“Winners” in Amazon sweepstakes sure to be the losers

Jeff Bezos, the world’s richest person, wouldn’t seem to need the money. Nonetheless, huge sums of money will be diverted from social needs to line his pockets — a cost that won’t stop there, as gentrification will be accelerated still more in New York City and the Washington area.

In all, Mr. Bezos scooped up nearly US$3.7 billion worth of subsidies this week. Does someone worth $112 billion and owner of a company that has racked up $7 billion in profits for the first nine months of 2018 really need such largesse? Corporate subsides are hardly unique to Amazon, but this to all appearances represents the most blatant example yet seen.

Incredibly, these astronomical sums of money don’t represent the biggest giveaway offers, even in the “winning” areas’ metropolitan areas. The state of New Jersey, then under the governorship of Chris Christie, offered $7 billion to Amazon to build its second headquarters in Newark, and the state of Maryland offered $8.5 billion to Amazon to build in Montgomery County, which borders Washington on the opposite side of the Potomac River from Arlington, Virginia.

The waterfront location for Amazon’s campus in New York City’s Long Island City neighborhood is just to the north (or to the left) of these high-rise buildings. (photo by Jim Henderson)

Many other locations across the United States offered gigantic subsidies, as Amazon did all it could to initiate a bidding war. But as the two locations chosen (splitting in two the original proposal to create a single “second headquarters”) were picked because of the available workforces and city amenities, were these gargantuan subsidies necessary? It would seem not, making them all the more hideous. One strong clue is that Google is rapidly expanding its presence in New York City without, as far as the public knows, any subsidies.

New York’s governor, Andrew Cuomo, justifies Amazon’s subsidies by claiming that “It costs us nothing,” going so far as to assert that the city and state will get back nine dollars every dollar given away in subsidies. This sounds dubious, to be put it mildly, given that once all the state and city incentives are added up, the cost will be approximately $100,000 per job — a total amounting to all the state and city income taxes that will be paid by all the Amazon employees for the 10-year period of the subsidies, according to an analysis by Josh Barro, a former fellow at the conservative Manhattan Institute.

Writing in New York magazine, Mr. Barro wrote:

“The problem with [Governor Cuomo’s] analysis is it assumes all the economic activity we’re buying with the subsidy package wouldn’t happen without the subsidy package. And that’s not true. Google’s impending expansion in Manhattan — where it will develop a campus nearly as large as the one Amazon plans — shows a mega-tech firm might locate here even if you don’t give it billions of dollars.

Plus, when we do bring Amazon in, it will tend to crowd out other businesses and especially other people that might have located where Amazon is going. New York is crowded — there’s more demand for housing than supply, and the number of top development sites is limited — so the case that subsidized economic development means more net economic activity is much weaker here than it might be in, say, Cleveland.”

A dictated outcome that will facilitate gentrification

A city councilman, Brad Lander, was still more direct in his criticism. At a demonstration the day after Amazon’s announcement, Councilman Lander said, “This is not only an assault on Long Island City [the neighborhood where Amazon will build]. It’s not only an assault on housing affordability. It’s not only an assault on transit capacity. This is an assault on our democracy.” The reason behind that last statement is that the plan to throw $3 billion at the world’s richest man was hatched and negotiated in secret, and will be forced through via a state agency so that local officials will have no say whatsoever.

The exception to that is Mayor Bill de Blasio, who is kicking in $900 million in city tax credits plus allowing Amazon to apply for a program that would enable it receive property tax abatements for up to 25 years. Mayor de Blasio, the Barack Obama of New York City who is far from a progressive although he plays one on television, continues to do his his part to facilitate gentrification as he continues the legacy of his billionaire neoliberal predecessor, financial-industry titan Michael Bloomberg.

The waterfront area where Amazon’s new campus will be built is not virgin land. It is an area of warehouses and other businesses with blue-collar jobs but is located adjacent to a waterfront area that was once industrial but is now full of high-rise luxury housing, most of which has been built in the past decade. Although it is true that manufacturing has long been in decline in waterfront neighborhoods such as Long Island City, it is also inescapable that city policy under snarling Rudy Giuliani, technocrat Michael Bloomberg and duplicitous Bill de Blasio has centered on accelerating gentrification by using zoning changes and developer incentives to force out industrial operations and replace them with million-dollar high-rise condos. Long Island City, and the nearby neighborhoods of Astoria, Greenpoint and Williamsburg (particularly the latter two), are rapidly changing under the tremendous pressures of uncontrolled real estate speculation.

A view of Alexandria, Virginia. (photo by David Fuchs)

Jobs at the existing businesses will be lost in the redevelopment to benefit Amazon, and still more pressure will be placed on the already dwindling stock of affordable housing, adding to the pressure from the mushrooming upscale housing. There will also be more strain on an infrastructure (including a decaying, underfunded subway system) already unable to handle the number of people living and working in these areas. Gentrification doesn’t just happen — it is a process assisted by a local government under the sway of local corporate elites, and is centered on dramatic increases in commercial and residential rents such that the people and culture who are being removed find it increasingly difficult to remain.

To provide a working definition, gentrification is a process whereby an organic culture originating in the imagination, sweat and intellectual ferment of a people living in a particular time and place who are symbolically or actually distinct from a dominant moneyed mono-culture is steadily removed and replaced by corporate money and power, which impose a colorless chain-store conformity. Make no mistake, Amazon’s arrival will not only accelerate gentrification in Long Island City and the nearby waterfront neighborhoods of Greenpoint and Williamsburg, but kickstart gentrification in Queens neighborhoods further from the East River. This will displace not only people but local businesses as New York City becomes ever more a homogenized corporate shopping mall.

Alexandria, Virginia, will surely not escape this fate, either, as the Washington area undergoes it owns process of gentrification. The state government of Virginia and the city of Alexandria are handing out $573 million in subsidies, equivalent to $22,000 per job. That doesn’t include another $223 million in promised transit improvements. Amazon will also be receiving $102 million in subsidies for a new operations center that is projected to employ 5,000 people in Nashville, Tennessee.

The biggest but far from the first Amazon subsidies

Subsidies, unfortunately, are nothing new for Amazon, although never before has it received giveaways of this scale. According to Good Jobs First, Amazon had already received $1.6 billion in subsidies for its warehouses, data centers, film productions and its WholeFoods supermarkets from 146 separate programs. Just in 2018 alone, a total of 17 subsidies from governments in 13 states gave the company at least $237 million.

Amazon’s profits are rapidly rising — not to mention making Mr. Bezos the richest person in the world. The company reported net income of $5.4 billion for 2016 and 2017 before racking up $7 billion in the first three quarters of 2018. As an owner of 80 million shares in Amazon, Mr. Bezos is in no danger of losing his fortune. The harshness of working conditions at Amazon, well documented in numerous reports, means that he gets rich off the sweat of his workers, not only through the massive subsidies showed upon him.

Although it is skilled at the art of taking public money for its private profit, Amazon is far from unique, One good example is Wal-Mart, which greedily gobbles up subsidies while racking up gigantic profits. Wal-Mart is a company that pays it employees so little that they skip meals and organize food drives; receives so many government subsidies that the public pays about $1 million per store in the United States; and is estimated to avoid $1 billion per year in U.S. taxes through its use of tax loopholes.

Protesting Amazon in Long Island City (photo via Local 338 RWDSU/UFCW)

Wal-Mart is a company that has reported net income of $70 billion over the previous five years, and in which three heirs of founder Sam Walton are each among the world’s sixteen richest people, worth a combined $139 billion. The Walton family owns about half of Wal-Mart’s stock, and last year “earned” from collecting dividends alone about $3 billion just for being born. They need not ever lift a finger to haul in these fantastic sums. The Donald Trump/Republican Party tax scam of 2018 that provided windfalls for U.S. corporations has showered still more money on Wal-Mart, which like most of its corporate peers, used the largesse to fatten profits and shower more money on its stockholders. Wal-Mart announced that in its last fiscal year it handed out $14.4 billion to shareholders in dividends and stock repurchases.

None of these appalling results are unique to Wal-Mart or to Amazon. The University of California Berkeley Labor Center calculates that low wages costs United States taxpayers $153 billion per year in public support for working families. Nearly three-quarters of United Statesians receiving public support are members of working families, the Labor Center reports, adding that more than half of combined state and federal spending on public assistance goes to working families.

So much has been written about inequality, stagnant or falling wages, corporate tax dodging and good old-fashioned capitalist class war what new can be said? Capitalism, alas, is working as it is supposed to.

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Why do Yemen’s dead not merit the attention of Jamal Khashoggi?

The apparent murder of Saudi Arabian dissident journalist Jamal Khashoggi is a shocking crime that merits the international attention it has received, but nonetheless it is impossible not to wonder why the death of a single person receives vastly more coverage than ongoing Saudi atrocities in Yemen.

Is it that a dramatic story involving a single personality is easier to grasp than a war fought over complex political and ethnic issues, or does the differing levels of attention signal that Mr. Khashoggi has achieved the status of an honorary westerner while the tens of thousands dead in Yemen represent a distant “other”? Some combination of both of these are likely at work, and that he is a fellow journalist makes his fate all the more compelling for reporters and editors. Geopolitical considerations are certainly at play here, with the towering hypocrisy of the Trump administration on full display, a hypocrisy that stands out even in the dismal history of U.S. government policies toward Saudi Arabia.

President Donald Trump’s transparent attempts to exonerate Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, by “speculating” that “rogue agents” might be behind Mr. Khashoggi’s demise inside the consulate is beyond laughable, or would be if the issue weren’t so serious. Billions of dollars of arms sales are at stake (not to mention a reliable supply of oil), so minor trifles like human rights or cold-blooded murder can be swept aside. Whatever evidence the Turkish government possesses has not been made public, and it would seem the most likely reason is because Ankara has bugged the Saudi consulate. If so, a sensitive matter that the Turkish government would rather evade.

The thuggish behavior of the crown prince has to be laid partially at the doorstep of the White House because President Trump has heartedly embraced him, giving the green light to Saudi Arabia’s bottomless contempt for human rights. We might even speculate that President Trump wishes he could do away with opponents as firmly as the crown prince. And never mind the atrocities the United States (along with Britain and France) facilitate in its all-out support of Saudi Arabia’s war in Yemen — what is human life (especially the lives of “others”) when profits are at stake?

A blind child carries a dove at a protest against the attack on the al-Nour Center for the Blind in Sana’a, Yemen, on January 10, 2016. Students say neither the school, nor themselves, have taken any side in the war. (photo by Almigdad Mojalli/VOA)

By any standard, the conduct of the war in Yemen is inhumane. Nobody knows how many people have died as a result of the fighting, although the independent group Armed Conflict Location & Event Data Project (ACLED) estimates that almost 50,000 people were killed from January 2016 to July 2018. Implying a much higher total, Save the Children estimates that at least 50,000 children died in 2017 alone, or about 130 per day. The charity further estimated that almost 400,000 children will need treatment for severe acute malnutrition.

The United Nations Office for the Coordination of Humanitarian Affairs offers this sobering assessment:

“An alarming 22.2 million people in Yemen need some kind of humanitarian or protection assistance, an estimated 17.8 million are food insecure — 8.4 million people are severely food insecure and at risk of starvation — 16 million lack access to safe water and sanitation, and 16.4 million lack access to adequate healthcare. Needs across the country have increased steadily, with 11.3 million who are in acute need — an increase of more than one million people in acute need of humanitarian assistance to survive.”

The United Nations Human Rights Council reports that Saudi-led “coalition air strikes have caused most direct civilian casualties. The airstrikes have hit residential areas, markets, funerals, weddings, detention facilities, civilian boats and even medical facilities.” Both sides are reported by the council to forcibly conscript children between the ages of 11 and 17 to fight.

A study written for the World Peace Foundation, The Strategies of the Coalition in the Yemen War: Aerial bombardment and food war, by Martha Mundy reports that “From August 2015 there appears a shift from military and governmental to civilian and economic targets, including water and transport infrastructure, food production and distribution, roads and transport, schools, cultural monuments, clinics and hospitals, and houses, fields and flocks.”

To what end are these atrocities committed? Professor Mundy writes:

“While the US and UK back their Coalition allies unfailingly in their wider political and strategic objectives, the two major Arab actors in the Coalition, Saudi Arabia and the [United Arab] Emirates, have different economic priorities in the war. That of Saudi Arabia is oil wealth, including preventing a united Yemen’s use of its own oil revenues, and developing a new pipeline through Yemen to the Indian Ocean; that of the Emirates is control over seaports, for trade, tourism and fish wealth. The attack on al-Hudayda [a major port] explicitly aims to complete the economic war militarily. That the immense suffering of Yemen’s people has still not brought surrender by those in Sanʾa [the Yemeni capital] does not give credibility to the tactic of further hunger and disease. Yet for the Coalition, as a senior Saʿudi diplomat responded (off the record) to a question about threatened starvation: ‘Once we control them, we will feed them.’ ”

Yemen is highly dependent on food imports, and the blockades of its ports have put Yemenis at risk of famine. Professor Mundy draws this conclusion:

“If one places the damage to the resources of food producers (farmers, herders, and fishers) alongside the targeting of food processing, storage and transport in urban areas and the wider economic war, there is strong evidence that Coalition strategy has aimed to destroy food production and distribution in the areas under the control of Sanʾa. … [F]rom the autumn of 2016, economic war has compounded physical destruction to create a mass failure in basic livelihoods. Deliberate destruction of family farming and artisanal fishing is a war crime.”

There is little coverage of this ongoing humanitarian disaster in the corporate media. Why are millions of lives almost an afterthought while one privileged life merits such intense attention? Again, the fate of Mr. Khashoggi and the spotlight it shines on Saudi practices merit the widespread commendation it has attracted. But why such indifference to millions of others? Where is our humanity?

Revised NAFTA shows every sign of being another Trump scam

If the renegotiated North American Free Trade Agreement were good for working people, its content wouldn’t be hidden. Just what the Trump administration and the Mexican government of Enrique Peña Nieto have cooked up we do not know, but given the proclivities of both it is not likely to be good.

That the hurried-up deal appears to be intended to force Canada, which has the strongest regulations among the three NAFTA countries, into signing on disadvantageous terms, provides all the more reason to be skeptical. And, finally, a study of the United States Office of the Trade Representative’s “fact sheet” leaves no doubt that any new NAFTA will be a windfall for multi-national corporations, at our expense.

Let’s back up for a moment and remind ourselves that we should judge actions, not words. The contrast between Donald Trump’s empty campaign lies and his administration’s actual policies and actions are glaring, such as, for example, in infrastructure, where his plan is little more than a package of subsidies to connected corporations under the guise of “public-private partnerships,” which are scams to funnel public money into corporate pockets. So it is with so-called “free trade” agreements, especially NAFTA.

Jardin de la Conchita, Mexico City (photo by Percisco)

In July 2017, the Trump administration quietly published its “Summary of Objectives for the NAFTA Renegotiation.” The 18-page document contained almost nothing concrete but did feature boilerplate language that in some cases appears to be lifted word for word from the Trans-Pacific Partnership. The document purports to adopt standards for labor and for the environment, but the language used is very similar to the language proposed for the Trans-Pacific Partnership and in use in other “free trade” agreements. There is little at all in these stated goals that differs from the stated goals that Obama administration put forth for the Trans-Pacific Partnership. They are meaningless window dressing.

Lest we believe those objectives were some sort of aberration, the Trump administration followed up in April 2018 with its “National Trade Estimate Report on Foreign Trade Barriers,” in which it took direct aim at no less than 137 countries. In this document, “trade barriers” are defined as “government laws, regulations, policies, or practices that either protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights.” Note the absence of labor, safety, health or environmental standards. Among the hundreds of pages of complaints, to provide one example, was that Norway expects food that it imports to be proven safe.

Quite clearly, the Trump administration, headed by a billionaire grifter who built his fortune on stiffing working people and stuffed with corporate raiders and Goldman Sachs executives, is wholly dedicated to furthering corporate plunder, as its tax “reform” amply demonstrates.

Corporate giveaways on financial services, IP

Although only corporate lobbyists have had access to the revised NAFTA text, the U.S. Office of the Trade Representative did provide some highlights of the agreement in its public “fact sheet.” These are not promising.

It appears that corporate wish lists for intellectual property, financial services and other areas were largely granted. New IP rules, if this agreement is passed into law, include stepped-up enforcement against “camcording of movies” and “cable signal theft,” as well as “Broad protection against trade secret theft.”

The IP rules would extend copyrights to 75 years, long a U.S. demand (and one opposed by the Canadian government); increase pressure on Internet service providers to take works alleged to infringe copyrights (in actuality a tool for censorship); and provide for “strong protection for pharmaceutical and agricultural innovators,” which can be presumed to be code for enabling further medicine price-gouging and crimping accessibility to generic and cheaper alternatives. The last of these was a prominent U.S. goal for the Trans-Pacific Partnership, which, inter alia, sought to eliminate the New Zealand government’s program to provide medicines in bulk at discounted prices at the behest of U.S. pharmaceutical companies. Related to this is a measure to include 10 years’ protection for biologic drugs and an expansion of products eligible for “protection.”

New York Stock Exchange (photo by Elisa Rolle)

Noting that the U.S. runs a surplus in financial services, the new NAFTA agreement would force Mexico wide open to U.S. financial companies. The agreement explicitly prohibits any regulations restricting foreign financial-services companies. This would be done under the guise of “national treatment,” and the Trade Office fact sheet flatly states that it is intended “to ensure that a Party does not discriminate against United States financial service suppliers.” That language is “trade speak” for allowing any predatory U.S. bank to run roughshod over other countries with no restrictions. And, as an added bonus, the IP rules also prohibit regulations against cross-border transfers of data. (Here U.S. negotiators likely have European Union privacy rules in their sights as this is a contentious point in the Transatlantic Trade and Partnership talks.)

There do appear, on paper, to be token gains for labor and the environment. But that assumes any such gains would be enforceable, which can not be taken for granted. A revised labor chapter calls on Mexico to commit to strengthening Mexican workers’ ability to collectively bargain, but this strongly clashes with the Trump administration’s unrelenting hostility to U.S. unions. In conjunction with raising the minimum North American content of automobiles, at least 40 percent of auto content must be made by workers earning at least US$16 per hour.

On the environment, the Trade Office claims there would be new protections for marine species including whales and sea turtles; “prohibitions on some of the most harmful fisheries subsidies”; and “articles to improve air quality.”

Don’t hold your breath for clean air

Unfortunately, such sentiments run 180 degrees opposite to the actual policies of the Trump administration. Nor is global warming even mentioned. Furthermore, it is necessary to pay close attention to the actual words used in various places of “free trade” agreements and, crucially, how those passages will be interpreted in the secret corporate tribunals that adjudicate disputes between governments and corporations. Those tribunals are held in secret, have no appeal process and hand down decisions by judges whose day jobs are as corporate lawyers for the corporations that bring these suits.

The U.S, Trade Office “fact sheet” makes no mention of the Investor-State Dispute Settlement (ISDS) provision. Inside US Trade reports that ISDS will remain intact for the oil and gas, infrastructure, energy generation and telecommunications industries, while for other industries, ISDS “will be limited to expropriation or failure to give national treatment or most-favored nation treatment.” Because suits by corporations against national governments seeking to eliminate regulations are almost always raised on just those issues, this “limitation” will likely prove to be of no consequence.

Spent shale from a Shale oil extraction process (photo by U.S. Argonne National Laboratory)

The announced tepid advances in labor and environmental rules aren’t likely to be enforceable. In the language of trade agreements, rules benefiting capital and erasing the ability of governments to regulate are implemented in trade-agreement texts with words like “shall” and “must” while the few rules that purport to protect labor, health, safety and environmental standards use words like “may” and “can.” It remains to be seen if there will be any change to that language, but it would be best not hold one’s breath. Promised breakthroughs in past “free trade” deals have consistently proven to be empty platitudes.

A Sierra Club analysis of the revised NAFTA text warns that environmental rules will be weakened. The analysis said:

“NAFTA negotiators have explicitly stated that they intend for NAFTA 2.0 to lock in the recent deregulation of oil and gas in Mexico, which has encouraged increased offshore drilling, fracking, and other fossil fuel extraction. A future Mexican government may want to restrict such activities to reduce climate, air, and water pollution. However, NAFTA 2.0 could bar such changes with a ‘standstill’ rule that requires the current oil and gas deregulation to persist indefinitely, even as the climate crisis worsens and demands for climate action crescendo.

NAFTA 2.0 includes expansive rules concerning ‘regulatory cooperation’ that could require Canada, the U.S., and Mexico to use burdensome and industry-dominated procedures for forming new regulations, which could delay, weaken, or halt new climate policies. These rules also could be used to pressure Canada and Mexico to adopt climate standards weakened by the Trump administration, making it harder to resume climate progress in the post-Trump era.”

Will the Canadian government allow itself to be bullied?

The Institute for Agriculture and Trade Policy, calling the rushed deal between Mexico and the U.S. a “transparent bullying tactic” intended to force Canada into a deal with unfavorable terms, also said that the deal would hurt family farmers in all three countries. The Institute said:

“Given the Trump administration’s lack of adherence to existing international agreements, a handshake deal can hardly be seen as credible. What little has been released on agriculture makes the dubious assertion that U.S. farmers have benefited from NAFTA and, even worse, promises new rules to lock in the spread of agricultural biotechnology, which would favor agribusiness interests over those of family farmers in each of the three countries.”

Food and Water Watch also threw cold water on the idea of an improved NAFTA, saying it had “no confidence” that the Trump administration would address NAFTA’s flaws. The group’s executive director, Wenonah Hauter, wrote:

“The devil resides in the details of these corporate-driven free trade deals, and we expect that the fine print will include the kind of pro-polluter, pro-fossil fuel industry, pro-Wall Street deregulation that has been a hallmark of Trump’s domestic agenda. These rumored trade provisions would codify the administration’s savage attacks on environmental protection, food safety and consumer rights into trade deals that enshrine and globalize deregulation, making it harder to restore U.S. environmental and consumer protections once this administration is shown the White House door.”

The Alberta tar sands (photo by Howl Arts Collective, Montréal)

The Canadian government has joined the NAFTA talks, although it is difficult to see how Canada can do other than concede, given that U.S. Treasury Secretary Steven Mnuchin has said that Canada has until August 31 — four days after the Mexico-U.S. agreement was announced — to come to terms or the White House will move to replace NAFTA with a Mexico-U.S. bilateral deal. On the other hand, President Trump does not have the authority to do that without congressional approval, and opinions expressed in the U.S. Senate have opposed a deal without Canada. And despite the many concessions made by Mexico, tariffs imposed on Mexico will remain in force until and unless further negotiations eliminate them.

The Council of Canadians, long a NAFTA critic, fears Canada will show weakness. The group’s honorary chair, Maude Barlow, wrote:

“Trump is threatening to push Canada out of the agreement, or making it a junior partner to the U.S. and Mexico. Our government must not give in to these tactics and hold the line on our public interest. When NAFTA was signed 30 years ago, we worried that Canada would be at the mercy of the U.S, and we were right. Now, Canada is going to have its auto workers and farmers pitted against each other.”

No reason for optimism in Mexico

There is no reason for optimism to the south, either. Mexican activist Manuel Pérez-Rocha, noting that it is “not surprising” that the NAFTA text is hidden from the public, wrote:

“Unfortunately, the public doesn’t have an idea of what the exact decisions on energy are, labor organizations have been kept completely aside from the negotiations and in terms of the settlement of disputes these mechanisms will only handcuff [President-elect Andrés Manuel López Obrador’s] government when it starts office on Dec. 1.”

Without question, NAFTA has been a disaster for working people in all three countries — a lose-lose-lose proposition that has gone on for more than two decades. Despite President Trump’s rhetoric, Mexican farmers have perhaps been hurt the most. Is an administration that is overturning every environmental regulation it can, that denies global warming, that puts industry executives in charge of regulatory agencies, that features cabinet officers such as Wilbur Ross, an investment banker who buys companies and then takes away pensions and medical benefits so he can flip his companies for a big short-term profit, really going to help working people?

Given the massive power imbalances of today, the policies of capitalist governments reflect the interests of the largest industrialists and financiers. The Trump administration is actually composed of large industrialists and financiers, to a degree perhaps unprecedented in modern times, so all the more are those interests promoted.

“Free trade” agreements are part of this process, which is why they have little to do with trade and much to do with bringing to life corporate wish lists. These agreements are an inevitable result of production being moved to places with the lowest wages and weakest regulation — with products assembled across oceans with parts delivered from yet more places, the multi-national corporations that benefit from these global production chains require ever more “free trade” deals to keep their cross-border profits coming and to maintain their sweatshop empires.

There remains no alternative to working people uniting across borders, in a broad movement, to reversing corporate agendas that accelerate races to the bottom. Opposing “free trade” deals on nationalist grounds is playing into the hands of corporate plunderers.

If the economy is so good, why are wages flat?

We are supposedly seven years into a “recovery” from the global economic collapse that commenced in 2008. The latest evidence offered to promote this oft-peddled mantra is that U.S. gross domestic product showed a strong uptick for the second quarter of 2018, an annualized rate of 4.1 percent, nearly double that of the first quarter.

Coupled with the ongoing decline in unemployment (although standard unemployment rates greatly underestimate the true rate of employment), orthodox economists, conservative propagandists and apologists for the Trump administration would have use believe happy days are here again.

So why aren’t our wages increasing?

In part, it is because the true unemployment rate is not nearly so low as the “official” unemployment rate used by governments around the world, and thus the ranks of unemployed and underemployed are sufficiently large that there is no upward pressure on wages. Orthodox economists, dedicated as they are to ignoring any evidence that doesn’t match their models designed to “prove” that all manners of capitalist excess are as natural as the tides of the ocean — and thus in practice the professional wing of conservative propagandists — have various excuses for stagnant wages and ever increasing inequality. A favorite among these is an alleged “skills mismatch” — too many unskilled workers and a shortage of skilled workers for the high-tech jobs of today.

Striking fast food workers were joined by university workers, students, janitors, retail workers and airport workers in an April 15 action in Minneapolis. (photo by Fibonacci Blue)

The data tells a different story, however. A 2014 report by the National Employment Law Project found that low-wage jobs were created at a faster pace than higher-paid jobs were lost in the first years to that point. The Project reported this breakdown:

  • Lower-wage industries ($9.48 per hour to $13.33) constituted 22 percent of the 2008-2010 losses, but 44 percent of jobs gained since then.
  • Mid-wage industries ($13.73 to $20.00) constituted 37 percent of the 2008-2010 losses, but 26 percent of jobs gained since then.
  • Higher-wage industries ($20.03 to $32.62) constituted 41 percent of the 2008-2010 losses, but 30 percent of jobs gained since then.

Moreover, an Economic Policy Institute study at the time found that those among the two categories of “some college” and holders of four-year college degrees showed the highest increases in long-term unemployment.

Imbalance in power forces down wages

The situation has not changed significantly since. A July 2018 commentary by the Economic Policy Institute, written by Heidi Shierholz and Elise Gould, notes that wages remain stagnant even though more recently middle- and high-wage jobs are being added at strong proportions than low-wage jobs. This development means that there is now upward pressure on wages, they write.

Yet wages clearly are not rising. How to account for this disparity? Dr. Shierholz and Dr. Gould argue that the increasing power of employers over employees is counteracting that upward pressure to instead depresses wages:

“What is most likely happening is that worker leverage and bargaining power have been so decimated by policy choices—policy choices that have, for example, led to the erosion of union coverage and labor standards like the minimum wage—that for tight labor markets to spark upward wage pressure the economy requires a much lower unemployment rate now than it did in the past.”

If there really were a shortage of skilled workers, the two economists wrote in a separate commentary, there would be faster wage growth because employers would need to offer higher wages to attract the limited pool of candidates. Therefore,

“Since we continue to see anemic average wage growth, not just slow wage growth for select groups of workers, it’s clear that there is not a widespread shortage of the types of workers (i.e., those with the right skills) that employers need.”

Compounding this situation is that the ongoing merger mania means that fewer corporations control the labor market. In other words, there are more industries in which a small number of companies have “monopsony power.” (A single or very limited number of sellers possess a monopoly; a single or very limited number of buyers constitutes a monopsony.) Dr. Shierholz and Dr. Gould explain that monopsony employers are able to pay less. They wrote:

“When firms have monopsony power, they are able to pay workers less than what their work is ‘worth,’ i.e. less than their marginal product. But a key dynamic of monopsony power is that even though monopsonists would like to hire more workers, the low wages they offer mean they can’t attract more workers unless they pay more. That is, it is a normal state of affairs for a firm with monopsony power to wish they could hire more workers at the wages they are offering, but to be unable to attract additional workers because their wages are too low. So when a firm with the power to set wages below a workers’ marginal product complains about not being able to find workers at the wages they are offering, it’s useful to remember that they are choosing to keep wages low in order to increase profits—which remain high as a share of corporate sector income—and could get more workers by simply raising wages. And importantly, when firms with monopsony power complain about not being able to find workers, it is not adequate evidence of a skills shortage.”

The inadequacy of gross domestic product

A look at numbers beyond gross domestic product reveal the true state of the economy. GDP, defined as “the sum of private consumption and investment and government spending (with account taken for foreign trade),” is increasingly seen as an inadequate measure. Even one of the leading voices of British finance capital, The Economist, criticizes GDP as a relic designed to measure economic output during World War II, terming it “A measure created when survival was at stake [that] took little notice of things such as depreciation of assets, or pollution of the environment, let alone finer human accomplishments.”

Similar criticisms have been offered by the International Monetary Fund, certainly no friend of working people. An IMF commentary admitted:

“The limit of GDP as a measure of economic welfare is that it records, largely, monetary transactions at their market prices. This measure does not include, for example, environmental externalities such as pollution or damage to species, since nobody pays a price for them. Nor does it incorporate changes in the value of assets, such as the depletion of resources or loss of biodiversity: GDP does not net these off the flow of transactions during the period it covers.”

Left unsaid by these standard-bearers of the establishment is that GDP pays no attention to inequality. If there is more wealth, but all that wealth is concentrated in a small number of hands while all others suffer declining living standards, then GDP will rise even though working people are worse off. And, as alluded to by The Economist and the IMF, a degradation in the environment could cause a spike in GDP because some corporation will make money from a government contract to clean up the mess (paid for by taxpayers) at the same time that the corporation that caused the mess can offload that cost onto society, and thus enhance its profitability.

A one-time boost to GDP, such as the United States reported for the second quarter of 2018, doesn’t necessarily signify anything. That boost is likely the product of factors that won’t repeat, some observers have already said. A July 27 commentary published by the online financial news service MarketWatch had no trouble debunking the nonsense spewed by Trump administration advisers Kevin Hassett and Larry Kudlow. For example, in countering the claim that the U.S. trade deficit has narrowed because Trump is “standing up for America,” the MarketWatch commentary noted:

“Exports of agricultural products like soybeans shot higher because farmers were racing to beat the imposition of Chinese tariffs. They already fell in June. There’s absolutely no evidence the U.S. is now trading on better terms than previously.”

It’s not only your wages that aren’t keeping up

If a better measure of economic well-being is wages, then there has been no improvement. Adjusted for inflation, the U.S. Bureau of Labor Statistics reports that the country’s average weekly wage was $930.81 for June 2018, a grand total of 47 cents better than June 2017. Considering that the rate of inflation was higher than the microscopic increase in wages over the past year, adjusted for inflation U.S. workers actually saw a slight decline over the past year. So happy days really aren’t here after all. It’s not only you.

This is a continuation of a decades-long pattern. Wages have been stagnant since the 1970s despite strong increases in worker productivity — the average U.S. household earns hundreds of dollars less than it would had wages kept pace with productivity. The same is true for Canadian households.

When adjusted for inflation, Statistics Canada reports that real wage growth for Canadian workers increased less than one percent per year from 2005 to 2015. That’s nothing new. “While Canada has undergone important economic, social and technological changes since the 1970s, the minimum wage and the average hourly wage are essentially unchanged,” Statistics Canada reports. Accounting for inflation, the Canadian minimum wage peaked in 1976 and average hourly earnings peaked in 1977. That is despite a consistent increase in Canadians earning degrees. So a “skills mismatch” would not seem to be a reality there, either.

The gap between labor productivity and median real hourly wages growth, 1986-2013 (percentage points per year)

Those trends are not limited to North America. British wages actually contracted between 2007 and 2015 despite a growing economy. Britain’s GDP is almost 10 percent higher now than at the bottom of the 2008 economic crash, yet wages have declined. Wages have not kept up with productivity across Europe, and in some countries haven’t kept up with inflation, meaning workers have seen de facto wage cuts. The most recent study on this topic, studying the balance between wages and productivity in 11 advanced-capitalist countries from 1986 to 2013, found that wages did not keep pace in eight of them, with the widest lag found in the United States. Germany was second.

Unfortunately these reports, although doing a fine job of quantifying how screwed we are, tend to conclude with pleas for better government policies. Surely there should be. But although positive reforms would be welcome, the problem is that reforms can, and are, taken away when mobilizations fade. The hyper-competitive nature of capitalism, under which our labor is a commodity, can’t be altered; at best through massive effort reforms can be achieved until the next wave of attacks commences. As long we continue to fail to question the world economic system, our conditions will only worsen.

World Bank solution for lack of jobs: Cut worker protections

The World Bank is in the process of completing its “World Development Report 2019: The Changing Nature of Work” and, surprisingly, the latest draft version opens with quotes from Karl Marx and John Maynard Keynes. Has the World Bank suddenly lost sight of its purpose and will now take up the cause of working people?

Well, you already know the answer to that question, didn’t you?

Only a few paragraphs down we begin to see where this paper is heading. After a bit of perfunctory hand-wringing over disruptions caused by robotics, we read the problem is “domestic bias towards state-owned or politically connected firms, the slow pace of technology adoption, or stifling regulation.” And although some jobs are disappearing, fear not because “the rise in the manufacturing sector in China has more than compensated for this loss.”

Oh, so we should all move to China to get new jobs.

Never mind that the highest minimum wage for Chinese workers, that mandated in Shanghai, is $382 per month. In some places the minimum wage is half that, if workers are fortunate enough to be paid regularly. And that millions of rural Chinese are being driven into cities to become sweatshop workers, so for now there won’t be enough work for the rest of the world. Then again, letting bosses have the upper hand is what the World Bank has in mind. No, its economists haven’t forgotten what the institution’s purpose is nor why it exists.

A Chinese-owned factory in Lesotho (photo by K. Kendall)

So what to do? The World Bank report does suggest not allowing corporations to dodge taxes to the degree that they do. Very well, but even if taxes were collected at the statutory rates, that would still leave corporations vastly under-taxed. No suggestion by the bank, of course, that corporations actually pay a fair tax rate. Corporations currently account for a paltry nine percent of U.S. tax receipts; in the 1950s, they accounted for 30 percent or more. Similarly, in Canada personal income taxes account for three and a half times more revenue than do corporate income taxes; these were equal in 1952.

There is much discussion of “investing in human capital,” a particularly favored mantra of the World Bank. What does that mean? Capitalists are likely to interpret such talk — rather common in NGO circles these days — to mean demanding more skills or degrees from prospective workers, but in the United States graduates with doctorate degrees are being forced to take jobs in academia as part-time adjuncts, and plenty of folks in other fields are “over-educated” already for the jobs they hold. This concept comes from the idea that the problem is that there aren’t enough skilled people for all those wonderful jobs that are out there, just over the rainbow. But in the real world, as opposed to Right-wing think tanks, that is not so.

A 2014 report issued by the National Employment Law Project found that higher-wage jobs were created at a much lower rate during the “recovery” from the 2007-08 economic collapse than had been lost; conversely, low-wage jobs (paying less than $13.33 per hour) were created twice as fast as they had been lost. In separate studies, the Economic Policy Institute found that long-term unemployment is elevated for workers at every education level (and was increasing at a somewhat higher rate for those with some college or a four-year college degree than the average), and that the so-called “skills mismatch” is a myth.

So we come to the real “solution” in the minds of World Bank officials: Cut worker-protection laws.

Aw, you really aren’t surprised, are you?

(Graphic by Real-World Economics Review)

Here’s a key passage in the report: “Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets.”

Dynamic for who? What we have here are code words meaning make it easier to fire people. And that’s the real takeaway message, no matter the lofty rhetoric about governments creating a new social contract. “Creating jobs” and “investing early in human capital” are two elements of the World Bank paper’s suggested new social contract. Unfortunately, there are no thoughts on how new jobs might be created when capitalists are in a frenzy of eliminating jobs to maintain their profit rates and survive relentless market competition. More schooling, which is what “investing early in human capital” amounts to, is fine by capitalists, as long as they don’t have to bear any of the costs. It’s up to students to take on more debt to create this new “human capital.”

Contrast this happy talk with the reality of the capitalist workplace. A report just issued by Democratic U.S. Representative Keith Ellison found the average ratio of CEO-to-median-worker pay is 339-to-1. That ratio among the 500 biggest U.S. corporations is as high as almost 5,000-to-1. Nope, I don’t think the boss works thousands of times harder than you do. At McDonalds, for example, the CEO’s annual salary could be used to pay the yearly wages of 3,101 workers making the chain’s median pay.

The sort of societal priorities and imbalances of power that enable such appalling inequality might be summed up by the uses to which money is put. In Los Angeles, a new football stadium is being built and the estimated cost of it is now estimated at $4.9 billion. That figure has risen considerably and likely will again. Given all the homelessness in Los Angeles, and all the other social problems, what could have been done with $4.9 billion?

The number of homeless people in California is estimated at 130,000. Doing something about that might be one way to “invest” in human development, and doing so might even save money. A Rand Corporation study carried out for Los Angeles County found that homeless people who are provided stable shelter make fewer trips to the emergency room and are arrested less frequently, to the extent that the cost of the housing is more than offset.

Oops, but that’s not profitable for the well-connected as throwing money at stadium boondoggles or cutting jobs. But if you earn enough degrees, perhaps you’ll fulfill the World Bank’s prophesy by landing a job at a Chinese sweatshop.

Hiding the real number of unemployed

Your government believes that exhausting your unemployment benefits is a cause for celebration — because you are no longer unemployed!

Huh? Well, there is a slight of hand here. Only working people who are receiving unemployment benefits are counted as “unemployed” in official statistics issued by countries around the world. Thus the actual unemployment rates are much higher than the “official” rates, generally about twice as high. Most governments make it difficult to find the actual rate, and the corporate media does its part by reporting the official rate as if that includes everybody.

Then there is the matter of how much of a given national population is actually engaged in paid employment, another useful number difficult to discover. Finally, we can consider wages, both how fast they might be rising as compared to inflation and whether they are increasing in concert with increases in productivity.

To cut to the chase, things ain’t so hot. But you already knew that, didn’t you?

The Blue Mountains from the lookout in Blackheath, Australia (photo by Gemm347)

Let’s start our global survey with the United States, where, contrary to expectations, the real unemployment figure is easier to discover than most other places. Perhaps the Trump régime hasn’t gotten around to suppressing it, busy as it is hiding scientific evidence about global warming, pollution and other inconvenient facts. The official U.S. unemployment rate for May was reported as 3.8 percent, the lowest it has been in several years, and less than half of what it was during the post-2008 economic collapse. Predictably, the Trump administration was quick to take credit, although the trend of falling employment has carried on for eight years now.

Nonetheless, you might have noticed that happy days aren’t exactly here again. The real U.S. unemployment figure — all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up) — is 7.6 percent. (This is the “U-6” rate.) That total, too, is less than half of its 2010 peak and is the lowest in several years. But this still doesn’t mean the number of people actually working is increasing.

Fewer people at work and they are making less

A better indication of how many people have found work is the “civilian labor force participation rate.” By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, and that was slightly lower than the previous month. This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3 percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor participation was lower. This number was consistently lower in the 1950s and 1960s, but in those days one income was sufficient to support a family. Now everybody works and still can’t make ends meet.

And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has fallen to 43 percent, according to research by the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past five years has been the lowest it has been since 1929, according to a New York Times report. And within the inequality of wages that don’t keep up with inflation or productivity gains, the worse-off are doing worse.

The Economic Policy Institute noted, “From 2000 to 2017, wage growth was strongest for the highest-wage workers, continuing the trend in rising wage inequality over the last four decades.” The strongest wage growth was for those in the top 10 percent of earnings, which skewed the results sufficiently that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may have been low, but it wasn’t as low as that — the typical U.S. worker thus suffered a de facto wage decrease last year.

What this sobering news tells us is that good-paying jobs are hard to come by. An EPI researcher, Elise Gould, wrote:

“Slow wage growth tells us that employers continue to hold the cards, and don’t have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren’t actively looking for one.”

The true unemployment rates in Canada and Europe

We find similar patterns elsewhere. In Canada, the official unemployment rate held at 5.8 percent in April, the lowest it has been since 1976, although there was a slight decrease in the number of people working in March, mainly due to job losses in wholesale and retail trade and construction. What is the actual unemployment rate? According to Statistics Canada’s R8 figure, it is 8.6 percent. The R8 counts counts people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed.

At the end of 2012, the R8 figure was 9.4 percent, but an analysis published by The Globe and Mail analyzing unemployment estimated the true unemployment rate for that year to be 14.2 percent. If the current statistical miscalculation is proportionate, then the true Canadian unemployment rate currently must be north of 13 percent. “[T]he narrow scope of the Canadian measure significantly understates labour underutilization,” the Globe and Mail analysis concludes.

Similar to its southern neighbor, Canada’s labor force participation rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7 percent in 2003.

Mount Meager volcanic complex, British Columbia (photo by Dave Steers)

The most recent official unemployment figure in Britain is 4.2 percent. The true figure is rather higher. How much higher is difficult to determine, but a September 2012 report by Sheffield Hallam University found that the total number of unemployed in Britain was more than 3.4 million in April of that year although the Labour Force Survey, from which official unemployment statistics are derived, reported only 2.5 million. So if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is about 5.7 percent.

The European Union reported an official unemployment rate of 7.1 percent (with Greece having the highest total at 20.8 percent). The EU’s Eurostat service doesn’t provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately provide totals for under-employed part-time workers and “potential additional labour force”; adding these two would effectively double the true EU rate of unemployed and so the actual figure must be about 14 percent.

Australia’s official seasonally adjusted unemployment rate is 5.6 percent, according to the country’s Bureau of Statistics. The statistic that would provide a more realistic measure, the “extended labour force under-utilisation” figure, seems to be well hidden. The most recent figure that could be found was for February 2017, when the rate was given as 15.4 percent. As the “official” unemployment rate at the time was 5.8 percent, it is reasonable to conclude that the real Australian unemployment rate is currently above 15 percent.

Mirroring the pattern in North America, global employment is on the decline. The International Labour Organization estimated the world labor force participation rate as 61.9 percent for 2017, a steadily decline from the 65.7 percent estimated for 1990.

Stagnant wages despite productivity growth around the world

Concomitant with the high numbers of people worldwide who don’t have proper employment is the stagnation of wages. Across North America and Europe, productivity is rising much faster than wages. A 2017 study found that across those regions median real wage growth since the mid-1980s has not kept pace with labor productivity growth.

Not surprisingly, the United States had the largest gap between wages and productivity. Germany was second in this category, perhaps not surprising, either, because German workers have suffered a long period of wage cuts (adjusted for inflation) since the Social Democratic Party codified austerity by instituting Gerhard Schröder’s “Agenda 2010” legislation. Despite this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of economic weakness is due to wages not falling enough. Yes, the Fed believes your wages are too high.

The lag of wages as compared to rising productivity is an ongoing global phenomenon. A separate statistical analysis from earlier this decade also demonstrated this pattern for working people in Canada, the United States, Britain, France, Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of dollars less per week than they would if wages had kept up with productivity gains.

In an era of runaway corporate globalization, there is ever more precarity. On a global scale, having regular employment is actually unusual. Using International Labour Organization figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion. Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

“It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

Having conquered virtually every corner of the globe and with nowhere left to expand into nor new markets to take, capitalists will continue to cut costs — in the first place, wages and benefits — in their ceaseless scrambles to sustain their accustomed profits. There is no reform that can permanently alter this relentless internal logic of capitalism. Although she was premature, Rosa Luxemburg’s forecast of socialism or barbarism draws nearer.

If you incentivize pollution, you incentive death

The cost of pollution in human lives is often abstract due to the long-term nature of such deaths. The cost, however, is quite concrete: A new report estimates that 4.1 million people died as a result of ambient air pollution in 2016. And that’s a conservative estimate.

Globally, only five causes of death took a higher toll. (High blood pressure and smoking were the leading causes.)

That sobering report was issued this month by teams of researchers at the Health Effects Institute and the Institute for Health Metrics and Evaluation. Their report, State of Global Air 2018, sought to analyze worldwide air pollution exposures and health impacts; data for 2016 is used because that is the most recent data available. The report states:

“Worldwide exposure to PM2.5 contributed to 4.1 million deaths from heart disease and stroke, lung cancer, chronic lung disease, and respiratory infections in 2016. PM2.5 was responsible for a substantially larger number of attributable deaths than other more well-known risk factors (such as alcohol use, physical inactivity, or high sodium intake) and for an equivalent number of attributable deaths as high cholesterol and high body mass index. Ozone, another important component of outdoor air pollution, whose levels are on the rise around the world, contributed to 234,000 [additional] deaths from chronic lung disease.”

“PM2.5” refers to particulate matter less than or equal to 2.5 micrometers in aerodynamic diameter. Because particle pollution can travel deep into the lungs and cause or aggravate heart and lung diseases, there are numerous health hazards associated with it, including reduced lung function, development of respiratory diseases in children, aggravation of existing lung diseases and premature death of people with lung diseases, according to a U.S. Environmental Protection Agency overview that the Trump administration appears to not have gotten around to censoring. Sources include incomplete combustion, automobile emissions, dust and industrial activity.

Smog in Kuala Lumpur, Malaysia (photo by Hafiz Noor Shams)

This pollution is a global problem — the State of Global Air 2018 report notes that 95 percent of the world’s population lives in areas exceeding World Health Organization guidelines for healthy air, and almost 60% live in areas that do not meet even the WHO’s least-stringent air quality target. That widespread pollution adds up. The report states that “In 2016, long-term exposure to ambient PM2.5 contributed to 4.1 million deaths and to a loss of 106 million [disability-adjusted life-years], making PM 2.5 exposure responsible for 7.5% of all global deaths and 4.4% of all global DALYs.” (The term “DALY” refers to losses of healthy life and are calculated as the sum of the years of life lost from a premature death and the years lived with disability.)

Different countries have different source characteristics. In China, for example, industrial coal, transportation and residential biomass burning are the major sources of deaths attributable to air pollution, accounting for more than 400,000 deaths. In India, residential biomass burning is by far the single biggest culprit, responsible for an estimated 268,000 deaths. China has recently begun to slowly reverse an earlier rise in air-pollution deaths, but these remain on the increase in India. The report estimates that India could avoid up to 1.2 million deaths in 2050 through instituting more aggressive measures rather than simply keeping current practices in place.

Further costs of pollution

The actual global total of 4.1 million might actually be an under-estimate. The report says its calculation does not include causes of death and disability for which evidence for a causal relationship with exposure to ambient PM2.5 is growing, such as the development of asthma in children, low birth weight and pre-term birth, type 2 diabetes and neurological disorders.

By no means does the State of Global Air 2018 report exhaust the literature of the toll of pollution. A United Nations study, Towards a Pollution-Free Planet (an advanced copy of which was posted in December 2017), cites the World Health Organization estimate that 12.6 million people died from environmental causes in 2012, or almost one-quarter of the world’s deaths that year. The cost of pollution is enormous, not only in lives shortened but in economic costs. The UN study says:

“In 2013, the global welfare costs associated with air pollution were estimated at some $5.11 trillion. The welfare costs from mortality relating to outdoor air pollution were estimated at $3 trillion; for indoor air pollution the figure was $2 trillion. … With regard to human health, the welfare cost of mortality from unsafe water is considerable in many developing countries. In 2004, losses stemming from inadequate water and sanitation services in developing countries were estimated at $260 billion per year – the equivalent of 10 per cent of gross domestic product (GDP) for some poor countries.”

Although deaths from pollution are much higher in developing countries, the total is significant in the advanced capitalist countries. Earlier studies, for example, estimated 200,000 premature deaths in the United States annually and 29,000 per year in Britain.

Alberta oil sands (photo by Eryn Rickard)

What is often missed in these sorts of reports is the externalization of costs. Industrial activity by large corporations is responsible for a significant amount of deadly pollution — but those corporate entities don’t bear the costs of that pollution. Rather, the costs are externalized onto society, leaving the profits to be grabbed by a handful of executives and speculators while the rest of the world must absorb the costs.

These economic costs are not insignificant. One corporate report, not intended for the public’s eyes, estimates that external costs total US$7.3 trillion per year, with greenhouse-gas emissions accounting for more than one-third of that total. The report, “Natural Capital at Risk–The Top 100 Externalities of Business,” finds that coal-fired power in East Asia and North America alone account for $770 billion per year in damage from the impacts of greenhouse-gas emissions and air pollution. These social costs exceeded the value of these sectors’ production value. Those two were among the top three sources of damages, along with South American cattle ranching, estimated to cost $350 billion.

It’s awful for us but great for profits

Getting closer to assessing responsibility, a separate United Nations report found that the world’s 3,000 biggest corporations cause $2.2 trillion of environmental damage in 2008. That total represents one-third of those corporations’ profits. This report appears never to have been released, although The Guardian was able to report briefly on its contents in February 2010. The true environmental cost, however, might have been yet higher, The Guardian reported:

“The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major ‘costs’ were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater.”

All the more absurd then, that fossil fuels are subsidized to enormous extents — $5.6 trillion per year. That, unfortunately, is not a misprint. That total comes from calculating not only the huge direct government subsidies and tax breaks provided to fossil-fuel companies, but the cost of environmental damages borne by the public rather than the corporations themselves. The subsidized cost of air pollution and global warming combined account for two-thirds of the $5.6 trillion total, according to the researchers who prepared the working paper, “How Large Are Global Energy Subsidies?.”

Although some of these reports, by implication, hint at the corporate responsibility for these massive costs, none dare to address the system that encourages such waste, instead offering boilerplate advice that humanity pollute less. The State of Global Air 2018 report discussed above, for example, concludes with a recommendation that “decision-makers” should be engaged in “identifying and taking action to control the major sources that contribute to them” and see to it that less coal is burned. The United Nations report Towards a Pollution-Free Planet, also discussed above, suggests a “framework for action” that is “founded on strong science to ensure that burdens and negative effects are not simply shifted from one area to another.”

There is nothing wrong with such suggestions, but if the source of the problem is never mentioned, how is a solution to be found? The massive environmental problems the Earth faces are not some deus ex machina or a natural variable such as ocean tides. They have concrete sources, rooted in the global economic system. Capitalism requires constant growth for which all incentives are for planned obsolescence, more growth, more industry and more pollution. That pollution in turn is mostly the result of activity by large corporations that are unaccountable and thus able to foist the costs of their activities onto society.

Once again, it is impossible to have infinite growth on a finite planet. The current global rate of consumption is 1.7 Earths for the provision of resources and the absorption of waste. It is impossible to indefinitely consume more than can be replenished, nor can rational and sustainable consumption and resource-use patterns be maintained in a system in which prices, taxation and incentives are so badly out of alignment with the environment. Our future ability to prosper can only be based on a steady-state economy that provides for need rather that private wealth accumulation, an impossibility under a system based on relentless competition.