Monday October 23rd 2017

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‘Economics’ Archives

The Siren call

In Greek mythology Sirens would call out from their island to passing sailors with music and song.  Heeding the irresistible calls the seamen would sail to their death as they became shipwrecked on the rocky coast.

The tradition of the Siren is alive and well in our modern world. With each day we are bombarded with the enchanting sounds of fantasy — that our economy can continue to grow forever.  This intoxicating delusion of an infinite world where we expect our every expectation and desire to be fulfilled runs through every facet of our popular culture.  It is broadcast endlessly across our media.  It permeates our value system and is part of our belief system.  It is taught at the highest levels of our education system.  It is espoused as dogma in our political system.

It is the defining fiber that makes up the fabric of our society.

As more and more societies around the world heed the siren call towards capitalism and consumerism humanity veers closer and closer to the metaphorical cliffs and true disaster.  The allure is so strong that, like the sailors of old, we seem oblivious to the clear signs of danger.

  • The climate is reeling out of control and within a lifetime may be unlivable for much of humanity.
  • Other forms of life are disappearing from the planet 1000 times faster than normal
  • Alienation, depression, and other emotional maladies are chronic, and growing more severe in consumer societies
  • The earth is reaching its limit in absorbing the pollution and toxic waste produced by  exponentially growing consumer societies.  The level and number of toxins in our bodies grows with each new day

So, I have to confess that my heart sank when i saw these two headlines in the New York Times Magazine:

In China, Cultivating the Urge to Splurge (November 24, 2010)

Shop, China, Shop (November 30, 2010)

In these stories the writers continue the suicidal mantra — if we are to prosper the world must encourage China to continue to grow and create millions, many, many more millions of people who consume like we do in America.

As soon as I saw the headlines I knew that I would have to write a blog posting on this.  I was heartened to see that even Joe Romm, who normally focuses on climate issues (Blog: Climate Progress), felt compelled to attack this lunacy.

I will close with a copy of his post here:

Killed by the NY Times magazine.

November 30, 2010

The larger idea is to build a more sustainable economy, or what Chinese leaders have called a balanced and harmonious society. In that economy, families would not have to save 20 percent of their income in order to pay for schooling and medical care, as many do now. They would instead be able to afford more of the comforts of modern life — better housing, clothing, transportation and communication. In time, China would become the world’s next great consumer society.

Maybe you thought that the word ’sustainable’ was already dead, but really it was only ill — ill-defined by overuse.  But thanks to the NYT magazine and economics columnist David Leonhardt, it has now been officially defined out of existence.

Maybe you thought ’sustainable’ meant something like “capable of being continued with minimal long-term effect on the environment.”  How wrong you were.  Apparently, to the Times, ’sustainable’ means being the biggest consumers in the world.  George Orwell would be proud.

Special props to the NYT and Leonhardt for running a piece that uses the words sustainable, sustain, and sustainability six times — without once mentioning global warming or China’s unsustainable contribution to it  — on the day before the big international climate conference in Cancun, a day their op-ed page ran three pieces on global warming, including one explaining the dangers of our unsustainable path (see Farmer in the Times: “Climate change, I believe, may eventually pose an existential threat to my way of life”).

And extra bonus credit to the Times for this head-exploding cover:

Shop china

Yes, the “health of the world economy depends on” China learning to spend “more like Americans.”  As if (see “Is the global economy a Ponzi scheme?“)

The article is a masterpiece of tortured logic and magical thinking.  Here’s the paragraph that follows the one quoted above:

That term may have negative connotations in the United States, particularly after the last decade of debt excess. But the term means something very different for China. A Chinese consumer society would improve the lives of hundreds of millions of people. The benefits of the industrial boom that began in the 1980s would spread more rapidly beyond the country’s eastern coast. The service sector would grow, and the economy would no longer be quite so dependent on smoke-spewing factories.

So the only negative connotation the NYT is aware of for the phrase “world’s next great consumer society” is debt excess.  No treehuggers at the Times magazine.

And somehow the benefits of the industrial boom would spread rapidly beyond the country’s east coast, but smoke-spewing factories wouldn’t?  How exactly are all those mass consumer goods bought by all those new Chinese shopaholics going to be manufactured?  By magic?

Note to NYT:  If you make a bunch of stuff for hundreds of millions of people, you’re gonna have to build a lot of smoke-spewing factories.

Finally, I’m all for improving the lives of hundreds of millions of people — but somehow I imagine it can be done without “cultivating the urge to splurge” of Americans.  Indeed, I am reminded of a piece I wrote two years ago — Chinese Premier: Rich nations should ditch ‘unsustainable’ lifestyles … and stop buying all the crap we make.  I cited an AFP story:

BEIJING (AFP) — Chinese Premier Wen Jiabao said Friday that rich nations should alter their lifestyles to help tackle global warming, at the start of a two-day meeting on climate change, state media reported.
“The developed countries have a responsibility and an obligation to respond to global climate change by altering their unsustainable way of life,” Wen was quoted as saying by Xinhua news agency.

Not exactly a view that the NYT felt needed to be part of its piece.

That said, the first thing that popped into my head when I read Wen Jiabao’s admonition was this Onion story: (Note from Sustainable Thoughts:  If you are not familiar with the Onion, this “article” is a spoof/parody)

Chinese Factory Worker Can’t Believe The Shit He Makes For Americans
FENGHUA, CHINA–Chen Hsien, an employee of Fenghua Ningbo Plastic Works Ltd., a plastics factory that manufactures lightweight household items for Western markets, expressed his disbelief Monday over the “sheer amount of shit Americans will buy.”

“Often, when we’re assigned a new order for, say, ’salad shooters,’ I will say to myself, ‘There’s no way that anyone will ever buy these,’ …. One month later, we will receive an order for the same product, but three times the quantity. How can anyone have a need for such useless shit?”

… “I hear that Americans can buy anything they want, and I believe it, judging from the things I’ve made for them,” Chen said….

Among the items that Chen has helped create are plastic-bag dispensers, microwave omelet cookers, glow-in-the-dark page magnifiers, Christmas-themed file baskets, animal-shaped contact-lens cases, and adhesive-backed wall hooks.
“Sometimes, an item the factory produces resembles nothing I’ve ever seen,” Chen said. “One time, we made something that looked like a ladle, but it had holes in its cup and a handle that bent down 90 degrees. The foreman told us that it was a soda-can holder for an automobile. If you are lucky enough to own a car, sit back and enjoy the journey. Save the soda beverage for later.”

… Chen expressed similar confusion over the tens of thousands of pineapple corers, plastic eyeshades, toothpick dispensers, and dog pull-toys that he has helped manufacture.

“Why the demand for so many kitchen gadgets?” Chen said. “I can understand having a good wok, a rice cooker, a tea kettle, a hot plate, some utensils, good china, a teapot with a strainer, and maybe a thermos. But all these extra things–where do the Americans put them? How many times will you use a taco-shell holder? ‘Oh, I really need this silverware-drawer sorter or I will have fits.’ Shut up, stupid American.”

Chen added that many of the items break after only a few uses.

“None are built to last very long,” Chen said. “That is probably so the Americans can return to buy more. Not even the badly translated assembly instructions deter them. If I bought a kitchen item that came with such poor Mandarin instructions, I would return the item immediately.”

May Gao of the Hong Kong-based labor-advocacy group China Labour Bulletin said complaints like Chen’s are common among workers in China’s bustling industrial cities.

“Last week, I took testimony from several young female workers from Shenzhen who said they were locked in a work room for 18 straight hours making inflatable Frisbees,” Gao said. “Finally, the girls joined hands on the factory floor and began to chant, ‘No more insane flying toys for Western pigs!’ They quickly lost their jobs and were ostracized by their families, but the incident was a testament to China’s growing disillusionment with producing needless crap for fat-ass foreigners.”

Continued Gao: “As Chinese manufacturing and foreign investment continue to grow, and more silly novelty products are invented, we can expect to see more of these protests.”

And if the NYT magazine has their way, the Chinese can look forward to making their own crap too!

A Great, GoodGuide

Any life form based on exponential growth on a finite planet is doomed.  Most economies around the world are now some form of capitalism.  The foundation of capitalism is exponential growth.  The driving engine of capitalism is the corporation.  Corporations are now the epicenter of economic and political power around the world.  The cornerstone of any attempt to create a sustainable society must address the anti-social and anti-democratic behavior of these organizations. It will require efforts at the highest level — revamping corporate law, passing national level legislation, enlightened decision-making by the supreme court, and perhaps even an amendment to the constitution.  It will likely require massive public outcry and sustained grassroots action to overcome the corporate center of gravity that currently overwhelms our political system.

So, yes, sharpen your pens and write your elected officials.  Get those protest signs painted and get out on the street.  Vote, and vote often.

There is also much we can do in our daily lives to point corporations in the right direction.  Corporations do respond to the demands of consumers.  Look at the morphing menu found at the fast food giant Mcdonald’s.  Due to rising pressure the chain did away with the “super size me” gimmick given the health implications.  Mcdonald’s also responded to the public’s demand for healthier foods by adding more salads, fruit, smaller sandwiches and oatmeal to the menu.  I had stopped going to Micky D’s years ago but began going again (occasionally, usually when traveling) since I could now get a decent salad there or at least a lower calorie meal.

Currently, corporations are rewarded only for providing the lowest price.  The success of Walmart is the clearest indicator of this.  Many of us buy our clothes there, or our TVs, or our groceries even though we know that  walmart treats it employees poorly, and that some (many?) of the products are made by people working under deplorable working conditions.  As a consumer it is very hard to know which products were made with safe ingredients, or if they employees were paid a livable wage, or if the product was produced in a way that is damaging to the environment.  At the moment there is no easy way to reward companies for good behavior – in fact these companies are often penalized because their products may carry a higher price.

Well, help is on the way.  There is a growing movement afoot to bring this type of information to the consumer at the point of sale.  So when you are standing at the store you will instantly, and easily compare products on their social impact, their health impact, and their environmental impact.  As a first step in this direction check out the GoodGuide here.  At this website you can find the social/health/environmental rating on a growing list of products.

I went to this website and looked up most of the personal hygiene products that I use — toothpaste, shampoo, soap, etc.  My entire life I have used Crest Toothpaste but based on the information I found here I decided to switch.

In these screen shots (click on the image to see it larger) I only showed the summary.  The website has detailed information for each category to indicate how the score was determined.

After I switched to my new brand of toothpaste I went to the Crest website and sent them a message explaining that I had switched and the reason why.  I mentioned that I had used their product most of my life and would be happy to switch back if they could improve their product score.  I sent them a link to their product at the GoodGuide website.  I explained that I am looking to support companies that produce products that are safe, environmentally responsible, and made by companies that treat their employees well.

I received a response from a Crest representative who explained that she will pass my concerns on to the management team.

There is another great website that focuses on cosmetics called Deep Skin, that rates skin care, makeup, hair care, nails, eye care, feminine hygiene, dental and oral hygiene, and fragrance products based on their risk to your health.

Start the revolution today.  Don’t shop.

When you must buy, look beyond price, and consider the true cost to society when making a purchase.  Use your purchase to reward responsible companies and help create a world we can be proud to live in.

The Corporate Challenge

We will never succeed in creating a sustainable society until we overcome the death-star like power, and evil, represented by the modern corporation. Seem a tad extreme? Let’s look at a few facts.

Corporations only make up 20% of US firms but they account for 85% of all US business revenue.

The economic power of the largest corporations boggles the mind — of the100 largest economies in the world, 53 of them are corporations!

There are only 10 COUNTRIES that have economies larger than Exxon Mobil. Or to put it another way, Exxon Mobil is economically larger than 180 countries in the world.

We now have 63,000 multi-national corporations in the world — huge monoliths that transcend national boundaries and operate beyond the legal jurisdiction of any national legal system.

The massive economic wealth of corporations overwhelms most political systems, including ours, and weakens democracies around the world. Our political process moves, or is blocked, at the whim of corporate sponsors and lobbyists.

We have no one to blame but ourselves — we are the mad scientists that have created these economic Frankensteins. How so?

First, we made it LAW, that the directors and managers of a corporation have a duty to act in the best interest of the corporation, which has been interpreted as an obligation to do whatever it takes to maximize the wealth of shareholders. This, the “best interest of the corporation” principle is one of the greatest obstacles in allowing corporations to become more socially responsible institutions.
If polluting the nearby river maximizes profit, the managers are obliged to do it. If the corporation can maximize dividends by closing a factory and moving to another country, shut her down. If carcinogenic ingredients help keep costs down, and therefore profits up, well, then a bit of cancer is the “price” of doing business.

Under our current system, a corporate manager is being UNETHICAL if they consider policies that would promote positive social, health, or environmental impacts if they would reduce profits. Really. No, really, that is the system that we created.

If an individual acted this way we would call him or her a sociopath, but if a corporation does it, it is “just business.”

Second, we further encourage such diabolical behavior by limiting the liability of shareholders for the action of their companies. Limited liability is why corporations must be chartered by a government authority — in the US the states do this. They are supposed to supervise and regulate the corporations but it is rarely done in practice. Shareholders might take more care if they were held financially accountable for the misdeeds of their companies (think BP and the oil disaster for a current example).

Third, in the US we have granted corporations “personhood” allowing them protection under the constitution just like a flesh-and-blood person. Corporations are now allowed to spend as much money as they like to influence elections.

Corporations have become not only the most powerful economic force on the planet, but the dominant political force as well. This concentration of power is increasingly unaccountable to you and me, to our government, or the planet.

How do we fix this? A few ideas:
  1. Revoke corporate charters of companies violating the public trust
  2. Roll back limited liability
  3. Corporate directors and top managers should be personally liable for gross negligence
  4. Extend liability to shareholders under certain circumstances
  5. Eliminate corporate personhood (Learn more here)
  6. Change the legal mandate that requires the corporation to strictly pursue its own self-interest and to give primacy to maximizing shareholder wealth.
    (Maryland has taken a step in the right direction by creating the legal framework for the “Benefit Corporation.” (Learn more here))

Ultimately, we need to rethink the whole nature of the corporation and its role in society. It is clear that the mindless pursuit of short term profits, regardless of consequences, is ultimately doomed to failure — not only for the company but for society at large.

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