The toll of pollution: How many lives vs. how much profit?

Frequently lost in the arguments over financial costs and benefits when it comes to pollution is the cost to human health. Not only illness and respiratory problems but premature death. To put it bluntly: How many human lives should we exchange for corporate profit?

Two new studies by the World Health Organization should force us to confront these issues head on. This is no small matter — the two WHO studies estimate that polluted environments cause 1.7 million children age five or younger to die per year.

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

Indoor and outdoor air pollution, second-hand smoke, unsafe water, lack of sanitation, and inadequate hygiene all contribute to these 1.7 million annual deaths, accounting for more than one-quarter of all deaths of children age five or younger globally. A summary notes:

“[W]hen infants and pre-schoolers are exposed to indoor and outdoor air pollution and second-hand smoke they have an increased risk of pneumonia in childhood, and a lifelong increased risk of chronic respiratory diseases, such as asthma. Exposure to air pollution may also increase their lifelong risk of heart disease, stroke and cancer.”

One of the two reports, Don’t pollute my future! The impact of the environment on children’s health, notes that most of humanity lives in environmentally stressed areas:

“92% of the global population, including billions of children, live in areas with ambient air pollution levels that exceed WHO limits. Over three billion people are exposed to household air pollution from the use of solid fuels. Air pollution causes approximately 600,000 deaths in children under five years annually and increases the risk for respiratory infections, asthma, adverse neonatal conditions and congenital anomalies. Air pollution accounts for over 50% of the overall disease burden of pneumonia which is among the leading causes of global child mortality. Growing evidence suggests that air pollution adversely affects cognitive development in children and early exposures might induce development of chronic disease in adulthood.” [page 3]

These types of calculations on health and mortality are absent from debates on environmental regulations. And not only is the human toll missing from cost/benefit analyses, but this pollution is actually subsidized.

Trump administration’s assault on the environment

These World Health Organization reports were published in the same month that the Trump administration mounted a full-scale assault on the U.S. environment. Not only has the Trump administration proposed draconian cuts to the Environmental Protection Agency and signaled its intention to rescind air-pollution rules for motor vehicles scheduled to come into force between 2022 and 2025, it has issued an executive order requiring a “review [of] existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources.”

One of the targets of this order is the Clean Power Plan, which requires a 32 percent reduction in carbon dioxide emissions from existing power plants by 2030, compared to 2005 emission rates. The standard, implemented by the Obama administration, was already seen as inadequate. The increased danger raised by President Donald Trump’s order was succinctly summed up by this headline on a Weather Underground article written by Jeff Masters: “Trump’s Executive Order Threatens to Wreck Earth as a Livable Planet for Humans.”

Threats don’t get much graver than that, do they?

Given the gigantic size of the United States economy and the pollution thrown into the atmosphere, this is of serious concern to the entire world. The World Resources Institute estimates that the U.S. accounts for almost 15 percent of Earth’s current greenhouse-gas emissions, second only to China’s 20 percent. Russia and the U.S. emit more than twice the global average on a per capita basis, as does Canada, which, due to its heavy reliance on fossil fuel extraction, has the world’s largest per-person greenhouse-gas footprint.

When greenhouse-gas emissions are calculated on a cumulative basis, then the responsibility of the global North comes into sharper focus: The United States has accounted for 27 percent of all greenhouse gases emitted since 1850, and the countries of the European Union contributed another 25 percent.

Carbon dioxide is the biggest single contributor to global warming — which is why the U.S. Environmental Protection Agency had sought to regulate carbon dioxide emissions as a pollutant — but methane is also a significant contributor. The EPA in 2016 issued an order requiring that owners and operators of oil and gas facilities provide data needed to help it determine how to best reduce methane and other harmful emissions. But the Trump administration has withdrawn the order to provide data.

Not everything can be reversed at the stroke a pen, however. The larger attack on the Clean Power Plan will likely take years to carry out, Dr. Masters wrote:

“The Clean Power Plan will be difficult to undo quickly. The plan was finalized by EPA in 2015, and is currently being reviewed in the U.S. Court of Appeals for the District of Columbia Circuit. Under the new executive order, the Department of Justice will ask the court to suspend the case until the EPA can review and write a new version of the rule. (Before that happens, the court may still rule on the Plan as written, which will influence how the EPA can rewrite the rule.) Once the case is removed from the court, the EPA will have to legally withdraw the existing rule and propose a new rule to take its place, a process that could take years, as the new rule will have to be justified in court, and would likely be challenged in court by environmental groups.”

Hundreds of thousands of lives in the balance

Nonetheless, a fightback is essential. Lives are literally at stake, in large numbers, if regulations safeguarding air quality are reversed. The EPA estimates that 160,000 premature deaths were prevented in 2010 by the Clean Air Act, and estimates that 230,000 lives will be saved and 120,000 emergency-room visits saved in 2020 if the act is left intact. The EPA said the benefits of the act “exceeds costs by a factor of more than 30 to one.” This study, at least for the moment, hasn’t been expunged from the Internet by the Trump administration.

A separate study by the Massachusetts Institute of Technology (MIT) estimates that air pollution causes 200,000 early deaths each year in the United States alone. The two biggest contributors to that death toll, the MIT report found, are emissions from road transportation and power generation, which together account for just more than half the total. One of the study’s authors, MIT professor Steven Barrett, said a person who dies from an air pollution-related cause typically dies about a decade earlier than he or she otherwise might have.

The Canadian government estimates that a 10 percent reduction in particulate-matter and ozone levels would result in a net social welfare benefit for Canadians of more than $4 billion. A separate study estimates that the cost to Canadian health care from air pollution will total $250 billion by 2031 without significant reductions.

Grangemouth oil refinery at sunset (photo by Steve Garvie, Dunfermline, Fife, Scotland)

This exercise can be repeated around the world. A 2015 World Health Organization study estimates that indoor and outdoor air pollution costs European economies as much as €1.2 trillion annually in deaths and diseases. This includes £54 billion and 29,000 deaths per year in Britain. For Australia, the cost from air pollution was estimated at $5.8 billion in 2010, a doubling in only five years.

Globally, air pollution could lead to nine million premature deaths and US$2.6 trillion in economic damage from the costs of sick days, medical bills and reduced agricultural output by 2060, according to an Organisation for Economic Cooperation and Development study.

Only a drastic reduction in emissions can reverse these costs in human health and the mounting dangers of global warming.

We’ll have to go well beyond current plans

Cap-and-trade schemes, promoted by North American liberals and European social democrats, simply don’t work. The European Union system, for example, issued so many free certificates that the price of pollution is a small fraction of the target price, and attempts by environmentalists to reduce the number of certifications are consistently rebuffed. Moreover, cap-and-trade plans often allow “offsets,” whereby companies can buy emission credits from outside the program to “offset” emissions above the allowable level, allowing polluters to substitute unverifiable reductions elsewhere for real reductions locally.

Nor are renewable energy sources, as vital as they are to any rational future, a substitute for reducing energy usage. Renewable energy is not necessarily clean nor without contributions to global warming. Wind power and biomass, for example, have their own problems. The primary source of bioenergy is wood, which portends an increase in logging, counter to winning a struggle against global warming. Denmark and Britain are among the biggest users of biomass but must import wood to sustain that. The turbines used to produce electricity from wind increasingly are built with the “rare earth” element neodymium, which requires a highly toxic process to produce. Production of rare earths are environmentally destructive; increasing their extraction means more pollution and toxic waste.

The argument here certainly isn’t that a switch from fossil fuels to renewable energy as quickly as practical isn’t necessary; of course such a switch needs to be made. But if reversing pollution and greenhouse-gas emissions is the goal, then renewables are at most a partial measure.

Haze from forest fires in St. Mary Valley, Glacier National Park in August 2015, during the hottest and driest summer in Pacific Northwest history. (photo by Pete Dolack)

The Paris Climate Summit ended with a surprise decision by the world’s governments to limit the rise of the global average temperature to 1.5 degrees Celsius above the pre-industrial revolution average instead of the previously intended limit of 2 degrees. The difficulty here, however, is that even if every national goal were met, the Earth’s temperature would rise 2.2 to 3.4 degrees by 2100 with more to come, and the Paris summit contains no mechanism to enforce these goals.

Adding to the difficulty of reducing fossil fuel usage sufficiently to meet the Paris summit’s goals (and which would also reduce the damage to human health) is the astounding total of subsidies for them. A 2015 study that attempted to quantify the size of these subsidies on a global basis estimated them at US$5.6 trillion! That includes not only direct government subsidies through tax breaks and other programs, but damage to the environment — these are not inconsequential as the costs of air pollution and global warming transferred to society account for nearly two-thirds of that total.

“Fracking” (hydraulic fracturing) of rock to blast out natural gas alone accounts for billions of dollars of damages through contaminated water, health problems from the chemicals used in the process, air pollution, methane that contributes to global warming, disruption to agriculture and damage to roads from trucks. That the cost of those is transferred to society is another mammoth subsidy to the energy industry.

Overshooting Earth’s carrying capacity

The most recent estimate of planetary consumption is that humanity is using the equivalent of 1.6 Earths per year. By 2030, at present rates of increase, we’ll be consuming two Earths — that is, twice the capacity of our planet to sustain.

Then there is the matter of global warming. Two scientific studies issued in 2015 suggest that so much carbon dioxide already has been thrown in the air that humanity may have already committed itself to a six-meter rise in sea level. A separate 2015 study, prepared by 18 scientists, found that the Earth is crossing several “planetary boundaries” that together will render the planet much less hospitable.

What is the price of making Earth uninhabitable? No amount of strip-mining the Moon or the asteroid belt will reverse mass die-offs on Earth.

Illusions that “green capitalism” will save us really must be abandoned. Beyond that capitalism requires constant growth (infinite growth is impossible on a finite planet) and discourages corporate responsibility because enterprises can offload their responsibilities onto society, every incentive is for more production. Adding to that, capitalist economics discounts the future so much that future life is seen as nearly worthless. Thus, in this type of accounting, there is no cost for future pollution.

Authors Richard York, Brett Clark and John Bellamy Foster put this plainly in a thoughtful May 2009 article in Monthly Review. They wrote:

“Where [orthodox economists] primarily differ is not on their views of the science behind climate change but on their value assumptions about the propriety of shifting burdens to future generations. This lays bare the ideology embedded in orthodox neoclassical economics, a field which regularly presents itself as using objective, even naturalistic, methods for modeling the economy. However, past all of the equations and technical jargon, the dominant economic paradigm is built on a value system that prizes capital accumulation in the short-term, while de-valuing everything else in the present and everything altogether in the future.”

As for the present day, capitalist enterprises aren’t going to guarantee jobs to workers displaced from energy-extraction industries, and if those workers don’t have any viable alternatives, it can’t be expected they will do anything other than join their bosses in fighting for their industry. Thus any rational plan to drastically shrink fossil fuel extraction has to be able to provide alternative jobs. Nor do the costs in human lives discussed above factor into capitalist economic calculations.

The drastic changes that are necessary to reverse the human and environmental tolls of pollution will come with a hefty price tag. But the cost of continuing business as usual is much higher — a price our descendants will pay if we don’t move to an economic system that values life rather than only profits.

Increased deprivation of capitalism causes half-million deaths

The recent years of austerity and economic dislocation have taken their toll around the world, but this deterioration on top of the already existing harshness of life in the United States has taken a particular toll there. Nearly half a million excess deaths have occurred in the U.S. since 1999.

Specifically, these half-million excess deaths are among middle-aged White non-Hispanic United Statesians, according to a paper by two Princeton University researchers, Anne Case and Angus Deaton, published in the peer-reviewed scientific journal PNAS. Widening inequality is seen as a significant factor. This increase in the death rate, reversing historic trends, was limited to the U.S. among advanced capitalist countries and, within the U.S., limited to non-Hispanic Whites. The authors of the paper, “Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century,” write:

“This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround. The midlife mortality reversal was confined to white non-Hispanics; black non-Hispanics and Hispanics at midlife, and those aged 65 and above in every racial and ethnic group, continued to see mortality rates fall. This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis.” [page 1]

AlcoholFrom 1978 to 1998, the mortality rate for U.S. Whites aged 45 to 54 fell by 2 percent per year on average, matching the average rate of decline in five comparison countries (Australia, Britain, Canada, France and Germany). But although, from 1999, other industrial countries continued to see a decline in mortality rates for the middle-aged, the U.S. White non-Hispanic mortality rose by half a percent a year, an increase that is unique, Drs. Case and Deaton report.

The authors calculate that if the U.S. White non-Hispanic mortality rate remained at the 1998 level, 96,000 deaths would have been prevented; had the previous rate of decline continued, a total of 488,500 deaths would have been prevented. The increased mortality rates are accompanied by “a large and statistically significant decline” in those reporting excellent or very good health and a corresponding increase in those reporting fair or poor health. This is a population that had not previously had unusual health results:

“[T]he post-1999 episode in midlife mortality in the United States is both historically and geographically unique, at least since 1950. The turnaround is not a simple cohort effect; Americans born between 1945 and 1965 did not have particularly high mortality rates before midlife.” [page 2]

Deaths other than natural more frequent

A sign of this midlife change is that deaths due to poisonings, suicide, chronic liver disease and diabetes have all increased since 1999. At the same time, however, mortality rates among Hispanics and non-Hispanic Blacks have continued to decline; Black deaths continue to be higher than the rate for Whites but the ratio between the two is narrowing, mostly due to the increased mortality of Whites.

The authors do not speculate on the reason for White deaths to increase in contrast to the trend of minority groups, but we might reasonably conclude that People of Color have had deprivation and economic difficulty imposed on them in greater numbers and more intensely, and thus are experiencing less of a change in historic circumstances than are Whites. The economic downturn that the world has lived through since 2008 certainly hasn’t bypassed People of Color — far from it — but the decline has not spared Whites, a group not as hardened to lower living standards thanks to their privileges.

The authors do gingerly dip their toes into declining living standards and rising inequality. They draw this general conclusion:

“After the productivity slowdown in the early 1970s, and with widening income inequality, many of the baby-boom generation are the first to find, in midlife, that they will not be better off than were their parents. Growth in real median earnings has been slow for this group, especially those with only a high school education. However, the productivity slowdown is common to many rich countries, some of which have seen even slower grow in median earnings than the United States, yet none have had the same mortality experience. The United States has moved primarily to defined-contribution pension plans with associated stock market risk, whereas, in Europe, defined-benefit pensions are still the norm. Future financial insecurity may weigh more heavily on US workers, if they perceive stock market risk harder to manage than earnings risk, or if they have contributed inadequately to defined-contribution plans.” [page 4]

It is not only the middle-aged who are feeling these deprivations, however.

“[A]ll 5-year age groups between 30–34 and 60–64 have witnessed marked and similar increases in mortality from the sum of drug and alcohol poisoning, suicide, and chronic liver disease and cirrhosis over the period 1999–2013; the midlife group is different only in that the sum of these deaths is large enough that the common growth rate changes the direction of all-cause mortality.” [page 3]

Worse conditions leads to worse results

It would not be proper to put words in the mouths of Drs. Case and Deaton, but it is possible for us to go beyond the scope of their paper, which is to quantify a previously unnoticed increase in mortality rates and offer general commentary on the macro-economic trends behind it. If we do go further, it could be reasonably concluded that neoliberal austerity — the continual pushing down of living standards, increased deprivation, overwork for those still employed, and increased unemployment or more precarious employment for many others — is a policy that kills.

Wax vanitas, Europe, 1701-1800Contrary to the assertion of Drs. Case and Deaton, productivity did not slow in the early 1970s. Pay slowed. Productivity grew 65 percent between 1979 and 2013 while pay increased eight percent for employees in that period, reports the Economic Policy Institute, and that trend certainly hasn’t reversed itself the past couple of years.

The present capitalist era of neoliberalism, with its increasingly harsh doses of austerity, does not fall out of the sky, but is the logical consequence of the relentless competitive pressures of capitalism and the consolidation of political power by the holders of economic power: industrialists and financiers.

This is hardly the first example of capitalism literally killing — mortality rates in the Soviet Union and other communist countries sharply increased following the imposition of capitalism. Mass privatization in the former Soviet bloc — the “shock therapy” instituted as the imposition of capitalism — is calculated to have led to one million excess deaths, according to a 2009 study published in The Lancet. Alcoholism and poverty skyrocketed in Russia following the fall of the Soviet Union; no surprise due to the economy shrinking 45 percent.

For that matter, health results in the U.S. badly lag other industrialized countries because the U.S. health system is designed to generate profits for pharmaceutical, medical-device and insurance companies rather than deliver health care. The U.S. spends an extra $1.15 trillion per year beyond what it would otherwise in comparison to health care spending in Britain, Canada, France and Germany, yet is well below average in life expectancy and infant mortality. About 22,000 people die and 700,000 go bankrupt per year as a result of inadequate, or no, health insurance in the United States.

It should come as no surprise that when people have life made more difficult, when the weight of corporate power and the governments that do the bidding of that corporate power constantly press down, health and well-being deteriorate. We ought to draw conclusions.

Dump the kid and get back to work

The presidential campaign season is well underway in the United States, and never in human history will more money be spent to say less. And only 16 more months to go.

A perennial favorite of the worst electoral system money can buy is the race among the candidates to be the most in favor of motherhood and apple pie. Not actually do something to make it easier to balance personal life and work, of course, but to send endless platitudes into the void. To put this in context, here is the complete list of all the countries in the world that do not provide paid maternity leave for women workers:

  • Papua New Guinea
  • United States of America

The International Labour Organization reports that 183 countries and territories on which it has information provide cash benefits to women on maternity leave; the two listed above do not. The ILO report, “Maternity and paternity at work: Law and practice across the world,” found that although not all countries reach its standard of at least two-thirds of pay for at least 14 weeks, almost half of the world’s countries do, including 25 of the 29 developed countries in which ILO researchers were able to make an assessment. [page 19] (Canada, Iceland and Slovakia are the others.)

Stockholm (photo by Sharon Hahn Darlin)

Stockholm (photo by Sharon Hahn Darlin)

The geographic region with the best results is Eastern Europe/Central Asia, where 88 percent of countries exceeded the ILO maternity-leave standards and every one at least equaled the standard. [page 18] This result isn’t surprising, as these countries were mostly part of the Soviet bloc. Women on maternity leave in the Soviet Union received full pay up to 112 days, partial pay up to 18 months, and unpaid leave from 18 to 36 months, according to a Max Planck Institute for Demographic Research paper. Maternity-leave benefits achieved during the communist era in countries such as Poland, the Czech Republic, Slovakia and Hungary have largely been retained.

That doesn’t mean all was well; women workers in the Soviet Union from the 1960s on earned about 70 percent of what men did, and industries with the highest concentrations of women tended to be those with the lowest pay. Then again, that is not much worse than today in the United States, where women earn 78 percent of what men earn. Canadian women earn about 74 percent of what Canadian men take home.

Leave for both parents

Of course, there is more to family-friendly work policies than conditions of maternity leave. Only about half of the world’s countries provide paternity leave. Although the ILO has not established a standard for paternity leave, the organization encourages it. The “Maternity and paternity at work” report says:

“Research suggests that fathers’ leave, men’s take-up of family responsibilities and child development are related. Fathers who take leave, especially those taking two weeks or more immediately after childbirth, are more likely to be involved with their young children. This is likely to have positive effects for gender equality in the home, which is the foundation of gender equality at work.” [page 52]

One way of encouraging gender equality is to provide for parental leave, where either parent can take it, or in the case of countries such as Sweden and Norway, some of the parental leave must be taken by the father. The ILO’s report says:

“As countries move toward greater gender equality in their legislation and policies, most countries are setting out parental leave as a shared entitlement, where either the mother or the father has the right to take parental leave and the parents determine the allocation of leave themselves. Countries adopting this approach include Albania, Cuba, Estonia, Finland, New Zealand, Uzbekistan and many others. …

“Sweden was the first country to grant men and women equal access to paid parental leave in 1974. Few men took parental leave, however, so, in 1995, Sweden introduced a non-transferable ‘daddy’s month’ and extended this leave to two months in 2002, with pay at 80 percent of income. Norway also has a non-transferable leave period of 14 weeks to encourage men’s take-up of childcare responsibilities. Germany and Portugal too provide non-transferable allocations of paid parental leave for fathers.” [page 62]

More help in difficult times

In contrast, in the United States, parental leave is a privilege attached to your job, just as with health care (where health care is far more expensive than every other developed country. Only 9 percent of companies in the U.S. offer paid maternity-leave benefits, down from 16 percent in 2008. Lest we pin this reduction on the ongoing economic crisis in which the world has been mired since 2008, the ILO report found that several European countries, along with others such as Chile and El Salvador, actually increased the levels of government support to families, and in 2010 Australia introduced paid universal parental leave for the first time. [page 28]

Those countries that already provided generous benefits haven’t reduced them. Sweden provides 480 days of paid parental leave, prenatal care through free or subsidized courses, and allows parents pushing infants and toddlers in prams and buggies to ride for free on public buses. Norway provides 49 weeks of paid parental leave at 100 percent of income or 59 weeks at 80 percent of income.

The only legal requirement in the U.S. is the 12 weeks of unpaid leave provided under the Family and Medical Leave Act — if you can’t afford to be without a wage, too bad. A Senate bill with 19 sponsors, the Family and Medical Insurance Leave Act, has been introduced that would provide up to two-thirds of pay for 12 weeks, capped at $4,000 per month, paid for by contributions by employers and employees. By contrast, most countries that provide paid parental leave do so through government benefits.

No Republicans have offered to co-sponsor this bill, and not one of the 17 candidates vying for the Republican Party nomination is in favor. The Family and Medical Leave Act was bitterly opposed by George H.W. Bush when he was president, who vetoed it twice, and his son, current Republican establishment favorite Jeb Bush, shows no more inclination to align actions with rhetoric. When governor of Florida, Jeb Bush’s big initiative was to privatize the foster-care system, which handed big profits to corporations, and which took “a pretty well-functioning system and blew it to bits,” according to one case worker.

When “the market” is allowed to decide social questions, it shouldn’t be a surprise that corporate profits, not human needs, are the priorities.

Higher taxes lead to more jobs

Make it harder for people to retain a job, and fewer people will. Adequate pay that makes a job worthwhile is one factor, but frequently overlooked are support structures that facilitate employment.

Contrary to orthodox economic ideology, punishing people does not increase employment.

Countries that provide more subsidies toward services that are complementary to work — such as child care, elder care and transportation — have higher workforce participation rates. This shouldn’t be surprising as we don’t leave the rest of our lives behind when we go to our jobs, however much bosses insist we should. Such a finding can only be controversial in a world dominated by ideologies that insist that conditions be made as harsh as possible to “force” people to work.

Alas, such a world is the one most of us live in, particularly in the English-speaking advanced capitalist countries. I have often noticed that the thinking of middle-class conservatives often boils down to “I had to suffer, so everybody else should have to suffer.” I’ve heard words to this effect from many conservatives. Although people who have enunciated that to me often are people who did indeed work hard to rise from modest circumstances, the reductionist hyper-individualism it reflects is blind to the social solidarity necessary for society to function.

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

More subsidies lead to a higher percentage of working-age people holding regular employment, and these subsidies are possible through higher taxation. Contrary to orthodox economics, higher rates of taxation lead to more employment. This is the conclusion of a study by Henrik Jacobsen Kleven, “How Can Scandinavians Tax So Much?” Professor Kleven, a professor at the London School of Economics, compared Denmark, Norway and Sweden with other OECD (Organisation for Economic Co-operation and Development) countries (a club of the world’s advanced capitalist and some of the largest developing countries) and found strong correlations between taxation rates and workforce participation.

More social services, more employment

Plotted on a graph, there is a steady progression of countries with higher “participation tax rates” having greater percentages of their population employed. This pattern, not surprisingly, is even stronger for women than men. The author defines a country’s “participation tax rate” as the average effective tax rate when including all income and consumption taxes, and public benefits. This rate is far higher in Denmark, Norway and Sweden than it is in, inter alia, the United States, Japan or Britain. Professor Kleven writes:

“[T]he Scandinavian countries spend relatively large amounts on means-tested transfer programs that create implicit taxes on working and therefore reinforce the distortions coming from the tax system. On the other hand, these countries also spend relatively large amounts on the public provision and subsidization of goods that are complementary to working, including child care, elderly care, and transportation. Such policies represent subsidies to the costs of market work, which encourage labor supply and make taxes less distortionary. Furthermore, Scandinavian countries spend heavily on education, which is complementary to long-run labor supply.” [page 7, citations omitted]

Denmark, Norway and Sweden also have unusually low rates of tax avoidance. Professor Kleven writes that systematic third-party reporting is “crucial” to minimizing tax avoidance. (If your income is reported, it is very difficult to avoid paying taxes on it.) The three countries also have a broad tax base and Denmark in particular allows very few deductions and exceptions.

The United States, in contrast, has a complicated tax system riddled with loopholes. U.S. tax policy for low-income workers centers on the Earned Income Tax Credit (EITC), yet the Scandinavian countries have higher rates of workplace participation without such tax deductions. Because child care subsidies act as a subsidy to labor participation, Professor Kleven argues, those countries have no need for a U.S.-style income tax credit.

Although the author recoils somewhat from his own conclusions at the end of his paper, he does earlier write:

“[E]empirical and theoretical arguments above suggest that public spending on work complements such as child care, preschool, and elder care allows for a more efficient provision of low-income support and at the same time weakens the argument for low participation tax rates at the bottom of the distribution through an EITC. In this sense, it is conceivable that Scandinavian countries (with their large subsidies to work complements and no EITC) got it right, while the US (with its small subsidies to work complements and a large EITC) got it wrong.”

More health care earlier, better jobs later

Perhaps imposing ever harsher conditions on working people makes for a weaker economy? It would seem that several years of punishing austerity has not exactly brought prosperity to the world. Another study daring to offer heterodox economic ideas, just released by the National Bureau of Economic Research, calculates that spending by the U.S. government on child health care through the Medicaid insurance program likely will pay for itself by the end of a recipient’s adult working career.

Providing health care ought to be a human right; it is something that should be provided as a matter of basic humanity to enable better lives. In the U.S., of course, such is not the case; health care there is a privilege reserved for those with full-time employment that provides benefits or for those who can afford it. But, in raw economic terms, Medicaid for children may be cost-free over the long term.

This study, “Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?,” prepared by Amanda E. Kowalski of Yale University and two economists with the U.S. Treasury Department, David W. Brown and Ithai Z. Lurie, found that children who were Medicaid recipients as adults earn more money on average and thus pay more in taxes than those who did not receive that benefit. These cohorts were followed until age 28, but, projecting the results over a full working career, the authors estimate that the extra taxes accruing to the federal government will amount to 56 cents for every Medicaid dollar. That is virtually identical to the 57 cents that the federal government pays out of every Medicaid dollar.

Professor Kowalski, in summarizing the study, said:

“Although it will take years to know the long-term impact of current expansions of Medicaid undertaken as part of the Affordable Care Act, this study shows that the investments that the government made in Medicaid in the 1980s and 1990s are paying off in the form of higher tax payments now.”

The study did not take into account the extra tax money paid to state and local governments, nor benefits from decreases in mortality and increases in college attendance. If all factors could be calculated over a lifetime, it is conceivable that Medicaid for children will actually be a direct financial benefit. Such a crass calculation shouldn’t be necessary, but the U.S. health care system exists to provide corporate profits rather than provide health care, which is why U.S. spends much more on health care than other countries while achieving inferior results.

A society that provides the infrastructure for a productive, balanced life, as opposed to one that imposes grim struggles to survive, is a healthy society. We are, after all, a social species, something that the ever more propagandized individualist ideology of capitalism seeks to erase.

They frack because clear air and water aren’t profitable

The true costs of resource extraction are never borne by energy and mining companies because they can dump the costs onto society. Those engaged in fracking are not going to act any differently, and can’t be expected to act any differently.

Having government in their pockets means they do it because they can, but the reasons go well beyond that. Pleading for them to act responsibility is of no use as capitalism requires them to act in socially irresponsible ways. Companies with stock traded on exchanges are legally required to earn the biggest possible profit on behalf of their shareholders, regardless of any other considerations. The rigors of competition also mandate this: If a company doesn’t grow, its competitors will and put it out of business.

Photo by Marc St. Gil

Photo by Marc St. Gil

One route to increasing profits is to shed as much cost and liability as possible. Indeed, a company would be shirking its legally mandated fiduciary responsibility were it to accept its responsibilities. For an energy company, these are considerable. Massive oil spills, contamination of water, degradation of soil, destruction of forests, mountaintop removal (with the debris dumped into valley streams), greenhouse-gas emissions — the list is long. But although the profits from these problems accrue to the corporations responsible, the costs aren’t charged to their bottom lines. Citizens pay for this, in many ways.

Hydraulic fracturing — the natural gas extraction process commonly known as “fracking” — promises more of the same. Fracking may prove to be profitable to the energy companies doing it, but what about the cost of ruined water supplies, soil contamination and other problems sure to follow? What is the price of clean air and water?

It doesn’t count as pollution if we say it doesn’t

Fracking is a technique in which hydraulic fluids — a mixture of water, chemicals and sand — are forced into wells to create pressure that cracks the rocks, allowing the gas to escape and flow out of the wells. Although the energy industry claims this technique has been used “safely” for decades, today’s fracking, intended to extract natural gas that until now had been uneconomical to tap, is different than previous techniques. A Food & Water Watch report on fracking says:

“[T]his next generation of horizontal fracking into hard rock is significantly different from traditional vertical well fracking. It is far more powerful — and more dangerous — than drilling methods used in the past. … Economically releasing gas from these tighter hard rock deposits requires more force, new techniques and a potentially toxic brew of chemicals to access the gas. … [D]rillers inject a mixture of water, sand and chemicals (often toxic ones) known as ‘slickwater’ fracking fluid to suspend the sand and prop open the fractures, as well as lubricants to speed the fluid into the well. In 2011, the [U.S. Environmental Protection Agency] estimated that 70 to 140 billion gallons of water are pumped into 35,000 fracking wells annually.” [citations omitted]

Although newly developed fracking techniques represent an intensification, they are largely exempt from oversight. The Energy Policy Act of 2005 exempts fracking from regulation under the Safe Drinking Water Act. This exemption, sometimes referred to as the “Halliburton loophole” and shepherded through Congress by on behalf of his former company by Dick Cheney during the Bush II/Cheney administration, amended the Safe Drinking Water Act to “exclude … the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.’’

Graphic by geologist Mike Norton

Graphic by geologist Mike Norton

The Halliburton loophole also changes the definition of a “pollutant” under the Clean Water Act so that, according to the text of the Energy Policy Act, “this term does not mean … water, gas, or other material which is injected into a well to facilitate production of oil or gas.”

Energy companies have gotten what they have paid for. A study by Common Cause reports that, from 2001 to 2011, companies engaged in fracking spent $726 million on lobbying and another $21 million in campaign contributions to members of Congress. The American Legislative Exchange Council (ALEC), the corporate lobbying organization that writes “model bills” for state legislatures, has its hand in this process as well, Common Cause reports:

“Prominent financial backers of ALEC’s activities include the American Petroleum Institute, ExxonMobil, and Koch Industries, owner of the largest network of natural gas-transmitting pipelines in the country.”

Health and environmental damage from fracking

The health costs of fracking are considerable. A report by Environment America details some of the costs of ongoing fracking operations and potential costs of proposed fracking. Among them:

  • Contamination of drinking water in Colorado and Pennsylvania has cost hundreds of thousands of dollars to mitigate for a handful of homes.
  • If fracking were to degrade the New York City watershed with sediment or other pollution, construction of a filtration plant would cost approximately $6 billion.
  • The inhalation of dust kicked up from silica sand, which is used in fracking, causes long-term health problems, including lung cancer. Dust-induced occupational ailments, including silicosis, imposed $50 million in medical care costs in the United States in 2007.
  • Air pollution from gas drilling in Arkansas’ Fayetteville Shale region imposed estimated public health costs of more than $10 million in 2008.

The environmental group Catskill Mountainkeeper, in a report noting the threat of contamination from floods overwhelming wells — New York state’s Catskills mountains have been hit hard by a series of floods in recent years — said a range of serious illnesses could take root from fracking:

“Fracking wastewater not only contains the toxic and hazardous chemicals used in fracking fluid but also contains contaminants that it picks up from deep within the earth, most notably salty brine and radioactive materials. The documented health consequences of exposure to these toxins include increased rates of asthma, infertility, ADHD, autism, diabetes, thyroid disorders, brain disorders and many types of cancer.”

Then there are the environmental costs. Some of these, Environment America reports, are:

  • The clearance of forest land in Pennsylvania for fracking could lead to increased delivery of nutrient pollution to the Chesapeake Bay, which already suffers from a vast nutrient-generated dead zone. The cost of reducing the same amount of pollution as could be generated by fracking would be approximately $1.5 million to $4 million per year.
  • Emissions of methane during well completion from each uncontrolled fracking well impose approximately $130,000 in social costs related to global warming.
  • The truck traffic needed to deliver water to a single fracking well causes as much damage to local roads as nearly 3.5 million car trips. Pennsylvania estimated in 2010 that $265 million would be needed to repair damaged roads in the Marcellus Shale region.
  • The five Pennsylvania counties with the heaviest Marcellus Shale drilling activity saw an 18.5 percent reduction in milk production between 2007 and 2010.

The Star-Telegram newspaper of Fort Worth, Texas, reported in 2012 that the Texas Department of Transportation estimates that repairing roads damaged by truck traffic related to oil and gas drilling would cost $2 billion, money it does not have.

But good luck getting the polluters to pay

Across the United States, federal and state requirements for financial guarantees to cover potential damages are inadequate to protect the public, according to Environment Texas. In most jurisdictions, drillers must provide guarantees to cover the cost of plugging a well but but require nothing toward any environmental damage. An Environment Texas report says:

“Bonding levels are much too low — only eight states require drillers to post bonds of $50,000 or more per well for plugging and reclamation at well depths commonly reached by fracking, despite documented instances in which fracking wells have cost $700,000 or more to plug. In addition, most states have “blanket bonding” options that further reduce the amount of financial assurance a driller must provide — in some cases to less than $100 per well.”

Although the full list of chemicals used by drillers is secret, those most commonly used are known. Dozens of them are listed on FracFocus, the national hydraulic fracturing chemical registry managed by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, organizations formed by state regulatory agencies. Hydrochloric acid, ethylene glycol (a poison used as an antifreeze), petroleum distillate (which attack the respiratory and central nervous systems), naphthalene (causes liver and neurological damage) and ethanol (a gasoline additive) are among the chemicals commonly used in fracking.

The economics don’t make sense, either

A remarkable level of potential long-term damage — for what? Proponents of fracking argue that short-term financial gains and the release into the market of new natural gas supplies will both be beneficial. But Deborah Rogers, executive director of Energy Policy Forum, in testimony she gave to the U.S. Senate Committee on Energy and Natural Resources, said there is not necessarily a gusher of gas waiting to be tapped:

“Shale wells deplete alarmingly. Overall field declines are running at the troubling rate of 30%-50% per annum. It will take approximately 7,000 new wells every year at a staggering cost of about $42 billion simply to maintain a flat production profile. Moreover, every shale gas play in the U.S., with the exception of the Marcellus, has already peaked and is in decline. Some have gone through almost a complete life cycle in a matter of a mere five years or so, negating entirely the notion of plentiful supply for 30, 40 or even 50 years. Even the Marcellus is showing signs of late middle age.

Financially, shale gas companies are struggling. The popular notion that these companies intend to provide a cheap and abundant product out of the goodness of their hearts to effect a manufacturing renaissance is nonsensical. Companies are in business to make a profit, not provide cheap inputs to the detriment of their own bottom line.”

The economics of natural gas are not robust. The U.S. Department of Energy’s Energy Information Administration reports that the July wholesale price of natural gas (the latest for which it has data) is US$5.54 per thousand cubic feet, while import and export prices are both less than $4 per thousand cubic feet. But the cost of producing gas via fracking is considerably higher. A commentary in The Financial Times says the full cost of finding, developing and operating shale gas wells, paying an average return on capital to investors, requires a spot gas price of $7.50 to $8 per thousand cubic foot.

In other words, to make fracking profitable, natural gas prices will have to rise significantly, thereby canceling the alleged consumer price benefits of producing more gas by any means available.

The good news is that resistance to fracking is steadily increasing. France and Bulgaria have national bans on fracking, grassroots protests are frequent occurrences in Britain, and Germany is considering a ban in certain regions under pressure from brewers. The Czech Republic in 2012 passed a temporary ban, while various local and regional bans are in place in Argentina, Ireland, Switzerland and the United States.

Opponents of fracking face an uphill swim because “market forces” are arrayed against them. Markets are nothing but the aggregate interests of the most powerful industrialists and financiers, and multi-national energy companies hungrily looking for new profits are certainly among them. To them, pollution, environmental destruction and health damage are “external” to their bottom line and they need not, and will not, consider them. Those costs are borne by those affected by their operations, while the profits accrue privately.

Such is the logic of capitalism — of allowing the “market” to decide ever more social questions. Fracking is a continuation of the taking of the commons, the process of privatizing nature and public spaces for private profit. As the proverb says, you can’t eat money when there is no more useable air and water but putting that idea into practice will require a more rational system.