Category: Economics

Think Produce is Expensive Where You Live? How About $1-K for a Small Bunch of Grapes?

Ruby Roman grapes, grown in Japan and Selling for $10,000+ per grape!

Ruby Roman grapes, grown in Japan and Selling for $10,000+ per grape!

I’m fortunate enough to live on the edge one of the world’s great produce-growing regions, California’s vast Central Valley. So I’m sure I’m spoiled by the easy accessibility and relatively low price of many kinds of fruits and vegetables, particularly when I buy fresh and local.

Or maybe the story I just read really is indicative of an outrageous situation…in Japan. The opening paragraphs of the stunning story:

A bunch of grapes has fetched a record price at an auction in Japan, where the fruit is considered a status symbol.

The bunch of about 30 grapes of the Ruby Roman variety sold for 1.1m yen (£8,350) – about £270 a grape. Each grape is roughly the size of a ping pong ball.

FYI, that’s just over $10,000 for 30 admittedly large grapes. Think about that for a moment. Let it roll around in your mind like…well, like a plump, juicy grape rolling around in your mouth.

This, in microcosm, is an example of the largest human-survival problem on the planet: the cost of food distribution is far, far too high. Japan can’t grow many grapes; it’s a country with relatively little arable land per person. Imports cost a ton of money because of shipping costs, refrigeration, spoilage en route and probably another dozen or more factors I’m not thinking of.

Eating locally grown produce is one way each of us can help reduce the problems of starvation around the globe.

I know I don’t want to pay $10,000 for a snack-sized serving of…well…come to think of it…anything!

 

TPP Must Be Defeated or U.S. Laws and Regulations Will be Weakened or Overturned

I am a strong opponent of the Trans-Pacific Partnership (TPP) the massive trade deal President Obama is trying to ram down the throats of the American people by steamrolling Congress into a single up-or-down vote.

Obama keeps lying about the bill, saying that no American laws will be abrogated or changed by any of its provisions. That is pure unadulterated bull-pucky.

As David Dayen reports on The Intercept today (Nov. 24), at least one American law designed to protect dolphin from “accidental” poaching has already headed to the Dumpster as a result of TPP provisions. More are clearly on the way.

The reversal of dolphin-free labeling regulations came not as a result of Mexico (the country that filed the complaint in question) forcing a change. Rather, it comes about obliquely. The World Trade Organization (WTO) ruled that the U.S. regulation unfairly discriminated against Mexico simply by denying their seafood a dolphin-safe label.Mexico and Canada are on the verge of effectively striking down another U.S. labeling law, this one mandating country-of-origin identification on meat and produce. The WTO ruled against that law in May, and Canada and Mexico proposed $3.7 billion in retaliatory sanctions. Once again, the sole grounds for the complaint is interference with profit margins of privately held corporations.

The mechanism that was central to both of those rulings is something called the “investor-state dispute settlement system” which is exactly what it sounds like: a replacement for national courts by WTO committees and councils who can impose huge fines against nations whose trade practices disrupt private corporate profits.

Can you say Fascism, boys and girls?

(Lest you be tempted to jump on my claim, please consider this quotation by American President Franklin Delano Roosevelt: “The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” (Emphases mine)

As Uber, AirBnB and Others Give “Sharing Economy” a Bad Rap, “Cooperative Economy” Gains Traction

coopAs someone who has long been interested in trying to help establish and promote sharing (or giving) economics, I have become dismayed in recent years as so-called “sharing” services like taxi competitors Uber and Lyft and and hotel competitor AirBnB have been touted as if they were contributors to the Social Good by their very business models.

In point of fact, as this excellent article from one of my favorite sites, Truthout.org, clearly explains, these services and their ilk are really thinly disguised “fronts for millionaires and billionaires to opportunistically ride off the backs of everyday people, while also exacerbating many economic inequalities.” Co-authors Brian Van Slyke and David Morgan of Grassroots Economic Organizing do a careful, thorough and revealing dissection of these companies, which try to convince us that they are all about leveling the economic playing field. They clearly are not.

I highly recommend this article if you share my interest in creating non-market options to the essentially unregulated capitalist economy which is destroying the American middle class and with it the American Dream.

The remedy Van Slyke and Morgan propose is the creation of more cooperative business ventures. Such businesses are owned and operated by their employees and/or customers/clients rather than by investors whose sole interest is (and should be) profit-making. According to a University of Wisconsin study, nearly 30,000 cooperatives of all kinds (consumer, producer, worker, etc.) operate within the United States at 73,000 places of business, own over $3 trillion in assets, and generate over $500 billion in revenue annually. Cooperatives employ over 2 million people and pay out an estimated $75 billion annually in wages, according to the study.

The Truthout piece focuses much of its attention on taxi coops, of which there are quite a number. Worker cooperatives provide services in all of the following economic sectors, as extracted from a 2005 “Snapshot” report on cooperatives produced by the University of Wisconsin:

  • Business services, such as personnel and benefits management, and group purchasing of goods and services ƒ
  • Childcare ƒ
  • Credit and personal financial services ƒ
  • Equipment, hardware and farm supplies ƒ
  • Electricity, telephone, Internet, satellite and cable TV services ƒ
  • Food and grocery services ƒ
  • Funeral and memorial service planning ƒ
  • Health care ƒ
  • Housing ƒ
  • Insurance ƒ
  • Legal and professional services ƒ
  • Marketing of agricultural and other products

That same report lists the following seven internationally recognized purposes for engaging in coop business enterprises:

  • Voluntary and open membership ƒ
  • Democratic member control ƒ
  • Member economic participation ƒ
  • Autonomy and independence ƒ
  • Education, training and information-sharing ƒ
  • Cooperation among cooperatives ƒ
  • Concern for community

One of the most recent analyses and discussions of the worker cooperative as an expanding business model comes from the folks at Shareable. In this article from July 2014, they provide a great deal of insight into the means and reasons for forming cooperatives, several case studies and resources for getting started in the coop business.

I see this model as the possible savior of the American middle class, but it needs much greater attention and expansion. One great way to bring it about might well be to proselytize workers in companies like Uber and AirBnB who are now being ripped off by their corporate owners who own none of the company assets, take none of the risk, and scrape large percentages off the top of their workers’ revenues with no more justification than a smartphone app.

In fact, worker coops creating those apps may well be another disruptive business model worth considering.

Growth is the Problem, Not the Solution

distributive_justice_bumper_stickerA friend and colleague recently shared with me yet another economic analysis from yet another economist who was struggling with the question of how to maintain perpetual growth in the economy to keep pace with — or, better, exceed — the rate of growth of the population.

I responded that this economist, like so many of his professional colleagues, is missing — or perhaps deliberately blinding himself to — the underlying Truth about which few if any of them wish to talk.

Growth is the problem, not the solution or even a path to the solution.

We must learn to live with enough rather than demanding excess. We must create a stable economy in which continual growth is recognized for the impossibility it has always been.

Every single resource that must be consumed (and ultimately depleted) to fuel the fires of economic growth is in finite supply. Every reliable indicator — not just from science but from every other area of human endeavor and understanding — points clearly to the impossibility of us continuing to increase the rate at which we consume these largely non-renewable resources.

As long as all of our economic indicators and processes depend on a growing economy, we will keep driving the engines of creation into the ditches of greed.

Distribution, not retribution, must characterize our systems of economic justice.

It is well past time to wake up to this Truth. We need to attempt to reach the point of population equilibrium (Zero Population Growth, or ZPG). We must learn to recognize the absolute and inalienable right of every human being to adequate food, shelter, water, medical care and personal safety. And then we must figure out how to reallocate the distribution of those goods across the broad population of the planet, to diminish or demolish the have-have not gap that keeps us from recognizing our fundamental Oneness.

Progressive Minnesota Out-Performs Conservative Wisconsin Economy by 100%!

In one of the best apples-to-apples comparison studies I’ve seen in many years, Ed Harris at EconBrowser.com demonstrates that since 2011, the growth rate of the Wisconsin economy has lagged behind neighboring and near economic mirror Minnesota by nearly 3%. In “log terms” (which economists use to even out mathematical comparisons) that’s on the order of a 100% gap.

As you undoubtedly know, Wisconsin, which has inexplicably made a sharp turn right in the past few years from its one-time place as one of the nation’s leading progressive states, is under total GOP control. Gov. Scott Walker, who has Presidential aspirations, has been following the ALEC (American Legislative Exchange Council) guidelines for so-called economic recovery along with his pet dog of a legislature. He touts a $3.6 billion state budget surplus but turns mute when asked who benefits from the surplus when unemployment and other economic indicators that affect real people are headed in the completely wrong direction. Cut taxes, cut spending, impose austerity and watch your economy become yet another great example of how to further widen the economic gap that will absolutely prove this nation’s downfall.

This is the kind of information that needs greater dissemination and emulation. Fact-based information about a field as frequently nebulous as economics is hard to come by. Here’s a great example of directly comparable situations. Let’s see if we can learn from it before it’s too late.

 

Germany’s Solar and Wind Success Come at Expense of Utility Companies

Solar panels cover the roofs in all or most homes in many German towns and cities.

Solar panels cover the roofs in all or most homes in many German towns and cities.

There may be no better illustration of the meaning of the phrase “disruptive technology” than in Germany’s experience over the last several years with wind and solar energy adoption. Germany, along with Canada and, interestingly enough, Brazil, leads the industrialized world in switching to a green economy.

The story of Germany’s incredibly rapid adoption of renewable energy sources has been told well and often enough that I need not repeat it here. If it’s news to you, you can check out this NYT article or this German government site that updates the national policy of energiewende (energy transformation). Or just Google “Germany renewables”.

But this piece by Justin Gillis focuses more on the impact of this transformation on Germany’s power utilities, who, according to Gillis, have seen “profits from power generation collapse.” He points out that, “In Germany, where solar panels supply 7 percent of power and wind turbines about 10 percent, wholesale power prices have crashed during what were once the most profitable times of day.” One of the nation’s largest power utilities recently announced a $3.8 billion loss for the most recent fiscal year. Its CEO admitted the company was “late, probably too late,” to respond to the transformation now sweeping the country.

American utilities are watching what is happening in Germany and they are acting like ducks: calm and unruffled on the surface, but underwater paddling like crazy to stay afloat without changing directions. In this country, Big Coal, and Big Oil, and other Big Power vested interests are resisting and opposing changes in rules and laws that would encourage and facilitate more rapid response to global climate change as they scramble to protect their obscene profits. Instead, they could and should be investing some of that windfall into clean energy, finding ways to channel some of the coming profit from the transformation into their coffers (which is, after all, the only thing they actually understand).

A sudden disruption of the power companies and their suppliers would have a temporarily devastating effect on the economy in the form of thousands, perhaps millions, of jobs lost. But if industry and government work together to plan the transformation, and if the private companies take an active role in creating and channeling the transformation, some of that disruption an be managed and minimized.

In the long run, though, the disruption is not only tolerable, it is essential. Global climate change threatens the very existence of humanity.

As it is, we’ve allowed Big Power to turn us into global eco-terrorists, holding humanity hostage as we refuse to give up the dangerous and poisonous ways we generate and consume energy even as the reserves become depleted and the air becomes unbreathable and the water becomes inhabitable.

How About a 30-Hour Work Week?

I’ve been thinking a good bit lately about the notion of a 30-hour work week. Many economists and sociologists have pointed out numerous advantages to declaring 30 hours to be the standard for full-time work, not the least of which is a likely significant uptick in employment. In theory, a 30-hour work week, assuming the demand for workers stays stable, will result in 25% more people being added to the workforce. Of course, that won’t be the case because in some cases employers will simply pay the 30-hour worker 1.5 times their standard salary or hourly rate for overtime. This would also have salutary effects on the economy as a way of growing the middle class, but it would reduce the impact on unemployment.

A 30-hour work week, compared to the present standard 40-hour week which was adopted federally in 1936 by the Fair Labor Standards Act, provides a solution to at least the following acknowledged problems in our present society:

  • overwork
  • unemployment
  • overconsumption
  • high carbon emissions
  • low well-being
  • entrenched inequalities
  • lack of time to live sustainably, to care for each other and simply to enjoy life.

(That list is from this New York Times article, which provides a decent summary of the arguments for a 30-hour week.)

Obviously, just cutting the work week and continuing business more or less as usual isn’t going to be helpful. We need a period of adjustment and we need to rethink some of the work rules and regulations that govern the workplace today. But 30-hour weeks are more sustainable over the long haul, more conducive to creating a viable middle class (which is the only real hope we have for overcoming the current economic abyss), and just better all the way around.

The Socialist Party of America — one of two truly progressive parties in our nation (the other being the Green Party) — has a platform plank calling for a 30-hour work week and six hours of vacation time every year.

We’ve eliminated child labor, taken the pre-union 60-plus-hour workweek down to 40, created safer working conditions and largely reduced the exploitation of women in the workplace, all of which seemed impossible at the time they were done. We can do this, too, if we wish to do so.

Plutocrats, Here Come the Pitchforks! (Says a Plutocrat)

Billionaire entrepreneur Nick Hanauer has a message for his fellow plutocrats: Wake up before the pitchforks are at our gates.

In this stimulating TED talk, Hanauer urges his fellow 0.01 percenters to get behind a national $15 minimum wage because doing so is good for business and because if they don’t, a popular uprising is inevitable. The fundamental operating principle of capitalism, he argues, is that when the middle class has money, businesses have customers, which means demand, which means profits, which means more workers. It is not, he argues, capitalism’s raison d’etre to make sure a handful of people become excruciatingly wealthy.

This brief talk is filled with pithy observations and quotable quotes but, beyond that, it is powerful medicine that needs to be heeded if this country is to survive in anything resembling its present form. Early in the talk, Hanauer says, “If wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks.”

I encourage you to take 20 minutes to listen to Mr. Hanauer. He’s right. And the time he forecasts is fast approaching.

The Period of Unbridled Growth is Over, PG, So Get Over It

As many people far more expert than I have noted, the fundamental flaw in the capitalist economic system is its absolute reliance on growth. And, in case you haven’t yet gotten the memo, the era of unbridled growth is over. It is no longer sustainable, which means it never was. We do reach places where people have enough stuff, enough of given commodities. We also reach the point where the finite natural resources are at or near exhaustion, where any product or process that requires more non-renewable resources is simply too expensive. We reached that point with fossil fuels some time ago, as some early prognosticators suggested.

Yesterday, Proctor & Gamble, the world’s largest brand, announced it would sell off half of its product lines in an effort to induce growth in those that remain. I don’t pretend to understand the underlying economic principles at work here. I presume that, using classic capitalist analysis, their decision makes sense. But it fails to take into account the fact that capitalism as we know it is dead. In many ways, PG’s decision — which is certain to exacerbate the unemployment rate and thus increase the number of people who can’t buy any of PG’s brands — resembles the dying gasps of species of animals going rapidly extinct.

This cannibalistic behavior on the part of megacorporations is one of the symptoms of the death of capitalism. The greed that is built into the system causes companies to become numb to the reality that as they contribute to the overall poverty of the nation, they eat their market. Only companies that provide necessities will survive and they will have to find new efficiencies and market approaches that will be able to sustain themselves in increasingly competitive and difficult times.

sacred_economicsWe are in for economic transformation. This transformation will result in our finding a new level of economy in which the key word is not “abundance” but “enough”, in which the rewarded driving force is not greed but sharing, in which the true Unity of all of humanity — indeed all of Life — is a core value. Like all transformation, those who resist will experience pain and suffering. But at the other end of the process, when the transformation is complete, we will have adapted once again to changing environmental conditions to ensure the survival of the human race, albeit in a new form. (For a thoughtful insight into what this is going to look like, I highly recommend Charles Eisenstein’s Sacred Economics: Money, Gift and Society in the Age of Transition.)

“USA does not have a planning culture.”

The headline for this post is taken from a news item this morning in which Robert Nicholls, a professor of coastal engineering at the University of Southampton, is quoted. The subject: climate change and its impact on coastal cities around the world. 

nyc_underwaterThese cities, most climate scientists now believe, will have to be either abandoned or fortified with massive and massively expensive seawalls in the face of irreversibly rising sea levels. The Netherlands, one of the lowest-lying nations on earth, has set aside 1 billion Euros to ratchet up its already formidable fortifications. It is thinking decades, even centuries ahead. Meanwhile, one of our two major political parties refuses — en bloc — even to acknowledge the truth of climate change for purely political reasons. They view their near-term political fate as more important than the future of the human race in its entirety. Purely Ayn Rand selfishness carried to its ultimate.

For many years, the United States has earned a reputation as a nation with no interest in long-term planning. While Japanese industrial giants were looking five, seven and 10 years out, American corporations could seldom be bothered with anything more long-range than this quarter’s 10K report. “Long range planning” meant figuring out with whom and where to have lunch Friday.

The problem, of course, is that we have an instant-gratification culture that moves at an incredible speed that does not allow time for reflection or contemplation. “Damn the environment. Full speed ahead!” seems to be a battle cry of our businesses. But this same disinterest in long-range planning affects every other area of our society. The failure to adopt a living wage. The offshoring of jobs. The refusal to engage in meaningful retraining of our work force. The reductions in budgets for social safety net programs. The opposition to universal health care. All of these issues and many more have massive long-term consequences of which we have been amply and ably warned. But we choose to focus instead on this quarter, this month, this week, this morning, this moment.

That short-term thinking will be the eventual undoing of, at the very least, Western civilization, if not of the entirety of humanity.

And as the global leaders, it will be primarily the fault of the United States when it starts to come undone.