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.