“Right to Work” vs “Competition”

After the Republican-controlled Michigan legislature passed two measures earlier in the day to ban unions from requiring workers to pay membership dues, that evening Gov. Rick Snyder (R) signed them into law, defending his move as one that would lead to “more jobs coming to Michigan.” [1]

Republicans and their supporters predicted that in an era of global competition the new laws will be a boon to economic growth.  They cited the need to compete with the other states with similar laws and especially with Indiana, the 23^rd state to pass a similar law and that boarders Michigan.

Michigan State Senator John Proos (R):  “ …the reality is…that workers today are in a competitive environment. There’s no question about that… And it’s up to each of the states to put themselves in the very best position to grow jobs and to grow the economy and to allow our Michigan businesses to compete to keep, grow and bring in new jobs…” [2]

Contrary to predictions of more jobs and economic growth made by Governor Snyder and others, the new laws will likely lead to the further erosion of Michigan’s economy.

According to Michael Porter, one of the preeminent researchers in this field whose frameworks are the foundation for modern thinking about competition and strategy, most people tend to think about competition as a form of warfare, a zero-sum battle for dominance in which only the strongest prevail.  In Mr. Porter’s view, this is a deeply flawed and destructive way of thinking. Instead of competing ‘to be the best,’ competition should be to ‘be unique.’ It is about uniqueness in the value you create and how you create it.  Zero-sum competition is rightly depicted as a race to the bottom.  It feeds on imitation.  Pure cost advantages such as lower labor costs are relatively easy to imitate. In contrast, competing to be unique thrives on innovation and in the long run demands sustained and cumulative investment in sources of competitive advantage associated with more complex production. [3] [4]

In their recent book, “Why Nations Fail – The Origins of Power, Prosperity and Poverty,” Daron Acemoglu and James A. Robinson theorize “that while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.” [5]

They argue that an inclusive political system is necessary for an inclusive economic system; one that provides incentives for people to acquire skills, work , invest, and, most importantly, innovate.

People have few incentives to innovate in a so-called extractive economic system where the political and economic system exists for the benefit of the elite.  Consequently, although it may grow for a short while, extractive economic systems do not generate sustained growth.

Over the past 30 to 40 years the US changed from a more or less inclusive to an extractive economic system as the political system was manipulated so the majority of the country’s wealth flowed to its already richest people.   At the same time the United States’ competitive economic position steadily deteriorated. The passage of the ‘right to work’ laws in Michigan is the latest episode in this process. [6] [7] [8]

Along with other ‘right to work’ states, Michigan’s newly passed laws put it in a race to the bottom of the economic ladder and call into question the governor’s and legislature’s ability as stewards of Michigan’s economic resources to uphold their responsibilities to the people of the State of Michigan.

1.  “Michigan enacts right-to-work law, dealing blow to unions,”  by Michael A. Fletcher and Sean Sullivan, The Washington Post, Published: December 11.

2.  “Michigan ‘Right-to-Work’ Laws Spark Heated Debate on Role of Labor Unions,” by Gwen Ifil, PBS News Hour, Air date Dec. 10.

3.  “Understanding Michael Porter  – The Essential Guide to Competition and Strategy,” by Joan Magretta, HBR Press, 2012.

4.  “The Competitive Advantage of Nations,” by Michael E. Porter, The Free Press, 1990, 1998.

5.  “Why Nations Fail – The Origins of Power, Prosperity and Poverty,” by Daron Acemoglu and James Robinson, Crown Publishers, 2012.

6.  “Winner-Take-All Politics – How Washington Made the Rich Richer-And Turned Its Back on the Middle Class,” by Jacob S. Hacker and Paul Pierson, Simon & Schuster, 2010.

7.  “Billionaires Ball – Gluttony and Hubris in an Age of Epic Inequality,”, by Linda McQuaig and Neil Brooks, Beacon Press, 2012.

8.  “Plutocrates – The Rise of the New Global Super-Rich and the Fall of Everyone Else,” by Chrystia Freeland, The Penguin Press, 2012.

“An Enemy of the People”*

Journalists Matt Taibbi and Chrystia Freeland join Bill  Moyers to discuss how the super-rich have willfully confused their self-interest with America’s interest.

In her recent article appearing in The New Yorker, “Super-Rich Irony,” Chrystia Freeland relates the growing antagonism of the super-rich for President Obama.

This is the group that has benefited most from the winner-take-all economy: the 0.1 per cent, whose share of the national income was 7.8 per cent in 2009, according to I.R.S. data.

The economists Emmanuel Saez and Thomas Pilketty have found that ninety-three per cent of the gains during the 2009-10 recovery went to the top one per cent of earners. The top 0.01 percent captured thirty-seven percent of the total recovery pie, with a rebound in their incomes of more than twenty per cent.

But, when, in June, 2011, in the middle of the debt-ceiling battle, Obama urged America’s millionaires and billionaires to pay their fair share, instead of supporting the President, the super-rich began to criticize him publicly with charges of “class warfare,” compared Obama to Hitler, and shifted their support to Romney.

America’s super-rich feel aggrieved because they believe that they have worked hard for, earned, what they have, while other people are freeloading. Foreshadowing Romney, Leon Cooperman, a billionaire hedge-fund manager, said

“It’s a question of tone. The President makes it sound like the problems of the ninety-nine per cent are caused by the one per cent, and that’s not the case…Our problem, frankly, is as long as the President remains anti-wealth, anti-business, anti-energy, anti-private-aviation, he will never get the business community behind him. The problem and the complications is the forty or fifty per cent of the country on the dole that support him.”

The super-rich believe they are the winners.  They feel that they deserve what they get because they are the “job creators.” To be prosperous, one must be fiscally disciplined. They have won the competition in the free market, therefore they must be the most disciplined and the most morally worthy, the ‘best’ people. They deserve to win.  If you are not prosperous it must be because you are undisciplined – which is itself a form of immorality – and so you deserve your poverty.

In contrast to the 50′s, business executives, people at the top now believe in Ann Rand’s philosophy that they are the wealth creators and they should get all the breaks and advantages, whereas everybody else is a parasite living off them.

Freeland cites Nick Hanauer, a Seattle entrepreneur and venture capitalist who was one of the first investors in Amazon. In a book published this year, he argues that since the Reagan era American capitalists have enjoyed a uniquely supportive set of ideological, political, and economic conditions. Their personal enrichment came to be seen as a precondition for the enrichment of everyone else. Lower taxes for them were a social good, rather than a selfish perk.

“If you are a job creator, you fifteen-per-cent tax rate is righteous. If you aren’t, it is a con job. The idea that the rich deserve to be rich is a very comforting idea if you are rich.” Referring to Obama’s “You didn’t build that” remark, Hanauer said that “the notion that you built it yourself is what you need to believe to feel comfortable with yourself and your desire not to pay too much taxes.”

Since Reagan there has been a view that we should all listen to the business person. We should all accept what he – all are male – thinks how society should be ordered because he, after all is the hero of our times, the hero of the capitalist narrative.

Obama’s underlying point is that American capitalism is not working the way it was in the ’50s; we are not seeing a rising tide lift all boats. Instead we are seeing the incomes of the people at the very top take off. Their economic fortunes are actually disconnected from most everybody else.

The old Henry Ford model where you needed the middle class to be well paid too has broken down. And to actually state that is profoundly threatening because it starts to break down this equation of the size of my bank account isn’t just good for me, it’s a manifestation of my civic contribution. My wealth = my virtue.

Obama is challenging this notion of the successful businessman as the hero and the driver of the American narrative. This is a big challenge that accounts for the disproportionate emotional response. Pointing out that capitalism creates the inequality is an existential threat and connects the ultra-rich with rest of population.

Romney’s campaign is saying “I’m a successful businessman so I will make a good president,” and Obama is saying “You know what? I don’t think that that equation works and is automatic anymore.” The plutocrats are not wrong to detect a very powerful ideological challenge.

But, Ms. Freeland observes that there is no credible counter-movement; no one is offering sufficiently compelling alternatives and solutions.

“My argument is we are living through equally profound economic transformations and just trying to rehash and re-tinker with the twentieth century institutions I don’t think is enough…let’s at least see the new ideas. We need to realize the ’50s are not coming back. So let’s really face the facts of how the world economy works and really come up with what needs to be the political and social response.”

*An Enemy of the people is an 1882 play by Norwegian playwright
Henrik Ibsen.

The Chicago Teachers Strike and Corporate Self-Interest

This gallery contains 6 photos.

When Chicago Teachers Union President Karen Lewis told a massive crowd of supporters that “This fight is for the very soul of public education, not only in Chicago but everywhere,” she was only partly right. [1] In a broader sense … Continue reading →

The Carbon Bomb – Playing Whac-a-Mole, Part I

Goldilocks Planet?

More than 20 years and $600 million dollars after NASA space scientist William Bourcki began to explore the galaxy looking for extraterrestrial life, he announced at a recent conference of his peers in Mountain View, CA, that his team had found their first planet orbiting a star in the habitable zone, that is, at the proper distance to have water—necessary for life. Similar to Earth, though bigger, scientists say the planet’s temperature averages about 72 degrees. Six hundred light years away, it orbits its own sun every 290 days. Bourcki and his team found it using the Kepler space telescope, which was launched three years ago and remains in orbit around the sun. Scientists are taking the discovery of a potentially habitable planet seriously, even though the fastest modern rocket ship would take 24 million years to get there.

• News Item

“Why wouldn’t you? If you think about the way we’ve taken care of our own planet, if we all piled into the family spaceship right now and didn’t stop for bathroom breaks until we got to this new place, we could still catch the last act.”

• Jay Leno

The Carbon Bomb

The Athabasca River originates from the melting snow and ice of the Athabasca Glacier, one of six major glaciers extending from the Columbia Icefield in the Rocky Mountains near Jasper, Alberta. The river flows northeast across Alberta for over 1,300 km before flowing through the Peace-Athabasca Delta into Lake Athabasca. (The word “Athabasca” in Woodland Cree, one of the indigenous people inhabiting the area in the 1600′s when Europeans arrived to trade for furs, means “[where] there are plants one after the other.”) . After leaving the mountains, the Athabasca River flows through rolling foothills, dominated by trembling aspen, balsam poplar, lodgepole pine, and white and black spruce. The lower reaches of the river are heavily forested with spruce, fir, pines and larch and with vast bogs and muskegs, the boreal forest region.

Near the town of Fort McMurry in northern Alberta, the Athabasca river exposes the McMurray Formation, a layer of shale, sandstone, and oil-impregnated sands that contains the Athabasca oil sands. Alberta’s oil sands occur in three areas over Northern Albert covering over 140,000 sq. km. – larger than the state of Florida – and contain the second largest known accumulation of hydrocarbons in the world after the Arabian peninsula. An estimated 1.7 to 2.5 trillion barrels of oil are trapped in a complex mixture of sand, water and clay.

Alberta’s geological history was instrumental in forming the oil sands. The oil is derived from concentrations of marine plants and animals (mostly algae) that formed in depressions in the shallow sea bed during the Paleozoic Era (about 600 million years ago) when Alberta was repeatedly submerged in shallow oceans. Bacteria removed most of the oxygen and nitrogen leaving primarily hydrogen and carbon molecules. Tremendous heat and pressure caused by the deposition of layer upon layer of rock, silt and sand led to decomposition and reorganization of the hydrogen bonds to form oil.

An open-pit mine in the Athabasca oil sands region.

Source: Suncor Energy

The oil is mined from the surface by first removing the overburden and the muskeg, a water-soaked area of decaying plant material that is one to three meters thick and lies on top of the overburden. After all of the overburden is removed, the oil sand is exposed and can be mined.

Mining machinery load the sand into trucks that haul it to a nearby processing plant where it is crushed and treated with hot water and chemicals to liberate the bitumen. The oil is a thick, sticky form of crude oil, so heavy and viscous that it will not flow unless heated or diluted with lighter hydrocarbons. At room temperature, it is much like cold molasses. The liberated bitumen is separated from the water, blended with naptha and pumped through the pipe line for further refining. Currently the mining operation produces 1.13 million barrels of oil per day.

Due to the more energy intensive extraction process using hot water to separate the sand and oil, the operation uses three times more energy and releases three times more emissions than standard oil recovery methods. This process generates two to four times the amount of greenhouse gases per barrel of final product as the “production” of conventional oil. In addition, vast amounts of water are needed to separate the extracted bitumen from the sand, silt and clay: 3 barrels of water for each barrel of oil or approximately 400 million gallons per day. The water is dumped into tailing ponds.

After the final product is shipped by pipeline to refineries, an environmental footprint remains. This can include open pit mine holes, process water dykes and emissions. Minimizing the impact to the environment begins by understanding the complexity of eco-systems. In Alberta, this form of oil extraction completely destroys the boreal forest, the bogs, the rivers as well as the natural landscape. The mining industry believes that the boreal forest will eventually colonize the reclaimed lands, yet 30 years after the opening of the first open pit mine near Fort McMurray, Alberta, no land is considered by the Alberta Government as having been “restored.”

Expanding production to take advantage of the proposed Keystone XL pipeline that would run from Alberta through the Midwestern United States to Huston and Port Arthur on the Gulf Coast would mean an increase of 900,000 barrels per day, doubling the current shipment rate. The tar sands oil transported by the XL pipeline would be further refined in Texas for export as diesel and other products for South America and Europe.  By opening the supply bottleneck to expanded markets, once the XL pipeline in completed, customers in the Mid-West can expect to pay the equivalent of $2-3 more per-barrel of crude oil than they are now for gasoline refined from tar sands oil.

The owners of the proposed pipeline, Transcanada, say the project will create much needed jobs and provide a secure source of energy for the United States.

The National Resource Defense Council charges that the expansion of the Keystone pipeline would undermine US commitment to a clean energy economy. They are also concerned about the potential contamination of the Ogalla aquifer, one of the largest reserves of fresh water in the world, by a leak in the pipeline.

Indigenous Peoples and Native Americans oppose the project because they feel it eradicates the local environment and contributes to global climate/environment disruption.

Environmentalists claim that constructing the pipeline is lighting the fuse to the carbon bomb. Due to the extra energy required for extraction and refining it, the Alberta tar sands could generate and extra 1.15 billion tons of green-house-gasses (GHG) over conventional oil. The GHGs would raise the atmospheric CO2 levels more than 200 ppm and make it almost impossible to avert global warming climate disaster.

In their seminal paper, “Target Atmosphere CO2: where should humanity aim?” NASA climate scientist J. Hansen, et. al., attempt to answer the question of what level of atmospheric man-made CO2 can be allowed without precipitating extreme climate disruptions—the “tipping point.”

The earth’s climate’s sensitivity varies as it grows warmer or colder: at lower temperatures a negative feedback loop results in more sea ice forming, leading to a “snowball” earth; at higher temperatures a positive feedback loop leads to an ice free planet. Currently the earth is at a “steady state” between the two feedback loop extremes. Relatively recent ice ages were instigated by slow changes in the earth’s orbit, especially by the spin-axis relative to the orbital plane and the precession of equinoxes. In the long-term, over centuries to millenia, recently emitted CO2 emissions will decline slowly if emissions are ended. But, if the atmospheric temperature increases much more, the positive feedback loop will release CH4 and CO2 from tundra, potentially leading to runaway temperature increases.  The authors’ recommendation is to target 350 ppm.

We have already passed  390 ppm and are climbing 2 ppm/year, and because of inertia, the climate system has not yet responded to the present conditions. If the CO2 level becomes greater than 450 ppm, the authors predict an ice-free planet, with all that entails—environmental and species destruction, including the loss of an estimated two-thirds  of the earths human population.

Because a large fraction of fossil fuel CO2 from the carbon cycle remains in the air for a long time – 25% for several centuries — a moderate delay in decreasing fossil fuel use will not appreciably affect climate change. But for the climate to remain hospitable to humans, most remaining fossil fuel carbon must remain in the ground.

“Humanity’s task of moderating human-caused global climate change is urgent. Ocean and ice sheet inertias provide a buffer delaying full response by centuries, but there is a danger that human-made forcings could drive the climate system beyond tipping points such that change proceeds out of our control…

“The stakes, for all life on the planet, surpass those of any previous crisis. The greatest danger is continued ignorance and denial, which could make tragic consequences unavoidable.” [1 p. 12-13]

In November, 2011, the Obama administration announced it would delay the decision on the controversial cross-country oil pipeline in order to assess a shift in its route, effectively putting off a politically vexing decision until after next year’s election. However, this decision appears unlikely to substantially disrupt Canada’s continued development of the oil fields.

The governance of the oil sands is evenly divided between that of Canada, which is responsible for commerce, trade and taxation, and Alberta, which “owns” the resources in the providence. Both governments are aligned with industry in the development of the oil sands. Conservative Prime Minister Steven Harper is actively promoting development. Critics charge that the public has been systematically shut out of meaningfully influencing decisions about the oil.

Even if construction of the XL pipeline can be permanently halted, with numerous other energy projects currently underway elsewhere, including Mongolia, Montana and Australia, , it appears doubtful that even temporary interruption of construction of the XL pipeline would significantly affect world-wide fossil fuel use and its effects on the climate and local and world population.  The forces driving the burning of fossil fuels are not located in the access to the resources, but in demand for their use.  It is futile to attempt to control their use by interrupting supply.  Fossil fuel energy sources will always be able to find a way around blockades.  Trying to stop the burning of fossil fuels by halting development of energy resources similar to the construction  the XL pipeline is essentially like a game of Whac-a-Mole.

Whac-a-Mole

What are the forces driving demand for energy?  We will examine these forces and possible ways to influence them in Part II of this series.

Note:  Recently President Obama gave Transamerica the green light to develop the southern portion of the XL pipeline.

1 Target Atmospheric CO2: Where Should Humanity Aim? by James Hansen, et. al., The Open Atmospheric Science Journal, 2008, 2, 217-231

The Past is Prologue – Drought in the South West

“We are stardust, we are golden,

We are billion year old carbon.

And we got to get ourselves back to the garden.”

— Joni Mitchell

The Salado Culture [1]

The prolonged drought in the Southwestern United States has lowered the levels of Roosevelt Lake in the Tonto Basin of central Arizona to the point that archeologists are able to investigate to a larger extent than previously possible the remains of the once thriving communities of the Salado Indian culture that inhabited the area beginning around AD 1150 until abruptly disappearing around AD 1450.

Named for their dependence on the nearby Rio Salado, or Salt River, the Salado culture took hold in the Tonto Basin where Tonto Creek joins the Salt River.  Following completion of Roosevelt Dam over a century ago in 1911, much of the evidence of the settlements and irrigation canals built by the Salado people in the Tonto Basin were submerged by the rising waters of Roosevelt Lake.

The Tonto Basin is located in what is known as the “transition zone,”
as it essentially bisects Arizona into two major geologic provinces, the Colorado Plateau to the north and the Basin and Range to the south.
The region is characterized by numerous mountain ranges separated by several basins, including Chino Valley, the Verde Valley, San Carlos Basin, the Safford Valley and Tonto Basin.

Ten to 30 million years ago tremendous forces wrenched apart the rocks of this region,
raising up huge blocks, and dropping others down in a jumbled mass of mountainous terrain through which molten rock was interjected and overlain. Corresponding with the latter millennia of the uplift was down-cutting by streams and rivers, including the Salt River, which carried debris from the uplands to the surrounding lowlands. Water erosion began to cut out the caves and alcoves now famous for the Salado cliff dwellings between 50,000 and 400,000 years ago, and by 10,000 years ago, the Salt River had carved the Tonto Basin into a landscape similar to that of today.

The Tonto Basin was inhabited by several American Indian groups with whom the Salado culture combined customs and characteristics, such as the Mogollon, whose pottery styles and burial traditions the Salado adopted, as well as the Hohokum and pueblo cultures.

The archeological evidence indicates that by the late 8^th century members of the Hohokum Culture from the lower Gila and Salt valleys (near today’s Phoenix) built permanent settlements in the Tonto Basin. For 400 years they used irrigation farming to grow corn, beans, squash, and cotton. They traded goods across a network that reached from Colorado to the Gulf of California.

Starting in 1100 the puebloan population centers to the north approached their social and economic peak. Archeological evidence indicates that in these regions drought, plant and animal depletion, and population growth pushed resource availability to critical levels. Many northern pueblo groups left their homelands, settled, then moved on, as part of their quest to find permanent homelands. Migration took them to what are now western New Mexico and central, southern, and eastern Arizona, including the Tonto Basin. By 1275 thousands of people lived in Tonto Basin.

Around 1300 a dramatic change occurred in the region’s climate. The region became more arid. The changing climate decreased farming and increased hunting and gathering, severely impacting the ecosystem. Important plants and animals declined or disappeared. By this time, the population had grown so large that demand and overuse led to a scarcity of resources. The 1300s were also marked by catastrophic flooding of the Salt River that destroyed lowland farms and villages as well as many of the irrigation canals, rendering hundreds of acres of farmland useless. Competition for dwindling resources created stress among the villagers and the quality of life declined. By 1450 those struggling to maintain their way of life gave up and left the area.

We don’t know the Salado people’s beliefs or culture—they left no written records. Their story is told largely through the interpretation of the artifacts and features found at places they lived. They likely did not understand and were unable to respond to the challenges brought about by population growth, natural disasters and climate change.

The American Southwest has always been relatively dry. Weather cycles known as El Niño and La Niña, caused by oceanic current oscillations in the Southern Hemisphere that primarily affect the Pacific Ocean and its coasts, also affect decade-long rainfall cycles in the Southwest that have caused, for example, the droughts of the 1300′s that affected the Salado, the 1930s (the Dust Bowl) and 1950s.
The current drought that is bringing more of the ruins of the Salado Culture to light as the water level in Roosevelt Lake declines, however, is likely the beginning of a period of even longer and more intense droughts—megadroughts—resulting from Anthropomorphic Climate Change (ACC). We now have scientific evidence that ACC will override the shorter-term weather cycles and create permanent drought conditions over this region of the United States [2], [3],[4]

Just as earlier drought conditions affected the Salado, the severe and prolonged drought will undoubtedly force drastic changes in lifestyles for the people currently living in the Southwest, including Arizona and the Phoenix area. The difference is that the knowledge and means to meet or even avert the crisis is available to the current residents. Unfortunately, it appears that the present culture has yet to evolve to the point where it likely will effectively deal with the climate consequences it produces.

1. Tonto National Monument: Saving a National Treasure; Teaching With Historic Lesson Plans, National Park Service, Department of the Interior

2. Model Projections of an Imminent Transition to a More Arid Climate in Southwestern North America by Richard Seager, and others
Science, v. 316, p. 1181-1184, 25 May 2007

3. Extended megadroughts in the southwestern United States
by Peter J. Fawcett, and others
Nature, v. 470, p. 518-521, 24 February 2011

4. Observational and model evidence of global emergence of permanent, unprecedented heat in the 20th and 21st centuries
by Noah Diffenbaugh and Martin Scherer
Climatic Change Letters, v. 107, n. 3-4, p. 615-624, 7 June 2011