Category Archives: fighting back

NPL in North Dakota (cont.)

Last Thanksgiving, Tony produced a short post on the Nonpartisan League. Think of this as an update. I happen to think the history of the NPL is important because it shows how effective a movement can be if they have a workable agenda. Instead of running against parties and personalities, an agenda-driven party wins because they are FOR something. Even better, an agenda usually outlives even the best supporters. And the State Bank of North Dakota is arguably the best political idea Progressives ever had—the signal accomplishment that lives on to this day.

WHEN NORTH DAKOTA FARMERS BLEW UP PARTISAN POLITICS
By Focusing on Economic Cooperation, Early 20th-Century Small Landowners Pushed Back Against Crony Capitalism

by MICHAEL J. LANSING | MAY 18, 2018

In a nation that envisions innovation as the domain of Silicon Valley start-ups, most dismiss North Dakota as flyover country. Yet the state’s history shows it deserves more credit as an innovator. A little more than 100 years ago, North Dakota’s farmers, challenged by economic hardship and indifferent politicians, invented a nonpartisan approach to elections that was as elegant and powerful as it was novel.

Today, Americans politics are partisan and polarized. But as a political movement made up of lower-middle-class farmers, the Nonpartisan League (NPL) took advantage of the direct primary—a new innovation at the time—to bypass entrenched politicians and parties.

During the early years of the 20th century, a broad impulse for popular government transformed election law—particularly primaries—in many northern and western states, but North Dakota took it further than some. Rejecting the notion that politics belonged only to professionals, citizens put themselves in the thick of things—replacing the mediating force of a political party with a self-organized polity. Parties, which had formerly controlled candidate selection, remained powerful, but voters could now challenge the establishment players who often used backroom deals and convention shenanigans to stay in power

From the start, the movement backed anyone who supported farm-friendly economic policies, regardless of that candidate’s party affiliation. Later this alternative to politics-as-usual famously established state-run industries, but also—as a correspondent in The Nation noted in 1923—ensured that “a sentiment and point of view had been established in the minds of hundreds of thousands of farmers and ranchers.” By empowering regular citizens across the West and Midwest to see themselves and their society anew, it created a resurgence of “We the People” government that sits at the heart of the nation’s best democratic traditions.

North Dakota was especially ready for political reform because of its history. Established in 1889, it had an almost entirely agricultural economy, giving the outsiders who transported and processed the crops it grew outsized political influence. Talk of cronyism and the indirect control of state politics by Minneapolis-based companies defined life in the capital, Bismarck, from the start.

Agitators for change found a ready audience for basic political reforms, but few imagined that the state’s farmers could transcend their many differences to organize the way they did. The farmers were far from homogeneous, but included Icelanders, Czechs, Germans from Russia, Norwegians, Irish, Ukrainians, Swedes, Germans, Danes, Hungarians, native-born Americans, and a handful of African Americans. They were all settled on land that had been taken from Native Americans. In some rural districts, distinct congregations of Protestants and Roman Catholics and Jews jostled up against each other, while outside Ross, North Dakota, a small community of Syrians practiced Islam. In fact, census data show that North Dakota had the highest proportion of foreign-born residents of any state in the country before World War II.

Despite their differences, by the early 1910s, farmers across the vast wheat belt of western Minnesota, North Dakota, South Dakota, and eastern Montana all faced a common problem: the overwhelming economic clout of the Minneapolis-based flour millers and wheat traders who dominated agricultural commodities markets. Grain farmers who shipped their products to Minneapolis for processing—nearly all of them—saw little of the profit that their wheat ultimately produced. Crop prices, controlled by milling and transportation companies, were low. Transportation costs, set by railroad companies, were exorbitant. The combination left farmers cash-strapped. As the rest of rural America experienced an agricultural boom, failed mortgages and hard times defined farm life on the Northern Plains.

Abhorring electoral politics, which they saw as sullied by corruption and power, wheat farmers in North Dakota, Minnesota, South Dakota, and Montana responded to their economic plight by organizing themselves into cooperatives, attempting to build power without getting involved in politics. They hoped that cooperatives might create a more equitable marketplace, one in which farmers might hold even odds to support their families. Their Equity Cooperative Exchange brought smallholders together to create democratically-run, customer-owned grain elevators across the Northern Plains. Farmer-owners made sure that more of the profits from wheat stayed in farmers’ pockets.

But in the 1910s the Exchange, realizing local organizing had its limits, tried to expand its reach by establishing a large terminal grain elevator to compete with those run by large corporations. Minneapolis-based companies responded by refusing to permit the Equity Cooperative Exchange to trade in that city’s wheat market. So, in 1915, the group’s leaders turned their attention from economic cooperation to state-level politics. Public policy, however flawed, seemed to offer the only avenue for change.

In North Dakota—and soon thereafter, in other states—wheat farmers used the Equity Cooperative Exchange as the foundation for a new political organization: the Nonpartisan League. The NPL built on existing relationships to encourage farmers to prioritize shared economic self-interest over ethnic, cultural, and religious divides. It also pushed farmers directly into electoral politics. Members canvassed door-to-door to recruit, ensure turnout at political rallies, and create an audience for the NPL newspaper. During election seasons, NPL people held their own members-only precinct caucus meetings and identified citizen-candidates to run for office. They quickly began to see themselves as political actors.

Platform-oriented rather than candidate-based, the NPL endorsed farmers for state offices, and supported the creation of a state-owned bank, grain elevator, and flour mill. And seeing their concerns reflected in electoral politics ensured that North Dakotan farmers responded enthusiastically at the polls. In 1916, NPL candidates won the governor’s race, the contest for attorney general, and the majority of seats in North Dakota’s House of Representatives. By 1918, they held those state-wide offices and seized a majority of seats in the state Senate as well.

Finally empowered to make their platform real, the newly elected farmers moved quickly to sidestep the large millers and traders in Minneapolis. They established a state-run terminal grain elevator and matched it with a state-run flour mill, keeping more profits from processed wheat in North Dakota. Leaguers also created a state-owned bank that allowed local lenders to reject financing from out-of-state interests. After taking hold of North Dakota’s state government in 1918, the NPL spread to twelve other states in the West and Midwest, and two Canadian provinces.

Misunderstood—then and now—as socialists, the NPL farmers remained avowedly nonpartisan. They held no ideological commitment to big or small government. They just saw government as the means to represent and institute the people’s will, rather than the interests of the powerful.

Too often belittled, this vision of citizens as more than just voters lies at the heart of a wide range of American movements for change—from 19th-century Grangers and Populists, to labor organizing in the 1930s, to the Black Freedom Movements of the 1950s and 1960s. It’s a tradition that encourages regular people to work across their differences to solve common problems.

In North Dakota, the NPL’s successes inspired broader change. Initially, for example, the group ignored farm women, who sought agency in their private and public lives, but its insistence on a participatory civic culture inspired women to organize NPL auxiliaries that engaged in fund-raising and civic education. One woman in Montana reported that “we are not going to talk about recipes for rhubarb conserve” but instead would discuss “the great battles for human rights so that we can vote straight when the time comes.”

After 1920, the women’s votes became more important than ever, as corporations in Minneapolis and established politicians began pushing back against the NPL, rightly seeing it as a threat.

Establishment foes attacked the League and its members at every turn, declaring it to be anti-war, and thus anti-patriotic—a serious charge after the U.S. entered World War I in 1917. Though many Leaguers opposed the potential for war-profiteering and heavy casualties, they consistently did their patriotic duty. Nonetheless, in Minnesota, South Dakota, Kansas, Montana, Nebraska, and Idaho, Leaguers remained suspect and faced direct challenges to their civil liberties. Local law enforcement denied the NPL the right to hold public meetings. Organizers were seized by mobs, tarred, and feathered.

In the meantime, in North Dakota, where the NPL-controlled statehouse ensured that local law enforcement would not engage in unconstitutional activities, autocratic League leaders made poor decisions that led to internal dissent. The head of the Nonpartisan League, a former farmer named Arthur Townley, alienated opponents and League members by proposing controversial business schemes that went beyond the organization’s stated aims. Put off by such behavior and new policies they saw as overreach, some NPL farmers turned against the movement—and as a result, in 1921, North Dakota held the nation’s first recall election. Many NPL officials, including the state’s citizen-farmer governor Lynn Frazier, lost their seats.

Never again would the League run the state. Yet its influence remained. A year after his recall, Frazier, still representing the NPL, was elected to the U.S. Senate. During the 1930s and 1940s, the Nonpartisan League persisted as a wing of the Republican Party. In 1956, it merged with North Dakota’s Democratic Party, still known today as the D-NPL. North Dakota’s state-owned bank, flour mill, and grain elevator continue to thrive. Soon marking their centennial, these institutions stand as a concrete testament to the Nonpartisan League and its lasting—and innovative—vision of nonpartisan, cooperatively organized, citizen-centered politics. more

Protectionism flickers to life

There are times when the conventional disgust with "protectionism" rises to the level of the outrage over pedophilia. Which is strange when you think about it. From Ben Franklin to Abe Lincoln to H. Ross Perot, there have been strong supporters of many of the ideas that the high tariff folks believed in so strongly. When a country is developing a sophisticated manufacturing base, the protectionists usually triumph. It is only when a country gets rich and imperial do the "free" traders win the day. The traders are a fraction of overall economic activity but when the dominant economic strategy favor traders over manufacturing, they get to write the rules in their favor.

Hudson is pretty good on trade issues. He's a ways from Lincoln but he's way better than your typical cable business talking head. So I thought he might celebrate the fact that Trump has at least moved the needle away from the free trade extremism as practiced since the late 1970s. Well, I was wrong. Hudson instead faults Trump for not having a coherent trade policy to back his Twitter outbursts on trade. Fair enough.

Me, I am happy that someone is reopening the Free Trade debate—which has been pretty dormant since the Battle for Seattle in 1999. Free trade has been such an unmitigated disaster there is barely time to count the ways. As someone who comes from the Naomi Klein wing of the DFL when it comes to trade issues, I find it a bit odd to hear some of our best arguments come from the mouth of Trump. I only hope he understands that by even questioning the free trade establishment, he has committed an unspeakable heresy and the the race is on among those who author papers glorifying the conventional economic wisdom to see who can denounce this sin with the greatest fervor.

Trump’s Travesty of Protectionism

by MICHAEL HUDSON, MARCH 9, 2018

Trump’s series of threats this week was a one-two punch. First, he threatened to impose national security tariffs on steel and aluminum, primarily against Canada and Mexico (along with Korea and Japan). Then, he suggested an alternative: He would exempt these countries if they agree to certain U.S. demands.

But these demands make so little economic sense that they should be viewed as an exercise in what academia used to call power politics. Or in Trump’s world, Us versus Them, a zero-sum game in which he has to show that America wins, they lose.

It won’t work. Trump’s diplomatic ploy with Mexico is to say that he’ll be willing to exempt them from the steel and aluminum tariffs if they agree to (1) build the wall that he promised to make them build, and (2) give other special favors to the United States. He can then go to American voters and say, “See, we won; Mexico lost.”

This is unlikely to elicit a Mexican surrender. Its president already has said that building a wall makes no sense, and cancelled the planned diplomatic visit to Washington last week. Giving in to Trump’s election promise to American voters (or more to the point, indulging in his own ego trip about the wall) would be political suicide. Trump would crow that he made Mexico bow to his bidding.

Matters aren’t much better in Canada. While some Pennsylvania and Ohio steel companies probably will try to make Trump look good by hiring back a few hundred workers if and when the tariffs are announced, Canada and other suppliers would have to be laid off. Canadian resentment already has been building up for decades, ever since the auto agreement of the 1960s and ‘70s that favored U.S. suppliers.

But the real economic problem comes from within the United States itself. If new steel workers are hired, they may be laid off in a few months. Most important is the bigger economy-wide picture: The Chamber of Commerce and other groups have calculated that the loss of jobs in steel- and aluminum-using industries will far outnumber the new hiring of steel and aluminum workers.

NPR on Wednesday had a maker of beer kegs explain that if the cost of steel goes up, he can’t afford to match the prices of foreign keg manufacturers who buy their raw materials cheaper – and do NOT have tariffs raised on higher manufactures.

There are many good arguments for protectionism. These arguments are in fact much better than the free-trade patter talk used to indoctrinate college economics students. Of all the branches of today’s mainstream economics, free-trade theory is the most unrealistic. If it were realistic, Britain, the United States and Germany never would have risen to world industrial powers. (I review the fallacies of free-trade theory in Trade, Development and Foreign Debt.)

Economic history provides a long and excellent successful pedigree of good arguments for protective tariffs. Britain created its empire by protectionism, stifling manufactures in the United States as long as it pursued free trade. After the Civil War ended, America built up its industry and agriculture by protectionism, as did Germany and France. (I discuss the strategy in America’s Protectionist Takeoff: 1815-1914.)

But as each of these nations became world leaders, they sought to pull up the ladder and prevent other countries from protecting their own industry and agriculture. So they changed to “free trade imperialism.” The aim of industrial leaders is to convince other countries not to regulate or plan their own markets, but to let the United States engineer an asymmetrical trade policy whose aim is to make other countries dependent on its food exports and monopoly exports, while opening their markets to U.S. companies.

Since the 1920s the protectionist economies that came to support free trade have rewritten of history to white out how they got rich. The strategy of protectionism has been forgotten. Trump’s so-called protective tariffs against steel and aluminum are the antithesis to every principle of protectionism. That is why they are so self-destructive.

A really nationalistic trade strategy is to buy raw materials cheaply, and sell finished manufactured goods at a high value-added price.

The idea of industrial protectionism, from British free trade in the 19thcentury to U.S. trade strategy in the 20th century, was to obtain raw materials in the cheapest places – by making other countries compete to supply them – and protect your high-technology manufactures where the major capital investment, profits and monopoly rents are.

Trump is doing the reverse: He’s increasing the cost of steel and aluminum raw materials inputs. This will squeeze the profits of industrial companies using steel and aluminum – without protecting their markets.

In fact, other countries are now able to legally raise their tariffs to protect their highest-technology sectors that might be most threatened by U.S. exports. Harley Davidson motorcycles have been singled out. They also can block U.S. monopoly exports, such as bourbon and Levi blue jeans, or pharmaceuticals. Or, China can block whatever U.S. technology it decides it wants to compete with.

Trump’s tariff threats caused short-term aluminum prices to jump by 40 percent, and steel prices by about 33 percent. This raises the price of these materials to U.S. manufacturers, squeezing their profits. Foreign manufacturers will not have their materials prices increased, and so can out-compete with U.S. steel- or aluminum-using rivals. The global oversupply in fact may make the price of steel and aluminum decline in foreign markets. So foreign industry will gain a cost advantage.

On top of that, foreign countries can legally raise tariffs in their own markets – for whatever industries they deem will best gain from this advantage.

Trump’s tariffs will not induce new capital investment in steel or aluminum

America’s logic behind protective tariffs after the Civil War ended the Southern free-trade policies was that tariff protection would create a price umbrella enabling U.S. manufacturers to invest in plant and equipment. Britain already had made these sunk costs, so the United States had to include the cost of capital in its revenue.

That’s how America built up its steel industry, chemical industry and other manufacturing industry.

But no steel or aluminum company is likely to invest more or hire more U.S. labor as a result of higher tariff revenues. These companies may raise their prices, but neither investment nor trickle-down effects are likely.

For one thing, aluminum is made out of electricity, and America is a high-cost producer. Alcan – America’s largest supplier – has a rip-off deal with Iceland getting electricity almost for nothing.

For steel, it takes a long time to build a modern steel mill. No company will do this without an assured market. Trump’s tariff increases do not guarantee that.

America’s policy of breaking international agreements (we’re the “indispensable nation”)

Few companies, labor groups or banks in New York City have been willing to trust Mr. Trump in recent years. He should have called his book “The Art of BREAKING THE deal.” That’s how he made his money. He would sign an agreement with suppliers to his hotels or other buildings, and then offer only 80 cents (or less) on the dollar. He’d tell them, in effect: “You want to sue? That will cost you $50,000 to get into court, and then wait three or four years, by which time we’ll have made enough money to pay you on the cheap.”

Bank lenders had as much trouble getting paid as did Trump’s hapless suppliers. He made his fortune this way – so successfully that he seems to believe that he can use the same strategy in international diplomacy, just as he’s threatening to break the Iran agreement.

Will this work? Or are foreign economies coming to view the United States as “not agreement-capable”? In fact, will U.S. companies themselves believe that agreements signed today will still be honored tomorrow?

Trump’s national security ploy to bypass Congressional authority over trade policy

This is not the first time the United States has raised tariffs unilaterally. George W. Bush did it. And my 1979 book, Global Fracture, describes U.S. protectionism in the 1970s against other countries. America did it again and again.

But Trump has introduced some new twists. First of all, former U.S. protectionism had Congressional backing. But Trump has bypassed Congress, no doubt aware that steel-using and aluminum-using industries can mobilize Congressional support against Trump.

So Trump has used the one play available to the Executive Branch: the National Security umbrella. In a great mind-expansion exercise he claims that it would be a loss of national security to depend on neighboring Canada, Mexico, or allies such as South Korea and Japan for steel and aluminum. If he can convince a kangaroo trade court, this loophole is indeed allowed under WTO rules (GATT Article XXI). The idea was to apply to times of war or other great crisis. But U.S. steel and aluminum production has been steady for over a decade, and there seems to be no military or economic crisis affecting national security.

Suppose Trump gets away with it. Other countries can play this “national security” game. Any economic activity can be deemed national security, because every economy is an overall system, with every given part affecting all the others. So Trump has opened the door for overall asymmetrical jockeying for position. The most likely arena may be high-technology and military-related sectors.

Back in the 1980s this was called “Uncle Sucker” patter talk – acting as if the United States was the exploited party, not the exploiting actor in international trade and investment. Ultimately at issue is how much policy asymmetry the rest of the world is willing to tolerate. Can the United States still push other countries around as it has done for so many years? How far can America push its one-sided agreements before other countries break away?

Each foreign country threatened with loss of steel or aluminum exports has a more high-tech industry that it would like to protect against U.S. competition. The response is likely to be asymmetrical.

And here at home, how long will higher manufacturing industries back Mr. Trump and his policy that makes a travesty of “smart” protectionism? more

Even the Paris 2015 climate accords won’t solve the problem

Robert Hunziker is perhaps the politician that best understands climate change—and has for some time. He is running for a seat in Washington's 8th Congressional District. I certainly hope he wins.

Whenever I stumble across someone who has a profound and deep understanding of a subject, I am immediately curious as to how he came to be that way. I am especially curious if that person is young. His campaign literature sort of explains his enlightened worldview. Turns out that there CAN be some significant advantages to learning a society from the bottom up. So here's to someone who has had enough exposure to Producing Class virtue to understand that no matter hpw enlightened a Leisure Class actor, that person cannot build the sustainable future.

Fixing Global Warming is Bigger Than Paris ‘15

by ROBERT HUNZIKER, MARCH 12, 2018

The worldwide effort to harness, slow down, lessen, reduce, remove the threat of global warming is epitomized by the Paris ’15 climate accord. This agreement calls for nations of the world to implement plans to slow down greenhouse gas emissions, specifically CO2 from fossil fuels, and to take other remedial actions necessary to hold global temps below 2°C but preferably 1.5°C relative to the start of the industrial revolution over 200 years ago.

That task may be an overwhelming one, more so than realized, due to the simple fact that, according to YaleEnvironment360: “Frighteningly, this modern rise of CO2 is also accelerating at an unusual rate. In the late 1950s, the annual rate of increase was about 0.7 ppm per year; from 2005-2014 it was about 2.1 ppm per year.” (Source: Nicola Jones, How the World Passed a Carbon Threshold and Why It Matters, YaleEnvironment360, January 26, 2017).

“If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted… CO2 will need to be reduced… to at most 350 ppm,” according to Columbia University climate guru James Hansen. We sailed past that target in about 1990, and it will take a gargantuan effort to turn back the clock,” Ibid.

Meanwhile, year-over-year CO2 numbers continue a relentless march upwards, unimpeded.

Monthly average CO2 Readings in Parts Per Million (“PPM”)
1850 (Ice Core Data) 285.20
1959 (Mauna Loa readings start) 316.18
February 2017 406.42
February 2018 408.35
March 2018 409.97
A return to 350 ppm is looking very distant.

For perspective on the challenge ahead, Wally Broecker (Columbia) aka: the Grandfather of Climate Science, discussed the outlook in a July 2017 interview:

“In 1950s, when I was in graduate school, we got 15 percent of our energy from renewables and nuclear, and 85 percent from fossil fuels. Today it’s the same. Both of them have been increasing at 3 percent a year.” (Source: David Wallace-Wells, The Man Who Coined the Term ‘Global Warming’ on the Worst-Case Scenario for Planet Earth, Daily Intelligencer, July 10, 2017).

Remarkably, according to Broecker, the ratio of renewable-to-fossil fuel energy has not changed one iota in almost 70 years. That’s all the more remarkable because, since the 1980s, global warming has been pinpointed as an existential threat. Yet, the renewable-to-fossil fuel energy ratio stays the same. According to Broecker, that ratio needs to change or all bets are off.

“Renewables and nuclear are not changing in their percentage share. And in order to stop the CO2 from rising we have to go to a factor-of-ten reduction in fossil fuel burning — at least a factor of ten. And that means changing all the world’s infrastructure,” Ibid.

The world relies upon trillions of dollars worth of infrastructure to source, create, and deliver energy. However, if renewables take over as the primary source of energy creation, a lot of fossil fuel infrastructure will be worth zero. So far, based upon the record over the past seven decades, fossil fuel infrastructure looks solidly in place, in fact, growing in size, and there are some powerful forces in the world that want to keep it that way, which, in turn, makes it doubly difficult to achieve Paris ’15.

One problem in confronting the global warming issue is participation, by whom and to what extent? Scientists such as James G. Anderson of Harvard states it takes a WWII type of effort to overcome the global warming problem, which implies all hands on deck, as well as within 5 years in a substantive way.

But, there are major obstacles: One year ago President Sauli Niinistö of the Republic of Finland met with President Putin of Russia at the International Arctic forum in Arkhangelsk, Russia, March 29-31, 2017.

In his opening remarks, President Niinistö stated: “My starting point today is the growing threat of climate change. Tackling this challenge is crucial if we want to ensure that the Arctic remains the place it is today. But the issue is of global significance: If we lose the Arctic, we lose the whole world.” (Source: Opening Remarks by the President of the Republic of Finland Sauli Niinistö at ‘The Arctic: Territory of Dialogue’ Forum, Arkhangelsk, 30th March 2017).

He continued: “This catastrophe will not be limited to the Arctic. There will be enormous consequences worldwide. As the ice melts, sea levels will rise. As the ice melts, solar radiation will not be reflected back – instead, its energy will further warm the water and accelerate global warming,” Ibid.

He mentioned Russia’s 7,000 methane-infused pingos that have suddenly popped up throughout Siberia, in his words: “A further concern is the recent report made by Russian scientists that in Siberia there are some 7,000 methane-filled pockets waiting to release content. This will create danger and disruption to infrastructure and humans in the area. What is worse, once released, methane is a much more potent greenhouse gas than carbon dioxide,” Ibid.

At latitude 66°33′47.1″ N, the Arctic Circle intersects Finland at its midpoint. President Sauli Niinistö knows the Arctic. He lives it.

Thereafter, President Putin’s speech at the same forum emphasized: “Russia, which makes up almost a third of the Arctic zone… includes over 150 projects with estimated investment of trillions of roubles… and creation of so-called development support zones… and the development of offshore deposits… we devoted special attention to the Northern Sea Route… almost a year-round artery….” (Source: Vladimir Putin’s Speech at the ‘Arctic: Territory of Dialogue’ International Arctic Forum, About the Forum, International Arctic Forum, March 2017).

No mention of global warming. However, Russia can’t wait for open blue waters in the Arctic for development of fossil fuels and open sea routes over the North Pole for transportation purposes.

Furthermore, in interviews following the forum, Putin stated his opinion that humans are not responsible for climate change: “Icebergs have been melting for decades, started in the 1930s” when, according to him, “there were no serious anthropological factors at work.” He says global warming cannot be stopped because “it’s tied to global cycles on Earth. The issue is to adapt to it.”

Russia adapts by spending trillions of rubles to explore for fossil fuels. Similarly, the United States follows in lockstep by opening up national parks all across the country to big oil, including Arctic Wilderness refuges.

Climate change deniers lead the world’s largest economy (United States) and Russia, the sixth largest. They are at the top of the pyramid of fossil fuel production at the very moment when the infrastructure of the Arctic, i.e., multi-year ice, is crumbling apart right before everybody’s eyes. Therefore, the question is whether a disintegrating Arctic is good or bad. Obviously, by their actions alone, both America and Russia want collapsing Arctic infrastructure. They are banking on it!

President Niinistö succinctly summed up the risks of a collapsing Arctic, on January 2nd 2018 when he was sworn in for a second six-year term, after a landslide victory at the polls: “Combating climate change is the most important issue in the coming years. That’s just how it must be, so that humankind won’t have to endure the destruction of the planet.” (Source: President Niinistö Emphasizes Climate Change at Inauguration, UUTISET News Jan. 2nd, 2018).

At that swearing-in ceremony, Maria Lohela, Speaker of the Parliament, praised President Niinistö’s first-term and specifically mentioned his initiatives to combat the use of coal, which accelerates the melting of polar ice caps.

Meanwhile, the Trump administration’s frantic delirium over coal, oil and gas exploration/production is only surpassed in exuberance by an historical event, John D. Rockefeller’s heartfelt passion for turning nature’s bounty into a fortune, growing Standard Oil Company from the world’s largest refinery in 1870 into the world’s first and largest multinational in 1911, indeed, a record pace for capitalistic development.

But, with America’s national parks opening up carte blanche to big oil, Trump has a shot at exceeding Rockefeller’s record pace. His emphasis, like Rockefeller of 100 years ago, is drill everywhere, far and wide, pole to pole.

Meanwhile, it’s nearly unimaginable/unbelievable contrasting Middle Eastern ethos to American and Russian, all major oil producers. As for example, the Kingdom of Saudi Arabia’s biggest solar farm currently in operation covers the parking lot of the National Oil Company, Saudi Aramco.

“The Saudi government wants not just to reshape its energy mix at home but also to emerge as a global force in clean power. (Source: Stanley Reed, From Oil to Solar: Saudi Arabia Plots a Shift to Renewables, The New York Times, Feb. 5, 2018).

By the end of the year, Saudi Arabia aims to invest up to $7 billion to develop seven new solar plants and a big wind farm.

In September 2017, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Prime Minister of the UAE and Ruler of Dubai, launched plans for the world’s largest Concentrated Solar Power project, including the world’s tallest solar tower.

In August 2017 Kuwait launched a $1.2B solar power plant project.

As of January 2018, Oman completed its feasibility plan for a huge solar park of 500MW.

The Kingdom of Bahrain is making plans to build a 100MW solar plant as part of its renewable energy agenda.

OPEC is turning green for practical purposes, but more importantly, they’re demonstrating an intellect and foresightedness above and beyond boorish accretion of oil as a way of life. They see the future.

Meantime, similar to John D. Rockefeller’s race to oil glory 100 years ago, the U.S. and Russia are in a trillion-dollar race competing for newly exposed riches of oil and gas but in frigid waters sans ice and in Arctic wildlife refuges, pounding on the door of the final frontier where a mistake magnifies ten-fold. It’s a dicey future.

Back in the day Rockefeller was a visionary. Today, the Rockefeller Family Fund is divesting all of its holdings of fossil fuel companies. more

Even the Paris 2015 climate accords won’t solve the problem

Robert Hunziker is perhaps the politician that best understands climate change—and has for some time. He is running for a seat in Washington's 8th Congressional District. I certainly hope he wins.

Whenever I stumble across someone who has a profound and deep understanding of a subject, I am immediately curious as to how he came to be that way. I am especially curious if that person is young. His campaign literature sort of explains his enlightened worldview. Turns out that there CAN be some significant advantages to learning a society from the bottom up. So here's to someone who has had enough exposure to Producing Class virtue to understand that no matter how enlightened a Leisure Class actor, that person cannot build the sustainable future.

Fixing Global Warming is Bigger Than Paris ‘15

by ROBERT HUNZIKER, MARCH 12, 2018

The worldwide effort to harness, slow down, lessen, reduce, remove the threat of global warming is epitomized by the Paris ’15 climate accord. This agreement calls for nations of the world to implement plans to slow down greenhouse gas emissions, specifically CO2 from fossil fuels, and to take other remedial actions necessary to hold global temps below 2°C but preferably 1.5°C relative to the start of the industrial revolution over 200 years ago.

That task may be an overwhelming one, more so than realized, due to the simple fact that, according to YaleEnvironment360: “Frighteningly, this modern rise of CO2 is also accelerating at an unusual rate. In the late 1950s, the annual rate of increase was about 0.7 ppm per year; from 2005-2014 it was about 2.1 ppm per year.” (Source: Nicola Jones, How the World Passed a Carbon Threshold and Why It Matters, YaleEnvironment360, January 26, 2017).

“If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted… CO2 will need to be reduced… to at most 350 ppm,” according to Columbia University climate guru James Hansen. We sailed past that target in about 1990, and it will take a gargantuan effort to turn back the clock,” Ibid.

Meanwhile, year-over-year CO2 numbers continue a relentless march upwards, unimpeded.

Monthly average CO2 Readings in Parts Per Million (“PPM”)
1850 (Ice Core Data) 285.20
1959 (Mauna Loa readings start) 316.18
February 2017 406.42
February 2018 408.35
March 2018 409.97
A return to 350 ppm is looking very distant.

For perspective on the challenge ahead, Wally Broecker (Columbia) aka: the Grandfather of Climate Science, discussed the outlook in a July 2017 interview:

“In 1950s, when I was in graduate school, we got 15 percent of our energy from renewables and nuclear, and 85 percent from fossil fuels. Today it’s the same. Both of them have been increasing at 3 percent a year.” (Source: David Wallace-Wells, The Man Who Coined the Term ‘Global Warming’ on the Worst-Case Scenario for Planet Earth, Daily Intelligencer, July 10, 2017).

Remarkably, according to Broecker, the ratio of renewable-to-fossil fuel energy has not changed one iota in almost 70 years. That’s all the more remarkable because, since the 1980s, global warming has been pinpointed as an existential threat. Yet, the renewable-to-fossil fuel energy ratio stays the same. According to Broecker, that ratio needs to change or all bets are off.

“Renewables and nuclear are not changing in their percentage share. And in order to stop the CO2 from rising we have to go to a factor-of-ten reduction in fossil fuel burning — at least a factor of ten. And that means changing all the world’s infrastructure,” Ibid.

The world relies upon trillions of dollars worth of infrastructure to source, create, and deliver energy. However, if renewables take over as the primary source of energy creation, a lot of fossil fuel infrastructure will be worth zero. So far, based upon the record over the past seven decades, fossil fuel infrastructure looks solidly in place, in fact, growing in size, and there are some powerful forces in the world that want to keep it that way, which, in turn, makes it doubly difficult to achieve Paris ’15.

One problem in confronting the global warming issue is participation, by whom and to what extent? Scientists such as James G. Anderson of Harvard states it takes a WWII type of effort to overcome the global warming problem, which implies all hands on deck, as well as within 5 years in a substantive way.

But, there are major obstacles: One year ago President Sauli Niinistö of the Republic of Finland met with President Putin of Russia at the International Arctic forum in Arkhangelsk, Russia, March 29-31, 2017.

In his opening remarks, President Niinistö stated: “My starting point today is the growing threat of climate change. Tackling this challenge is crucial if we want to ensure that the Arctic remains the place it is today. But the issue is of global significance: If we lose the Arctic, we lose the whole world.” (Source: Opening Remarks by the President of the Republic of Finland Sauli Niinistö at ‘The Arctic: Territory of Dialogue’ Forum, Arkhangelsk, 30th March 2017).

He continued: “This catastrophe will not be limited to the Arctic. There will be enormous consequences worldwide. As the ice melts, sea levels will rise. As the ice melts, solar radiation will not be reflected back – instead, its energy will further warm the water and accelerate global warming,” Ibid.

He mentioned Russia’s 7,000 methane-infused pingos that have suddenly popped up throughout Siberia, in his words: “A further concern is the recent report made by Russian scientists that in Siberia there are some 7,000 methane-filled pockets waiting to release content. This will create danger and disruption to infrastructure and humans in the area. What is worse, once released, methane is a much more potent greenhouse gas than carbon dioxide,” Ibid.

At latitude 66°33′47.1″ N, the Arctic Circle intersects Finland at its midpoint. President Sauli Niinistö knows the Arctic. He lives it.

Thereafter, President Putin’s speech at the same forum emphasized: “Russia, which makes up almost a third of the Arctic zone… includes over 150 projects with estimated investment of trillions of roubles… and creation of so-called development support zones… and the development of offshore deposits… we devoted special attention to the Northern Sea Route… almost a year-round artery….” (Source: Vladimir Putin’s Speech at the ‘Arctic: Territory of Dialogue’ International Arctic Forum, About the Forum, International Arctic Forum, March 2017).

No mention of global warming. However, Russia can’t wait for open blue waters in the Arctic for development of fossil fuels and open sea routes over the North Pole for transportation purposes.

Furthermore, in interviews following the forum, Putin stated his opinion that humans are not responsible for climate change: “Icebergs have been melting for decades, started in the 1930s” when, according to him, “there were no serious anthropological factors at work.” He says global warming cannot be stopped because “it’s tied to global cycles on Earth. The issue is to adapt to it.”

Russia adapts by spending trillions of rubles to explore for fossil fuels. Similarly, the United States follows in lockstep by opening up national parks all across the country to big oil, including Arctic Wilderness refuges.

Climate change deniers lead the world’s largest economy (United States) and Russia, the sixth largest. They are at the top of the pyramid of fossil fuel production at the very moment when the infrastructure of the Arctic, i.e., multi-year ice, is crumbling apart right before everybody’s eyes. Therefore, the question is whether a disintegrating Arctic is good or bad. Obviously, by their actions alone, both America and Russia want collapsing Arctic infrastructure. They are banking on it!

President Niinistö succinctly summed up the risks of a collapsing Arctic, on January 2nd 2018 when he was sworn in for a second six-year term, after a landslide victory at the polls: “Combating climate change is the most important issue in the coming years. That’s just how it must be, so that humankind won’t have to endure the destruction of the planet.” (Source: President Niinistö Emphasizes Climate Change at Inauguration, UUTISET News Jan. 2nd, 2018).

At that swearing-in ceremony, Maria Lohela, Speaker of the Parliament, praised President Niinistö’s first-term and specifically mentioned his initiatives to combat the use of coal, which accelerates the melting of polar ice caps.

Meanwhile, the Trump administration’s frantic delirium over coal, oil and gas exploration/production is only surpassed in exuberance by an historical event, John D. Rockefeller’s heartfelt passion for turning nature’s bounty into a fortune, growing Standard Oil Company from the world’s largest refinery in 1870 into the world’s first and largest multinational in 1911, indeed, a record pace for capitalistic development.

But, with America’s national parks opening up carte blanche to big oil, Trump has a shot at exceeding Rockefeller’s record pace. His emphasis, like Rockefeller of 100 years ago, is drill everywhere, far and wide, pole to pole.

Meanwhile, it’s nearly unimaginable/unbelievable contrasting Middle Eastern ethos to American and Russian, all major oil producers. As for example, the Kingdom of Saudi Arabia’s biggest solar farm currently in operation covers the parking lot of the National Oil Company, Saudi Aramco.

“The Saudi government wants not just to reshape its energy mix at home but also to emerge as a global force in clean power. (Source: Stanley Reed, From Oil to Solar: Saudi Arabia Plots a Shift to Renewables, The New York Times, Feb. 5, 2018).

By the end of the year, Saudi Arabia aims to invest up to $7 billion to develop seven new solar plants and a big wind farm.

In September 2017, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Prime Minister of the UAE and Ruler of Dubai, launched plans for the world’s largest Concentrated Solar Power project, including the world’s tallest solar tower.

In August 2017 Kuwait launched a $1.2B solar power plant project.

As of January 2018, Oman completed its feasibility plan for a huge solar park of 500MW.

The Kingdom of Bahrain is making plans to build a 100MW solar plant as part of its renewable energy agenda.

OPEC is turning green for practical purposes, but more importantly, they’re demonstrating an intellect and foresightedness above and beyond boorish accretion of oil as a way of life. They see the future.

Meantime, similar to John D. Rockefeller’s race to oil glory 100 years ago, the U.S. and Russia are in a trillion-dollar race competing for newly exposed riches of oil and gas but in frigid waters sans ice and in Arctic wildlife refuges, pounding on the door of the final frontier where a mistake magnifies ten-fold. It’s a dicey future.

Back in the day Rockefeller was a visionary. Today, the Rockefeller Family Fund is divesting all of its holdings of fossil fuel companies. more

Infrastructure funding

Whenever I discuss possible solutions to climate change, it isn't long before someone demands, "How much will this cost??!! And how do you propose we pay for it?" These are in fact excellent questions because the MAIN reason why this civilization-threatening problem doesn't get seriously addressed is the sticker shock that occurs whenever someone gives a realistic estimate for a fix.

Then there's Ellen Brown who reminds us that the problem of not enough money should be the easiest problem to solve of all. Then she gives us historical examples of why democratic money creation suggest the perfect solutions to the funding problems. Unfortunately, folks who saw the world like Ellen does mostly disappeared by the early 1950s so she has become an almost lone voice for a sane monetary and banking organization.

Which is all the more reason why she should be read.

Funding Infrastructure: Why China Is Running Circles Around America
Posted on February 27, 2018 by Ellen Brown

“One Belt, One Road,” China’s $1 trillion infrastructure initiative, is a massive undertaking of highways, pipelines, transmission lines, ports, power stations, fiber optics, and railroads connecting China to Central Asia, Europe and Africa. According to Dan Slane, a former advisor in President Trump’s transition team, “It is the largest infrastructure project initiated by one nation in the history of the world and is designed to enable China to become the dominant economic power in the world.” In a January 29th article titled “Trump’s Plan a Recipe for Failure, Former Infrastructure Advisor Says,” he added, “If we don’t get our act together very soon, we should all be brushing up on our Mandarin.”

On Monday, February 12th, President Trump’s own infrastructure initiative was finally unveiled. Perhaps to trump China’s $1 trillion mega-project, the Administration has now upped the ante from $1 trillion to $1.5 trillion, or at least so the initiative is billed. But as Donald Cohen observes in The American Prospect, it’s really only $200 billion, the sole sum that is to come from federal funding; and it’s not even that after factoring in the billions in tax cuts in infrastructure-related projects. The rest of the $1.5 trillion is to come from cities, states, and private investors; and since city and state coffers are depleted, that chiefly means private investors. The focus of the Administration’s plan is on public-private partnerships, which as Slane notes are not suitable for many of the most critical infrastructure projects, since they lack the sort of ongoing funding stream such as a toll or fee that would attract private investors. Public-private partnerships also drive up costs compared to financing with municipal bonds.

In any case, as Yves Smith observes, private equity firms are not much interested in public assets; and to the extent that they are, they are more interested in privatizing existing infrastructure than in funding the new development that is at the heart of the president’s plan. Moreover, local officials and local businessmen are now leery of privatization deals. They know the price of quick cash is to be bled dry with user charges and profit guarantees.

The White House says its initiative is not a take-it-or-leave-it proposal but is the start of a negotiation, and that the president is “open to new sources of funding.” But no one in Congress seems to have a viable proposal. Perhaps it is time to look more closely at how China does it . . . .

China’s Secret Funding Source: The Deep Pocket of Its State-owned Banks

While American politicians argue endlessly about where to find the money, China has been forging full steam ahead with its mega-projects. A case in point is its 12,000 miles of high-speed rail, built in a mere decade while American politicians were still trying to fund much more modest rail projects. The money largely came from loans from China’s state-owned banks. The country’s five largest banks are majority-owned by the central government, and they lend principally to large, state-owned enterprises.

Where do the banks get the money? Basically, they print it. Not directly. Not obviously. But as the Bank of England has acknowledged, banks do not merely recycle existing deposits but actually create the money they lend by writing it into their borrowers’ deposit accounts. Incoming deposits are needed to balance the books, but at some point these deposits originated in the deposit accounts of other banks; and since the Chinese government owns most of the country’s banks, it can aim this funding fire hose at its most pressing national needs.

China’s central bank, the People’s Bank of China, issues money for infrastructure in an even more direct way. It has turned to an innovative form of quantitative easing in which liquidity is directed not at propping up the biggest banks but at “surgical strikes” into the most productive sectors of the economy. Citigroup chief economist Willem Buiter calls this “qualitative easing” to distinguish it from the quantitative easing engaged in by Western central banks. According to a 2014 Wall Street Journal article:
In China’s context, such so-called qualitative easing happens when the People’s Bank of China adds riskier assets to its balance sheet – such as by relending to the agriculture sector and small businesses and offering cheap loans for low-return infrastructure projects – while maintaining a normal pace of balance-sheet expansion [loan creation]. . . .

The purpose of China’s qualitative easing is to provide affordable financing to select sectors, and it reflects Beijing’s intention to dictate interest rates for some sectors, Citigroup’s economists said. They added that while such a policy would also put inflationary pressure on the economy, the impact is less pronounced than the U.S.-style quantitative easing.
Among the targets of these surgical strikes with central bank financing is the One Belt, One Road initiative. According to a May 2015 article in Bloomberg:
Instead of turning the liquidity sprinkler on full-throttle for the whole garden, the PBOC is aiming its hose at specific parts. The latest innovations include plans to bolster the market for local government bonds and the recapitalisation of policy banks so they can boost lending to government-favoured projects. . . .

Policymakers have sought to bolster credit for small and medium-sized enterprises, and borrowers supporting the goals of the communist leadership, such as the One Belt, One Road initiative developing infrastructure along China’s old Silk Road trade routes.
“Non-Performing Loans” or “Helicopter Money for Infrastructure”? Money that Need Not Be Repaid

Critics say China has a dangerously high debt-to-GDP ratio and a “bad debt” problem, meaning its banks have too many “non-performing” loans. But according to financial research strategist Chen Zhao in a Harvard review called “China: A Bullish Case,” these factors are being misinterpreted and need not be cause for alarm. China has a high debt to GDP ratio because most Chinese businesses are funded through loans rather than through the stock market, as in the US; and China’s banks are able to engage in massive lending because the Chinese chiefly save their money in banks rather than investing it in the stock market, providing the deposit base to back this extensive lending. As for China’s public “debt,” most of it is money created on bank balance sheets for economic stimulus. Zhao writes:
During the 2008-09 financial crisis, the U.S. government deficit shot up to about 10 percent of GDP due to bail-out programs like the TARP. In contrast, the Chinese government deficit during that period didn’t change much. However, Chinese bank loan growth shot up to 40 percent while loan growth in the U.S. collapsed. These contrasting pictures suggest that most of China’s four trillion RMB stimulus package was carried out by its state-owned banks. . . . The so-called “bad debt problem” is effectively a consequence of Beijing’s fiscal projects and thus should be treated as such.
China calls this government bank financing “lending” rather than “money printing,” but the effect is very similar to what European central bankers are calling “helicopter money” for infrastructure – central bank-generated money that does not need to be repaid. If the Chinese loans get repaid, great; but if they don’t, it’s not considered a problem. Like helicopter money, the non-performing loans merely leave extra money circulating in the marketplace, creating the extra “demand” needed to fill the gap between GDP and consumer purchasing power, something that is particularly necessary in an economy that is contracting due to shrinking global markets following the 2008-09 crisis.

In a December 2017 article in the Financial Times called “Stop Worrying about Chinese Debt, a Crisis Is Not Brewing”, Zhao expanded on these concepts, writing:
[S]o-called credit risk in China is, in fact, sovereign risk. The Chinese government often relies on bank credit to finance government stimulus programmes. . . . China’s sovereign risk is extremely low. Importantly, the balance sheets of the Chinese state-owned banks, the government and the People’s Bank of China are all interconnected. Under these circumstances, a debt crisis in China is almost impossible.
Chinese state-owned banks are not going to need a Wall Street-style bailout from the government. They are the government, and the Chinese government has a massive global account surplus. It is not going bankrupt any time soon.

What about the risk of inflation? As noted by the Citigroup economists, Chinese-style “qualitative easing” is actually less inflationary than the bank-focused “quantitative easing” engaged in by Western central banks. And Western-style QE has barely succeeded in reaching the Fed’s 2 percent inflation target. For 2017, the Chinese inflation rate was a modest 1.8 percent.

What to Do When Congress Won’t Act

Rather than regarding China as a national security threat and putting our resources into rebuilding our military defenses, we might be further ahead studying its successful economic policies and adapting them to rebuilding our own crumbling roads and bridges before it is too late. The US government could set up a national infrastructure bank that lends just as China’s big public banks do, or the Federal Reserve could do qualitative easing for infrastructure as the PBOC does. The main roadblock to those solutions seems to be political. They would kill the privatization cash cow of the vested interests calling the shots behind the scenes.

What alternatives are left for cash-strapped state and local governments? Unlike the Fed, they cannot issue money directly; but they can establish their own banks. Fifty percent of the cost of infrastructure is financing, so having their own banks would allow them to cut the cost of infrastructure nearly in half. The savings on infrastructure projects with an income stream could then be used to fund those critically necessary projects that lack an income stream.

For a model, they can look to the century-old Bank of North Dakota (BND), currently the nation’s only publicly-owned depository bank. The BND makes 2 percent loans to local communities for infrastructure, far below the 12 percent average sought by private equity firms. Yet as noted in a November 2014 Wall Street Journal article, the BND is more profitable than Goldman Sachs and JPMorgan Chase. Before submitting to exploitation by public-private partnerships, state and local governments would do well to give the BND model further study. more