Saturday, July 26, 2008
"MAKE FREDDIE AND FANNIE GO GREEN!" Attach Green Strings to Those $Billions of Bailout Greenbacks! Brent Blackwelder and James S. Henry
With Congress about to "lend" at least $300 billion to Fannie Mae and Freddie Mac, the nation's two giant mortgage lenders, shouldn't we at least insist in getting some lending policies that help promote energy-efficient new housing for all this money?
For the full article, go here.
(Note: Brent Blackwelder is President of Friends of the Earth. He is not only a committed environmentalist but a straight arrow. Unlike the others on this page, he has never pocketed $millions from a $9 billion corporate earnings overstatement or mismanaged a gigantic corporation, let alone defended white-collar criminals, barred FBI agents from sharing intellligence with the CIA and DOD, or helped to shield former senior CIA and NSA officials from responsibility for 9/11.)
Saturday, January 01, 2005
SO-CALLED “NATURAL” DISASTERS Part I. Overview James S. Henry
For the second year in a row, December comes to a close with a dramatic reminder of the precariousness of daily life in the developing world -- and the continuing failure of the international community to provide adequate early warning systems, pre-crisis funding, and rapid, effective global relief for the victims of so-called “natural disasters” -- most of which are actually quite predictable, at least in the aggregate.
This year, on December 26, 2004, it was the 9.0Rs earthquake off the western coast of northern Sumatra, Indonesia’s second largest island, the fifth largest earthquake recorded since 1900.
One year ago to the day, on December 26, 2003, the disaster in question was the 6.6Rs earthquake that devastated the city of Bam in southeast Iran, at a cost of 26,500 lives, 25,000 injured and 80,000 homeless.
The death toll from this year's Sumatra quake is likely to exceed 150,000, with thousands of people still missing, several hundred thousand who have been seriously injured, and more than five million -- most of whom were impoverished to begin with -- suffering from thirst, hunger, homelessness, lost employment, and the threat of mass epidemics.
Furthermore, as we were also reminded in Bam, among the worst consequences of such catastrophic events are the longer-term traumas associated with disease, losing friends, family, fellow citizens, livelihoods, communities, and whole ways of life.
As usual -- and as was true in the case of 9/11, for example -- much of the initial media coverage of this Sumatra tsunami has focused on body counts, other dire visible consequences, and the massive relief effort that has followed.
That is to be expected. But before our attention span drifts too far off in the direction of some other new Third World calamity, it may be helpful to step back and examine some of the systematic factors that contribute to the high costs of such mishaps over and over again, and the extraordinary costs of this "natural" tsunami disaster in particular.
Our overall theme is that there is really no such thing as a “natural disaster” per se. This is not to say that man-made forces were responsible for Saturday’s tsunami. But, as discussed below, the degree to which any such event results in a social and economic “disaster” is often to a great extent under our control.
In the case of this particular tsunami, its high costs:
- Were entirely foreseeable, at least in a “sometime soon” sense, based on both long-term and recent experience with tsunamis in the Indonesian arena;
- Were actually foreseen by several geological experts, some of whom have been advocating (unsuccessfully) an Indian Ocean tsunami early warning system for years;
- Could have been substantially mitigated if US, Japanese, and other scientists around the globe who monitor elaborate earthquake- and tsunami-warning systems, and had ample warning of this event, had simply shown a reasonable degree of human concern, imagination, and non-bureaucratic initiative;
- Might have been avoided entirely with a relatively modest investment in tsunami “early warning systems” for Indonesia and the Indian Ocean.
Furthermore, the global response to this horrific disaster has been long on the size of aid pledges, dignitary press conferences, and “oh – the horror” press coverage.
It has been conspicuously short on actual aid getting through to the front lines. Today, almost a week after the disaster, aid efforts are well-funded, but they remain sluggish, disorganized, and ineffective, with at least as many additional lives in jeopardy right now for want of aid as perished in the original waves.
This is partly explained by the sheer difficulty of getting aid through to remote regions like northern Sumatra. But, as explained below, it is also due to political factors, and the fact that the world community still runs its humanitarian relief efforts like a “pick-up” softball game.
Fortunately, this particular crisis seems to have captured the attention of the world's donor community. At this point, with more than $2 billion in aid pledged by governments, multilateral institutions, and more than 50 private relief organizations, the real problem is not money, but organization.
But we may want to demand that the UN, the US Government, the EU, and all these relief organizations get their acts together, and establish a permanent, well-run, well-funded global relief organization that can move more quickly the next time around. Along the way, they should also pay far more attention to preventive systems that can help save the future victims of such disasters, before all the relief becomes necessary.
© James S. Henry, Submerging Markets™, January 05
Friday, December 24, 2004
THE HORROR OF CHRISTMAS II The Social Pathologies of Our Grandest "Holiday" James S. Henry**
When I was a kid in Minnesota, my family had a huge Scandinavian feast every Christmas Eve, complete with more than two dozen relatives, three feet of snow, a mountainous evergreen that was trimmed to the top with popcorn balls, candy canes, tinsel, and hundreds of precious once-a-year decorations, a six-course dinner with lutefisk, ham, turkey and eight or ten pies, long-winded after-dinner stories about baseball, the space race, and World War II, and, of course, lots of brightly-wrapped presents.
It has taken more than three decades of rigorous training in economics and law and life on the East Coast for me to shake off the nostalgia of those warm, festive occasions. But I am now willing to say out loud what I expect many Americans are muttering all across the country at this time of year: Christmas is a real net loser as a socio-economic institution.
Although for decades the observance of Christmas has been justified on the grounds that it is “merry,” rigorous quantitative analysis proves that precisely the opposite is the case. Despite numerous claims by its proponents that this holiday promotes a desirable “spirit,” and makes people “jolly,” the hard data clearly demonstrate that the yuletide period is marked by environmental degradation, a sharp increase in unfortunate encounters with hazardous products, massive congestion, tedious, time-consuming travel, and the abuse and inefficient use of vast numbers of animals, birds, trees, and many other valuable resources.
Moreover, the number of people who are rendered truly “joyous” by Christmas is almost certainly exceeded by the number who are made to feel rather blue. Nor does Christmas truly fulfill its purported distributional objective: the transfer of gifts to those who really need them.
Finally, it turns out that this so-called “holiday” may make a significant contribution to America’s dwindling savings rate, unsustainable trade deficit, declining competitiveness, and the motivation for a great many property crimes.
In short, although Christmas may be an important source of religious inspiration for some, and a genuine source of wintertime fun for others -- mainly children, who would probably be having fun anyway -- it fails the test of social cost effectiveness. It is high time for those of us who are serious adults to take a good long holiday from this overblown annual ritual.
Christmas consumes vast resources in the dubious, really quite uncharitable pursuit of “forced giving.”
To begin with, let us recall the countless hours that we have wasted on Christmas – all that precious time spent searching for “just the right gifts” for people we barely know; writing and mailing cards or emails to “friends” that one ignores the entire rest of the year; hanging ornate decorations on so-called “evergreen” trees that will become un-decorated, un-green fire hazards in less than a month; attending all those semi-compulsory, over-produced parties that are saturated with cholesterol-rich food, drink, and false cheer; and the tedious task of returning all those mismatched presents after the New Year, just as their retail values plummet.
Assuming conservatively that each American adult spends an average of two days a year on such activities, this represents a wasted investment of 1.2 million person-years per season. At a per capita “shadow wage” of $38,000, that works out to a “deadweight Christmas loss” of $45 billion per year -- even apart from any extra spending associated with these dubious activities.
Just as important is the amount that Americans spend on gratuitous gifts each year - at least $50 to $60 billion per season, by my careful estimates. All this extra consumer spending is sometimes considered beneficial because it stimulates the economy. But a closer look reveals that this massive yuletide spike actually creates many harmful side-effects.
Misfit gifts are one key example. According to New York department stores, at least 15-20 percent of all retail purchases at Christmas are returned after the holidays. Allowing for the inability of young children to return undesired gifts, and the fact that many other misfit gifts are retained involuntarily because recipients feel obliged to disguise their true feelings, perhaps as much as a third of all Christmas season purchases may be unwelcome.
This means that Christmas is really a throwback to a barter economy, where people have to try and match each other’s wants to their own offerings. The whole institution of money was invented precisely to solve this inefficiency – the so-called “double coincidence of wants” problem. In the case of Christmas, one simple solution might be to require people to give each other cash. But that would expose the absurdity of the whole institution.
All this “forced giving” artificially pumps up consumption and reduces savings, since it is unlikely that all the silly, expensive presents given at Christmas would be given at other times of the year. One particularly noxious aspect of surplus consumption is “conspicuous giving” -- luxury gifts like Tiffany eggs, gold toothpicks, crystal paperweights, $30,000 sable stoles, and $15,000 watches. Such gifts are designed precisely for those who are least in need (e.g., “for the person who has everything”). And most of these high-priced gifts are given at Christmas. According to a sample of New York department stores, the fourth quarter of the year provides more than half of the year’s diamond, watch, and fur sale, and an even higher share of their annual profits.
No doubt all this gratuitous spending delights these retailers, and many other “dealers” in the Christmas racket. To the neo-Marxists in the crowd, this suggests that the holiday is explained by economic determinism -- what we have here is not just a coherent, self-sustaining religious ideology, but a powerful set of underlying economic interests, with a huge stake in perpetuating this season’s fatuous gift-giving mythology.
Lower Savings, Higher Debt
Meanwhile, for the nation as a whole, the fact is that Christmas just reduces our already-flagging personal savings rate -- now just a paltry 1 to 2 percent of personal income. It also adds to the burden of consumer debt. Almost a quarter of Christmas season sales are financed by credit cards or charge accounts, and January has become the peak month for credit card delinquencies. It turns out, in other words, that Christmas is quite literally a festival that we can no longer afford.
For parents, another exasperating aspect of Christmas binge spending is toy fetishism. The holiday season accounts for more than 60 percent of the US’ annual $31 billion expenditure on toys and video games. Much of this new toy capital depreciates rapidly, if it works at all. The surfeit of hyper-stimulating toys is no doubt a major contributor to the ADD scourge among young Americans, and to our pitifully low youth savings rates. It is also educationally unproductive. According to the National Toy Industry Association, the US now spends nearly three times as much each year on mindless video games ($10 billion), action figures ($1.2 billion) like the Hulk, Harry Potter, and Anne Coulter, and dolls ($2.8 billion), as on all retail book sales for children ($1.5 billion). Toys in the “learning and exploration” category account for a mere half billion dollars.
Over time, all this free-wheeling spending on unproductive child toys also encourages heavy spending on unproductive “adult toy capital,” like Porsches, J-120 sail boats, and synthetic Vice Presidential candidate action figures with Southern accents and really thick hair.
Since a large share of the leading Christmas toys in the US market are now made by Chinese companies, the toy binge is also making the US dangerously dependent on foreign toy imports. This opens the door to insidious, all-too-poorly-understood cultural influences that may take decades to reverse.
Many Christmas toys are also hazardous -- snowboards, skates, sleds, hockey sticks, Roller Blades, bicycles, baseball bats, boxing gloves, even iPods when put in the wrong hands. The US Consumer Product Safety Commission reports that last year there were 17 deaths and 203,000 emergency room admissions in the US due to hazardous toys. There were also more than 11 million toy recalls. If we allocate these deaths, injuries, and recalls in proportion to seasonal sales, Christmas is clearly the dominant problem. (The comparable figures for deaths caused by books and book recalls were zero and zero, respectively.)
Finally, one only has to visit any Toys ‘R’ Us or Walmart at this time of year to see the holiday’s negative impact on parent-child relations. The store floors are replete with distraught mothers and fathers dragging their tiny, toy-addled munchkins kicking and screaming away from the latest high-priced, must-have offerings. All this unproductive consumption would be much better spent on mathematical drill books, computer learning, alarm clocks, pencil sharpeners and green eyeshades.
Christmas creates massive congestion at the worst possible time of year.
At least in large urban areas, Christmas is by far the most unpleasant time of year to shop, travel, dine out, or visit a bathroom in a mall. Just when stores are the most crowded, shopping becomes mandatory; just when everyone else in the nation is making their de rigueur, mid-winter, cross-country trek to “be with” friends and family, we also are drafted into this forced march.
December 21 and 22 are the year’s peak dates for air travel, according to the Air Transport Association of America, with more 2.1 million Americans per day jamming the nations airports, (twice the annual daily average.) Nearly forty million people will travel during the period from December 17 to January 3, just when the weather is the worst, airlines, buses, and trains are charging the highest prices, and security threats from the growing ranks of our non-Christian enemies around the globe are peaking.
According to the US Postal Service, the volume of mail traffic triples at Christmas time, to more than 288 million letters and 8.6 million parcels per day during the week before Christmas. This batters a delivery system that is barely profitable to begin with, and has already been weakened in the previous two months by tens of millions of extra direct-mail catalogs and advertisements.
Telephone calls can reach more than 200 million per day during the month from Thanksgiving to New Years’ Eve, and there is also a seasonal surge in Internet traffic. At many businesses, stores and offices, costly second- and third shifts have to be added to handle the excess demand. All this “peak loading” means that airlines, Internet services, mail delivery, stores, banks, warehouses, telephone systems, roads, and parking lots must carry more excess capacity than if these activities were distributed more evenly throughout the year. This is peak load capacity that we consumers ultimately have to pay for – it is a waste of our nation’s precious capital.
Christmas destroys the environment, plus untold numbers of innocent animals, birds, and other wildlife.
These have perhaps not been mainstream concerns for hardnosed economists like myself. But if one takes account of all the Christmas trees, letters, packages, increased newspaper advertising, wrapping paper, catalogs and cards, as well as the millions of animals slaughtered for feast and fur at the holidays, it becomes clear even to an economist that this holiday is nothing less than a catastrophe for the entire ecosystem.
According to the US Forest Service, 23.4 million natural Christmas trees are now consumed in the US alone. This number has recently been growing fast, driven by resurgence in hard-shell Christianity and the trend toward more than one tree per household – related, in turn, by our rapidly expanding average home sizes. Americans also now use 18 million artificial Christmas trees each year, half of which are purchased brand new.
All this produces nothing less than an environmental calamity. Since natural Christmas trees have to be grown from scratch each year, millions of forest acres are now subject to an artificially-short rotation period. Recent evidence from countries like Denmark, now the world’s second largest producer of Christmas trees, suggests that the resulting “industrialization” of non-organic Christmas tree production creates massive problems with groundwater pollution. And the piles of needles these natural trees produce shorten the lives of untold numbers of vacuum cleaners and household pets.
Given the growing role of foreign tree producers like China and Denmark in the global Christmas tree trade – the emerging “tree cartel” – the resulting “Christmas tree gap,” on top of the “foreign toy gap,” also adds to our burgeoning trade deficit.
As for the impact on our feathered and furry friends, Christmas has become nothing less than a giant abattoir. This year, according to the Animal Protection Institute, 5.3 million foxes, 36 million minks, 100,000 polecats, 70,000 chinchillas, 330,000 nutrias, 352,000 seals, 4 million Persian lambs, and hundreds of thousands of sable, plus millions of leather-producing cows, will be butchered around the world just to satisfy the seemingly-insatiable human lust for real fur coats, stoles, hats, and leather coats and shoes. While many of these animals meet their fates for the sake of other occasions than Christmas, a disproportionate share are feeling Herod’s sword.
To anyone who has ever visited a turkey, pig, or chicken farm, Christmas and Thanksgiving take on a whole new meaning. Every single day during the run-up to these festivals, thousands of bewildered, de-beaked, growth-hormone-saturated, inorganic birds are hung upside down on assembly-line racks and given electric shocks. Then their throats are slit and they are dropped into pots of boiling water.
After they are cooked and on the table, a few poor dead animals do have an opportunity to take revenge on their human persecutors. According to one health expert, day-old turkey contains more than 2100 separate strains of bacteria. Even washing a turkey before cooking it just helps to spread all these bugs around the kitchen.
Christmas introduces seasonal fluctuations into the demand for money, and may also lead to a seasonal slump in labor productivity.
Christmas is the peak season for carrying big bills around in the wallet, and cash is also a very popular Christmas gift. The volume of currency in circulation peaks each year in December, then declines by 4 to 5 percent. As noted below, this probably helps to stimulate robberies at this time of year. It also forces the US Federal Reserve and the banking system to work hard to supply all this currency, and to cushion the resulting cycles in money demand.
As for work force productivity, many American companies completely shut down for the two-week period from Christmas to New Year’s. Even those that remain open often find that on-the-job performance suffers because of seasonal high jinks and absenteeism. Armies of illegal aliens from Mexico and Central America also sneak back across the border to their homelands just to visit their families at Christmas time – a costly subterranean migration that may be touching, but deprives us of cheap labor.
Meanwhile, our Asian competitors – except for the Philippines and South Korea, which have large Christian populations -- are insulated from these Christmas-induced distortions. They continue beavering away while we party.
Far from being “the season to be jolly,” Christmas is really the season of sadness and despair.
The season’s compulsory merriment, hyper-commercialism, heavy drinking, and undue media emphasis on the idealized, two-child, two-parent, orthodox Christian family makes those who don’t happen to share such lifestyles or religious sentiments feel left out, lonely, and even somewhat un-American.
Even in so-called normal families, media hype about the season’s merriments raises expectations beyond reasonable levels, and sets up many of us for disappointment. According to a leading East Coast psychiatrist, many women exhaust themselves trying to meet both the demands of full-time jobs and more traditional expectations about what holidays are supposed to be like - in many cases, established by their (non-working) mothers.
There is also a great deal of emotional stress associated with overspending and involuntary displays of affection. While it is apparently a popular myth that US suicide rates are higher during the holiday season, police, psychiatrists, and hospitals do report that there is a dramatic rise in alcoholic “slips,” drug overdoses, domestic quarrels, hotline calls, and emergency medical calls at this time of year. “Any redolent setting can be very sad for people who don’t have a dancing partner,” says the psychiatrist. “Christmas is one of those times.”
Christmas is one of the most hazardous times of the year for humans and our pets.
The combination of trees, lights, blazing hearths, yuletide passion, and other indoor festivities results in more household fires at this time of year than any other. The fire department in Washington, D.C., reports that fire calls in December are 40 percent above its monthly average; New York City had 2,600 residential fires last December, as compared with a 2,300-per-month average.
According to the National Highway Traffic Safety Administration, December is the peak month for drunk driving and “DWI” arrests, which totaled 1.5 million last year. It is also the peak month for accidents-because of drunkenness, congestion, and bad weather - with more than 585,000 last year, compared with a monthly average of only 527,000.
In the three days around Christmas last year, 513 people died on the nations highways. The only consolation is that last year’s Thanksgiving was even worse, with 560 deaths. Of course bad weather is a compounding factor. For those of us in colder climes, life would be much easier if we could at least agree to observe Christmas in the summer, when the lutefisk is ripe.
December is also the peak month of the year for robberies, and a pretty good month for auto theft and burglary, too. Police suspect that much of this property crime is because many criminals are also motivated by the need to fill their families’ stockings. December also has a disproportionate number of murders -- almost 1500 last year – and aggravated assaults, many of which are committed by friends and families against each other in the course of holiday revels. “Christmas is a crazy season,” says one former police chief. “It’s a potpourri of emotional extremes -- either extremely quiet, or all hell breaks loose. There are more assaults, bar-room brawls, and family altercations.”
Excessive eating and drinking are used to compensate for all these Christmas tribulations. According to the Distilled Spirits Counsel and the Department of Agriculture, in the six short weeks from Thanksgiving through New Year’s, last year we consumed more than $20 billion of alcohol - including 109 million gallons of hard liquor - plus more than 2 billion pounds of turkey, and a huge quantity of ham, cookies, pies, eggnog, stuffing, plum pudding, and other trimmings.
All this indulgence does little for the nation’s waistline: the Christmas season is the single most important contributor to obesity. The average American consumes at least 3,500-5000 calories at Christmas Day dinner alone, a three-days supply of calories.
Naturally, January is the peak month for diet plans, many of which end up in failure and despair. This helps to account for the recent trend toward obesity in America – at last count, 65 percent of all American adults and 16 percent of all children were overweight.
Other Hazards to Adults
There are also many products associated with Christmas that are especially hazardous. For example, among those that are potentially very harmful to pets and small children are angel hair (spun glass), artificial snow (poisonous), plants like holly, ivy, mistletoe and poinsettia, the Christmas Rose, the Christmas Cactus, dieffenbachia, Lily, the Star of Bethlehem, Yew, Jerusalem Cherry, Hibiscus, and Jequirity Bean; tree decorations like tinsel, metal hooks, ornaments, and glass balls, candles, ribbons, aluminum foil, pine cones, and other packaging, electronic lights, turkey bones, and chocolate.
Furthermore, a high fraction of candles still have lead wires in their wicks, and many aromatherapy candles produce carcinogenic soot.
There is also a sharp increase in the number of household accidents at Christmas time, from scalded fingers and sliced thumbs to scissor stabs, bike spills, and ladder accidents. All this produces a sharp increase in Christmas-related hospital admissions each year. Among the vintage Christmas accidents reported recently:
1. Turkeys exploding in microwave ovens;
2. Children and pets swallowing Christmas tree bulbs whole;
3. Painful glass cuts resulting from attempts to Xerox one’s lower extremities at the annual office party;
4. Children who ran into the street and were hit by cars while their parents were distracted by Christmas shopping;
5. The fellow who drowned after he tried to walk on the “ice” – actually, open water -- after a few holiday party drinks.
6. The fellow who tied a rope to the family car and around his waist, then climbed up on the roof and started down the chimney with presents. Unfortunately, he neglected to tell his wife, who got in the car and drove off.
7. The unfortunate would-be Chinese immigrant whose body was recently discovered in a shipping container filled with artificial Christmas trees.
8. The fellow whose sweater caught on fire when he fell into a tree with lit candles.
9. The 5800 other Americans who suffered injuries last year while decorating their Christmas trees – all of which were serious enough to require visits to the emergency room;
From a distributional standpoint, Christmas aggravates social and economic inequality.
This is because almost all gift-giving at Christmas time takes place within the family, or at least within the same social class, and doesn’t reach the folks who really need our help.
In fact, Salvation Army drum-beating aside, Christmas almost certainly reduces our capacity for charity, by draining us of wealth that might otherwise be given to the truly needy, and by exhausting our charitable impulses in costly bouts of spending, getting, and giving to “we happy few.” Having just spent thousands on gifts and dinners for Muffy, Ben, Mom, and the kids, we are not eager to make sizeable contributions to perfect strangers, no matter how deserving.
Presumably this is not the outcome that the Person for whom this holiday was named would prefer.
SUMMARY – STICK A FORK IN IT
Overall, the message is clear: Christmas is hazardous to our health and safety, imposes a huge efficiency tax on the economy, and does little to further social justice.
Furthermore, these harms may well be growing. An analysis of long-term changes in the seasonality of the US economy suggests that the Christmas buying season has been getting longer, more costly, and more intense.
Of course, Christmas commercialism really is a rather modern innovation. The ancient Christians did not even observe the holiday until the fifth century. Medieval Christians observed it much more modestly, and the Puritans quite sensibly refused to celebrate it at all. Only in the last fifty years, with the perfection of mass-market advertising, department store merchandising, and the commercialization and expansion of pop-Christianity, has Christmas become such a command performance.
In short, from a purely economic and social standpoint, Christmas is an experiment that has been tried and found wanting. In a sense, it has become the flipside of the positive contribution that the “Protestant Ethic” once made to capitalism: Christianity’s second highest holiday now almost certainly makes most of us worse off.
What is to be done? We have a modest proposal: a 3- to 5-year moratorium on the whole affair, to let us pay our bills and recover some of the fellow feeling that we’ve lost. After this interval, we can evaluate the “lessons learned” and the economic impacts again, and devise a new celebration strategy.
This may sound like tough medicine, especially to youngsters. It will also probably offend the many interest groups that have acquired a large commercial stake in this ritual, from bulb manufacturers and tree floggers to ambulance drivers, bar tenders, Park Avenue door men, professional Santas, tinsel makers, and booze peddlers.
But the truth is that the rest of us can no longer afford it. If we celebrate this holiday at all this year, we should do so mainly because it is over for one more year.
**This is an update and revision of an article by the author that first appeared as a cover story for The New Republic on December 31, 1990. Research assistance by Andrew Hellman. © Submerging Markets™, 2004.
Friday, December 10, 2004
Global Growth, Poverty, and Inequality Part I. A Little Christmas Cheer? James S. Henry and Andrew Hellman
The Christmas season is a very special time of year, when Americans, in particular, engage in a veritable month-long orgy of holiday revels and festivities, including eggnog sipping, Santa sitting, package wrapping, neighborhood caroling, tree decorating, menorah lighting, turkey stuffing, and generally speaking, spending, getting, and giving as much as possible, at least with respect to their immediate friends and family.
We certainly don’t wish to question the legitimacy of all these festivities. After all, as this November’s Presidential election has reminded us, ours is surely one of the most powerful, vehement, unapologetic Judeo-Christian empires in world history. Like all other such empires, it has every right to celebrate its triumph while it lasts.
According to the latest opinion surveys, this is indeed an incredibly religious nation, at least if we take Americans at their word. More than 85% of Americans adults consider themselves “Christians,” another 1.5% consider themselves “Jews," 84% pray every week, 81% believe in life after death, 60% believe the Bible is “totally accurate in all its teachings,” 59% support teaching creationism in public schools, and fully 32% -- 70 million people, including 66% of all evangelicals -- would even support a Constitutional Amendment to make Christianity the official US national religion.
In light of all this apparent religious fervor, it is disturbing to read several recent analyses by OXFAM and the UN of certain persistent, grim social realities around the world – and our paltry efforts to redress them. Is the intensity of our religious rhetoric and this season's celebrations just a way of escaping these unpleasant realities?
· According to the UN’s International Labor Organization (December 2004), among those still waiting for economic justice are nearly three-quarters of the world’s population – 4.7 billion people -- who somehow manage to survive on less than $2.50 per day. These include 1.4 billion working poor, half of the 2.8 billion people on the planet who are employed.
· According to the UN’s Food and Agricultural Organization (December 2004), the world’s poor now include at least 852 million people who go to bed hungry each night – an increase of 20 million since 1997. The continuing problem of mass famine has many side-effects – including an estimated 20 million low-birth-rate babies that are born in developing countries each year, and another 5 million children who simply die of malnutrition each year. In some countries, like Bangladesh, half of all children under the age of six are malnourished.
· Overall, for the 5.1 billion residents of low- and middle-income countries, average life expectancy remains about 20-30 percent shorter than the 78 year average that those who live in First World countries now enjoy. By 2015, this will produce a shortfall of some 50 million poor children and several hundred million poor adults. But at least this will help us realize the perhaps otherwise-unachievable “Millennium Development Goals” for poverty reduction.
· According to UNICEF (December 2004), more than 1 billion children – half of all children in the world -- are now growing up hungry, in unhealthy places that are suffering from severe poverty, war, and diseases like HIV/AIDs.
· According to Oxfam (December 2004), First World countries have basically reneged on their 1970 promise to commit .7 percent of national income to aid to poor countries. Last year such aid amounted to just .24 percent of national income among OECD nations, half the 1960s average. And the US commitment level was just .14 percent, the lowest of any First World country, and less than a tenth of the Iraq War’s cost to date.
· This month’s 10th UN Conference on Climate Change (COP-10) in Johannesburg reviewed a growing body of evidence that suggests that climate change is accelerating, and that the world’s poor will be among its worst victims. Among the effects that are already becoming evident are widespread droughts, rising sea levels, increasingly severe tropical storms, coastal flooding and wetlands damage, tropical diseases, the destruction of coral reefs and arctic ecosystems, and, God forbid, a reversal of the ocean’s “thermohaline” currents.
Overall, as the conference concluded, for world’s poorest countries – and many island economies – the threat of such effects is much more threatening than “global terrorism.”
So far, however, the US – which with less than one-twentieth of the world’s population, still produces over a fifth of the world’s greenhouse gases -- seems determined to do nothing but stand by and watch while energy-intensive “economic growth” continues. This year’s oil price increases have slowed the sales of gas-guzzling SUVs somewhat, yet more than 2.75 million Navigators, Hummers, Land Rovers, Suburbans, and Expeditions have already been sold. The US stock of passenger cars and light trucks, which accounts for more than 60 percent of all US oil consumption, is fast approaching 220 million -- almost 1 per person of driving age.
Meanwhile, leading neoconservative economists and their fellow-travelers in the Anglo-American media continue to tout conventional measures of “growth” and “poverty.” Indeed, according to the most corybantic analysts, a free-market-induced “end to poverty as we have defined it” has either already arrived, or will only require the poor to hold their breath just a little bit longer – until, say, 2015.
As we will see in Part II of this series, this claim turns out to be -- like so many other elements of modern neoconservative dogma – a preposterous falsehood. But it does help to shelter our favorite dogmas – religious and otherwise -- from a day of reckoning with the truth.
Friday, December 03, 2004
”WHERE’S WARREN?” Bhopal’s 20th Anniversary
Today marks the twentieth anniversary of the deadly December 3, 1984, chemical gas leak at an Indian pesticide plant in the very center of Bhopal, a city of 90,000 – just a little larger than Danbury, Connecticut -- in the state of Madhya Pradesh, in central India. At the time the plant was owned by Union Carbide India, Ltd. (UCIL), an Indian company whose majority (50.9%) shareholder was Danbury-based Union Carbide Corporation (UCC) which was acquired by Dow Chemical in 2001.
This anniversary provides us with an opportunity to reflect on “lessons learned” from this disaster – including the need to make sure that the globalization of trade and investment is also accompanied by the globalization of justice for the victims of transnational corporate misbehavior.
As a recent report by Amnesty International details, this industrial accident, perhaps the worst in history, killed more than 7,000 to 10,000 people in the first few days, including many children.
There were also serious long-term injuries to up to 570,000 others who were exposed to the fumes.
At least 15,248 of these survivors have already died because of their injuries – in addition to the 7,000 to 10,000 initial victims.
Up to 570,000 others continue to suffer from a wide range of serious health problems, including birth defects, cancer, swollen joints, lung disease, eye ailments, neurological damage, and many other painful, long-term illnesses.
Thousands of animals also died, and many people lost their homes, jobs, income, and access to clean water.
WHO WAS TO BLAME?
nion Carbide’s ultimate “parent authority” for this accident is very clear. In the middle of the night, a cloud of lethal gas caused by the leak of at least 27 tons of “methyl isocyanate” (MIC), a high-toxic odorless poison, and another 13 tons of “reaction products” began wafting through the city center. The gas spread without warning throughout the town. The leaks continued for more than two hours before any alarms were sounded.
All six of the plant’s alarm systems failed. It was later shown that the company management had systematically tried to cut corners on safety and warning equipment – by, for example, failing to equip the plant with adequate safety equipment and trained personnel to handle bulk MIC storage; failing to apply the same safety standards that it used in the US; and failing to insure that there was a comprehensive plan to warn residents of leaks.
In fact, company staff and many others were aware of the risks created by this situation. In June 1984, six months before the accident, an Indian journalist had written an article about them: “Bhopal – On the Brink of Disaster.” But nothing was done – partly, according to Amnesty, just to cut costs.
The result was that shortly after midnight on December 3, 1984, Bhopal’s families woke up screaming in the dark, unable to breathe, their eyes and lungs on fire from the poison, choking on their own vomit. By daybreak there were already hundreds of bodies on the ground, with scores of funeral pyres burning brightly.
In addition, long before the 1984 accident, there had been a series of leaks at the site that management was well aware of, and which caused serious pollution – contamination that continues to this day.
All told, as the Amnesty report makes clear, this amounts not only to an health and environmental disaster, but a serious infringement of the human rights of thousands of Indian citizens.
All this was bad enough. But the other key part of Bhopal’s injustice has to do with the fact that key actors like Dow Chemical/Union Carbide, the Indian Government, and the individual US and Indian senior executives and other officials who were responsible for the accident have managed to avoid liability for the full costs of the “accident,” as well as personal accountability.
This impunity was underscored this week when the BBC fell victim to a hoax perpetrated by someone who pretended to be a Dow Chemical executive. He concocted a false statement that the company was reversing its denial of all responsibility for Bhopal, and was establishing a E12 billion fund for 120,000 victims.
· Union Carbide (UCC) and Dow Chemical, UCC's new owner since it purchased the company for $10.3 billion in 2001, have consistently denied any liability for the disaster. They have argued, for example, that UCC was a “domestic” US company, with no “operations” in India. Supposedly it was also not responsible for UCIL’ actions, because UCIL was just an “independent” Indian company.
· In fact, while UCC disposed of its interests in UCIL in 1994, until then, UCC maintained at least 51 percent ownership in UCIL. Furthermore, according to the Amnesty report, UCC played an active role in UCIL’s management and board activities, and was responsible for the detailed design, senior staffing, and on-going operating procedures and safety at the Bhopal plant.
· Furthermore, as UCC’s CEO at the time, Warren Anderson, bragged before the US Congress in 1984, Union Carbide had 100,000 employees around the world. At the same time, another senior UCC executive, Jackson Browning, said that UCC’s “international operations represented 30 percent of sales,” and that “India was one of three dozen countries where the company has affiliates and business interests.”
· After the spill, according to the Amnesty report, UCC officials (1) tried to minimize MIC’s toxicity, (2) withheld vital information about its toxicity and the reaction products, which they treated as trade secrets; and (3) refused to pay interim relief to the victims.
· The Indian Government and the State Government of Madhya Pradesh also bear grave responsibility for the disaster itself, and then for striking an irresponsible private settlement with the perpetrators. As the Amnesty report makes clear, environmental regulations were very poorly enforced against UCIL. Then, having sued for $3 billion in damages in 1988, the Indian Government settled for just $470 million in 1989, without adequate participation from victims. The Indian Government has also discontinued medical research on the impact of the gas leak, and failed to publish its interim findings.
In October 2003, it was disclosed that by then, some 15,298 death claims and 554,895 claims for other injuries and disabilities had been awarded by the Madhya Pradesh Gas Relief and Rehabilitation Department – five times the number assumed in the settlement calculations by the Indian Supreme Court.
· UCC’s insurance paid that paltry amount in full. But then the Indian Government was very slow to pay out the money to victims. As of July 2004, $334.6 million had been paid out, while $327.5 million was still sitting in Indian government custody. At that point, 20 years after the disaster, the Indian Supreme Court finally ordered that the remaining money be paid out to some 570,000 registered victims – an average of $575 apiece. Even these payments won’t all get to the victims; a significant portion is reportedly consumed by India’s notorious bribe-ridden state bureaucracy.
· Local authorities in Bhopal filed criminal charges against both UCC its former CEO Warren M. Anderson in 1991-2. Anderson was charged with “culpable homicide (manslaughter),” facing a prison term of at least 10 years. He failed to appear, and is still considered an “absconder” by the Bhopal District Court and the Supreme Court of India.
However, despite the existence of a US-India extradition treaty, the Indian Government has failed to pursue a request for Anderson’s extradition vigorously.
The 82-year old Anderson, who is still subject to an Indian arrest warrant, has a very nice home with an unlisted number in Bridgehampton, New York, and another in Vero Beach, Florida.
Meanwhile, while the Indian Government has been willing to hold local Indian companies that operate hazardous businesses strictly liable for damages caused by them, it has been reluctant to apply this rule to transnational companies -- perhaps because it is more worried about attracting foreign investment than insuring that foreign investors manage their activities responsibily.
SUMMARY – GLOBALIZING JUSTICE
Overall, twenty years after the original incident, Bhopal remains a striking example of transnational corporate misconduct, an incredible case of the negligent mishandling of a true “chemical weapon of mass destruction.”
This behavior may not have been as culpable, perhaps, as the willful use of toxic weapons against innocent civilians by former dictators like Saddam and Syria's Assad. But it was no less deadly.
As we saw above, Bhopal was also an example of the incredible loopholes that still apply to leading companies in globalized industries.
Especially in corruption-ridden developing countries like India, they have often been able to take advantages of lax law enforcement, weak safety regulations, clever holding company structures that limit liability, and the sheer expense of bringing them to justice.
Evidently the globalization of investment and trade is not sufficient. Economic globalization needs to be augmented by the globalization of justice. Among other things, that means that it is high time for transnational corporations to be subject to an enforceable code of conduct, back up by an International Court for Corporate Responsibility.
© James S. Henry, SubmergingMarkets™, 2004