Prospect Magazine has an interesting article by Parag Khanna, who "visits China's remote, rebellious western provinces of Tibet and Xinjiang—and sees how China's government is today bending central Asia to its will." (Thanks, Peony.)
Ever heard of the Corrections Corporation of America, "the nation’s industry leader of privately-managed corrections solutions for federal, state and local government"? Traded on the NY Stock Exchange, it runs "more than 64 correctional facilities and detention centers from coast to coast, in small cities, metropolitan areas and destinations in between" in 21 states. As one might guess, the interests of its shareholders are singularly aligned with — you guessed it — growth in the number of prisoners. Each quarter, its financial results report key metrics like the growth of inmate populations and the number of new beds placed into service. If these numbers fall, the stock price falls. That's no good for a corporation, is it?
The land of the free already incarcerates 2.2 million people, or 1% of its adult population (the highest rate in the world; five times higher than in W. Europe and twice as high as in Singapore, which is infamous for its spartan legal system). British columnist George Monbiot describes what tends to happen when the prison industry becomes part of the free market system:
It’s a staggering case; more staggering still that it has scarcely been mentioned on this side of the ocean. Last week two judges in Pennsylvania were convicted of jailing some 2000 children in exchange for bribes from private prison companies.
Mark Ciavarella and Michael Conahan sent children to jail for offences so trivial that some of them weren’t even crimes. A 15 year-old called Hillary Transue got three months for creating a spoof web page ridiculing her school’s assistant principal. Mr Ciavarella sent Shane Bly, then 13, to boot camp for trespassing in a vacant building. He gave a 14 year-old, Jamie Quinn, 11 months in prison for slapping a friend during an argument, after the friend slapped her. The judges were paid $2.6 million by companies belonging to the Mid Atlantic Youth Services Corp for helping to fill its jails. This is what happens when public services are run for profit.
It’s an extreme example, but it hints at the wider consequences of the trade in human lives created by private prisons. In the US and the UK they have a powerful incentive to ensure that the number of prisoners keeps rising.
More here.
Many pundits have adequately explained the crisis (especially listen to George Soros—video below) and why the US government had to devise a massive bailout for Wall Street and recapitalize the banks (think of it as an emergency liver transplant for one who had turned to a reckless, binge drinking lifestyle). It also brought home another fact of modern capitalism: bankruptcy is only for the little folks; those big enough can't be allowed to fail for their irresponsibility, lest they bring down the whole house. Neat, aye?
But now, having traded a pressing liquidity crisis with a higher national debt, is the worst finally behind us? In other words, do we now simply need to hunker down and ride out an economic recession that may be, at worst, longer than usual (say, lasting up to 18-24 months, instead of the average 10 months) and wait for the eventual market rebound?
Not so fast, Speedy Gonzales. Besides the long-term fiscal instability from a $10+ trillion debt that is set to rise by $1-2 trillion next year with no end to annual deficits in sight, there may be more ticking time-bombs just ahead. Enter credit default swaps and other derivatives. Invented in the mid-90s by math and physics PhDs, these financial instruments were designed and adopted by money lenders to mitigate risk but have managed to achieve the precise opposite due to some shockingly naive assumptions about economics and human nature. Their advent encouraged subprime loans by giving lenders an (ultimately illusory) instrument for reducing their risk from loan defaults.
Credit default swaps (CDS) are contracts between private institutions that trade in a completely unregulated market. They "resemble an insurance policy, as they can be used by debt owners to hedge, or insure against a default on a debt. However, [unlike insurance,] because there is no requirement to actually hold any asset or suffer a loss, CDS can also be used for speculative purposes." Since 2000, the CDS market has grown from near $0 to a staggering $55 trillion, i.e., about four times the combined worth of all companies traded on the NY Stock Exchange! CDS trading has added huge, unaccounted-for liabilities and exposure to corporate balance sheets. Their deleterious impact surfaced with the recent subprime crisis, but this may well be just the tip of the iceberg.
A significant and ominous, if also brave, admission came last week from none other than the godfather of US capitalism in the last two decades: Alan Greenspan. An economist of the libertarian, Ayn Rand stripe, he admitted that he is shocked to have found a flaw in his model of how the world works and that he had been wrong in resisting regulations for these new-fangled instruments. Known for his cryptic-diplomatic phrases (recall "irrational exuberance"?), the sage simply predicted, “The financial landscape that will greet the end of the crisis will be far different from the one that entered it little more than a year ago.” Whoops! Sorry, people. Hope you don't have to spend your retirement years working at Walmart.
Here is a primer on credit default swaps that explains why Warren Buffet has called CDS the "financial weapons of mass destruction" and why others call it "the dark matter" of the financial universe. "Like rogue nukes, they've proliferated around the world and now lie hiding, waiting to blow up the balance sheets of countless other financial institutions." (Read more overview articles here, here, and here.)
(Video: George Soros in conversation with Bill Moyers, 25 mins.)
"Life on the farm isn't what it used to be. The green pastures and idyllic barnyard scenes portrayed in children's books have been replaced by windowless sheds, tiny crates, wire cages, and other confinement systems integral to what is now known as 'factory farming.'" Here is a sobering look at how farm animals are transformed into food today (viewer discretion advised. Also see my previous post on this topic.)
(Click image to go to video site. The source of the image above here.)
Here's an arresting short talk (25 minutes) on the realities and prevalence of human trafficking and slavery given recently by Julia Ormond at the Global Philanthropy Forum in Redwood City, CA. According to Ormond, slavery is alive and well today. Worldwide, tens of millions of people live in slavery; and while this is the smallest fraction of the human population ever to live in bondage, they are nevertheless the largest number of slaves in history. She tells us that the institution is economically tied to powerful international crime syndicates and terrorists and involves more horror than one should ever have to imagine.
From FORA.tv: Julia Ormond, President of Alliance to Stop Slavery and End Trafficking (ASSET) and UN Goodwill Ambassador in Human Trafficking addressed the Global Philanthropy Forum. Julia Ormond reveals statistics in human trafficking and slavery and why it often goes unreported. Ormond recalls stories from child victims from around the world to shed light on the growing problem (from April 11th, 2008).
August afternoons in Shanghai, ambling down Nanjing Road with posh boutiques blasting chilled air through open doors into the sultry street, one might imagine that energy is free in China. At less than 5c per KWH, it is certainly cheap (10c in India and the US). But the real costs are hidden, though, increasingly, not very well. Most visitors to China are struck by its urban air pollution. A pall of sulphrous smoke hangs over towns and cities and even wafts through the countryside into neighboring countries. One new coal-fired power plant opens each week. Respiratory illnesses are common. In 2006, China surpassed the US to become the leading producer of green house emissions in the world.
This is not breaking news. Much has been written about China's environmental crisis in recent years: vanishing forests, encroaching desert, depleting ground water, acid rain, toxic chemicals in polluted rivers, etc. China has clearly prioritized economic growth over environmental health. But a part of the problem is inherent in the drivers of its economic growth -- China has become the industrial heartland of the world. The developed countries have, in effect, shifted their factories and pollution to China (this is one outsourcing no politician in the US complains about). As a result, as consumers, all of us are now a party to China's environmental crisis. Each time we buy a plastic toy, a blender, or an iPod, we send a puff of sulphrous smoke into China's air. And some of it is coming back to haunt us in our own backyards!
A decent survey of China's environmental malaise by Jacques Leslie recently appeared in Mother Jones:
I had planned to review Amy Chua's "World On Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability" but I doubt I'll get to it. This review by Michelle Goldberg matches my own thoughts on this insightful book:
The case Amy Chua makes ... is so clear and persuasive it almost seems as if it had been obvious all along. Yet her argument, that rapid switches to majoritarian rule and free-market democracy in many Third World countries benefit certain ethnic groups over others and lead to vicious sectarian strife, is quite new... Writers such as Robert Kaplan have long argued that the Western obsession with exporting democracy to countries without the institutions to support it is naive and often dangerous, fostering demagogues and communal hatreds. Chua builds on this argument in an essential way, showing how expanding markets exacerbate the problem by enriching already-dominant minority groups even as democracy empowers angry majorities ...
She argues that when economic liberalization and democracy are rapidly introduced to countries with market-dominant minorities, the two forces necessarily come into conflict. "Markets concentrate enormous wealth in the hands of an 'outsider' minority, fomenting ethnic envy and hatred among often chronically poor majorities," she writes. "Introducing democracy in these circumstances does not transform voters into open-minded cocitizens in a national community. Rather, the competition for votes fosters the emergence of demagogues who scapegoat the resented minority and foment active ethnonationalist movements demanding that the country's wealth and identity be reclaimed by the 'true owners of the nation.'"
Let's say you are a professional in the US. You love your job, make $100K, and pay $25K in taxes each year. Do you know how your taxes are spent? The US government summarizes this in a pie-chart in the 1040 tax instruction booklet each year (see left). The major slices include military spending (21%), Social Security (21%), Medicare (12%), health spending (10%), interest payments on the nine trillion dollars national debt (9%), etc.
These numbers have long been challenged by many watchdog and pacifist groups. They claim that interest payments for national debt hide
the contribution to that debt from past military spending, that a chunk of the health and welfare slice is spent on war
veterans, that the official budget is supplemented by "one-off" war spending bills, etc. One such group is the War Resisters League (WRL) which holds "war to be a crime against humanity ... founded in 1923, [it] advocates Gandhian nonviolence as the method for creating a democratic society free of war, racism, sexism, and human exploitation."
If the accounting is made honest, claims the WRL (read their analysis), the numbers turn out to be 51% for military-oriented spending, 49% for the rest. And with a 52% share of the global arms trade (2006 data), the big, blind economic forces in the US seem aligned to sustain not only the military-industrial complex that employs so many but also the arms trading industry (largely on the back of sales to emerging third world nations). I've wondered more than once: How do liberals reconcile buying retirement mutual funds that invest in missile/fighter jet makers with their apparent yearning for peace in the world?
And if the WRL is right, you, as the professional above, fork over $12,500 each year to US military-oriented spending (a chunk of it currently for the Iraq war) and you labor 1-1/2 months each year to pay for it. Whatever your profession, it sure ain't no labor of love.
The newspaper business has changed radically in recent decades. Most newspapers are now owned by a handful of large corporations, even by "holding companies", with parallel interests in cement, telecom, real estate, etc. While profit was once a motive for running a newspaper, it has become the sole motive today. In this Darwinian jungle, allegiance to the reader has been replaced by allegiance to the shareholder. Socially engaged and public service journalism, to the extent it existed, is increasingly rare -- its practitioners have become dinosaurs, unfit for the new age.
Many, including Chomsky, have reminded us for decades that corporate media, as profit-driven institutions, tend to serve the agendas and interests of dominant, elite groups in society. The "integration of the media into the market system has been accelerated
by the loosening of rules limiting media concentration,
cross-ownership, and control by non-media companies." And this trend has no national borders. The Times of India now sells editorial space, with not even the decency of adding a footnote to identify a commissioned write-up. A floundering old politician or a Bollywood starlet? An industrialist with a labor unrest problem? No worries. Just pay the Times for a series of flattering pieces on your wonderful human qualities. Want fries with that? Let the Times roll it out to its numerous other media "properties".
"Free market news" is in practically an oxymoron. Unlike in most professions, free market economics has been disastrous for journalism. Loyalty to shareholders only incidentally coincides with loyalty to readers. What we inevitably end up with is news that sells like any consumable, made palatable, which builds and affirms the myths of national greatness and benevolence. When aspirations devolve down to ratings and "eyeballs", news makers cater to the lowest common denominator. Dissent and disturbing stories tend not to be rewarded, sensational exposés and feel-good stories do. Soon, this spirals into frivolity or conformism, the latter best evidenced in the US right before the Iraq war.
To make matters worse, the juggernaut of the Internet has not been kind to newspapers. Circulation is down and so is print advertising. Too many newspapers are in the red. Alternate business models -- such as online versions with online ads -- have failed to stop the bleeding. The web has too much competition for advertising dollars, which simply follow the "eyeballs". Newspapers are therefore being sold off or shut down, concentrating corporate ownership even further. What will become of journalism? Should we worry about this?
In April 2006, John S Carroll, an eminent journalist and news editor, delivered an incisive and impassioned speech on the state of journalism at the annual meeting of the American Society of Newspaper Editors (ASNE):
A generation ago, we at the ASNE convention might have encountered such formidable editors as Gene Roberts, Ben Bradlee, Abe Rosenthal and Gene Patterson. With all due respect, there is no such pride of lions roaming among us today. This is not entirely our fault. Our jobs are harder than theirs. Our papers are shrinking, and so is our confidence.
How long has it been since an editor was so rash as to cite public service in justifying a budget? You might as well ask to be branded with a scarlet N, for naive. Our corporate superiors regard our beliefs as quaint, wasteful and increasingly tiresome. Even outside the corporation we have lost stature. We might see ourselves as public servants, but does the public see us that way?
Climate change has emerged as a significant issue only in the last few years. Though evidence has been building for decades, it has taken this long to reach a point where Leno & Letterman can joke about it and be understood. Al Gore's remarkable documentary certainly went a long way in building this awareness, but what left me unsatisfied about it was the lack of a plan of action. What are our options now? Their costs. Probabilities of various outcomes. Etc.
Here is a calm and rational survey article, Warmer, Warmer, by John Lanchester, a contributing editor at the London Review of Books, on how we got here, the politics of climate change, our realistic options, viable alternate energies, and the various possible scenarios for the future, including one which might include "breeding pairs, and camels in the Arctic".
I don’t think I can be the only person who finds in myself a strong degree of psychological resistance to the whole subject of climate change. I just don’t want to think about it. This isn’t an entirely unfamiliar sensation: someone my age is likely to have spent a couple of formative decades trying not to think too much about nuclear war, a subject which offered the same combination of individual impotence and prospective planetary catastrophe. Global warming is even harder to ignore, not so much because it is increasingly omnipresent in the media but because the evidence for it is starting to be manifest in daily life. Even a city boy like me can see evidence that the world is a little warmer than it was.
Part of the problem is one of scale. Global warming is as a subject so much more important than almost anything else that it is difficult to frame or discuss. At the moment there is a global warming-related item on the news at least once a week. Today, for instance, there are two: close to home, a judge throwing out the government’s phoney ‘consultation’ process over nuclear power, and further away, at a conference in Washington, an ‘informal agreement’ marking a new commitment to ‘tackling climate change’ and resulting in a ‘non-binding’ declaration which reflected ‘a real change of mood’. Just what the world needs – more hot air. And then the news moves on to other things, to contaminated Anglo-Hungarian turkeys and gang shootings and potential schisms in the Anglican Church. There is a kind of falsehood built into this; at the very least, a powerful degree of denial. If global warming is as much of a threat as we have good reason to think it is, the subject can’t be covered in the same way as church fêtes and county swimming championships. I suspect we’re reluctant to think about it because we’re worried that if we start we will have no choice but to think about nothing else.
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