By Mohamed Farag Bashmilah
Client of the International Human Rights Clinic at NYU
February 25, 2009
Huffington Post
From October 2003 until May 2005, I was illegally detained by the U.S. government and held in CIA-run "black sites" with no contact with the outside world. On May 5, 2005, without explanation, my American captors removed me from my cell and cuffed, hooded, and bundled me onto a plane that delivered me to Sana'a, Yemen. I was transferred into the custody of my own government, which held me -- apparently at the behest of the United States -- until March 27, 2006, when I was finally released, never once having faced any terrorism-related charges. Since my release, the U.S. government has never explained why I was detained and has blocked all attempts to find out more about my detention.
What I do know is that the Jordanian government -- after torturing me for several days -- handed me over to a U.S. "rendition team" in Amman, which then abducted me, forced me onto a plane, and flew me to Afghanistan. During this, and several other transfers between CIA prisons, I was subjected to a brutal and deeply humiliating "preparation" ritual. I was stripped naked, dressed in a diaper, shackled, blindfolded and hooded, and then boarded onto a waiting plane. I was forced into painful positions, often reeling from the blows and kicks of the men who had "prepared" me for flight.
During my detention, I agonized constantly about my family back in Yemen, knowing they had no idea where I was. They never once received information about who had taken me, why I was taken, or even whether I was alive. They were never contacted by the U.S. government or the International Committee of the Red Cross. My mother and wife were in such anguish that they had to be hospitalized for illness, stress, and anxiety. My father passed away while I was disappeared and I am still distraught thinking that he died without knowing whether I was dead or alive. I continue to suffer from bouts of illness that medical doctors attribute to the treatment I experienced in the "black sites." My physical symptoms are made worse by the anxiety caused by never knowing where I was held, and not having any form of acknowledgment that I was disappeared and tortured by the U.S. government.
I believe that acknowledgment is the first step toward accounting for a wrongdoing. The American public needs to face what has happened to those of us who were disappeared and mistreated in the name of their national security, demand accountability for those who committed torture and other crimes, and acknowledge the suffering of those who became victims. Today, a group of concerned Americans called on President Obama to take the first steps to do just that, by demanding that he establish an independent commission of inquiry into the treatment of detainees in the "War on Terror."
President Obama himself recently said that "democracy requires accountability and accountability requires transparency." If he establishes this commission, it would break the silence about what has happened and signal a real commitment not only to changing the practices of the past but also to ensuring that they do not happen again. Both the American public and the victims of these past policies need to understand what the CIA did in the name of U.S. national security. We need to find out where we were all held and who is still missing. And we need justice for the crimes that were committed in violation of our most basic human rights -- rights the United States has always claimed to uphold and defend. President Obama's recent order to the CIA to shut down its secret prisons was a significant step in the right direction, but it did not resolve the unfinished business of establishing accountability and restoring transparency.
The American public deserves to know what was done to people like me -- and I deserve to know why I lost nineteen months of my life -- all in the name of protecting their security. It gives me faith to see that Americans are standing up for my rights and calling for the truth to be exposed. It is my hope that the President will not only establish this commission, but that he will also direct the relevant authorities to investigate and prosecute those who broke American laws in ordering the torture and disappearance of people like me. Truth and justice are not in opposition; both are necessary, and both are the right of all Americans and the victims harmed in their name.
Mohamed Farag Ahmad Bashmilah, a citizen of Yemen, is a client of the International Human Rights Clinic at NYU School of Law, which represents him in his quest for truth and justice.
Saturday, February 28, 2009
Friday, February 27, 2009
Things To Do if in Auckland
Update - it would help Bob if you could read.... turned up a week early I did
wot a plonker
Tough Times in Troubled Towns
America's Municipal Meltdowns
By Nick Turse
When Barack Obama traveled to Elkhart, Indiana, to push his $800 billion economic recovery package two weeks ago, he made the former "RV capital of the world" a poster-child for the current economic crisis. Over the last year, as the British paper The Independent reported, "Practically the entire [recreational vehicle] industry has disappeared," leaving thousands of RV workers in Elkhart and the surrounding area out of work. As Daily Show host Jon Stewart summed the situation up: "Imagine your main industry combines the slowdown of the auto market with the plunging values in the housing sector." Unfortunately, the pain in Elkhart is no joke, and it only grew worse recently when local manufacturers Keystone RV Co. and Jayco Inc. announced more than 500 additional job cuts.
In a speech at Elkhart's town hall, Obama caught the town's plight dramatically: "[This] area has lost jobs faster than anywhere else in the United States of America, with an unemployment rate of over 15 percent when it was 4.7 percent just last year… We're talking about people who have lost their livelihood and don't know what will take its place… That's what those numbers and statistics mean. That is the true measure of this economic crisis."
Elkhart, as it happens, is but one of countless towns and small cities across the U.S. that have proven particularly vulnerable to tough times simply because their economies relied on just a few major employers, or a single industry, or even a single company that has gone under or cut back drastically. Places like Elkhart are feeling the pain in ways most of the country isn't -- yet; and even worse, from the out-of-work to local officials, no one knows how to stop the bleeding.
Take Dalton, Georgia, and its 33,000 residents. As the self-proclaimed "Carpet Capital of the World," it wasn't exactly well positioned when the foreclosure crisis hit and the construction industry ran off the rails. In fact, with its carpets piling up underfoot rather than heading out the factory doors, the housing crisis has all but wrecked Dalton which, from the 1980s to last year, had never been at a loss for jobs. Now, the Atlanta Journal-Constitution reports, U.S. Bureau of Labor statistics show the Dalton metro area ranking "second among 369 American cities in its rate of job loss, jumping from 6.2 percent to 11.2 percent last year."
Across the country, individuals, foreclosed or suddenly jobless, have been melting down like the economy and so bubbling up into the news in the form of extreme acts ranging from suicide and murder to arson and robbery. The same might now be said for news about whole troubled communities.
A few months ago, stories of economically-troubled towns were strictly local fare. Now, more and more of them are rising to regional or national attention. Take Lehigh Acres, Florida, a community that's home to large numbers of carpenters and pest exterminators who rode the housing boom until it went bust in a county that, between June 2007 and June 2008, lost a higher percentage of jobs (8.8%) than any other in the nation. A New York Times article on the "once-middle-class exurb" detailed the devastation:
"[H]omes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006."
Similarly, the Wall Street Journal profiled the plight of Rockford, Illinois, an industrial city about 90 miles northwest of Chicago with 12.5% unemployment, the highest in the state, a shortfall of $7.6 million in the city's budget, streets filled with "gaping potholes" and a "city center… rife with vacant storefronts."
Most of America's desperate towns and small cities, however, still remain relatively anonymous. Even with their pain quotient on the rise, they lack New York Times profiles or presidential photo ops to draw attention to their woes. But it's important to note that Elkhart, Dalton, and Lehigh Acres aren't American oddities. Other towns and cities in surprising numbers are following fast down the path they have already cleared. Such places are now hurt or possibly, in some cases, even dying -- with little in the way of hope or help in sight. Under the circumstances, they should no longer be treated as individual stories, locally or nationally. They represent a pattern, and putting even a small number of their stories together casts a light on a disturbing countrywide trend that may determine the tomorrows of a remarkable number of Americans.
Tough Times in the East
After Governor Deval Patrick slashed aid to municipalities across the state, the "cash-strapped" town of Winthrop, Massachusetts, was left with a $512,000 budget gap. As a first step, the town axed its $117,000-a-year police chief and is now considering shuttering its public library. "The library has gotten a lot of attention, but if it's not the library it's going to be something else," said Winthrop Town Council President Thomas Reilly, a 40-year veteran of local government. "This is the worst I've seen," he told the Boston Herald.
Tough times have even reached tony Greenwich, Connecticut, which, the Greenwich Time reports, is looking to cut $5 million from its proposed 2009-2010 budget, in part through layoffs as well as a wage freeze for public employees. This famed haven for the rich is also experiencing joblessness "near a record high that has not been seen since the withering downturn of the early '90s."
West Warwick, Rhode Island, a textile mill town that, according to its website, gave the world the "Fruit of the Loom" trademark, is another municipality in dire fiscal straights. In early February, West Warwick announced that it could not meet its obligations on a multi-million dollar lawsuit settlement stemming from a nightclub fire and that its school system was $3.5 million over budget. "There is no way that we can tax our way out of this problem," Town Manager James Thomas told local television station WPRI.
Tough Times in the South
The small Appalachian town of West Jefferson, North Carolina, like its northern brethren, has also been hit hard. A recent Associated Press report noted that in a little more than a year, "the town and the neighboring county seat of Jefferson have lost more than 500 factory jobs -- a number equal to 20 percent of the town's population." All of this resulted from crucial town businesses like its light-switch plant, which had long benefited from the housing boom, shutting down, sending ripples through its heavily manufacturing-dependent economy. As a result, other local businesses, from Thistlewood, a women's clothing boutique, to a Dodge car dealership, are shutting down as well. It's a symptom of the times that the local food bank is now feeding nearly 50% more families than a year ago.
When the Peanut Corporation of America plant linked to the 2008 salmonella outbreak decided to lay off almost all of its 50 workers in January -- the company has since filed for bankruptcy -- it was a hard pill for Mayor Ric Hall of Blakely, Georgia, to swallow. After all, it was one of the two main businesses the town of 5,700 -- and the self-proclaimed "Peanut Capital of the World" -- relied on for its economic wellbeing. In a sign of the times (and perhaps of the collapsing newspaper industry), the other, a newspaper production plant, had already announced plans to lay off at least 100 workers. "We're already struggling with high poverty and a struggling agricultural economy, and this will impact not just our community, but this entire region of the state," Hall told the Los Angeles Times. "That's a total of about 150 to 170 people who have lost their jobs," he said. "Being the small agricultural community that we are, the prospect of finding new employment is virtually impossible. People here don't have much, and the layoffs make it even more devastating."
Times are tough in Dillon, South Carolina, too, the town where Federal Reserve Chairman Ben Bernanke grew up. Just recently, his childhood home was purchased at a foreclosure sale -- an all-too-common occurrence in a town already long battered by the decline of the local tobacco and textile industries. Now, writes the Wall Street Journal, it's "facing a fresh assault of plant closings and layoffs that have pushed its unemployment rate to 14.2% -- almost double the national average." As in so many other places, the catastrophic housing and automotive markets have hit Dillon with hurricane force. Mohawk Industries, which made yarn for carpeting and employed 137 people in town, shut down, while Wix Manufacturing, which produces automotive filters, has slashed employee hours and some jobs. In fact, just outside of town, at South of the Border, a faux Mexican-themed "village" of souvenir stops, restaurants, and low-rent attractions where Bernanke once worked, business -- which depends on vacationers trekking down the East Coast to Florida -- is off 10%, the worst downturn since the 1973 oil crisis, according to Richard Schafer, the patriarch of the family that runs the tourist trap. "People are losing their home and jobs," he says, "and they're not traveling as much."
Tough Times in the Midwest
Wilmington, Ohio, is another company town whose fortunes have plummeted. After overnight shipper DHL shut down its domestic courier service, the town went into a tailspin. Already, 3,000 jobs have been lost at the local airport. Within months the number is expected to rise to 8,000, according to an Associated Press report. As a result, in the town of 12,000, new claims for unemployment benefits are the highest they've been in 26 years and many businesses are facing the prospect of closing down, as is its hospital. "I think one in five small businesses will fail or could fail," says Wilmington's mayor David Raizk. As a result, more and more families are visiting local food banks, while community leaders are promoting backyard gardens as an inexpensive way to help feed families. In fact, Wilmington College is even opening up gardening plots on its property for needy townspeople.
In Lordstown, Ohio, a town of 3,600, General Motors and its 5-million-square-foot plant was the lifeblood of the community. In January, however, GM told 2,800 of its more than 4,000 Lordstown workers to stay home for the month. At the end of the month, 800 of them were told not to return. Now the town, which derives 75-80% of its tax revenues from the auto plant, according to the Youngstown Vindicator, is facing ruin. "We're a one-horse town in that regard," said Mayor Michael Chaffee, who estimates, according to a CBS Evening News report, that for every GM job lost, at least two others are needed to replace it, due to pay differentials. Meanwhile, the Lordstown village council approved a wage freeze for its full-time workers and 60 part-time employees and is looking for other ways to cut costs, like suspending capital improvements like road repair. Elsewhere in Ohio, other GM towns are feeling Lordstown's pain. At GM's engine and transmission parts plant in Defiance, for instance, 100 GM employees were being laid off in mid-February.
GM isn't the only source of mid-Western woes, though. In recent months, massive layoffs by businesses in downtown Des Moines, Iowa, have caused great economic hardship. And the situation won't be getting better soon as software giant Microsoft recently shelved plans to build "a $500 million data center in West Des Moines" that would have brought with it 75 new jobs. On top of that, just this month the American Enterprise Group, a local insurance company announced 51 layoffs; the Des Moines City Council announced 88 jobs cuts; while the Des Moines County jail is contemplating unpaid furloughs or layoffs and a scheme by which inmates would pay for their own toilet paper. Robert Crandall, the executive director of the Bidwell-Riverside Center, a food pantry in Des Moines, noted that the number of families his group was serving had risen as much as 33% in recent months. "The really sharp [jump in numbers] started late summer, early fall," he told the Des Moines Register.
Tough Times in the West
In the West, California dominates the news with a seemingly endless string of stories about the deepening crisis faced by towns (sometimes in that state officially labeled "cities," even with populations of less than 1,000). El Centro, California, for example, boasts an eye-popping 22.6% jobless rate -- and while this is the highest rate in any metropolitan area, it isn't even the worst case in the state.
"We have a major problem to deal with," Mayor Robert Silva of Mendota, California, told local TV station KFSN in January. A month earlier, the "Cantaloupe Capital of the World" (population: 10,000) experienced the greatest spike ever in its unemployment rate. At an astounding 35%, it was clearly in a local Great Depression, whatever the rest of the country was in. In a rich agricultural area, it was also in a great drought as water supplies dwindled, fields were left fallow, and farming jobs dried up. Not surprisingly, with so many out of work, local businesses are suffering. Among the hardest hit are fertilizer and irrigation equipment suppliers as well as trucking companies with nothing to transport. "And, of course, it all trickles down to hairdressing shops, restaurants and other small businesses in town," Sarah Woolf of the Westlands Water District, which provides water to more than 600 family-owned farms in the region, told the San Jose Mercury News. Silva, who also works as a manager at a local store, agrees: "We're down 20% like all business in Mendota. Everybody's down." The fallout from the agricultural crisis has also hit the housing market where, the Wall Street Journal reports, Mendota's home sales "fell to fewer than 10 in the fourth quarter of last year from nearly 100 in the second quarter of 2007; [and] median prices dropped 37% to about $175,000 from a 2006 high of about $275,000…"
Things are only slightly better eight miles north in Firebaugh (population: 5,700), which saw its jobless rate climb to nearly 23%. In that town, too, the crisis is intimately linked to drought conditions across California. "I would call it the perfect storm or compound crisis," said Firebaugh City Manager Jose Ramirez.
In Rio Vista, a town of about 7,000, "plummeting property and sales taxes and building fees due to the housing bust, and a drop in funds from the state" have led to a $900,000 deficit in the local budget, according to a report in the San Francisco Chronicle. As a result, Rio Vista was forced to lay off four employees and leave 20 already vacant full-time jobs empty, freeze salaries, cut recreation programs, and adopt a four-day work week at city hall. The austerity plan has so far staved off bankruptcy, but the wolves at the town's door didn't have far to travel to find easy prey.
Maria La Ganga of the Los Angeles Times recently reported that Rio Vista's neighbor, tiny Isleton -- a half-square mile town with just 817 residents -- is almost $1 million in the red and fighting to stave off bankruptcy, if not dissolution, due to its seemingly insurmountable debt. "Some people have said, 'Just hand it over to the county and go home,'" said City Manager Bruce Pope. But while Isleton's case is among the worst in the state, it's hardly alone in its fiscal anguish. La Ganga notes:
"Vallejo, 36 miles northwest, filed for bankruptcy protection in May. Watsonville closed all city services except police and fire for two weeks over the holidays. Calexico declared a fiscal emergency… The state's 10 biggest cities are more than a quarter-billion dollars in the red this fiscal year. Next year, San Francisco and Los Angeles predict a combined $1-billion deficit."
Big Cities Going Bust in Tough Times
San Francisco and Los Angeles are far from alone. The one- or two-factory towns lacking economic diversity and suffering mightily for it may be harbingers for the fate of the bigger cities, many of which are already facing financial hardships. After all, as CNN reported, Labor Department statistics show unemployment rates rising "in 98% of metropolitan areas across the country in December."
In Chicago, recently named "the third most miserable city" in the United States by Forbes magazine, "unemployment is expected to rise to 9.2 percent… and major layoffs have hit local powerhouse employers including Midway Games, Motorola and the University of Chicago Medical Center."
In January, during his fourth State of the City message, Mayor Jerry Sanders of San Diego painted a typically grim picture, citing "a $54 million deficit, scaled-back city services, higher fees, layoffs and mandatory water rationing." And it could get much worse, he told San Diegans. "This year, an even larger deficit looms. Sacramento [the state government] is more likely to hurt us than help us, and we'll again need to make painful decisions. That scenario could repeat itself, next year and the year after." Subsequently, Rani Gupta of VoiceOfSanDiego.org -- San Diego's non-profit on-line site that has been hailed as a new model for news gathering -- reported that estimates of the city's budget gap by a former mayoral candidate's think-tank actually top out at more than double the mayor's figure -- an astounding $128 million.
In New York City, 65,000 jobs were lost in the last three months of 2008 alone, while the jobless rate jumped from 6.3% to 7.4% between November and December. Mayor Michael Bloomberg has estimated that an additional 300,000 job losses, including 46,000 fewer jobs on Wall Street, are expected to clobber the Big Apple by year's end. At the same time, a report by investment bank UBS suggests that such losses may translate into a 10.5% unemployment rate, "a level not seen since the mid-1970s."
Meanwhile, New York's Metropolitan Transportation Authority (MTA) is considering a 23% increase in fares and tolls, the elimination of multiple subway lines and more than 24 bus routes, among other measures to help close its own $1.2 billion budget gap. The MTA is just one of many big city transportation authorities looking to make giant cuts in tough times. Recently, the New York Times reported that "[t]ransit systems across the country are raising fares and cutting service even after attracting record numbers of riders last year." A particularly dire case is St. Louis, where "despite rising ridership, the transit system plans to lay off a quarter of its work force and make drastic service cuts to balance its books." Boston, Atlanta, and San Francisco are facing similar tough choices when it comes to cutting subway or bus services, raising fares, and potentially leaving significant numbers of city and suburban dwellers high and dry.
Troubled Towns and Troubled Times
Stories about the economic woes facing individual cities and towns are already a staple of national newspapers, even as the bad news, experts believe, is only beginning to flow in. Spikes in unemployment already reaching double-digit levels in some cases, municipal governments deep in the red, essential cutbacks in local services, increasing lines at food pantries, towns facing bankruptcy or even contemplating municipal suicide are increasingly common nationwide.
Towns like Elkhart, Lehigh Acres, and Mendota may now be media poster-towns for tough times nationwide, but most distressed small towns are still suffering in silence and, as a group, they may only be the proverbial canaries in the coal mine. It isn't surprising that towns which relied heavily on the collapsing auto industry and the building trades are going belly-up first, but what about the rest of America's towns and even big cities? The same economic forces are battering them, and while they may have been able to withstand immediate collapse, there's no guarantee that town after town won't be deep in the red, drowning in joblessness, and facing catastrophe as the American depression drags on.
Nick Turse is the associate editor of TomDispatch.com
By Nick Turse
When Barack Obama traveled to Elkhart, Indiana, to push his $800 billion economic recovery package two weeks ago, he made the former "RV capital of the world" a poster-child for the current economic crisis. Over the last year, as the British paper The Independent reported, "Practically the entire [recreational vehicle] industry has disappeared," leaving thousands of RV workers in Elkhart and the surrounding area out of work. As Daily Show host Jon Stewart summed the situation up: "Imagine your main industry combines the slowdown of the auto market with the plunging values in the housing sector." Unfortunately, the pain in Elkhart is no joke, and it only grew worse recently when local manufacturers Keystone RV Co. and Jayco Inc. announced more than 500 additional job cuts.
In a speech at Elkhart's town hall, Obama caught the town's plight dramatically: "[This] area has lost jobs faster than anywhere else in the United States of America, with an unemployment rate of over 15 percent when it was 4.7 percent just last year… We're talking about people who have lost their livelihood and don't know what will take its place… That's what those numbers and statistics mean. That is the true measure of this economic crisis."
Elkhart, as it happens, is but one of countless towns and small cities across the U.S. that have proven particularly vulnerable to tough times simply because their economies relied on just a few major employers, or a single industry, or even a single company that has gone under or cut back drastically. Places like Elkhart are feeling the pain in ways most of the country isn't -- yet; and even worse, from the out-of-work to local officials, no one knows how to stop the bleeding.
Take Dalton, Georgia, and its 33,000 residents. As the self-proclaimed "Carpet Capital of the World," it wasn't exactly well positioned when the foreclosure crisis hit and the construction industry ran off the rails. In fact, with its carpets piling up underfoot rather than heading out the factory doors, the housing crisis has all but wrecked Dalton which, from the 1980s to last year, had never been at a loss for jobs. Now, the Atlanta Journal-Constitution reports, U.S. Bureau of Labor statistics show the Dalton metro area ranking "second among 369 American cities in its rate of job loss, jumping from 6.2 percent to 11.2 percent last year."
Across the country, individuals, foreclosed or suddenly jobless, have been melting down like the economy and so bubbling up into the news in the form of extreme acts ranging from suicide and murder to arson and robbery. The same might now be said for news about whole troubled communities.
A few months ago, stories of economically-troubled towns were strictly local fare. Now, more and more of them are rising to regional or national attention. Take Lehigh Acres, Florida, a community that's home to large numbers of carpenters and pest exterminators who rode the housing boom until it went bust in a county that, between June 2007 and June 2008, lost a higher percentage of jobs (8.8%) than any other in the nation. A New York Times article on the "once-middle-class exurb" detailed the devastation:
"[H]omes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006."
Similarly, the Wall Street Journal profiled the plight of Rockford, Illinois, an industrial city about 90 miles northwest of Chicago with 12.5% unemployment, the highest in the state, a shortfall of $7.6 million in the city's budget, streets filled with "gaping potholes" and a "city center… rife with vacant storefronts."
Most of America's desperate towns and small cities, however, still remain relatively anonymous. Even with their pain quotient on the rise, they lack New York Times profiles or presidential photo ops to draw attention to their woes. But it's important to note that Elkhart, Dalton, and Lehigh Acres aren't American oddities. Other towns and cities in surprising numbers are following fast down the path they have already cleared. Such places are now hurt or possibly, in some cases, even dying -- with little in the way of hope or help in sight. Under the circumstances, they should no longer be treated as individual stories, locally or nationally. They represent a pattern, and putting even a small number of their stories together casts a light on a disturbing countrywide trend that may determine the tomorrows of a remarkable number of Americans.
Tough Times in the East
After Governor Deval Patrick slashed aid to municipalities across the state, the "cash-strapped" town of Winthrop, Massachusetts, was left with a $512,000 budget gap. As a first step, the town axed its $117,000-a-year police chief and is now considering shuttering its public library. "The library has gotten a lot of attention, but if it's not the library it's going to be something else," said Winthrop Town Council President Thomas Reilly, a 40-year veteran of local government. "This is the worst I've seen," he told the Boston Herald.
Tough times have even reached tony Greenwich, Connecticut, which, the Greenwich Time reports, is looking to cut $5 million from its proposed 2009-2010 budget, in part through layoffs as well as a wage freeze for public employees. This famed haven for the rich is also experiencing joblessness "near a record high that has not been seen since the withering downturn of the early '90s."
West Warwick, Rhode Island, a textile mill town that, according to its website, gave the world the "Fruit of the Loom" trademark, is another municipality in dire fiscal straights. In early February, West Warwick announced that it could not meet its obligations on a multi-million dollar lawsuit settlement stemming from a nightclub fire and that its school system was $3.5 million over budget. "There is no way that we can tax our way out of this problem," Town Manager James Thomas told local television station WPRI.
Tough Times in the South
The small Appalachian town of West Jefferson, North Carolina, like its northern brethren, has also been hit hard. A recent Associated Press report noted that in a little more than a year, "the town and the neighboring county seat of Jefferson have lost more than 500 factory jobs -- a number equal to 20 percent of the town's population." All of this resulted from crucial town businesses like its light-switch plant, which had long benefited from the housing boom, shutting down, sending ripples through its heavily manufacturing-dependent economy. As a result, other local businesses, from Thistlewood, a women's clothing boutique, to a Dodge car dealership, are shutting down as well. It's a symptom of the times that the local food bank is now feeding nearly 50% more families than a year ago.
When the Peanut Corporation of America plant linked to the 2008 salmonella outbreak decided to lay off almost all of its 50 workers in January -- the company has since filed for bankruptcy -- it was a hard pill for Mayor Ric Hall of Blakely, Georgia, to swallow. After all, it was one of the two main businesses the town of 5,700 -- and the self-proclaimed "Peanut Capital of the World" -- relied on for its economic wellbeing. In a sign of the times (and perhaps of the collapsing newspaper industry), the other, a newspaper production plant, had already announced plans to lay off at least 100 workers. "We're already struggling with high poverty and a struggling agricultural economy, and this will impact not just our community, but this entire region of the state," Hall told the Los Angeles Times. "That's a total of about 150 to 170 people who have lost their jobs," he said. "Being the small agricultural community that we are, the prospect of finding new employment is virtually impossible. People here don't have much, and the layoffs make it even more devastating."
Times are tough in Dillon, South Carolina, too, the town where Federal Reserve Chairman Ben Bernanke grew up. Just recently, his childhood home was purchased at a foreclosure sale -- an all-too-common occurrence in a town already long battered by the decline of the local tobacco and textile industries. Now, writes the Wall Street Journal, it's "facing a fresh assault of plant closings and layoffs that have pushed its unemployment rate to 14.2% -- almost double the national average." As in so many other places, the catastrophic housing and automotive markets have hit Dillon with hurricane force. Mohawk Industries, which made yarn for carpeting and employed 137 people in town, shut down, while Wix Manufacturing, which produces automotive filters, has slashed employee hours and some jobs. In fact, just outside of town, at South of the Border, a faux Mexican-themed "village" of souvenir stops, restaurants, and low-rent attractions where Bernanke once worked, business -- which depends on vacationers trekking down the East Coast to Florida -- is off 10%, the worst downturn since the 1973 oil crisis, according to Richard Schafer, the patriarch of the family that runs the tourist trap. "People are losing their home and jobs," he says, "and they're not traveling as much."
Tough Times in the Midwest
Wilmington, Ohio, is another company town whose fortunes have plummeted. After overnight shipper DHL shut down its domestic courier service, the town went into a tailspin. Already, 3,000 jobs have been lost at the local airport. Within months the number is expected to rise to 8,000, according to an Associated Press report. As a result, in the town of 12,000, new claims for unemployment benefits are the highest they've been in 26 years and many businesses are facing the prospect of closing down, as is its hospital. "I think one in five small businesses will fail or could fail," says Wilmington's mayor David Raizk. As a result, more and more families are visiting local food banks, while community leaders are promoting backyard gardens as an inexpensive way to help feed families. In fact, Wilmington College is even opening up gardening plots on its property for needy townspeople.
In Lordstown, Ohio, a town of 3,600, General Motors and its 5-million-square-foot plant was the lifeblood of the community. In January, however, GM told 2,800 of its more than 4,000 Lordstown workers to stay home for the month. At the end of the month, 800 of them were told not to return. Now the town, which derives 75-80% of its tax revenues from the auto plant, according to the Youngstown Vindicator, is facing ruin. "We're a one-horse town in that regard," said Mayor Michael Chaffee, who estimates, according to a CBS Evening News report, that for every GM job lost, at least two others are needed to replace it, due to pay differentials. Meanwhile, the Lordstown village council approved a wage freeze for its full-time workers and 60 part-time employees and is looking for other ways to cut costs, like suspending capital improvements like road repair. Elsewhere in Ohio, other GM towns are feeling Lordstown's pain. At GM's engine and transmission parts plant in Defiance, for instance, 100 GM employees were being laid off in mid-February.
GM isn't the only source of mid-Western woes, though. In recent months, massive layoffs by businesses in downtown Des Moines, Iowa, have caused great economic hardship. And the situation won't be getting better soon as software giant Microsoft recently shelved plans to build "a $500 million data center in West Des Moines" that would have brought with it 75 new jobs. On top of that, just this month the American Enterprise Group, a local insurance company announced 51 layoffs; the Des Moines City Council announced 88 jobs cuts; while the Des Moines County jail is contemplating unpaid furloughs or layoffs and a scheme by which inmates would pay for their own toilet paper. Robert Crandall, the executive director of the Bidwell-Riverside Center, a food pantry in Des Moines, noted that the number of families his group was serving had risen as much as 33% in recent months. "The really sharp [jump in numbers] started late summer, early fall," he told the Des Moines Register.
Tough Times in the West
In the West, California dominates the news with a seemingly endless string of stories about the deepening crisis faced by towns (sometimes in that state officially labeled "cities," even with populations of less than 1,000). El Centro, California, for example, boasts an eye-popping 22.6% jobless rate -- and while this is the highest rate in any metropolitan area, it isn't even the worst case in the state.
"We have a major problem to deal with," Mayor Robert Silva of Mendota, California, told local TV station KFSN in January. A month earlier, the "Cantaloupe Capital of the World" (population: 10,000) experienced the greatest spike ever in its unemployment rate. At an astounding 35%, it was clearly in a local Great Depression, whatever the rest of the country was in. In a rich agricultural area, it was also in a great drought as water supplies dwindled, fields were left fallow, and farming jobs dried up. Not surprisingly, with so many out of work, local businesses are suffering. Among the hardest hit are fertilizer and irrigation equipment suppliers as well as trucking companies with nothing to transport. "And, of course, it all trickles down to hairdressing shops, restaurants and other small businesses in town," Sarah Woolf of the Westlands Water District, which provides water to more than 600 family-owned farms in the region, told the San Jose Mercury News. Silva, who also works as a manager at a local store, agrees: "We're down 20% like all business in Mendota. Everybody's down." The fallout from the agricultural crisis has also hit the housing market where, the Wall Street Journal reports, Mendota's home sales "fell to fewer than 10 in the fourth quarter of last year from nearly 100 in the second quarter of 2007; [and] median prices dropped 37% to about $175,000 from a 2006 high of about $275,000…"
Things are only slightly better eight miles north in Firebaugh (population: 5,700), which saw its jobless rate climb to nearly 23%. In that town, too, the crisis is intimately linked to drought conditions across California. "I would call it the perfect storm or compound crisis," said Firebaugh City Manager Jose Ramirez.
In Rio Vista, a town of about 7,000, "plummeting property and sales taxes and building fees due to the housing bust, and a drop in funds from the state" have led to a $900,000 deficit in the local budget, according to a report in the San Francisco Chronicle. As a result, Rio Vista was forced to lay off four employees and leave 20 already vacant full-time jobs empty, freeze salaries, cut recreation programs, and adopt a four-day work week at city hall. The austerity plan has so far staved off bankruptcy, but the wolves at the town's door didn't have far to travel to find easy prey.
Maria La Ganga of the Los Angeles Times recently reported that Rio Vista's neighbor, tiny Isleton -- a half-square mile town with just 817 residents -- is almost $1 million in the red and fighting to stave off bankruptcy, if not dissolution, due to its seemingly insurmountable debt. "Some people have said, 'Just hand it over to the county and go home,'" said City Manager Bruce Pope. But while Isleton's case is among the worst in the state, it's hardly alone in its fiscal anguish. La Ganga notes:
"Vallejo, 36 miles northwest, filed for bankruptcy protection in May. Watsonville closed all city services except police and fire for two weeks over the holidays. Calexico declared a fiscal emergency… The state's 10 biggest cities are more than a quarter-billion dollars in the red this fiscal year. Next year, San Francisco and Los Angeles predict a combined $1-billion deficit."
Big Cities Going Bust in Tough Times
San Francisco and Los Angeles are far from alone. The one- or two-factory towns lacking economic diversity and suffering mightily for it may be harbingers for the fate of the bigger cities, many of which are already facing financial hardships. After all, as CNN reported, Labor Department statistics show unemployment rates rising "in 98% of metropolitan areas across the country in December."
In Chicago, recently named "the third most miserable city" in the United States by Forbes magazine, "unemployment is expected to rise to 9.2 percent… and major layoffs have hit local powerhouse employers including Midway Games, Motorola and the University of Chicago Medical Center."
In January, during his fourth State of the City message, Mayor Jerry Sanders of San Diego painted a typically grim picture, citing "a $54 million deficit, scaled-back city services, higher fees, layoffs and mandatory water rationing." And it could get much worse, he told San Diegans. "This year, an even larger deficit looms. Sacramento [the state government] is more likely to hurt us than help us, and we'll again need to make painful decisions. That scenario could repeat itself, next year and the year after." Subsequently, Rani Gupta of VoiceOfSanDiego.org -- San Diego's non-profit on-line site that has been hailed as a new model for news gathering -- reported that estimates of the city's budget gap by a former mayoral candidate's think-tank actually top out at more than double the mayor's figure -- an astounding $128 million.
In New York City, 65,000 jobs were lost in the last three months of 2008 alone, while the jobless rate jumped from 6.3% to 7.4% between November and December. Mayor Michael Bloomberg has estimated that an additional 300,000 job losses, including 46,000 fewer jobs on Wall Street, are expected to clobber the Big Apple by year's end. At the same time, a report by investment bank UBS suggests that such losses may translate into a 10.5% unemployment rate, "a level not seen since the mid-1970s."
Meanwhile, New York's Metropolitan Transportation Authority (MTA) is considering a 23% increase in fares and tolls, the elimination of multiple subway lines and more than 24 bus routes, among other measures to help close its own $1.2 billion budget gap. The MTA is just one of many big city transportation authorities looking to make giant cuts in tough times. Recently, the New York Times reported that "[t]ransit systems across the country are raising fares and cutting service even after attracting record numbers of riders last year." A particularly dire case is St. Louis, where "despite rising ridership, the transit system plans to lay off a quarter of its work force and make drastic service cuts to balance its books." Boston, Atlanta, and San Francisco are facing similar tough choices when it comes to cutting subway or bus services, raising fares, and potentially leaving significant numbers of city and suburban dwellers high and dry.
Troubled Towns and Troubled Times
Stories about the economic woes facing individual cities and towns are already a staple of national newspapers, even as the bad news, experts believe, is only beginning to flow in. Spikes in unemployment already reaching double-digit levels in some cases, municipal governments deep in the red, essential cutbacks in local services, increasing lines at food pantries, towns facing bankruptcy or even contemplating municipal suicide are increasingly common nationwide.
Towns like Elkhart, Lehigh Acres, and Mendota may now be media poster-towns for tough times nationwide, but most distressed small towns are still suffering in silence and, as a group, they may only be the proverbial canaries in the coal mine. It isn't surprising that towns which relied heavily on the collapsing auto industry and the building trades are going belly-up first, but what about the rest of America's towns and even big cities? The same economic forces are battering them, and while they may have been able to withstand immediate collapse, there's no guarantee that town after town won't be deep in the red, drowning in joblessness, and facing catastrophe as the American depression drags on.
Nick Turse is the associate editor of TomDispatch.com
Thursday, February 26, 2009
Dear John,
Please tell us the truth about the economy and what it means for our standards of living. Tell us what we need to do as a nation and as individuals to get through this with the minimum of pain for ourselves and succeeding generations. Tell us what we’ve done wrong and how we can fix it.
Trust us with the truth. I think New Zealanders can handle it because deep down we know something is deeply wrong and know we need to change. We’re just not sure exactly what to change and we haven’t had someone “in charge” tell us what to do.
According to the latest polls, most of us trust you and like you. We are craving leadership and we know real leaders sometimes tell us things we don’t want to hear. We know real leaders look beyond the electoral cycle and look past the flotsam and jetsam that bobs around in the 24-hour news cycle. Sometimes a leader will rally the troops to prepare them for a fight. Now is that time.
I think you know the seriousness of the situation and the fundamental flaws in the way New Zealanders have used their money, but I have yet to hear you spell it out. I read your speech to the Waitakere Enterprise Business Club on February 4 that said we lived in challenging times and that the government couldn’t afford to go on a big spend-up because it would create too much debt for our children and could trigger a credit rating downgrade.
But you also said we only faced a “couple of tough years” and that the New Zealand economy would rebound strongly. I see too from your comments on television this morning that you’re sceptical about unemployment rising over 10%.
We all know that’s gilding the lily. Bill English’s comments that “restraint is permanent” are closer to the mark.
What we really need is for you as the Prime Minister to tell it like it is and spell out what it means for New Zealanders for the long term. It’s nice to hear it from the Reserve Bank governor or the Finance Minister, but you’re the man.
Here’s a suggested speech. You can use it for free (!). A bit presumptuous I know, but I hope you get the picture. Let’s call it open source politics…
You could start by giving this speech at the jobs summit this week.
Clear throat. Look uncomfortable. Deliver in a sober manner. Shouldn’t be a hard delivery style.
Fellow New Zealanders, I have a few uncomfortable things to say.
I think it’s time we confronted the most serious threat to our economy in 80 years with a common understanding of what went wrong and how to fix it.
We will get through it, but it’s going to take more than a decade and most New Zealanders will experience lower standards of living during that time. We need to work together to make sure our social safety net catches everyone as they fall and that it becomes a type of trampoline that bounces everyone higher when the recovery comes. We need to embrace the idea of spending less, saving more and investing more.
Firstly, a few home truths.
Most of us spent much more than we earned for the last five or six years. We bought too many cars. We bought too many flat-screen televisions. We went on too many overseas holidays. We bought too many useless things that are now just cluttering up the basement.
Our economy seemed to be growing stronger and longer than it normally did. There’s a reason for that. It shouldn’t have. This economic growth was fuelled by foreign debt. Our net foreign debt has almost hit 100% of GDP and that is all private sector debt. That makes us the second most indebted developed country after (pause for effect) Iceland.
There’s a reason for this. We spent much more than we earned for almost a decade. We borrowed the deficit between the spending and earning or sold our assets to foreign investors to bridge the gap. Now we have so much debt and send so much in dividends overseas that we are struggling simply to pay the interest on the old debt. Essentially, we are now borrowing more to pay the interest on the old debt. That is utterly unsustainable.
This is why our current account deficit is now around 9% despite several years of an export price boom and a sharply lower currency. We are now in a select group of six advanced economies with current account deficits of over 8%. This group includes Spain, Greece, Portugal, Cyprus and (pause for effect) Iceland. Spain, Greece and Portugal have all had their sovereign credit ratings downgraded. Their unemployment rates are rapidly heading towards 20%. We all know what happened to Iceland.
New Zealand’s Treasury is now forecasting a current account deficit of 10.6% for 2010, given that its “downside” scenario is now its central forecast because of the significant deterioration in the global economy in the last two months.
Standard and Poor’s has warned us that our credit rating will be downgraded unless New Zealand’s government can come up with a “credible medium-term strategy” to reduce the government’s debt. That’s because the current “downside” central forecast is that without changes in our approach the government’s gross debt will hit almost 80% of GDP.
This is important because up until the last year or two the government was saving while consumers (that’s most of us) were spending and borrowing. New Zealand can’t have both the government and consumers spending and borrowing at the same time.
We must bring down our current account deficit and reduce the outlook for our public and private debt. There is nowhere for New Zealand to hide now. The warning from Standard and Poor’s was effectively our orange light. Foreign lenders are hunting down economies that borrow too much and they are forcing them to stop. They do this by selling their currency and forcing their market interest rates up. Any such forced adjustment would be brutal. Interest rates would skyrocket. Imports would become very expensive or simply impossible for most to afford. Unemployment would skyrocket. The economy would crater.
This is not going to go away when the global economy rebounds. It’s time to be realistic about the global economy and the way it has boomed for the last five years. That boom was also unsustainable. At least New Zealanders were not alone in borrowing and spending too much. Americans, Australians, Britons, Spanish people, Irish people and Icelandic people all did the same.
Now this model of western consumers borrowing from cashed-up Chinese and Middle Eastern governments to buy Chinese and European imports is broken. The financial system that supported this model broke on September 15 last year when Lehman Brothers collapsed. The scale of the debt created by that system was absolutely enormous. It will take more than a decade to wind down. That process of winding down the debt or “de-leveraging” has already destroyed the value of shares and houses globally. However, this process has only just begun.
The former chairman of the Federal Reserve, the 82-year-old Paul Volcker, says the economy is slowing faster than it did at the start of the great Depression. Renowned investor George Soros says there is no end in sight to this financial crisis. The NZ Institute says we are vulnerable to a foreign investment freeze that could drive our unemployment rate to 11.2%.
We cannot let this happen. We simply have to spend less, save more and invest more. This is easy to say. It is harder to do.
That’s why we must all accept something completely foreign to all of us and to politicians in particular. We must accept a lower standard of living. (Pause for effect)(Wait for applause)(Start speaking again after uncomfortable silence.)
We must accept that we cannot just consume what we’d like to have or think we need to have. Those days are over for both consumers and politicians. We can’t afford any more monuments to politicians. We can’t afford to build empires inside our departments. We can’t afford to pay David Beckham millions to play soccer in front of a half-empty stadium. We can’t afford many things.
So it means we must cut out the unnecessary things from our private and public lives.
We must first ensure that the poorest and most vulnerable in our society are healthy and safe. We must ensure we invest in our human and physical infrastructure to make sure we can grow strongly when this long recession ends. That means investing in schools, in health services, in roads and in broadband. We must invest in public assets that will keep generating essential public services for decades to come. The private sector must invest in private assets that generate goods and services for decades to come. The poorest kids should not be hungry or sick. They should get a great education so they can contribute when we recover.
We all must do everything to ensure that public and private investment happens. That means removing roadblocks to investment. It means changing the way we think. We must think now about the long-term future. We must think about making sure our children and grandchildren have the tools they need to succeed. That means taxpayers and workers must spend less and save more now. That means the government will have to hand out less money for people to consume things and instead use that money to invest and to save.
But “we the public” is wider than just the government. It means “we” as consumers and taxpayers.
“We” as citizens cannot afford these tax cuts that we promised before the election. I’m sorry. National was wrong. I was wrong. I thought we could afford them, but we can’t.
We consumers can’t afford to buy new cars and flat-screen televisions and all the unnecessary things of the modern age. Ask yourself before every purchase: Do I really need this? Do we need fancy overseas holidays? Do we need brand new clothes? Do we need all of these imported consumer goods that we can’t afford? Do we really need another flat white and another biscotti? Can we live without it? We all might be surprised how much we can live without. We might even find we enjoy it more.
This government is now going through its budget line by line to weed out any hint of unnecessary spending. The nation should do the same.
I ask you now to go home and do a personal budget. The best way to do it is to look at the outgoings every month from your bank account and the income into your bank account. Do they match? Are you finding yourself spending more than you earn? If you are then you need to stop right now.
Once we’ve spent less we’ll find we have some spare cash. When that happens, the first thing we should do is repay debt. Don’t muck around. Pay off the credit card. Pay off the car. Pay off the fridge. Pay off the mortgage. Just get rid of the debt. If you don’t, someone else will.
New Zealand’s governments of the last 20 years managed to reduce its debt to almost nothing. It can afford to increase it slightly, but only for investment in productive assets. We can’t afford to hand over money to taxpayers to simply spend it on more consumption. There are no easy fixes. We cannot tiptoe out of the room and hope the ceiling doesn’t collapse. It already has.
We must instead invest this money in assets our children can use and avoid building a mountain of debt that our grandchildren will have to pay off.
I know this is a bit of a shock. I didn’t talk about this before the election. But to be frank, I was a lot like everyone else. I didn’t realise the depth and the scale of the problem. I do now.
I hate disappointing people and saying no to requests to do more, to give more and to spend more. I’m more of a “Yes we can” kind of guy. But sometimes the right thing is to do is to say “No we shouldn’t,” “No we can’t,” ”We can’t do it that way any more.”
In fact it’s a different kind of “Yes we can”. Yes we can dig ourselves out of this hole. Yes we can avoid bankrupting the generations to follow. Yes we can save more. Yes we can invest.
Yes we can get by with less.
Because we have to.
And that’s the speech. No charge. Hope it’s useful.
Kind Regards
Bernard Hickey
Please tell us the truth about the economy and what it means for our standards of living. Tell us what we need to do as a nation and as individuals to get through this with the minimum of pain for ourselves and succeeding generations. Tell us what we’ve done wrong and how we can fix it.
Trust us with the truth. I think New Zealanders can handle it because deep down we know something is deeply wrong and know we need to change. We’re just not sure exactly what to change and we haven’t had someone “in charge” tell us what to do.
According to the latest polls, most of us trust you and like you. We are craving leadership and we know real leaders sometimes tell us things we don’t want to hear. We know real leaders look beyond the electoral cycle and look past the flotsam and jetsam that bobs around in the 24-hour news cycle. Sometimes a leader will rally the troops to prepare them for a fight. Now is that time.
I think you know the seriousness of the situation and the fundamental flaws in the way New Zealanders have used their money, but I have yet to hear you spell it out. I read your speech to the Waitakere Enterprise Business Club on February 4 that said we lived in challenging times and that the government couldn’t afford to go on a big spend-up because it would create too much debt for our children and could trigger a credit rating downgrade.
But you also said we only faced a “couple of tough years” and that the New Zealand economy would rebound strongly. I see too from your comments on television this morning that you’re sceptical about unemployment rising over 10%.
We all know that’s gilding the lily. Bill English’s comments that “restraint is permanent” are closer to the mark.
What we really need is for you as the Prime Minister to tell it like it is and spell out what it means for New Zealanders for the long term. It’s nice to hear it from the Reserve Bank governor or the Finance Minister, but you’re the man.
Here’s a suggested speech. You can use it for free (!). A bit presumptuous I know, but I hope you get the picture. Let’s call it open source politics…
You could start by giving this speech at the jobs summit this week.
Clear throat. Look uncomfortable. Deliver in a sober manner. Shouldn’t be a hard delivery style.
Fellow New Zealanders, I have a few uncomfortable things to say.
I think it’s time we confronted the most serious threat to our economy in 80 years with a common understanding of what went wrong and how to fix it.
We will get through it, but it’s going to take more than a decade and most New Zealanders will experience lower standards of living during that time. We need to work together to make sure our social safety net catches everyone as they fall and that it becomes a type of trampoline that bounces everyone higher when the recovery comes. We need to embrace the idea of spending less, saving more and investing more.
Firstly, a few home truths.
Most of us spent much more than we earned for the last five or six years. We bought too many cars. We bought too many flat-screen televisions. We went on too many overseas holidays. We bought too many useless things that are now just cluttering up the basement.
Our economy seemed to be growing stronger and longer than it normally did. There’s a reason for that. It shouldn’t have. This economic growth was fuelled by foreign debt. Our net foreign debt has almost hit 100% of GDP and that is all private sector debt. That makes us the second most indebted developed country after (pause for effect) Iceland.
There’s a reason for this. We spent much more than we earned for almost a decade. We borrowed the deficit between the spending and earning or sold our assets to foreign investors to bridge the gap. Now we have so much debt and send so much in dividends overseas that we are struggling simply to pay the interest on the old debt. Essentially, we are now borrowing more to pay the interest on the old debt. That is utterly unsustainable.
This is why our current account deficit is now around 9% despite several years of an export price boom and a sharply lower currency. We are now in a select group of six advanced economies with current account deficits of over 8%. This group includes Spain, Greece, Portugal, Cyprus and (pause for effect) Iceland. Spain, Greece and Portugal have all had their sovereign credit ratings downgraded. Their unemployment rates are rapidly heading towards 20%. We all know what happened to Iceland.
New Zealand’s Treasury is now forecasting a current account deficit of 10.6% for 2010, given that its “downside” scenario is now its central forecast because of the significant deterioration in the global economy in the last two months.
Standard and Poor’s has warned us that our credit rating will be downgraded unless New Zealand’s government can come up with a “credible medium-term strategy” to reduce the government’s debt. That’s because the current “downside” central forecast is that without changes in our approach the government’s gross debt will hit almost 80% of GDP.
This is important because up until the last year or two the government was saving while consumers (that’s most of us) were spending and borrowing. New Zealand can’t have both the government and consumers spending and borrowing at the same time.
We must bring down our current account deficit and reduce the outlook for our public and private debt. There is nowhere for New Zealand to hide now. The warning from Standard and Poor’s was effectively our orange light. Foreign lenders are hunting down economies that borrow too much and they are forcing them to stop. They do this by selling their currency and forcing their market interest rates up. Any such forced adjustment would be brutal. Interest rates would skyrocket. Imports would become very expensive or simply impossible for most to afford. Unemployment would skyrocket. The economy would crater.
This is not going to go away when the global economy rebounds. It’s time to be realistic about the global economy and the way it has boomed for the last five years. That boom was also unsustainable. At least New Zealanders were not alone in borrowing and spending too much. Americans, Australians, Britons, Spanish people, Irish people and Icelandic people all did the same.
Now this model of western consumers borrowing from cashed-up Chinese and Middle Eastern governments to buy Chinese and European imports is broken. The financial system that supported this model broke on September 15 last year when Lehman Brothers collapsed. The scale of the debt created by that system was absolutely enormous. It will take more than a decade to wind down. That process of winding down the debt or “de-leveraging” has already destroyed the value of shares and houses globally. However, this process has only just begun.
The former chairman of the Federal Reserve, the 82-year-old Paul Volcker, says the economy is slowing faster than it did at the start of the great Depression. Renowned investor George Soros says there is no end in sight to this financial crisis. The NZ Institute says we are vulnerable to a foreign investment freeze that could drive our unemployment rate to 11.2%.
We cannot let this happen. We simply have to spend less, save more and invest more. This is easy to say. It is harder to do.
That’s why we must all accept something completely foreign to all of us and to politicians in particular. We must accept a lower standard of living. (Pause for effect)(Wait for applause)(Start speaking again after uncomfortable silence.)
We must accept that we cannot just consume what we’d like to have or think we need to have. Those days are over for both consumers and politicians. We can’t afford any more monuments to politicians. We can’t afford to build empires inside our departments. We can’t afford to pay David Beckham millions to play soccer in front of a half-empty stadium. We can’t afford many things.
So it means we must cut out the unnecessary things from our private and public lives.
We must first ensure that the poorest and most vulnerable in our society are healthy and safe. We must ensure we invest in our human and physical infrastructure to make sure we can grow strongly when this long recession ends. That means investing in schools, in health services, in roads and in broadband. We must invest in public assets that will keep generating essential public services for decades to come. The private sector must invest in private assets that generate goods and services for decades to come. The poorest kids should not be hungry or sick. They should get a great education so they can contribute when we recover.
We all must do everything to ensure that public and private investment happens. That means removing roadblocks to investment. It means changing the way we think. We must think now about the long-term future. We must think about making sure our children and grandchildren have the tools they need to succeed. That means taxpayers and workers must spend less and save more now. That means the government will have to hand out less money for people to consume things and instead use that money to invest and to save.
But “we the public” is wider than just the government. It means “we” as consumers and taxpayers.
“We” as citizens cannot afford these tax cuts that we promised before the election. I’m sorry. National was wrong. I was wrong. I thought we could afford them, but we can’t.
We consumers can’t afford to buy new cars and flat-screen televisions and all the unnecessary things of the modern age. Ask yourself before every purchase: Do I really need this? Do we need fancy overseas holidays? Do we need brand new clothes? Do we need all of these imported consumer goods that we can’t afford? Do we really need another flat white and another biscotti? Can we live without it? We all might be surprised how much we can live without. We might even find we enjoy it more.
This government is now going through its budget line by line to weed out any hint of unnecessary spending. The nation should do the same.
I ask you now to go home and do a personal budget. The best way to do it is to look at the outgoings every month from your bank account and the income into your bank account. Do they match? Are you finding yourself spending more than you earn? If you are then you need to stop right now.
Once we’ve spent less we’ll find we have some spare cash. When that happens, the first thing we should do is repay debt. Don’t muck around. Pay off the credit card. Pay off the car. Pay off the fridge. Pay off the mortgage. Just get rid of the debt. If you don’t, someone else will.
New Zealand’s governments of the last 20 years managed to reduce its debt to almost nothing. It can afford to increase it slightly, but only for investment in productive assets. We can’t afford to hand over money to taxpayers to simply spend it on more consumption. There are no easy fixes. We cannot tiptoe out of the room and hope the ceiling doesn’t collapse. It already has.
We must instead invest this money in assets our children can use and avoid building a mountain of debt that our grandchildren will have to pay off.
I know this is a bit of a shock. I didn’t talk about this before the election. But to be frank, I was a lot like everyone else. I didn’t realise the depth and the scale of the problem. I do now.
I hate disappointing people and saying no to requests to do more, to give more and to spend more. I’m more of a “Yes we can” kind of guy. But sometimes the right thing is to do is to say “No we shouldn’t,” “No we can’t,” ”We can’t do it that way any more.”
In fact it’s a different kind of “Yes we can”. Yes we can dig ourselves out of this hole. Yes we can avoid bankrupting the generations to follow. Yes we can save more. Yes we can invest.
Yes we can get by with less.
Because we have to.
And that’s the speech. No charge. Hope it’s useful.
Kind Regards
Bernard Hickey
Wednesday, February 25, 2009
1000 Posts
I need to get out more.... this is my 1000th post here, actually to be precise my 1002nd post
Here is Moby's 1000 to celebrate
hip hip hoooray, or something
Here is Moby's 1000 to celebrate
hip hip hoooray, or something
Tuesday, February 24, 2009
The New Depression
The business and political elite are flying blind. This is the mother of all economic crises. It has barely started and remains completely out of control.
By Martin Jacques, the New Statesman.
We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.
Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.
The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.
In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.
In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.
Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' economics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.
But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.
Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.
Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.
But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.
There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.
Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.
Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".
Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.
This is the sad story of the New Labour era.
The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.
There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.
The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.
Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.
So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.
The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.
This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.
This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.
Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.
The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.
One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.
Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)
By Martin Jacques, the New Statesman.
We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.
Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.
The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.
In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.
In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.
Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' economics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.
But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.
Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.
Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.
But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.
There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.
Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.
Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".
Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.
This is the sad story of the New Labour era.
The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.
There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.
The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.
Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.
So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.
The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.
This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.
This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.
Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.
The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.
One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.
Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)
Monday, February 23, 2009
The Death of The News
If reporting vanishes, the world will get darker and uglier. Subsidizing newspapers may be the only answer.
By Gary Kamiya
February 17, 2009 "Salon" --- Journalism as we know it is in crisis. Daily newspapers are going out of business at an unprecedented rate, and the survivors are slashing their budgets. Thousands of reporters and editors have lost their jobs. No print publication is immune, including the mighty New York Times. As analyst Allan Mutter noted, 2008 was the worst year in history for newspaper publishers, with shares dropping a stunning 83 percent on average. Newspapers lost $64.5 billion in market value in 12 months.
All traditional media is in trouble, from magazines to network TV. But newspapers are the most threatened. For readers of a certain age, newspapers stand for a vanishing era, and the pleasures of holding newsprint in their hands is one that they are loath to give up. As a former newspaperman myself, like most of the original founders of Salon, I have a strong attachment to my dose of daily ink. I get most of my news online, but I still subscribe to both the local paper, in my case the San Francisco Chronicle, and to the New York Times. At parties and in casual conversations, speculation that newspapers might vanish like the dinosaurs that once ruled the earth spurs passionate jeremiads about the decline and fall of Western civilization.
But the real problem isn't that newspapers may be doomed. I would be severely disheartened if I was forced to abandon my morning ritual of sitting on my deck with a coffee and the papers, but I would no doubt get used to burning out my retinas over the screen an hour earlier than usual. As Nation columnist Eric Alterman recently argued, the real problem isn't the impending death of newspapers, but the impending death of news -- at least news as we know it.
What is really threatened by the decline of newspapers and the related rise of online media is reporting -- on-the-ground reporting by trained journalists who know the subject, have developed sources on all sides, strive for objectivity and are working with editors who check their facts, steer them in the right direction and are a further check against unwarranted assumptions, sloppy thinking and reporting, and conscious or unconscious bias.
If newspapers die, so does reporting. That's because the majority of reporting originates at newspapers. Online journalism is essentially parasitic. Like most TV news, it derives or follows up on stories that first appeared in print. Former Los Angeles Times editor John Carroll has estimated that 80 percent of all online news originates in print. As a longtime editor of an online journal who has taken part in hundreds of editorial meetings in which story ideas are generated from pieces that appeared in print, that figure strikes me as low.
There's no reason to believe this is going to change. Currently there is no business model that makes online reporting financially viable. From a business perspective, reporting is a loser. There are good financial reasons why the biggest content-driven Web business success story of the last few years, the Huffington Post, does very little original reporting. Reported pieces take a lot of time, cost a lot of money, require specialized skills and don't usually generate as much traffic as an Op-Ed screed, preferably by a celebrity. It takes a facile writer an hour to write an 800-word rant. Very seldom can the best daily reporters and editors produce copy that fast.
But the story is more complicated than that. At the same time that newspapers are dying, blogging and "unofficial" types of journalism continue to expand, grow more sophisticated and take over some (but not all) of the reportorial functions once performed by newspapers. New technologies provide an infinitely more robust feed of raw data to the public, along with the accompanying range of filtering, interpreting and commenting mechanisms that the Internet excels in generating.
As these developments expand, our knowledge of the world will become much less broad. Document-based reporting and academic-style research will increasingly replace face-to-face reporting. And the ideal of journalistic objectivity and fairness will increasingly crumble, to be replaced by more tendentious and opinionated reports.
The brave new media world will be one of tunnel vision and self-selected expertise, in which reported pieces are increasingly devoid of human interaction or human stories, often written by individuals who do not pretend to have a neutral stance. Raw, non-mediated video or audio will provide primary stories to anyone who is interested in them. In this imagined future, the New York Times will have died and only one or two wire services will still have reporters in, say, Gaza. In lieu of edited stories will be video interviews with Gaza inhabitants, as well as commentary and analysis from a vast army of experts, semi-experts and kibitzers. Consumers can set one info-dial to "Middle East primary feeds," set a commentary dial to "expert," "kibitzer" or "shuffle," set yet another to a targeted archival search of every academic paper written about Gaza. It will be feast and famine: There will be far less primary reporting done by professionals and far more information available to ordinary citizens.
This brave new info-world will have some advantages. So far, the Internet media revolution has been a huge net plus for journalism. It has greatly increased the quantity and quality of available opinion and (to a much lesser degree) news. Trying to figure out what the truth is about any given subject means reading about it from as many perspectives as possible, and exponentially more perspectives are accessible now. From foreign newspapers to brilliant bloggers, the Internet has given a voice to countless talented and informed people who would otherwise have no platform. It has empowered readers, created an army of bloggers who provide much-needed fact-checking and criticism of the entitled mandarins of the establishment press, and provided powerful counternarratives to the bland, centrist pablum so often served up by the "respectable" media.
Moreover, bloggers can also be valuable reporters, albeit ones who generally don't wear out much shoe leather. As Slate writer and media critic Jack Shafer has pointed out, some bloggers have done significant research reporting, digging through FOIA documents or unearthing official secrets.
As for the old media, it has not exactly always done a bang-up job of capturing reality. All too often it has been sclerotic, incompetent and driven by hidden corporatist, nationalist or reactionary agendas. The press's catastrophic failure to question the Bush administration's case for war in Iraq is the most glaring recent example, but there are many. "Professionalism" can be a vice, evidenced by the pathologically cozy relationship between many bigwig Beltway reporters and their government sources. Huffing and puffing about interloping amateurs all too often conceals the fact that those amateurs know as much or more about the subject as the professionals, and are not subject to being bamboozled by "insiders" with an agenda. Academic Middle East analysts, most of whom probably never picked up the phone in their life, but know the region's language and its history, were resoundingly right about the Iraq war. The professional journalism brigade, with its access to high-level sources and people on the ground, was disgracefully wrong. And the Internet has greatly empowered such academics.
The MSM's less than stellar record explains why in online forums and threads about this subject, many posters welcome the impending end of the media universe as we know it. But those who are calling for the demise of traditional media are throwing the baby out with the bath water -- and the baby is reporting.
There is no substitute for field reporting, in which a real live human being observes an event while it is happening and talks to other real, live human beings. It is an immutable fact that firsthand observation is the building block not just of journalism, but of all human knowledge. This isn't just true in journalism, but in all fields, from science to the humanities. Academics acquire their knowledge through primary sources. Historians value firsthand accounts more than secondary ones, and give them more weight. The same is true for the law. An eyewitness to an event has more legal standing than someone who heard what the eyewitness said later.
If field reporting dies out, the world will become a less known place. Vast areas will simply not be covered, and those that are will not be covered from multiple perspectives. Precisely because reporters are imperfect, because they by necessity capture only a fragment of reality, it is essential that numerous firsthand accounts exist. If Reuters, the Times and all the other newspapers with foreign bureaus have died and only the AP reporter is telling us what happened in China, readers will be forced to accept his or her version without being able to compare it. And that faint gleam of empirical evidence will be lost amid the infinite amount of commentary that will instantly dominate the Internet.
The information universe today is not, of course, comprehensive, nor could it ever be. What appears in the newspapers is a result of editorial whim and financial pressures. But this limited and capricious hodgepodge of information is far preferable to the self-selected alternative that awaits us -- it stimulates parts of our brain that would otherwise atrophy.
It's much easier to consume unfamiliar information in a newspaper than on the Internet. Because of the physical layout of a newspaper, you're much more likely to read a story you aren't interested in than you would if you were online. Even if the same reported stories were available online, they would not be as widely read. Online media is tailored to respond to the individual's conscious desires; it is less capable of stimulating latent ones.
A perfect example of why newspapers must continue to exist appeared in the New York Times on Feb. 1, 2009. Titled "Slain Exile Detailed Cruelty of the Ruler of Chechnya," the 3,700-word piece was reported from Vienna, London, Moscow, Oslo and Chechnya. It obviously took months of work and cost tens if not hundreds of thousands of dollars in salaries and expenses. And it revealed beyond any reasonable doubt that the president of Chechnya, Ramzan Kadyrov, is a murderous, sadistic thug who personally tortured many captured dissidents and ordered the assassination of a former insider who had fled to Vienna.
I would probably not have sought out this story on my own. But because it was on the front page of the New York Times, I read it. And as a result, my world expanded significantly.
If this kind of reporting dies out, the global consequences would be dire. Moral outrage would wither. Regimes would feel free to commit atrocities with impunity. As the Iraq and Gaza wars demonstrate, regimes prefer to wage controversial wars in the dark. Without reporting, dirty little wars would be invisible dirty little wars.
The civic consequences would be just as calamitous. With little empirical evidence about the world, the country would divide further into solipsistic, isolated communities. There would be no agreement on even the most rudimentary facts: We would look back nostalgically at those days when "only" half of Americans were so ill-informed, and susceptible to government propaganda, that they believed that Saddam Hussein was involved with 9/11. Rancorous division into exclusive camps would become even more pronounced than it is now, making political compromises even less likely. In this ignorant yet loudly opinionated future, our shared civic culture would degenerate, and demagogic leaders would flourish.
Karl Marx's prediction that capitalism would end up devouring itself has not stood up well (although there's a bit of leg-nibbling going on right now). But his dictum might end up being true for the news media.
The Internet gives readers what they want; newspapers give them what they need. And in a culture where the almighty market is always right, you can always get what you want -- but you can't always get what you need. In their bottom-line desperation, newspapers are imitating the Internet. As Michael Hirschorn pointed out in a recent Atlantic article, papers are giving readers and advertisers what they think they want, blowing all their money on lifestyle and "consumer-friendly" pieces rather than on in-depth reporting.
If capitalism wins the battle, the result will be an unregulated marketplace of ideas in which consumers choose their own news -- in effect, choose their own reality. Ironically, conservative devotees of the free market would find themselves living in a postmodern world right out of a seminar taught by Jacques Derrida. Nietzsche's credo that "there are no facts, only interpretations" will become our epistemological motto. In this deconstructed universe, not just readers, but the very idea of objective reality, would be the ultimate victim.
Historically, the only countervailing force against the market and the apotheosis of consumers' desires has been the institutional power of newspapers. Newspapers are institutions that adhere to a tradition of journalism and have the financial resources to carry on that tradition. Today, those institutions are threatened as never before, in part because of the disappearance of old-school publishers who regarded their media properties as a public trust, in part because of the rise of new media.
This bleak situation has given rise to a once-unthinkable notion: removing the news from market forces altogether by subsidizing it. In a recent Op-Ed in the New York Times, two business analysts suggested turning newspapers into "nonprofit, endowed institutions -- like colleges and universities."
Most journalists probably find something vaguely creepy about this idea; it's a little too high-minded, abstract and self-congratulatory to fit with their self-image as regular Joes and Jills. There are also legitimate concerns whether foundations or other public supporters would influence editorial content or direction. But the alternative is disturbing.
A world without primary reporting will be literally less human. Talking to actual, live human beings, as opposed to reading documents or commentary or what they say online, has an innately moderating effect on one's approach. A good reporter sees issues in greater complexity because humans are complex. The Roman playwright Terence's credo "Nothing human is alien to me" is a noble one. But it will be harder to believe in it when actual human beings have vanished from the news. There is a reason why the online world, where humans are virtual, is prone to flame wars and creepy trolls. It is easier to despise someone you have never met. As writers who have worked online know, the simple act of replying courteously to a hostile poster usually leads them to become much more civil. And that is even truer of face-to-face interactions.
With all their flaws, traditional media institutions served as unifying forces in society. No one wants to go back to the days of network TV or the old Time magazine, when the media served as a quasi-official info-nanny telling citizens what to think. But a society without any shared sources of trusted information will be in danger of fragmenting. The old media acted as an institutional check on individual passions and prejudices. It served a Lockean function, upholding the social contract. The new world could be a Hobbesian one, a war of all against all.
Finally, the death of reporting will dangerously erode the ideal of objectivity. Newspapers embrace the institutional mission of objectivity: Their goal is to find out and report the truth about a given subject, no matter what that truth is. They are not supposed to go in looking for an answer, or holding preconceived beliefs. Of course, the distinction between fact and interpretation is only absolute in the simplest cases -- it breaks down as soon as the event being covered acquires the least complexity or controversy. Reporters, like all human beings who are trying to make sense of complex experiences, must constantly make judgments that go beyond the mere facts. And the he-said, she-said approach mandated by objectivity can be ridiculously stupid. If Joe says the sky is blue and Jack, who is widely known to be a delusional psychotic who has just taken two tabs of acid, says it's purple with pink polka-dots, is it really necessary to report what Jack says?
But if perfect objectivity is impossible, that doesn't mean that it should not be the goal. The reporter's predisposition toward fact and fairness serves as a kind of ballast, a corrective to her natural instinct to make up her mind prematurely. And those who have not been trained and inculcated in an institution dedicated to objectivity are less likely to be able to do this. Institutions matter. And traditional journalistic institutions, newspapers in particular, are weighted toward fairness and objectivity. The Internet is not. Of course, bloggers or untrained writers are capable of being fair; indeed, the better bloggers are precisely those who fully and fairly engage with those who disagree with them. But the blogging ethos as a whole runs in the opposite direction. Being a reporter does not come naturally to bloggers.
No one can predict what the new information age will look like, and my version may be excessively dystopian. But one thing is indisputable: Reporting must be kept alive. With all its limitations and faults, it is a light that illuminates the world outside ourselves. And in an increasingly virtual and solipsistic age, that light is needed more than ever.
Gary Kamiya is writer at large for Salon.com . Kamiya's writing has appeared in the New York Times Book Review, ArtForum, and Sports Illustrated, among many other publications.
By Gary Kamiya
February 17, 2009 "Salon" --- Journalism as we know it is in crisis. Daily newspapers are going out of business at an unprecedented rate, and the survivors are slashing their budgets. Thousands of reporters and editors have lost their jobs. No print publication is immune, including the mighty New York Times. As analyst Allan Mutter noted, 2008 was the worst year in history for newspaper publishers, with shares dropping a stunning 83 percent on average. Newspapers lost $64.5 billion in market value in 12 months.
All traditional media is in trouble, from magazines to network TV. But newspapers are the most threatened. For readers of a certain age, newspapers stand for a vanishing era, and the pleasures of holding newsprint in their hands is one that they are loath to give up. As a former newspaperman myself, like most of the original founders of Salon, I have a strong attachment to my dose of daily ink. I get most of my news online, but I still subscribe to both the local paper, in my case the San Francisco Chronicle, and to the New York Times. At parties and in casual conversations, speculation that newspapers might vanish like the dinosaurs that once ruled the earth spurs passionate jeremiads about the decline and fall of Western civilization.
But the real problem isn't that newspapers may be doomed. I would be severely disheartened if I was forced to abandon my morning ritual of sitting on my deck with a coffee and the papers, but I would no doubt get used to burning out my retinas over the screen an hour earlier than usual. As Nation columnist Eric Alterman recently argued, the real problem isn't the impending death of newspapers, but the impending death of news -- at least news as we know it.
What is really threatened by the decline of newspapers and the related rise of online media is reporting -- on-the-ground reporting by trained journalists who know the subject, have developed sources on all sides, strive for objectivity and are working with editors who check their facts, steer them in the right direction and are a further check against unwarranted assumptions, sloppy thinking and reporting, and conscious or unconscious bias.
If newspapers die, so does reporting. That's because the majority of reporting originates at newspapers. Online journalism is essentially parasitic. Like most TV news, it derives or follows up on stories that first appeared in print. Former Los Angeles Times editor John Carroll has estimated that 80 percent of all online news originates in print. As a longtime editor of an online journal who has taken part in hundreds of editorial meetings in which story ideas are generated from pieces that appeared in print, that figure strikes me as low.
There's no reason to believe this is going to change. Currently there is no business model that makes online reporting financially viable. From a business perspective, reporting is a loser. There are good financial reasons why the biggest content-driven Web business success story of the last few years, the Huffington Post, does very little original reporting. Reported pieces take a lot of time, cost a lot of money, require specialized skills and don't usually generate as much traffic as an Op-Ed screed, preferably by a celebrity. It takes a facile writer an hour to write an 800-word rant. Very seldom can the best daily reporters and editors produce copy that fast.
But the story is more complicated than that. At the same time that newspapers are dying, blogging and "unofficial" types of journalism continue to expand, grow more sophisticated and take over some (but not all) of the reportorial functions once performed by newspapers. New technologies provide an infinitely more robust feed of raw data to the public, along with the accompanying range of filtering, interpreting and commenting mechanisms that the Internet excels in generating.
As these developments expand, our knowledge of the world will become much less broad. Document-based reporting and academic-style research will increasingly replace face-to-face reporting. And the ideal of journalistic objectivity and fairness will increasingly crumble, to be replaced by more tendentious and opinionated reports.
The brave new media world will be one of tunnel vision and self-selected expertise, in which reported pieces are increasingly devoid of human interaction or human stories, often written by individuals who do not pretend to have a neutral stance. Raw, non-mediated video or audio will provide primary stories to anyone who is interested in them. In this imagined future, the New York Times will have died and only one or two wire services will still have reporters in, say, Gaza. In lieu of edited stories will be video interviews with Gaza inhabitants, as well as commentary and analysis from a vast army of experts, semi-experts and kibitzers. Consumers can set one info-dial to "Middle East primary feeds," set a commentary dial to "expert," "kibitzer" or "shuffle," set yet another to a targeted archival search of every academic paper written about Gaza. It will be feast and famine: There will be far less primary reporting done by professionals and far more information available to ordinary citizens.
This brave new info-world will have some advantages. So far, the Internet media revolution has been a huge net plus for journalism. It has greatly increased the quantity and quality of available opinion and (to a much lesser degree) news. Trying to figure out what the truth is about any given subject means reading about it from as many perspectives as possible, and exponentially more perspectives are accessible now. From foreign newspapers to brilliant bloggers, the Internet has given a voice to countless talented and informed people who would otherwise have no platform. It has empowered readers, created an army of bloggers who provide much-needed fact-checking and criticism of the entitled mandarins of the establishment press, and provided powerful counternarratives to the bland, centrist pablum so often served up by the "respectable" media.
Moreover, bloggers can also be valuable reporters, albeit ones who generally don't wear out much shoe leather. As Slate writer and media critic Jack Shafer has pointed out, some bloggers have done significant research reporting, digging through FOIA documents or unearthing official secrets.
As for the old media, it has not exactly always done a bang-up job of capturing reality. All too often it has been sclerotic, incompetent and driven by hidden corporatist, nationalist or reactionary agendas. The press's catastrophic failure to question the Bush administration's case for war in Iraq is the most glaring recent example, but there are many. "Professionalism" can be a vice, evidenced by the pathologically cozy relationship between many bigwig Beltway reporters and their government sources. Huffing and puffing about interloping amateurs all too often conceals the fact that those amateurs know as much or more about the subject as the professionals, and are not subject to being bamboozled by "insiders" with an agenda. Academic Middle East analysts, most of whom probably never picked up the phone in their life, but know the region's language and its history, were resoundingly right about the Iraq war. The professional journalism brigade, with its access to high-level sources and people on the ground, was disgracefully wrong. And the Internet has greatly empowered such academics.
The MSM's less than stellar record explains why in online forums and threads about this subject, many posters welcome the impending end of the media universe as we know it. But those who are calling for the demise of traditional media are throwing the baby out with the bath water -- and the baby is reporting.
There is no substitute for field reporting, in which a real live human being observes an event while it is happening and talks to other real, live human beings. It is an immutable fact that firsthand observation is the building block not just of journalism, but of all human knowledge. This isn't just true in journalism, but in all fields, from science to the humanities. Academics acquire their knowledge through primary sources. Historians value firsthand accounts more than secondary ones, and give them more weight. The same is true for the law. An eyewitness to an event has more legal standing than someone who heard what the eyewitness said later.
If field reporting dies out, the world will become a less known place. Vast areas will simply not be covered, and those that are will not be covered from multiple perspectives. Precisely because reporters are imperfect, because they by necessity capture only a fragment of reality, it is essential that numerous firsthand accounts exist. If Reuters, the Times and all the other newspapers with foreign bureaus have died and only the AP reporter is telling us what happened in China, readers will be forced to accept his or her version without being able to compare it. And that faint gleam of empirical evidence will be lost amid the infinite amount of commentary that will instantly dominate the Internet.
The information universe today is not, of course, comprehensive, nor could it ever be. What appears in the newspapers is a result of editorial whim and financial pressures. But this limited and capricious hodgepodge of information is far preferable to the self-selected alternative that awaits us -- it stimulates parts of our brain that would otherwise atrophy.
It's much easier to consume unfamiliar information in a newspaper than on the Internet. Because of the physical layout of a newspaper, you're much more likely to read a story you aren't interested in than you would if you were online. Even if the same reported stories were available online, they would not be as widely read. Online media is tailored to respond to the individual's conscious desires; it is less capable of stimulating latent ones.
A perfect example of why newspapers must continue to exist appeared in the New York Times on Feb. 1, 2009. Titled "Slain Exile Detailed Cruelty of the Ruler of Chechnya," the 3,700-word piece was reported from Vienna, London, Moscow, Oslo and Chechnya. It obviously took months of work and cost tens if not hundreds of thousands of dollars in salaries and expenses. And it revealed beyond any reasonable doubt that the president of Chechnya, Ramzan Kadyrov, is a murderous, sadistic thug who personally tortured many captured dissidents and ordered the assassination of a former insider who had fled to Vienna.
I would probably not have sought out this story on my own. But because it was on the front page of the New York Times, I read it. And as a result, my world expanded significantly.
If this kind of reporting dies out, the global consequences would be dire. Moral outrage would wither. Regimes would feel free to commit atrocities with impunity. As the Iraq and Gaza wars demonstrate, regimes prefer to wage controversial wars in the dark. Without reporting, dirty little wars would be invisible dirty little wars.
The civic consequences would be just as calamitous. With little empirical evidence about the world, the country would divide further into solipsistic, isolated communities. There would be no agreement on even the most rudimentary facts: We would look back nostalgically at those days when "only" half of Americans were so ill-informed, and susceptible to government propaganda, that they believed that Saddam Hussein was involved with 9/11. Rancorous division into exclusive camps would become even more pronounced than it is now, making political compromises even less likely. In this ignorant yet loudly opinionated future, our shared civic culture would degenerate, and demagogic leaders would flourish.
Karl Marx's prediction that capitalism would end up devouring itself has not stood up well (although there's a bit of leg-nibbling going on right now). But his dictum might end up being true for the news media.
The Internet gives readers what they want; newspapers give them what they need. And in a culture where the almighty market is always right, you can always get what you want -- but you can't always get what you need. In their bottom-line desperation, newspapers are imitating the Internet. As Michael Hirschorn pointed out in a recent Atlantic article, papers are giving readers and advertisers what they think they want, blowing all their money on lifestyle and "consumer-friendly" pieces rather than on in-depth reporting.
If capitalism wins the battle, the result will be an unregulated marketplace of ideas in which consumers choose their own news -- in effect, choose their own reality. Ironically, conservative devotees of the free market would find themselves living in a postmodern world right out of a seminar taught by Jacques Derrida. Nietzsche's credo that "there are no facts, only interpretations" will become our epistemological motto. In this deconstructed universe, not just readers, but the very idea of objective reality, would be the ultimate victim.
Historically, the only countervailing force against the market and the apotheosis of consumers' desires has been the institutional power of newspapers. Newspapers are institutions that adhere to a tradition of journalism and have the financial resources to carry on that tradition. Today, those institutions are threatened as never before, in part because of the disappearance of old-school publishers who regarded their media properties as a public trust, in part because of the rise of new media.
This bleak situation has given rise to a once-unthinkable notion: removing the news from market forces altogether by subsidizing it. In a recent Op-Ed in the New York Times, two business analysts suggested turning newspapers into "nonprofit, endowed institutions -- like colleges and universities."
Most journalists probably find something vaguely creepy about this idea; it's a little too high-minded, abstract and self-congratulatory to fit with their self-image as regular Joes and Jills. There are also legitimate concerns whether foundations or other public supporters would influence editorial content or direction. But the alternative is disturbing.
A world without primary reporting will be literally less human. Talking to actual, live human beings, as opposed to reading documents or commentary or what they say online, has an innately moderating effect on one's approach. A good reporter sees issues in greater complexity because humans are complex. The Roman playwright Terence's credo "Nothing human is alien to me" is a noble one. But it will be harder to believe in it when actual human beings have vanished from the news. There is a reason why the online world, where humans are virtual, is prone to flame wars and creepy trolls. It is easier to despise someone you have never met. As writers who have worked online know, the simple act of replying courteously to a hostile poster usually leads them to become much more civil. And that is even truer of face-to-face interactions.
With all their flaws, traditional media institutions served as unifying forces in society. No one wants to go back to the days of network TV or the old Time magazine, when the media served as a quasi-official info-nanny telling citizens what to think. But a society without any shared sources of trusted information will be in danger of fragmenting. The old media acted as an institutional check on individual passions and prejudices. It served a Lockean function, upholding the social contract. The new world could be a Hobbesian one, a war of all against all.
Finally, the death of reporting will dangerously erode the ideal of objectivity. Newspapers embrace the institutional mission of objectivity: Their goal is to find out and report the truth about a given subject, no matter what that truth is. They are not supposed to go in looking for an answer, or holding preconceived beliefs. Of course, the distinction between fact and interpretation is only absolute in the simplest cases -- it breaks down as soon as the event being covered acquires the least complexity or controversy. Reporters, like all human beings who are trying to make sense of complex experiences, must constantly make judgments that go beyond the mere facts. And the he-said, she-said approach mandated by objectivity can be ridiculously stupid. If Joe says the sky is blue and Jack, who is widely known to be a delusional psychotic who has just taken two tabs of acid, says it's purple with pink polka-dots, is it really necessary to report what Jack says?
But if perfect objectivity is impossible, that doesn't mean that it should not be the goal. The reporter's predisposition toward fact and fairness serves as a kind of ballast, a corrective to her natural instinct to make up her mind prematurely. And those who have not been trained and inculcated in an institution dedicated to objectivity are less likely to be able to do this. Institutions matter. And traditional journalistic institutions, newspapers in particular, are weighted toward fairness and objectivity. The Internet is not. Of course, bloggers or untrained writers are capable of being fair; indeed, the better bloggers are precisely those who fully and fairly engage with those who disagree with them. But the blogging ethos as a whole runs in the opposite direction. Being a reporter does not come naturally to bloggers.
No one can predict what the new information age will look like, and my version may be excessively dystopian. But one thing is indisputable: Reporting must be kept alive. With all its limitations and faults, it is a light that illuminates the world outside ourselves. And in an increasingly virtual and solipsistic age, that light is needed more than ever.
Gary Kamiya is writer at large for Salon.com . Kamiya's writing has appeared in the New York Times Book Review, ArtForum, and Sports Illustrated, among many other publications.
Sunday, February 22, 2009
Burning Questions:
What Does Economic "Recovery" Mean on an Extreme Weather Planet?
By Tom Engelhardt
It turns out that you don't want to be a former city dweller in rural parts of southernmost Australia, a stalk of wheat in China or Iraq, a soybean in Argentina, an almond or grape in northern California, a cow in Texas, or almost anything in parts of east Africa right now. Let me explain.
As anyone who has turned on the prime-time TV news these last weeks knows, southeastern Australia has been burning up. It's already dry climate has been growing ever hotter. "The great drying," Australian environmental scientist Tim Flannery calls it. At its epicenter, Melbourne recorded its hottest day ever this month at a sweltering 115.5 degrees, while temperatures soared even higher in the surrounding countryside. After more than a decade of drought, followed by the lowest rainfall on record, the eucalyptus forests are now burning. To be exact, they are now pouring vast quantities of stored carbon dioxide, the greenhouse gas considered largely responsible for global warming, into the atmosphere.
In fact, everything's been burning there. Huge sheets of flame, possibly aided and abetted by arsonists, tore through whole towns. More than 180 people are dead and thousands homeless. Flannery, who has written eloquently about global warming, drove through the fire belt, and reported:
"It was as if a great cremation had taken place… I was born in Victoria, and over five decades I've watched as the state has changed. The long, wet and cold winters that seemed insufferable to me as a boy vanished decades ago, and for the past 12 years a new, drier climate has established itself… I had not appreciated the difference a degree or two of extra heat and a dry soil can make to the ferocity of a fire. This fire was different from anything seen before."
Australia, by the way, is a wheat-growing breadbasket for the world and its wheat crops have been hurt in recent years by continued drought.
Meanwhile, central China is experiencing the worst drought in half a century. Temperatures have been unseasonably high and rainfall, in some areas, 80% below normal; more than half the country's provinces have been affected by drought, leaving millions of Chinese and their livestock without adequate access to water. In the region which raises 95% of the country's winter wheat, crop production has already been impaired and is in further danger without imminent rain. All of this represents a potential financial catastrophe for Chinese farmers at a moment when about 20 million migrant workers are estimated to have lost their jobs in the global economic meltdown. Many of those workers, who left the countryside for China's booming cities (and remitted parts of their paychecks to rural areas), may now be headed home jobless to potential disaster. A Wall Street Journal report concludes, "Some scientists warn China could face more frequent droughts as a result of global warming and changes in farming patterns."
Globe-jumping to the Middle East, Iraq, which makes the news these days mainly for spectacular suicide bombings or the politics of American withdrawal, turns out to be another country in severe drought. Americans may think of Iraq as largely desert, but (as we were all taught in high school) the lands between the Tigris and Euphrates Rivers, the "fertile crescent," are considered the homeland of agriculture, not to speak of human civilization.
Well, not so fertile these days, it seems. The worst drought in at least a decade and possibly a farming lifetime is expected to reduce wheat production by at least half; while the coutry's vast marshlands, once believed to be the location of the Garden of Eden, have been turned into endless expanses of baked mud. That region, purposely drained by dictator Saddam Hussein to tame rebellious "Marsh Arabs," is now experiencing the draining power of nature.
Nor is Iraq's drought a localized event. Serious drought conditions extend across the Middle East, threatening to exacerbate local conflicts from Cyprus and Lebanon to Gaza, the West Bank, and Israel where this January was reported to have been the hottest and driest in 60 years. "With less than 2 months of winter left," Daniel Pedersen has written at the environmental website Green Prophet, "the region has received only 6%-50% of the annual average rainfall, with the desert areas getting 30% or less."
Leaping continents, in Latin America, Argentina is experiencing "the most intense, prolonged and expensive drought in the past 50 years," according to Hugo Luis Biolcati, the president of the Argentine Rural Society. One of the world's largest grain exporters, it has already lost five billion dollars to the drought. Its soybeans -- the country is the third largest producer of them -- are wilting in the fields; its corn -- Argentina is the world's second largest producer -- and wheat crops are in trouble; and its famed grass-fed herds of cattle are dying -- 1.5 million head of them since October with no end in sight.
Dust Bowl Economics
In our own backyard, much of the state of Texas -- 97.4% to be exact -- is now gripped by drought, and parts of it by the worst drought in almost a century. According to the New York Times, "Winter wheat crops have failed. Ponds have dried up. Ranchers are spending heavily on hay and feed pellets to get their cattle through the winter. Some wonder if they will have to slaughter their herds come summer. Farmers say the soil is too dry for seeds to germinate and are considering not planting." Since 2004, in fact, the state has yoyo-ed between the extremities of flood and drought.
Meanwhile, scientists predict that, as global warming strengthens, the American southwest, parts of which have struggled with varying levels of drought conditions for years, could fall into "a possibly permanent state of drought." We're talking potential future "dust bowl" here. A December 2008 U.S. Geological Survey report warns: "In the Southwest, for example, the models project a permanent drying by the mid-21st century that reaches the level of aridity seen in historical droughts, and a quarter of the projections may reach this level of aridity much earlier."
And talking about drought gripping breadbasket regions, don't forget northern California which "produces 50 percent of the nation's fruits, nuts and vegetables, and a majority of [U.S.] salad, strawberries and premium wine grapes." Its agriculturally vital Central Valley, in particular, is in the third year of an already monumental drought in which the state has been forced to cut water deliveries to farms by up to 85%.
Observers are predicting that it may prove to be the worst drought in the history of a region "already reeling from housing foreclosures, the credit crisis, and a plunge in construction and manufacturing jobs." January, normally California's wettest month, has been wretchedly dry and the snowpack in the northern Sierra Mountains, crucial to the state's water supplies and its agricultural health, is at less than half normal levels.
Northern California, in fact, offers a glimpse of the havoc that the extreme weather conditions scientists associate with climate change could cause, especially when combined with other crises. In a Los Angeles Times interview, new Secretary of Energy Steven Chu offered an eye-popping warning (of a sort top government officials simply don't give) about what a global-warming future might hold in store for California, his home state. Interviewer Jim Tankersley summed up Chu's thoughts this way:
"California's farms and vineyards could vanish by the end of the century, and its major cities could be in jeopardy, if Americans do not act to slow the advance of global warming... In a worst case... up to 90% of the Sierra snowpack could disappear, all but eliminating a natural storage system for water vital to agriculture. 'I don't think the American public has gripped in its gut what could happen,' [Chu] said. 'We're looking at a scenario where there's no more agriculture in California.' And, he added, 'I don't actually see how they can keep their cities going' either."
As for East Africa and the Horn of Africa, under the pressure of rising temperatures, drought has become a tenacious long-term visitor. For East Africa, the drought years of 2005-2006 were particularly horrific and now Kenya, with the region's biggest economy, a country recently wracked by political disorder and ethnic violence, is experiencing crop failures. An estimated 10 million Kenyans may face hunger, even starvation, this year in the wake of a poor harvest, lack of rainfall, and rising food prices; if you include the drought-plagued Horn of Africa, 20 million people may be endangered, according to the International Federation of Red Cross and Red Crescent Societies.
Recently, climatologist David Battisti and Rosamond Naylor, director of Stanford University's Program on Food Security and the Environment, published a study in Science magazine on the effect of extreme heat on crops. They concluded, based on recent climate models and a study of past extreme heat waves, that there was "a 90% chance that, by the end of the century, the coolest temperatures in the tropics during the crop growing season would exceed the hottest temperatures recorded between 1900 and 2006." According to the British Guardian, under such circumstances Battisti and Naylor believe "[h]alf of the world's population could face severe food shortages by the end of the century as rising temperatures take their toll on farmers' crops...
Harvests of staple food crops such as rice and maize could fall by between 20% and 40% as a result of higher temperatures during the growing season in the tropics and subtropics."
Not surprisingly, it's hard to imagine -- perhaps I mean swallow -- such an extreme world, and so most of us, the mainstream media included, don't bother to. That means certain potentially burning questions go not just unanswered but unasked.
The Grapes of Wrath (Updated)
Mind you, what you've read thus far represents an amateur's eye view of drought on our planet at this moment. It's hardly comprehensive. To give but one example, Afghanistan has only recently begun to emerge from an eight-year drought involving severe food shortages -- and, as journalist Christian Parenti writes, it would need another "five years worth of regular snowfall just to replenish its aquifers." Parenti adds: "As snow packs in the Himalayan and Hindu Kush ranges continue to recede, the rivers flowing from them will diminish and the economic situation in all of Central Asia will deteriorate badly."
Nor is this piece meant to be authoritative, exactly because I know so relatively little. Think of it as a reflection of my own frustration with work not done elsewhere -- and, by the way, thank heavens for Google University. Yes, Googling leaves you on your own, can be time-consuming, and tends to lead to cul-de-sacs ("Nuggets end 17-year drought in Orlando"), but what would we do without it? Thanks to good ol' G.U., anyone can, for instance, check out the National Oceanic and Atmospheric Administration's Drought Information Center or its U.S. Drought Monitor, or the National Weather Service's Climate Prediction Center and begin a self-education.
Now let me explain why I even bothered to write this piece. It's true that, if you're reading the mainstream press, each of the droughts mentioned above has gotten at least some attention, several of them a fair amount of attention (as well as some fine reporting), and the Australian firestorms have been headlines globally for weeks. The problem is that (the professional literature, the science magazines, and a few environmental websites and blogs aside) no one in the mainstream media seems to have thought to connect these dots or blots of aridity in any way. And yet it seems a no-brainer that mainstream reporters should be doing just that.
After all, cumulatively these drought hotspots, places now experiencing record or near-record aridity, could be thought of as representing so many burning questions for our planet. And yet you can search far and wide without stumbling across a mainstream American overview of drought in our world at this moment. This seems, politely put, puzzling, especially at a time when University College London's Global Drought Monitor claims that 104 million people are now living under "exceptional drought conditions."
Scientists generally agree that, as climate change accelerates throughout this century (and no matter what happens from here on in, nothing will evidently stop some form of acceleration), extreme weather of every sort, including drought, will become ever more the planetary norm. In fact, experts are suggesting that, as the Washington Post reported recently, "The pace of global warming is likely to be much faster than recent predictions, because industrial greenhouse gas emissions have increased more quickly than expected and higher temperatures are triggering self-reinforcing feedback mechanisms in global ecosystems."
Now, no one can claim beyond all doubt that global warming is the cause of any specific drought, or certainly the only cause anyway. As with the Texas drought, a La Niña weather pattern in the Pacific is often mentioned as a key causal factor right now. But the crucial point is what the present can tell us about the impact of a global pattern of extreme weather, especially extreme drought, on what will surely be a more extreme planet in the relatively near future.
If global temperatures are on the rise and more heat means lower crop yields, then you're talking about more Kenyas, and not just in Africa either. You're probably also talking about desperation, upheaval, resource conflicts, and mass out-migrations of populations, even -- if scientists are right -- from the American Southwest. (And in case you don't think such a thing can happen here, remember Steinbeck's The Grapes of Wrath or think of any of Dorothea Lange's iconic photos of the "Okies" fleeing the American dustbowl of the 1930s.)
Burning Questions
Right now, the global economic meltdown has massively depressed fuel prices (key to farming, processing, and transporting most crops to market) and commodity prices have generally fallen as well, including food prices. Whatever the future economic weather, however, that is not likely to last.
So here's a burning question on my mind:
We're now experiencing the extreme effects of economic bad "weather" in the wake of the near collapse of the global financial system. Nonetheless, from the White House to the media, speculation about "the road to recovery" is already underway. The stimulus package, for instance, had been dubbed the "recovery bill," aka the American Recovery and Reinvestment Act, and the question of when we'll hit bottom and when -- 2010, 2011, 2012 -- a real recovery will begin is certainly in the air.
Recently, in a speech in Singapore, Dominique Strauss-Kahn, head of the International Monetary Fund, suggested that the "world's advanced economies" -- the U.S., Western Europe, and Japan -- were "already in depression," and the "worst cannot be ruled out." This got little attention here, but President Obama's comment at his first press conference that delay on his stimulus package could lead to a "lost decade," as in Japan in the 1990s (or, though it went unmentioned, the U.S. in the 1930s), made the headlines.
If, indeed, this is "the big one," and does result in a "lost decade" or more, here's what I wonder: Could the sort of "recovery" that everyone assumes lies just over a recessive or depressive horizon not be there? What if our lost decade lasts long enough to meet an environmental crisis involving extreme weather -- drought and flood, hurricanes, typhoons, and firestorms of unprecedented magnitude -- possibly in some of the breadbasket regions of the planet? What will happen if the rising fuel prices likely to come with the beginning of any economic "recovery" were to meet the soaring food prices of environmental disaster? What kind of human tsunami might that result in?
Once we start connecting some of today's drought dots, wouldn't it make sense to try to connect a few of the prospective dots as well? After all, if you begin to imagine what the worst might look like, you can also begin to think about what might be done to mitigate it. Isn't that more sensible than looking the other way?
If the kinds of hits regional agriculture is now taking from record-setting drought became the future norm, wouldn't we then be bereft of our most reassuring formulations in bad times? For example, the president spoke at that press conference of our present moment as "the worst economic crisis since the Great Depression." On an extreme planet, no such comforting "since the..." would be available, nor would there be any historical road map for what was coming at us, not if we had already run out of history.
Maybe the world we knew but scarce months ago is already, in some sense, long gone. What if, after a lost decade, we were to find ourselves living on another planet?
Feel free, of course, to ignore my burning questions. After all, I'm only an amateur with the flimsiest of credentials from Google U. Still, I do keep wondering when the media pros will finally pitch in, and what they'll tell us is on that distant horizon, the one with the red glow.
Tom Engelhardt, co-founder of the American Empire Project, runs the Nation Institute's TomDispatch.com. He is the author of The End of Victory Culture, a history of the American Age of Denial. He also edited The World According to TomDispatch: America in the New Age of Empire (Verso, 2008), a collection of some of the best pieces from his site and an alternative history of the mad Bush years.
By Tom Engelhardt
It turns out that you don't want to be a former city dweller in rural parts of southernmost Australia, a stalk of wheat in China or Iraq, a soybean in Argentina, an almond or grape in northern California, a cow in Texas, or almost anything in parts of east Africa right now. Let me explain.
As anyone who has turned on the prime-time TV news these last weeks knows, southeastern Australia has been burning up. It's already dry climate has been growing ever hotter. "The great drying," Australian environmental scientist Tim Flannery calls it. At its epicenter, Melbourne recorded its hottest day ever this month at a sweltering 115.5 degrees, while temperatures soared even higher in the surrounding countryside. After more than a decade of drought, followed by the lowest rainfall on record, the eucalyptus forests are now burning. To be exact, they are now pouring vast quantities of stored carbon dioxide, the greenhouse gas considered largely responsible for global warming, into the atmosphere.
In fact, everything's been burning there. Huge sheets of flame, possibly aided and abetted by arsonists, tore through whole towns. More than 180 people are dead and thousands homeless. Flannery, who has written eloquently about global warming, drove through the fire belt, and reported:
"It was as if a great cremation had taken place… I was born in Victoria, and over five decades I've watched as the state has changed. The long, wet and cold winters that seemed insufferable to me as a boy vanished decades ago, and for the past 12 years a new, drier climate has established itself… I had not appreciated the difference a degree or two of extra heat and a dry soil can make to the ferocity of a fire. This fire was different from anything seen before."
Australia, by the way, is a wheat-growing breadbasket for the world and its wheat crops have been hurt in recent years by continued drought.
Meanwhile, central China is experiencing the worst drought in half a century. Temperatures have been unseasonably high and rainfall, in some areas, 80% below normal; more than half the country's provinces have been affected by drought, leaving millions of Chinese and their livestock without adequate access to water. In the region which raises 95% of the country's winter wheat, crop production has already been impaired and is in further danger without imminent rain. All of this represents a potential financial catastrophe for Chinese farmers at a moment when about 20 million migrant workers are estimated to have lost their jobs in the global economic meltdown. Many of those workers, who left the countryside for China's booming cities (and remitted parts of their paychecks to rural areas), may now be headed home jobless to potential disaster. A Wall Street Journal report concludes, "Some scientists warn China could face more frequent droughts as a result of global warming and changes in farming patterns."
Globe-jumping to the Middle East, Iraq, which makes the news these days mainly for spectacular suicide bombings or the politics of American withdrawal, turns out to be another country in severe drought. Americans may think of Iraq as largely desert, but (as we were all taught in high school) the lands between the Tigris and Euphrates Rivers, the "fertile crescent," are considered the homeland of agriculture, not to speak of human civilization.
Well, not so fertile these days, it seems. The worst drought in at least a decade and possibly a farming lifetime is expected to reduce wheat production by at least half; while the coutry's vast marshlands, once believed to be the location of the Garden of Eden, have been turned into endless expanses of baked mud. That region, purposely drained by dictator Saddam Hussein to tame rebellious "Marsh Arabs," is now experiencing the draining power of nature.
Nor is Iraq's drought a localized event. Serious drought conditions extend across the Middle East, threatening to exacerbate local conflicts from Cyprus and Lebanon to Gaza, the West Bank, and Israel where this January was reported to have been the hottest and driest in 60 years. "With less than 2 months of winter left," Daniel Pedersen has written at the environmental website Green Prophet, "the region has received only 6%-50% of the annual average rainfall, with the desert areas getting 30% or less."
Leaping continents, in Latin America, Argentina is experiencing "the most intense, prolonged and expensive drought in the past 50 years," according to Hugo Luis Biolcati, the president of the Argentine Rural Society. One of the world's largest grain exporters, it has already lost five billion dollars to the drought. Its soybeans -- the country is the third largest producer of them -- are wilting in the fields; its corn -- Argentina is the world's second largest producer -- and wheat crops are in trouble; and its famed grass-fed herds of cattle are dying -- 1.5 million head of them since October with no end in sight.
Dust Bowl Economics
In our own backyard, much of the state of Texas -- 97.4% to be exact -- is now gripped by drought, and parts of it by the worst drought in almost a century. According to the New York Times, "Winter wheat crops have failed. Ponds have dried up. Ranchers are spending heavily on hay and feed pellets to get their cattle through the winter. Some wonder if they will have to slaughter their herds come summer. Farmers say the soil is too dry for seeds to germinate and are considering not planting." Since 2004, in fact, the state has yoyo-ed between the extremities of flood and drought.
Meanwhile, scientists predict that, as global warming strengthens, the American southwest, parts of which have struggled with varying levels of drought conditions for years, could fall into "a possibly permanent state of drought." We're talking potential future "dust bowl" here. A December 2008 U.S. Geological Survey report warns: "In the Southwest, for example, the models project a permanent drying by the mid-21st century that reaches the level of aridity seen in historical droughts, and a quarter of the projections may reach this level of aridity much earlier."
And talking about drought gripping breadbasket regions, don't forget northern California which "produces 50 percent of the nation's fruits, nuts and vegetables, and a majority of [U.S.] salad, strawberries and premium wine grapes." Its agriculturally vital Central Valley, in particular, is in the third year of an already monumental drought in which the state has been forced to cut water deliveries to farms by up to 85%.
Observers are predicting that it may prove to be the worst drought in the history of a region "already reeling from housing foreclosures, the credit crisis, and a plunge in construction and manufacturing jobs." January, normally California's wettest month, has been wretchedly dry and the snowpack in the northern Sierra Mountains, crucial to the state's water supplies and its agricultural health, is at less than half normal levels.
Northern California, in fact, offers a glimpse of the havoc that the extreme weather conditions scientists associate with climate change could cause, especially when combined with other crises. In a Los Angeles Times interview, new Secretary of Energy Steven Chu offered an eye-popping warning (of a sort top government officials simply don't give) about what a global-warming future might hold in store for California, his home state. Interviewer Jim Tankersley summed up Chu's thoughts this way:
"California's farms and vineyards could vanish by the end of the century, and its major cities could be in jeopardy, if Americans do not act to slow the advance of global warming... In a worst case... up to 90% of the Sierra snowpack could disappear, all but eliminating a natural storage system for water vital to agriculture. 'I don't think the American public has gripped in its gut what could happen,' [Chu] said. 'We're looking at a scenario where there's no more agriculture in California.' And, he added, 'I don't actually see how they can keep their cities going' either."
As for East Africa and the Horn of Africa, under the pressure of rising temperatures, drought has become a tenacious long-term visitor. For East Africa, the drought years of 2005-2006 were particularly horrific and now Kenya, with the region's biggest economy, a country recently wracked by political disorder and ethnic violence, is experiencing crop failures. An estimated 10 million Kenyans may face hunger, even starvation, this year in the wake of a poor harvest, lack of rainfall, and rising food prices; if you include the drought-plagued Horn of Africa, 20 million people may be endangered, according to the International Federation of Red Cross and Red Crescent Societies.
Recently, climatologist David Battisti and Rosamond Naylor, director of Stanford University's Program on Food Security and the Environment, published a study in Science magazine on the effect of extreme heat on crops. They concluded, based on recent climate models and a study of past extreme heat waves, that there was "a 90% chance that, by the end of the century, the coolest temperatures in the tropics during the crop growing season would exceed the hottest temperatures recorded between 1900 and 2006." According to the British Guardian, under such circumstances Battisti and Naylor believe "[h]alf of the world's population could face severe food shortages by the end of the century as rising temperatures take their toll on farmers' crops...
Harvests of staple food crops such as rice and maize could fall by between 20% and 40% as a result of higher temperatures during the growing season in the tropics and subtropics."
Not surprisingly, it's hard to imagine -- perhaps I mean swallow -- such an extreme world, and so most of us, the mainstream media included, don't bother to. That means certain potentially burning questions go not just unanswered but unasked.
The Grapes of Wrath (Updated)
Mind you, what you've read thus far represents an amateur's eye view of drought on our planet at this moment. It's hardly comprehensive. To give but one example, Afghanistan has only recently begun to emerge from an eight-year drought involving severe food shortages -- and, as journalist Christian Parenti writes, it would need another "five years worth of regular snowfall just to replenish its aquifers." Parenti adds: "As snow packs in the Himalayan and Hindu Kush ranges continue to recede, the rivers flowing from them will diminish and the economic situation in all of Central Asia will deteriorate badly."
Nor is this piece meant to be authoritative, exactly because I know so relatively little. Think of it as a reflection of my own frustration with work not done elsewhere -- and, by the way, thank heavens for Google University. Yes, Googling leaves you on your own, can be time-consuming, and tends to lead to cul-de-sacs ("Nuggets end 17-year drought in Orlando"), but what would we do without it? Thanks to good ol' G.U., anyone can, for instance, check out the National Oceanic and Atmospheric Administration's Drought Information Center or its U.S. Drought Monitor, or the National Weather Service's Climate Prediction Center and begin a self-education.
Now let me explain why I even bothered to write this piece. It's true that, if you're reading the mainstream press, each of the droughts mentioned above has gotten at least some attention, several of them a fair amount of attention (as well as some fine reporting), and the Australian firestorms have been headlines globally for weeks. The problem is that (the professional literature, the science magazines, and a few environmental websites and blogs aside) no one in the mainstream media seems to have thought to connect these dots or blots of aridity in any way. And yet it seems a no-brainer that mainstream reporters should be doing just that.
After all, cumulatively these drought hotspots, places now experiencing record or near-record aridity, could be thought of as representing so many burning questions for our planet. And yet you can search far and wide without stumbling across a mainstream American overview of drought in our world at this moment. This seems, politely put, puzzling, especially at a time when University College London's Global Drought Monitor claims that 104 million people are now living under "exceptional drought conditions."
Scientists generally agree that, as climate change accelerates throughout this century (and no matter what happens from here on in, nothing will evidently stop some form of acceleration), extreme weather of every sort, including drought, will become ever more the planetary norm. In fact, experts are suggesting that, as the Washington Post reported recently, "The pace of global warming is likely to be much faster than recent predictions, because industrial greenhouse gas emissions have increased more quickly than expected and higher temperatures are triggering self-reinforcing feedback mechanisms in global ecosystems."
Now, no one can claim beyond all doubt that global warming is the cause of any specific drought, or certainly the only cause anyway. As with the Texas drought, a La Niña weather pattern in the Pacific is often mentioned as a key causal factor right now. But the crucial point is what the present can tell us about the impact of a global pattern of extreme weather, especially extreme drought, on what will surely be a more extreme planet in the relatively near future.
If global temperatures are on the rise and more heat means lower crop yields, then you're talking about more Kenyas, and not just in Africa either. You're probably also talking about desperation, upheaval, resource conflicts, and mass out-migrations of populations, even -- if scientists are right -- from the American Southwest. (And in case you don't think such a thing can happen here, remember Steinbeck's The Grapes of Wrath or think of any of Dorothea Lange's iconic photos of the "Okies" fleeing the American dustbowl of the 1930s.)
Burning Questions
Right now, the global economic meltdown has massively depressed fuel prices (key to farming, processing, and transporting most crops to market) and commodity prices have generally fallen as well, including food prices. Whatever the future economic weather, however, that is not likely to last.
So here's a burning question on my mind:
We're now experiencing the extreme effects of economic bad "weather" in the wake of the near collapse of the global financial system. Nonetheless, from the White House to the media, speculation about "the road to recovery" is already underway. The stimulus package, for instance, had been dubbed the "recovery bill," aka the American Recovery and Reinvestment Act, and the question of when we'll hit bottom and when -- 2010, 2011, 2012 -- a real recovery will begin is certainly in the air.
Recently, in a speech in Singapore, Dominique Strauss-Kahn, head of the International Monetary Fund, suggested that the "world's advanced economies" -- the U.S., Western Europe, and Japan -- were "already in depression," and the "worst cannot be ruled out." This got little attention here, but President Obama's comment at his first press conference that delay on his stimulus package could lead to a "lost decade," as in Japan in the 1990s (or, though it went unmentioned, the U.S. in the 1930s), made the headlines.
If, indeed, this is "the big one," and does result in a "lost decade" or more, here's what I wonder: Could the sort of "recovery" that everyone assumes lies just over a recessive or depressive horizon not be there? What if our lost decade lasts long enough to meet an environmental crisis involving extreme weather -- drought and flood, hurricanes, typhoons, and firestorms of unprecedented magnitude -- possibly in some of the breadbasket regions of the planet? What will happen if the rising fuel prices likely to come with the beginning of any economic "recovery" were to meet the soaring food prices of environmental disaster? What kind of human tsunami might that result in?
Once we start connecting some of today's drought dots, wouldn't it make sense to try to connect a few of the prospective dots as well? After all, if you begin to imagine what the worst might look like, you can also begin to think about what might be done to mitigate it. Isn't that more sensible than looking the other way?
If the kinds of hits regional agriculture is now taking from record-setting drought became the future norm, wouldn't we then be bereft of our most reassuring formulations in bad times? For example, the president spoke at that press conference of our present moment as "the worst economic crisis since the Great Depression." On an extreme planet, no such comforting "since the..." would be available, nor would there be any historical road map for what was coming at us, not if we had already run out of history.
Maybe the world we knew but scarce months ago is already, in some sense, long gone. What if, after a lost decade, we were to find ourselves living on another planet?
Feel free, of course, to ignore my burning questions. After all, I'm only an amateur with the flimsiest of credentials from Google U. Still, I do keep wondering when the media pros will finally pitch in, and what they'll tell us is on that distant horizon, the one with the red glow.
Tom Engelhardt, co-founder of the American Empire Project, runs the Nation Institute's TomDispatch.com. He is the author of The End of Victory Culture, a history of the American Age of Denial. He also edited The World According to TomDispatch: America in the New Age of Empire (Verso, 2008), a collection of some of the best pieces from his site and an alternative history of the mad Bush years.
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