, each of which carrying instructions on how to reassemble them at their destination. These packets would be sent out into the network, using whatever pathway was open. Thus began a network that could still function even if big chunks of it (say, the Washington, DC and New York metro areas) were vaporized in a nuclear war. Such a network would carry digital messages — and it began to dawn on us that any old thing — be it music, books, photos, cartoons of the Prophet, video games — can be poured into an electronic tube in the form of ones and zeros, and decoded at the other end. The most neato thing of all, the thing that gave the Internet its nerd-heroic revolutionary ethos, is that it was participatory. Essentially, every user of the Internet would have equal access to every other user — and to a significant extent this remains true, even in these days of massive mass media. If you have a cell phone and a Net connection, you can report the breaking news. And, if you’re creative, savvy and lucky, it’s possible, with a very low initial investment, to get your Web content up in front of millions of viewers. This has been a boon to advocates and activists of all kinds — and a few notably successful entrepreneurs. We’re All Content Providers The Internet companies that have made it biggest have been those who have found the best ways to leverage their users’ input. Google sells advertisements whose effectiveness are maximized automatically by association with the things people choose to search for. Ebay monetizes the crap in everyone’s basement by letting people present it, for free, to those who want to buy it. And Facebook! I often look at Facebook, over morning coffee, and wonder what the heck it’s good for — but it’s amazingly good at what it does. Facebook takes the genius of Google and Ebay a step further: not only does it expertly remind you about the stuff you’ve thought about, looked at or purchased — it does so in the context of the world’s favorite time-wasting hangout. I would not be surprised if a study were to show that Facebook users exist in some sort of hyper-relaxed hypnotic state: Like… yes, and share… All of these incredibly successful Internet firms rely on their users to be content providers. Yet, notwithstanding the amazing variety of cool stuff you can do with the World Wide Web, in physical terms it is just a way of transferring digital files from one computer to another. You can dump coded 1’s and 0’s into many kinds of pipe — and the pipe you want is the one that can reach as many users as possible. Initially, this was the telephone system, with its universal service, as was mandated in the US by the Communications Act of 1934. Among many other provisions, this law designated telephone companies as Common Carriers. This meant that they had no responsibility or liability for the information their lines carried, and that they could neither refuse nor discriminate against any caller because of anything said over the phone. As you would expect, Internet Service Providers (ISPs) initially had every incentive to act as common characters. It was the textbook example of what economists call a “network externality” — the more ideas, innovations, philosophy and porn its users provided, the more people would want use the Internet. This didn’t tend to overload the information-carrying capacity (the bandwidth) of the phone lines, because in the beginning, the Net transmitted information in the form of text. People accessed the Net using dial-up modems (the ones that made the weird skritchy noises when they connected); the fastest ones pulled in 56K bits per second. Right now I am using a DSL Internet connection, whose speed is on the low end of what is currently called “broadband.” My wife is downstairs watching a streaming video, and my laptop just recorded a download speed of 3.9 M bits per second — in other words, 69 times faster than the old dialup days. Back then, we thought the Internet was way cool and full of potential, but it wasn’t a pop-culture thing. It had a learning curve, and a lingo of its own, and this gave rise to a culture of proud geekery. Nerdiness slowly became hip. We also thought that the day of streaming video on demand was about as far in the future as Star Trek’s live-streaming of human beings. Moore’s Law Marches On Internet Culture, however, was on a collision course with the Net’s emergence as a pop phenomenon. Little by little, it got easier to use. There was no stopping it: text-based interfaces gave way to graphical browsers (which were given away free). Online commerce boomed, following the lead of Jeff Bezos, who shipped Amazon.com’s first book from his garage in 1995. Over the last fifteen years the Net has changed the way just about everyone does business. And, the list of feasible online wonders keeps expanding, to the tune of this crazy little thing called Moore’s Law. Intel pioneer Gordon Moore articulated the principle that sheer data-processing power tends to double every 18-24 months. This has held true for over three decades. While the laws of quantum mechanics prohibit this process from going on forever, predictions of when the Moore’s Law Curve would flatten out have repeatedly been pushed into the future. “In 1976,” writes Jonathan Strickland, “the Cray-1 was state-of-the-art: it could process 160 million floating-point operations per second (flops) and had 8 megabytes (MB) of memory.” The laptop on which I’m typing these words has an Intel i7 processor that can process 113 billion flops, and has exactly 1,000 times the memory capacity of the ’76 Cray. Things have gotten way faster. It may never be possible to store entire human beings in computer memory (Star Trek’s transporter is the ultimate, I guess, in Cloud Computing) — but I can now watch Star Trek on my laptop anytime I want, even at the relatively pokey download speeds available in rural Maine. The Internet has entered the era of streaming video — and that is what has made the issue of “Net Neutrality” so huge. Streaming video uses a tremendous amount of bandwidth. Netflix and YouTube alone account for more than 47% of the overall downstream bandwidth use in the US today. Net Neutrality is the principle that ISPs should be “common carriers.” The so-called “last mile” providers, who own the wires that bring the data to your home, enjoy a monopoly. According to Net Neutrality advocates, they have no business discriminating against any of the data coming through those wires. People get very emotional about this (I think the wonderful Vi Hart offers the most listenable explanation, but John Oliver’s excellent rant is a must-see, too). The Internet’s character as a wide open frontier, with equal access for everybody, is what made it such a fertile ground for innovation and creativity. If we allow ISPs to pick and choose the data they transmit to us, we’re on a slippery slope. Big money will pay for big pipes. The Internet gave normal folks a seat at the Grownup Media Table; now Big Cable wants to take it all away. The case for Net Neutrality seems pefectly obvious — and that is how advocates present it: as a simple standoff between We the People and the forces of Corporate Privilege. Cui Bono? Network Neutrality started becoming widely debated after certain bandwidth-hogging services became popular. (Before that, it wasn’t a front-page issue, because Net Neutrality wasn’t widely perceived as threatened.) First it was peer-to-peer file-sharing by services such as BitTorrent (including lots of illegal copies of copyrighted TV shows and films). A 2007 lawsuit against Comcast, the nation’s largest cable company, forced it to stop blocking BitTorrent. Recently, controversy ensued after Comcast slowed down Netflix service to its subscribers. The dispute was settled this past February when Netflix agreed to pay Comcast for faster, more reliable service. This agreement, of course, violated the principle of Net Neutrality. A few technical observations will help us to understand the issues here. Back in the days of dialup modems, many local companies competed to provide Internet access; they all had equal access to the phone lines. As demand for broadband grew, however, Internet service started to depend on privately-owned wires, of either the phone company of the cable-TV company. Because most customers have only one set of these wires available, ISPs effectively have a monopoly. The Net Neutrality debate centers around the behavior of these ISPs, which provide the vital “last mile” service to individual homes. The ISPs deliver content; they don’t provide it. Content comes to individual users from the worldwide Internet, via the ISPs. The abandonment of Net Neutrality, we are told, will allow the establishment of a “fast lane” for providers with deep pockets. However, ISPs aren’t able to deliver content any faster than it comes to them through the worldwide Internet. ISPs cannot actually speed up data; they can only slow it down — and they contend that bandwidth-heavy services clog up their currently available capacity, slowing down service for everyone. In the early days, all users of the Internet shared the infrastructure through which Net data coursed: the Internet backbone. Today, however, there exists a “fast lane” through the Internet that has nothing to do with the last-mile providers. Large content providers such as Netflix or YouTube use content delivery network (CDN) technology, which sets up cached versions of their content on servers close to high-demand areas. This greatly speeds up the delivery of the video content to the ISP — and, it greatly increases the volume of data the ISP must handle. Some ISPs have blocked content from some CDNs; others have negotiated payment agreements. Now, if one company, by utilizing a paid CDN service, is able to get faster speeds, is that not establishing a “fast lane” and violating neutrality? Well… it’s certainly establishing a fast lane, anyway — and that is how today’s Internet works. If every packet of data were required to be treated just the same — in other words, if no proprietary way-clearing equipment were allowed — most users would get poorer service than they do now. How Will We Get Our TV? The key factor in all this is that only recently have on-demand movies and TV series on the Internet become commercially viable. Before that, we consumed TV shows in broadcast form — all at the same time — either via a broadcast antenna or a cable subscription, and we consumed feature films either in movie theatres or by renting the physical media. One might ask why it’s so hard to get videos on the Internet, when we’ve been getting hundreds of TV channels through coaxial cable for decades. The difference is in the way the signal is provided. A broadcast TV show is provided via a certain frequency through a cable. It is only available at the time of broadcast. One signal can be sent to the node in, say, each apartment building, where it can be split among 1-200 subscribers. However, the consumer of a streaming video on the Internet can start the show anytime, pause it and resume it later, and simultaneously have access to the full range of sites on the Web. An Internet TV show takes up a bunch of bandwidth, which must be dedicated at that specific time to each individual user who clicks on it. That is the case for all Internet content, of course — but websites and still images take up so much less bandwidth that millions of them can bounce back and forth without degrading anyone’s service. The key to ensuring fair and innovative Internet service is competition. Under current conditions, cable or telecom companies have a monopoly on last-mile Internet service. However, there are a number of interesting developments that can, potentially, invigorate competition among Internet providers. Indeed, many commentators argue that mandating Net Neutrality rules now would stifle various forms of technological innovation, and weaken Internet service across the board. Until very recently, cable companies have been mainly in business to deliver broadcast-model cable TV via established cable networks. As demand for that service falls, they will have more incentive to devote bandwidth to Internet services. In a way, the Net Neutrality debate comes down to a conflict between two types of Big Player — the ISP, such as Comcast, and the large-scale content provider, such as Netflix — over who is going to pay for increased capacity. Each wants to preserve the viability of its own business model — but in the end, the market is going to decide who wins. Possible Sources of Competition Folks in big cities have their zippy cable modems — but, DSL service through regular old twisted-copper telephone wires is still the most prevalent form of broadband service. New technology is under development that promised to achieve Gigabit speeds over regular phone lines (i.e., some 20x faster than my Star Trek stream). It would require step-up boxes within a quarter mile or less of the home, but current DSL systems also require local boxes, only a bit less frequent — and if the market is there, there’s a good chance the hardware will be provided. The next generation of cable technology also promises considerable improvement in download speeds: the race is on. It’s worth noting that any system that reliably steams high-quality video will have no trouble handling the less bandwidth-intensive needs of all of us lowly content providers who offer mere journalism, art, poetry, advocacy, education — content, that is, in the form of text and images. In today’s market, the cost of storing and transmitting such things has been cut, effectively, to zero. This is not to say that fabulous, as-yet-unheard-of new applications might not require considerable bandwidth. Who knows when the next Google or Facebook will show up? But when it does, it will emerge on the open Internet, just as all those other sites did — and, in today’s market, when content becomes popular enough to need extra delivery capacity, content providers can afford to buy it. Many people, of course, have ideas to share or programs to promulgate, things that are very important to them, yet have failed, thus far, to “go viral.” Is the next phase of the Internet going to pass these good people by? It’s conceivable — but it seems to me that this ship has already sailed. The Internet has been a very, very big place, for some years now. Yet, it’s worth noting that neither ISP monopolies not bandwidth limitations have kept anyone from viewing the video of NYC police officers choking Eric Garner. The Internet’s democratizing potential is still strong. How About Municipal Broadband? Finally, there might be one more way to ensure that there is healthy competition in the ISP market. Some — including, lately, President Obama — have advocated municipal investment in broadband service.  This would be one way to keep the big-cable ISPs on their toes. Big Cable recognizes this, because its lobbyists have been working overtime to get states to pass laws to restrict or prohibit the practice; such laws are on the books in twenty states. Tennessee, for instance, prohibits cities from establishing municipal broadband in an “area where a privately-held cable television operator is providing cable service.” Apparently Chattanooga got in under the wire, though, because the city (pop. 171,000) has provided fiber-optic cable directly to every home in it. It accomplished this feat along with an upgrade to its municipally-owned power grid, and it was funded by a combination of Federal stimulus funds and municipal bonds. Chattanoogans can get full Gigabit service for $350 per month, but most opt for the affordable 30 MB service — six times faster than the national average. Chattanooga’s fiber system carries TV and telephone signals as well. Not only is it expected to start showing a profit this year, it also makes possible a slew of other money-saving innovations, such as a smart electrical grid, traffic lights that respond in real time to changes in traffic patterns, and vastly improved responses to outages. It’s the wave of the future, and Chattanoogans are quite happy to be surfing it. Skeptics of the “Net Neutrality” position argue that Internet service is qualitatively different from public utilities such as highways, or electrical service (and the deregulation of wholesale electric power over the past few decades has yielded strong efficiencies). The key difference, they argue, is that Moore’s Law continues to be in effect; unfettered technological innovation will continue to yield unpredictable benefits, and should not be hindered by regulation. Everyone, however (everyone, anyway, who isn’t paid by Time Warner/Comcast) agrees that lack of competition in “last mile” Internet service hinders progress. Where will this competition come from? Well, it could come from a number of sources. Successful implementation of Gigabit DSL service, for example, would provide a strong competitor to the cable companies. Or, fiber-to-the-home could blow cable out of the water. This could be done by local governments, as in Chattanooga (and in Wilson, a town of 50,000 in Eastern North Carolina), or by private companies, as Google has been doing in Kansas City, Missouri. But, if such an infrastructure improvement would be cost-effective or even outright profitable for a city that undertakes it, it’s hard to see why a city would have to wait for the largesse of a Google. Public investment in local broadband is simply good municipal policy. If it is, and to the extent that it is, the Henry George Theorem tells us that it will fully pay for itself in higher land values. Don’t you think that cheap, reliable high-speed Internet service will move Chattanooga, Tennessee up on the list of desirable places to start a business? There’s no doubt that people prefer places with high-quality, reliable infrastructure. There’s also no doubt (though this is a fact that is less widely understood) that the very best way to pay for local infrastructure is by taxes on land value — after all, it is precisely those public investments that have created that land value in the first place. Undoubtedly, Internet service is a “public utility” issue — which is why the Net Neutrality debate has been so fraught and passionate. But the answer isn’t to try to restore the Internet to a bygone era of “neutrality” that merely rations existing capacity. The answer is to let a million technological flowers bloom — and when they do, remember who rightfully owns the ground they’re growing in. So, join hands, everyone — all together now: What do we want? Municipal broadband! How do we pay for it? The land value tax! I can’t hear you! Come on — say it again now, much louder:

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Keystone XL: This Far. No Further.

“We will close our reservation borders to Keystone XL. Authorizing Keystone XL is an act of war against our people.”
— Cyril Scott, President, Rosebud Sioux Tribe

“Get off my land!” That injunction, which calls to mind a rifle-wielding homesteader, protecting hearth and home against intruders — is about as American an image as you can think of.

The civil infrastructure behind that image is less storied, but equally consequential. There is scarcely a square inch of North American land whose tenure is not duly recorded and righteously enforced, down to the pickiest easement or lien. Americans believe in land ownership.

A big infrastructure project, such as an oil pipeline — or a highway, or a railroad — must pass through many boundaries, and its legal right to do so must, in every case, be secured, purchased, negotiated — or conquered. There are many layers of irony in the fact that the biggest, most fraught and controversial pipeline project of the new century could be stopped by a band of people in tipis, saying “No further.”
Many people have heard of the Keystone XL pipeline. A fair number have even marched against it. However, readers may not have a clear idea of the overall industrial context; in other words, they might not know how many oil pipelines there are: some 185,000 miles of them, crisscrossing the United States, carrying every kind of crude oil and refined petroleum product. About 55,000 miles of these are “crude oil trunk lines,” of which the Keystone XL represents the large variety. It is planned to be three feet in diameter (the trans-Alaska pipeline is the biggest, with a diameter of four feet). Its daily capacity is projected to be around 830,000 barrels of crude per day.

It’s hard to get your mind around something as huge as oil consumption in the United States. The US currently uses 18.89 million barrels of oil per day; this figure is down from a high of 20.9 million in 2006. That seems like a lot. How can we visualize it? Let’s think of it in terms of tanker trucks: the big semis that pull up to fill tanks at your local gas station. Such a tanker carries about 5,000 gallons, or 895 barrels of gasoline. That means that today’s United States uses 21,106 tankerfuls of oil every day. Each of those trucks is about 60 feet long; if we put them all on a road with an average of three feet of space between them, we’d be looking at 252 miles of semi trucks. And, of course, we don’t consume crude oil, we consume refined petroleum products, which means that the oil has to be transported at least twice. That means that, at a minimum, the US’s daily oil-transportation needs would fill four lanes of the entire length of the New Jersey Turnpike bumper-to-bumper with tank trucks, with a few thousand more waiting on the on-ramps. Tanker trucks, of course, really only make sense for dispensing finished products; most crude oil is moved through pipelines.

If that’s the case, then why is the Keystone project so controversial? Well, to hear its supporters talk, it shouldn’t be. Arguments against it are characterized as no more than treehugging, Obamafied puffery. Oil is oil; it’s the stuff that modern economies run on; demand for oil may fluctuate a little, but over the long term it’s a given. Getting more crude to US refineries, especially from a friendly neighbor country, can only be a good thing. “Global warming” probably isn’t even real. These assumptions describe the political climate that TransCanada faced in building its Keystone pipeline project, most of which, indeed, is already in place, transporting gobs and gobs of oil as we speak. They didn’t expect this final section, connecting Hardisty, Alberta with Steele City, Nebraska via Montana and the Dakotas, to pose a problem.

Oil Sands: the Crudest Crude

When we hear the price of oil reported on the financial news, we often hear it in terms of the a benchmark called “light, sweet crude,” which sounds very nice, sort of like maple syrup. Lightness and sweetness are references to crude oil’s density, and its sulfur content. Light, sweet oil, such as Brent crude from the North Sea, are priced higher, because they demand less refining to yield retail products such as gasoline. The kind of crude oil the Keystone XL pipeline would carry is less like light, sweet maple syrup, more like the kind of gunk you’d scrape off the bottom of a truck. It’s called “oil sands.” (Many call it “tar sands,” which is more descriptive, but Canadian oil people insist that because tar is a human product, “oil sands” is more correct.)

The resource is bitumen, a tar-like substance mixed with sand. Extremely large deposits of the stuff exist in Alberta (there are other large deposits in Venezuela). It is mined in two ways, either by strip mining, for shallow deposits — or, for deeper deposits, by a process similar to fracking, in which steam is forced underground, liquefying the bitumen and pushing it to the surface. In either case, however, mere mining doesn’t elevate the gunk to the status of “crude oil.” It must undergo an energy- and water-intensive pre-refining process to make it valuable enough to bother with refining, and fluid enough to move through a pipeline.

Indeed, in the oil-embargo years of the 1970s, there were proposals to exploit Canada’s oil sand fields, which have long been known to be vast: Canada’s proven oil reserves are second only to Saudi Arabia’s. But because of its many disadvantages, oil sands was not deemed commercially viable at the time. Since then, a few factors have changed: easily-recoverable sources of liquid crude oil have become depleted, raising the average cost of a barrel of crude. Lots of oil is still being brought to market, but more of it is getting there through new technologies such as deep-ocean drilling and hydraulic fracturing. The newfound viability of Canadian tar sands (if it indeed exists) is part of this trend. Additionally, instability in the Middle East, the area that surrounds the world’s largest petroleum reserves, makes North American sources that much more attractive.

Nasty Stuff

Nevertheless, the delivery of tar sands oil is anything but a light, sweet process. Surface mining operations thus far have dug up huge areas of hitherto pristine boreal forest and marshland; some four tons of earth must be moved to create a single barrel of oil. Furthermore, separating bitumen from its sand matrix consumes between two and four barrels of water per barrel of oil.  It actually uses more water than that, but some is recycled. The used water, however, is laced with toxic chemicals and cannot be placed back into the environment, but is held indefinitely in huge “tailings ponds,” two of which are visible from space to the naked eye. The process also uses lots of energy. The strip-mining operations use the world’s largest electric shovels, loading 100 tons per scoop into dump trucks that carry 400 tons per load. The water used to separate bitumen from sand must be heated. It has been estimated that current tar sands operations contribute four per cent of Canada’s total greenhouse-gas emissions, and that figure is projected to triple over the next six years. Some engineers are proposing to lower this figure, however, by using portable nuclear reactors to heat the water.

The more one looks into the realities of the tar-sands industry, the more absurd it seems. In order to separate the bitumen (which is only twelve per cent of the oil sands “ore” by volume; four tons of it must be mined to yield a barrel of oil) they need to heat so much water that nuclear reactors are a viable way to do it? And even once the bitumen is separated, it is still too viscous to ship; it has to be “upgraded,” using more heat and pressure, to get it to flow.

But, (advocates insist) we need the oil. And if these ecological travesties are going on way up in Northern Alberta (where, by the way, it is creating lots of jobs; the remote village of Fort McMurray is a boom town), what do we care? They’ve got plenty of land up there. But: the remoteness of the Albertan oil sands deposits brings us to the next chapter of our story. No oil-refining capacity exists anywhere near them. For this oil to be viable, there has to be a cost-effective way to get it to refineries.

The  Bottleneck

Advocates of the Keystone XL assert that it should be built because those Canadians are going to sell their oil anyway; if they can’t use this route, they’ll send it West to the Chinese, or East to Atlantic ports. It isn’t that easy, though. To get to the Pacific, a pipeline would have to cross the Rocky Mountains. The route East is much longer, would have to pass through many complex, populated rights-of-way, and has already faced vociferous opposition in Portland, Maine, where voters this year prohibited the reversal of flow through an existing pipeline to accommodate oil-sands crude. Shipping of crude oil by railroad is at just about the peak of existing capacity, and has led to some devastating spills. No, there is a very big, very clear reason why the Keystone XL pipeline is such a big deal:

Without it, the Canadian oil sands industry will be a losing proposition.

Now, let’s be clear: I’m saying that without Keystone XL, the Canadian oil sands industry will be a losing business proposition for its investors. It’s already a losing proposition for the planet; its external costs are, as we’ve seen, absurdly high. But, in spite of everything, if it is able to deliver 830,000 barrels per day to US refineries, it will be profitable — and this pipeline is the only way it can possibly do that. If the pipeline goes through, mining operations will ramp up, economies of scale will kick in, and money will be made. If it doesn’t, well… then the big scar on Alberta’s land won’t get bigger, and a very large amount of carbon won’t get dumped into the world’s air.

James Hansen and Bill McKibben saw the writing on the wall, and organized a very efficient public campaign to raise awareness about the pipeline and its dangers, and their efforts seem to have been effective in strengthening President Obama’s resolve against the project (because it crosses an international border, its final approval is the responsibility of the State Department). This could be overridden by new legislation. A bill to force approval of the pipeline recently lost narrowly in the lame-duck senate; once the new Republican senate is in place, it will almost surely pass. Obama has been sending signals that he would likely veto the bill — but, that may not be the end of the Keystone XL. There could conceivably be enough votes to override his veto, or the pipeline could be traded for a policy the president wants more, such as a minimum wage increase.

The Last Stand

So, bad as it is, the Keystone XL might get the go-ahead anyway, and there’ll be no stopping it, right?

Perhaps there will. There is another sovereignty that must be consulted here — one that deeply disapproves of the Keystone XL pipeline. President Cyril Scott of the Rosebud Sioux Tribe said this in a November 14th statement in response to the bill to force approval of the pipeline that was passed by the House of Representatives:

[T]he Rosebud Sioux Tribe (Sicangu Lakota Oyate) recognizes the authorization of the this pipeline as an act of war. The tribe has done its part to remain peaceful in its dealing with the United States in this matter, in spite of the fact that the Rosebud Sioux Tribe has yet to be properly consulted on the project, which would cross through tribal land, and the concerns brought to the Department of Interior and to the Department of State have yet to be addressed.

The House has now signed our death warrants and the death warrants of our children and grandchildren. The Rosebud Sioux Tribe will not allow this pipeline through our lands.

In earnest of this, the Rosebud Sioux, with the full cooperation of the other Sioux Tribes in South Dakota, have set up a “Spirit Camp” near the tiny community of Ideal, South Dakota, on a small patch of Rosebud tribal land that appears to lie in the proposed path of the pipeline. There, tribal members and supporters have vowed to stay, to guard the land and stop the pipeline.

Does the pipeline route actually cross reservation land? That is an important question, and it appears that TransCanada has chosen the route carefully to avoid doing so. First Nations in Canada have, for the most part, strongly opposed oil sands development, and the company clearly wanted to avoid crossing reservations land in the US, recognizing that doing so could expose them to another level of legal complications.

However, it is very difficult to cross the country to the North and East of the Rosebud Sioux reservation without crossing land that does, indeed, belong to the Rosebud Sioux. And, furthermore, even were the pipeline not to actually cross Rosebud trust land, consultation with the tribe is still legally required if such a project were to cross adjacent lands in which the tribe has recognized riparian, burial or sacred considerations.

This Far. No Further.

The question of whether a crude oil pipeline in South Dakota crosses sovereign Indian land is by no means settled, legally or morally. The history of the “Great Sioux Reservation” which was created by the 1868 treaty of Fort Laramie is, in many ways, an apt microcosm of the entire history of dealings between the United States and the indigenous people of North America.

The vast majority of surviving Native Americans never surrendered to the United States, and never sought to become US citizens. As settlement pressure increased, tribes were moved, often forcibly, to designated areas. On these reservations, Indians would maintain self-government. They were not subject to the laws of the state(s) that surrounded the reservations; they would maintain a “nation-to-nation” relationship with the federal government, based on treaties (treaties duly negotiated between sovereign states had long been considered, under common law, as the law of the land).

However, by 1887, even that arrangement, disadvantageous as it was to the Indians, came into conflict with the Manifest Destiny of the United States. That year, under the Dawes, or “General Allotment” Act, Native Americans were offered US citizenship under the worst possible terms. Under this law, the reservations would be dissolved and individual families would be allotted 160 acres of land. If individuals accepted these allotments and farmed their lands in a suitable manner, they would be granted citizenship. To be sure, there were many more 160-acre parcels of land in the Great Sioux Reservation than there were individual families to allot them to. That was part of the plan: the “surplus” land would be made available to white settlers.

This was, of course, just the latest in a long series of treaty abrogations by the US government. Nevertheless, as in the case of slavery (or fee-simple land ownership, for that matter), a need was felt for some form of legal justification. This came in the 1903 Supreme Court decision of Lone Wolf v. Hitchcock, which has been called the “Indian Dred Scott decision.” The court held that the US Congress has the power to unilaterally abrogate treaty obligations with native tribes. A series of laws, pursuant to this decision, offered to buy Rosebud Sioux lands for $2.50 (later $2.75) per acre. As the poster shows, these were bargain prices.

This history is the source of the “checkerboard” pattern of trust lands held by the Rosebud Sioux, which are now considered non-contiguous parts of their Reservation. The sovereign status of Indian nations was reinstated in US law by the Indian Reorganization Act of 1934, pushed by the Franklin Roosevelt administration and termed the “Indian New Deal.” By this time, however, more that 90 million acres, some two-thirds of Indian lands, had been transferred to white settlers.

The Profaning of the Black Hills

Gold was discovered in the Black Hills of South Dakota (and Wyoming) in 1874. Before that, this area, which had been held as sacred for hundreds of years, had not been much use to the United States. But, after the Lakota were defeated in the battle of Little Big Horn (1876), Congress seized the Black Hills, in a rider to an 1877 law that ceased all government aid, including food, unless the Black Hills were immediately ceded to the US. There was no mention of compensation.

In 1942, the national monument opened at Mount Rushmore (named for Charles Rushmore, a prospector). The mountain had previously been known by the Lakota as Six Grandfathers, and it featured prominently in the celebrated spiritual journey of Black Elk.

In 1980, the US Supreme Court, upholding a 1977 decision by the US Court of Claims, affirmed that the seizure of the Black Hills was illegal under the Fifth amendment, and awarded the Lakota $106 million in compensation. The various Lakota tribes making up the Sioux nation (Rosebud, Pine Ridge, Crow Creek, Cheyenne River, Standing Rock) agreed not to accept the cash compensation and demanded that the land be returned to them, as stipulated in the Fort Laramie Treaty of 1851. The money was held in escrow, and now totals over a billion dollars. Some are tempted to take the money; the various Sioux reservations are among the poorest areas in the United States. However, the current value of the settlement would only amount to a bit over $10,000 per person.

The Spirit Camp

It is widely understood that all aspects of legal precedent regarding the “government-to-government” relationship between the United States and Indian nations are uncertain. Indeed, the 1903 Lone Wolf decision (affirming Congress’s right to abrogate treaties with Indian nations at will) has not been overturned. And, laws passed that enforced the allotment policies of the Dawes act are still accepted as legal precedent. Nevertheless, there is a body of law that establishes some form of sovereignty for federally recognized Indian nations. Under that body of law, you can’t slap a pipeline down on reservation land — or atop sacred or burial sites on nearby stolen land — without permission.

The Rosebud Sioux members who are living in tipis along the pipeline route, outside of Ideal, South Daktoa, are making sure these facts are not ignored:

Resistance to this threat is underway. The Lakota and their allies are rising to the challenge with several carefully calculated actions, one of which is to organize and erect spiritual tipi camps to stop progress along the pipeline right-of-way…. We will use the legal and moral authority of the First Nations peoples to protect significant spiritual and burial sites which are at immediate risk…. Our government spends millions of dollars to protect cultural sites in other countries we occupy while it issues permits for the destruction of similar sites in the heartland of America for corporate profit.

The XL pipeline is the current leading threat to the survival of the planet and these spiritual tipi camps are our best opportunity to stop it. Lakota men and women are putting their lives on the line for all of us, and they need your help.

Should the Keystone XL pipeline survive a presidential veto, or otherwise gain government approval, the Spirit Camp could be the last thing that stands in its way. To be sure, the US government has the ability to sweep aside this resistance which, however heroic, is quite small. But, it won’t be able to do so without perpetrating yet another unforgivable atrocity against the Lakota people.

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Ebola Crisis, or Poverty Crisis?

It has been suggested that the Ebola crisis is less a public health crisis than an inequality crisis. My first response upon hearing this was, “Ya think!?” No blame to Jim Wallis for saying it; I’m glad he did. But the fact that it needed to be said is troubling, to say the least.

happydocThus far, the American political and media response to the news about Ebola has left me feeling ashamed of my country. Our outbreak of posturing and wagon-circling has been American Exceptionalism at its tawdriest. Respected people, astute enough to sit on the Congressional Homeland Security Committee, urgently demand that we “seal the borders! Ban flights from West Africa!” Why hasn’t Obama done that already?

Seal US borders?

Among the many reasons why that’s a bad idea, the most obvious is that there are hundreds of alternate routes; for a ban to be effective, it would have to be worldwide. But, it would be impossible to enforce a worldwide travel ban; people would sneak into all manner of places, making exposures that much harder to track down. Also, there is wide agreement that the need for people and resources to help fight the West African outbreak is so great that it cannot be met without the resources of commercial airlines.

I suppose it’s understandable, though, that we’d be a little freaked out by a gigantic outbreak in West Africa of a fatal disease that manifests itself in such symptoms as high fever, headache, vomiting and diarrhea. In Sierra Leone, currently the epicenter of this outbreak, some 7,500 people, mostly children, have died of it in the past year.

No, I’m not speaking of Ebola, but another disease: malaria. Sierra Leone has the world’s highest death rate from malaria. (It also has the world’s highest death rate from tuberculosis, which kills even more West Africans than malaria does.) This year, Ebola has killed a (comparatively) modest 3,000 people in Sierra Leone.

Not All the News from Africa is Bad

There has been some good news out of Africa recently. Economic growth is taking off, and a new middle class is emerging in many countries, skilled at leapfrogging into 21st-century communications via mobile phones. Innovative entrepreneurs are creating devices that bypass infrastructural deficiencies to meet the needs of real Africans. South Africa and, especially, Botswana are making real strides against government corruption. At the moment, the most compelling piece of good African news is the way Nigeria has carefully, methodically — and so far, successfully — controlled the threat of an Ebola outbreak. It could have gone far differently. Lagos, Nigeria’s capital, is a city of 21 million people.

If Nigeria, a country that’s infamous for epic mismanagement and corruption, can do what it takes to contain an outbreak of Ebola, then surely the United States can do it — and, initial missteps aside, the US almost certainly will do it. But, it is a costly, and tricky, process. Ebola is only contagious when victims have already begun to show symptoms — which occurs after an incubation period of up to 21 days. Those symptoms include severe vomiting and diarrhea, and patients can decline rapidly. As their disease becomes more acute, the concentration of the virus in bodily fluids increases; this means that health workers (or family members) caring for acute Ebola patients are at the greatest risk.

hazmatEquipment, and techniques, exist for dealing with such patients. However, they are expensive and cumbersome; practitioners have to be carefully trained. It can be done, though: in late September, CNN aired a report on how one woman in Liberia cared for four family members with Ebola without getting infected. We all hope the two Dallas nurses who contracted Ebola will recover soon. It is not the least bit surprising, though, that there would be initial hiccups in a nation’s response to such a tricky disease. Make no mistake, though: nobody, anywhere, thinks that people in the United States need to panic (nobody, that is, except the cynical self-promoters who seek to gain from our panic).

Sierra Leone & Liberia

Sierra Leone and Liberia have made great strides toward economic and social stability in recent years. With their devastating civil wars behind them, their economies have been growing at rates of 11-13% . Two Liberian women, Ellen Johnson Sirleaf — the first woman to be elected President of a modern African nation — and peace activist Leymah Gbowee shared the Nobel Peace Prize in 2011. Liberia and Sierra Leone are comparable in size to North and South Carolina. They have long, lovely Atlantic coastlines, and are amply endowed with arable land and various natural resources.

The Carolinas have a combined economic output (GSP, Gross State Product) of $656.4 billion, while Sierra Leone and Liberia have a combined output of only $13.4 billion (GDP). Alas, these two nations are in no shape, in terms of medical infrastructure, to even combat the devastating diseases they were struggling with before the Ebola outbreak, diseases including: malaria, AIDS, dysentery, etc.

Some selected statistics (from the CIA World Factbook) should be enough to illustrate the point:

Sierra LeoneLiberiaUnited States
People under age 1441.9%43.2%19.4%
Life expectancy57.458.279.6
People per doctor50,000100,000416
Female literacy rate32.6%56.8%99%
GDP per capita$1,400$700$49,800
Population below poverty line70.2%80%15.1%

In June of this year, Sierra Leone closed all schools due to the Ebola outbreak. In October, a school-by-radio program was announced. Its effectiveness will be limited, however, because only about 25% of families in the country own radios.

Monrovia
Monrovia

I have been emphasizing Sierra Leone because it is simpler to gather numbers for a single country, but most of what I’m saying about Sierra Leone applies to Liberia even more strongly. Indeed, it’s not easy to see why they benefit from being separate countries. Sierra Leone’s colonial history was tied with Great Britain while Liberia’s was with the United States, but their colonial, and post-colonial, politics were the same. Both powers cultivated tribal elites for powerful “overseer” roles that transferred intact into post-colonial politics. Recently, aided by the machinations of Liberian warlord (and convicted war criminal) Charles Taylor, both countries became embroiled in brutal civil wars. The war in Sierra Leone killed 50,000 people; Liberia’s killed more than 200,000.

Colonial Legacy

This histories of Sierra Leone and Liberia are of course complicated. However, for the purpose of understanding their current health crisis, it is sufficient to oversimplify. They are both a product of colonialism. Boundaries were drawn in line with European interests, pitting rival groups against one another as part of a system of divide and conqueror. A class of elites/political pawns were posted to ruling positions. When independence came, the elites were poised to consolidate their power. In the Cold War political climate of the time, regimes vied for gifts of money and weapons from either the Soviets or the West. Political control bounced back and forth between “socialist” and “anti-socialist” regimes, but domestically the labels made little difference. People’s needs were never well-satisfied, which made them receptive to the promises of each new rebel faction that seized control.

diamondsFrom a distance, people are tempted to ask why these people can’t get their act together — but the reasons are not hard to decipher. According to many experts such as Paul Collier and Pádraig Carmody, perhaps the most important source of continued poverty  and conflict in West Africa is natural resources.  For example, Sierra Leone’s largest export is unsorted diamonds — precious stones scraped out of the ground and sold for much less than their improved value at, say Tiffany’s. The URF rebels in Sierra Leone paid Liberia’s Charles Taylor in diamonds for the weapons they used to escalate their civil war.

How much would it cost to wipe out Ebola?

I live in Central Maine, which, by US standards, is not a wealthy place. Frequently I see donation jars, in local stores, for a family whose house has been lost in a fire, or who has been visited with a very expensive injury or illness. People invariably fill those jars, but only after disaster strikes are they willing to give. It may be harder for us to wrap our minds around the suffering our neighbors in West Africa -but make no mistake, they are our neighbors. Our esteemed Congressional representatives have been making that point over and over, by telling us how easy it is for them to come and visit us.

At the national level, though, the cost of turning this terrible situation around is comparable to the small change I might toss into one of those local-relief jars. That may be hard to believe, but it really is. After the 2004 tsunami in Indonesia, the US sent 12,600 military personnel to a relief and rescue mission, various governments contributed $5 billion in direct aid, and private donors raised still more. Did that scale of relief effort cause any economic hardship? Does the reader even remember this?

As Ebola accelerates at frightening pace, the World Health Organization estimates the cost of stopping the outbreak at less than $1 billion. The WHO estimates the overall cost of eradicating the much larger and deadlier problem of malaria to be around $6 billion a year for a ten-year period.

The F-22 fighter jet just went on its first combat mission, successfully dropping bombs on an ISIL command-and-control building in Raqqah, Syria. The United States has a fleet of 190 of this state-of-the-art stealth fighter, at an overall cost of over $36 billion.

The US Navy has twelve full-size aircraft carriers. When one of these behemoths goes to sea, it does so with a retinue of ten escort ships; operating a single carrier battle group costs roughly $900 million per year.

According to the US Office of National Drug Control Policy, the amount that Americans spend each year on cocaine has fallen substantially, to a mere $28 billion.

I think we can afford to invest the funds necessary to prevent preventable diseases in West Africa. Don’t you?

Long Term Solution

We need to render such nations less vulnerable, unilaterally — by promoting democracy, transparency, and economic freedom.  Economic freedom would consist of taxing these countries’ vast natural resources, and using the funds to improve medical infrastructure, among other things. Oil and diamonds are obvious examples, but the most important resource, one which all countries have, is land. Taxing it as a function of its market value would break up large feudal land holdings, making it available for poor subsistence farmers. In time, such a system would bolster domestic markets and reduce dependence on bargain-priced exports (and foreign loans). But it’s very hard to establish reasonable, sensible, long-term reforms when so many people, especially children, are dying before your eyes.

P.S.: The Impulse to Panic

Since the above article was filed, it has been reported that a doctor who volunteered in Guinea for Doctors Without Borders and returned, symptomless to New York City, has been diagnosed with Ebola. Before that, apparently, Dr. Craig Spencer did some normal traveling about the city. “See! See!” scream our friends at Fox News. Dr. Spencer was very familiar with Ebola’s pathology. He monitored his own condition carefully, and followed established procedures as soon as he developed a fever. (Initial reports that his fever was 103 degrees turned out to be a transcription error: it was actually 100.3.)

A woman, a nurse from New Jersey, was quarantined upon arrival at Newark Airport, and she has since developed a fever. This was done under a new policy announced by Governors Andrew Cuomo and Chris Christie; their two states will go beyond the Centers for Disease Control’s recommendations and impose a 21-day quarantine on medical workers returning from Ebola-stricken countries. New York and New Jersey will also impose tougher screening procedures on people arriving from Liberia, Sierra Leone and Guinea than those required by the federal government.

According to the Centers for Disease Control, it is likely that the NY/NJ restrictions will mean that fewer health workers will be willing to volunteer in West Africa, at a time when every possible hand is needed. The CDC has announced a new “active monitoring” system that seeks to severely limit the risk of new Ebola cases without the harmful effects of a travel ban or automatic quarantine.

Thus far there have been five cases of Ebola in the United States, and one death. It seems that Congressional Republicans and other fear-mongers won’t be satisfied unless there are no new cases — but that is not a realistic goal. We live in an intensely interconnected world, and freedom entails some risk: there are going to be some cases. I wonder how long it will take for the US Ebola death toll to reach 9 individuals. That’s the number of Americans killed, so far in 2014, in school shootings.

 

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