Category Archives: budget fight & ecological crisis

US pushed to reform cotton subsidies in farm bill as Brazil watches

By Paige McClanahan, cross-posted from The Guardian

July 19, 2012 – US lawmakers have been busy this summer shaping the latest version of the farm bill, the far-reaching legislation that governs how the US treats its farmers and feeds its poor people, among many other things.

Discussions and hearings have been going on for weeks, but there is one topic that few people on Capitol Hill seem to be paying attention to: how Congress’s failure to reform US cotton subsidies may hurt millions of farmers in other countries, along with Hollywood, American pharmaceutical companies and the US music industry.

What is the link? It all boils down to one word: trade.
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Filed under budget fight & ecological crisis, Corporate Globalization, Indigenous Peoples, Latin America-Caribbean

U.S. Lifestyle Is Not Up for Negotiation

By Thalif Deen, cross-posted from Other News

UNITED NATIONS, May 1, 2012 (IPS) - Just before the 1992 Earth Summit in Rio de Janeiro, some of the industrial nations, and specifically the United States, were lambasted for their obscenely high consumption of the world’s finite resources, including food, water and energy.

The world was being gradually destroyed, environmentalists warned, by unsustainable consumption.

Hitting back at critics, then U.S. president George H.W. Bush famously declared: “The American way of life is not up for negotiations. Period.”

The message, a pre-emptive diplomatic strike by the United States, reverberated throughout the summit of world leaders, whose plan of action for the 21st century virtually skirted the hot political issue.

Now, 20 years later, the United Nations will once again focus on population, consumption and the environment at the U.N. Conference on Sustainable Development(also known as Rio+20) in mid-June in Brazil.

The upcoming summit will adopt a new plan of action for a greener economy and a sustainable future.

A new 134-page study, released on the eve of the summit, and titled “People and the Planet“, highlights the rapid and widespread changes in the world’s population and the unprecedented levels of consumption that are threatening the well being of the planet.

Authored by the Royal Society, a 352-year-old institution described as a fellowship of the world’s most eminent scientists, the study says the Earth’s capacity to meet human needs is finite.

But how the limits are approached depends on lifestyle choices and associated consumption – and these depend on what is used, and how, and what is regarded as essential for human wellbeing.

The members of the Royal Society’s glorious past include some of the world’s illustrious scientists and thinkers of a bygone era, the likes of Isaac Newton, Charles Darwin, James Watson and Albert Einstein.

Presenting the report on behalf of the Royal Society, Nobel Laureate Sir John Sulston told reporters Tuesday there is a strong link between population, consumption and the environment.

The unsustainable consumption of the world’s most developed and emerging economies must be urgently reduced, he said.

A child born in the developed world, he pointed out, consumes 30 to 50 times as much water as one born in the developing world.

The increase in “material consumption”, he said, involved food, water, energy and minerals.

And as the report points out, “these resources are the most basic needs for survival, and in some parts of the world even these basic needs are not being met for some people.”

By contrast, high levels of material consumption seen in many parts of the world “may lead eventually to loss of well being for the consumer, and, in an inequitable world with finite resources, also result in the deprivation of others.”

The 21st century is a critical period for people and the planet, says the study, pointing out that the global population, which reached 7.0 billion during 2011, will reach between eight and 11 billion by 2050.

“Human impact on the Earth raises serious concerns, and in the richest parts of the world per capita material consumption is far above the level that can be sustained for everyone in a population of seven billion or more.”

This is in stark contrast to the world’s 1.3 billion poorest people, who need to consume more in order to be raised out of extreme poverty.

The study also says that population and consumption are both important: the combination of increasing global population and increasing overall material consumption has implications for a finite planet.

As both continue to rise, signs of unwanted impacts and feedback (such as climate change reducing crop yields in some areas) and of irreversible changes (such as the increased rate of species extinction) are “growing alarmingly”.

“The relationship between population, consumption and the environment is not straightforward, as the natural environment and human socio- economic systems are complex in their own right.”

Demographic change is driven by economic development, social and cultural factors as well as environmental change. A transition from high to low birth and death rates has occurred in various cultures, in widely different socioeconomic settings, and at different rates, the study adds.

And countries such as Iran and South Korea have moved through the phases of this transition much more rapidly than Europe or North America.

This has brought with it challenges different from those that were experienced by the more developed countries as they reached the late stages of the transition.

Developing countries will be building the equivalent of a city of a million people every five days from now to 2050, the study predicts.

And the continuing and rapid growth of the urban population is having a marked bearing on lifestyle and behaviour: how and what they consume, how many children they have, the type of employment they undertake.

Urban planning is essential to avoid the spread of slums, which are highly deleterious to the welfare of individuals and societies, the study notes.

In a series of recommendations, the study calls on the international community to bring the 1.3 billion people living on less than 1.25 dollars per day out of absolute poverty, and reduce the inequality that persists in the world today.

Additionally, the most developed and the emerging economies must stabilise and then reduce material consumption levels through dramatic improvements in resource use efficiency, including reducing waste; investment in sustainable resources, technologies and infrastructures; and systematically decoupling economic activity from environmental impact.

Also, reproductive health and voluntary family planning programmes urgently require political leadership and financial commitment, both nationally and internationally.

Population and the environment should not be considered as two separate issues, the study says.

“Demographic changes, and the influences on them, should be factored into economic and environmental debate and planning at international meetings, such as the Rio+20 Conference on Sustainable Development and subsequent meetings,” it says.

Also, governments should realise the potential of urbanisation to reduce material consumption and environmental impact through efficiency measures.

And in order to meet previously agreed goals for universal education, policy makers in countries with low school attendance need to work with international funders and organisations, such as U.N. Educational, Scientific and Cultural Organisation (UNESCO), the U.N. Population Fund (UNFPA), the U.N. children’s agency UNICEF, the International Monetary Fund (IMF), World Bank and Education for All.


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ILO Urges Worker-Friendly Recovery Policies

By Jim Lobe* cross-posted from Other News

WASHINGTON, Apr 29, 2012 (IPS) - Although economic growth has resumed in much of the world since the 2008 financial crisis, the global unemployment situation remains alarming and could worsen, according to the International Labour Organisation (ILO).

European governments, in particular, should adopt more worker- friendly approaches in dealing with fiscal austerity, according to the agency’s “World of Work Report 2012” that was released here and at its headquarters in Geneva Sunday.

Such a change in policy could result in adding around two million jobs in the advanced economies over the next year, as opposed to only about 800,000 if current approaches persist, according to the report.

Persistently high rates of unemployment in the Arab world and Africa also put those regions at high risk of social unrest, according to the 128-page report, which noted that most of Latin America and some Asian countries have emerged in relatively better shape in that respect.

The report comes at a critical moment, particularly for key advanced economies where pending elections appear to offer stark choices between candidates and parties that favour very different approaches yawning fiscal deficits and high unemployment.

In France, for example, the current front-runner, the Socialist Party’s Francois Hollande, favour more worker-friendly policies than the more austere approach taken by the incumbent president, Nicolas Sarkozy.

And in the United States, the all-but-certain Republican challenger to President Barack Obama, former Massachusetts governor Mitt Romney, has endorsed his party’s proposals for sharp cuts to social and government jobs programmes, combined with reductions in already-low tax rates for corporations and wealthy individuals.

The report charged that the combination of fiscal austerity and tougher labour market reforms – or de-regulation – adopted by many advanced economies, especially in the Eurozone, have proved devastating to job creation, in particular, and largely ineffective in reducing fiscal deficits.

“The narrow focus of many Eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe,” according to Raymond Torres, the director of the International Institute for Labour Studies, the ILO’s research arm.

“Countries that have chosen job-centred macroeconomic policies have achieved better economic and social outcomes,” added Torres, the report’s lead author. “Many of them have also become more competitive and weathered the crisis better than those that followed the austerity path.”

The unemployment rate has increased in nearly two-thirds of European Union (EU) countries since 2010, according to the report, which also noted that labour market recovery has also stalled in other industrialised nations, including Japan and the United States.

At the same time, joblessness, especially for younger workers, remains acute in the Middle East and North and Sub-Saharan Africa.

“Four years into the global crisis, labour market imbalances are becoming more structural, and therefore more difficult to eradicate,” according to the report.

“Certain groups, such as the long-term unemployed, are at risk of exclusion from the labour market. This means that they would be unable to obtain new employment even if there were a strong recovery,” Torres noted, adding that employment has also become “more unstable or precarious” for many workers who have a job.

Where employment growth has resumed, for example, many of the jobs have been short term.

Combined with increases in growing income and wealth inequality in many countries, the unemployment situation is also increasing the risk of social unrest in the most-affected economies, according to the 128-report.

Out of 106 countries with available statistics, 54 percent reported an increase in the score for the risk of unrest in 2011 compared to 2010, Torres said.

The regions with the highest risk of unrest are sub-Saharan Africa, the Middle East and North Africa, according to the study’s barometer, which also found important increases in risk in industrialised economies, particularly in Central and Eastern Europe.

Altogether, the report estimates that some 50 million jobs are missing compared to the situation before the 2008 financial crisis.

Employment rates have increased in only five of 36 advanced economies – Germany, Israel, Luxembourg, Malta, and Poland – since 2007, according to the report.

Youth unemployment rates have increased in half of the developed economies and in one-third of developing economies in about 80 percent of advanced economies and in two-thirds of the developing economies since the onset of the crisis, according to the report.

In that period, poverty rates increased in half of the advanced economies and in a third of developing countries, while the gaps between rich and poor widened in half of advanced countries and in one quarter of developing nations.

In reacting to the crisis, 28 percent of the governments of developing and emerging countries reduced social benefits for workers and the poor. By contrast, nearly two-thirds (65 percent) of developed-country governments reduced social benefits.

The report calls for a “dramatic shift in the current policy approach” to one that would “plac(e) jobs at the top of the policy agenda…”

First, core labour standards, including the right to form unions, should be strengthened, and the report calls for all G20 countries to ratify the ILO’s core Conventions to send a positive signal in that regard.

Second, more should be done to provide adequate credit and a more favourable environment for small businesses, particularly in the Eurozone countries where the major banks have failed to boost credit where it is most needed.

Finally, in emerging and developing countries, efforts should be centred on public investment and social protection to reduce poverty and income inequality and stimulate demand, while in advanced economies, policies should focus on ensuring that the unemployed, especially among the youth population, receive adequate support to find new jobs.

Policy-makers should “be embracing the perception that job-friendly policies have a positive effect on the economy and that the voice of finance should not drive policy-making,” according to Torres.(END)

*Jim Lobe’s blog on U.S. foreign policy can be read at

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In New U.S. “Bioeconomy”, Industry Trumps Environment

NOTE: Yesterday, the White House announced its new National Bioeconomy Blueprint, and the Global Forest Coalition (GFC) released its report, Bioeconomy Vs. Biodiversity, which stongly counters the Obama adminsitration’s findings. Global Justice Ecology Project is the North American focal point for Global Forest Coalition; the GFC report is available here. – GJEP

In New U.S. “Bioeconomy”, Industry Trumps Environment

By Carey L. Biron, Cross-posted from IPS

WASHINGTON, Apr 26, 2012 (IPS) – The White House on Thursday announced the formulation of the National Bioeconomy Blueprint, aimed at shoring up the U.S. commitment to bioscience-related research.

But critics warn that the new programme focuses too much on economic concerns, placing too little emphasis on either social issues or on the environment itself.

“We’re disappointed to see what finally came out,” Eric Hoffman, a Washington-based campaigner with Friends of the Earth, an international NGO, told IPS. “This report largely seems to be an endorsement for the biotechnology industry to rush ahead without any real oversight.”

The biotechnology industry “says that it has been calling for this type of legislation for long time,” Hoffman notes. “That makes sense, given that the industry stands to gain the most from the types of policies laid out in the Blueprint.”

Hoffman says that the biotechnology industry includes many of the largest oil and petrochemical producers – ExxonMobil, BP, Chevron, Monsanto, Dow. The lack of plans for government regulation apparent in the Blueprint leaves him pessimistic that much “clean, green” technology will come out of the new effort.

He also points to a recent study by the Woodrow Wilson Center, based here, that found that “zero percent” of federal funding of synthetic biology was going into risk assessment. “That’s not how you have an honest policy debate,” he says.

The government itself defines the bioeconomy as “economic activity powered by research and innovation in the biosciences”. In the Blueprint, the issue of environmental concerns is dealt with only tangentially, although the general push is to phase out fossil fuels and industrial materials in favour of organically based compounds and “green” approaches.

Of the five strategic objectives laid out in the Blueprint, only one specifically mentions the environment. Even then, it arises only in a call to “Develop and reform regulations to reduce barriers, increase the speed and predictability of regulatory processes, and reduce costs while protecting human and environmental health.”

The bioeconomy has increasingly emerged as a priority for the Barack Obama administration. Thursday’s announcement followed on initial plans announced by the U.S. government in September 2011, building on legislation passed in 2000 called the Biomass Research and Development Act.

Other developed countries are also increasing their focus on aspects of their nascent bioeconomies, particularly in moving beyond fossil fuels. In February, the European Commission publicised a new strategy to ramp up related efforts. The “green economy” is also a central theme at the upcoming United Nations Conference on Sustainable Development in Rio de Janeiro.

While many such efforts are to be lauded individually, there is growing understanding of the dangers of state-backed moves towards relying on ecosystem-based products.

“While the idea of using renewable resources instead of fossil fuels is a good idea in theory, the way in which the bio-economy approach proposes to achieve this goal is at best deeply flawed and inequitable, and at worst downright dangerous,” states a new report released on Thursday by the Global Forest Coalition, an international umbrella group.

The report, “Bio-economy Versus Biodiversity”, notes the spiking demand for land across the world for both food production and human habitat. This has not only led to increased land-based conflict, the report suggests, but has also increased global hunger.

“Without reducing consumption and demand for energy and products, the sheer scale on which biomass would have to produced to meet the demands of a global bio-economy would severely exacerbate these problems,” the report states.

Those technologies currently being lauded in the attempt to move beyond fossil fuels – such as the use of algae in creating electricity – are risky or as yet untested on a wide scale, warns the report. As such, the technologies that would undoubtedly be used in the immediate future – and almost certainly beyond – would be relatively dirty and wasteful, such as burning biomass.

“The bio-economy approach offers politicians in industrialized countries an opportunity to be seen to be doing something about meeting ill-defined ‘renewable energy targets’, while maximizing opportunities for economic growth and securing a constant supply of energy,” the report warns. “There is precious little concern about the environment, or about impacts in other countries, apart from the usual platitudes about providing jobs.”

Concerns over this new push towards the bioeconomy coincide with high levels of international anxiety over food security.

“The current U.S. mandate prescribes a huge increase in the generation of energy from land,” Ujjayant Chakravorty, a professor at the Alberta School of Economics, told IPS. “Forty percent of U.S. corn is already used for energy rather than food, and that number will go up in the next 10 years.”

In the U.S. in particular, any major new push towards mass reliance on biofuels would almost certainly have a direct impact on wellbeing in other parts of the world.

For instance, Chakravorty says that rice, wheat and sugar constitute around two-thirds of daily calories for many people in India, as they do for much of the developing world. If more land in India were to be sown for non-edible biofuels, prices for these necessities would almost certainly rise.

“The U.S. has a quarter of the world’s vehicles,” Chakravorty says. “In India alone, the U.S. biofuel policy could directly result in 15 to 40 million people dropping below the poverty line.”

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Scientists call for rethink on consumption, population

Cross-posted from Reuters

26th April 2012 – Scientists have called for a radical rethink of our relationship with the planet to head off what they warn could be economic and environmental catastrophe.

In a report published on Thursday by the London-based Royal Society, an international group of 23 scientists chaired by Nobel laureate Sir John Sulston called for a rebalancing of consumption in favour of poor countries coupled with increased efforts to control population growth to lift the estimated 1.3-billion people living on less than $1.25 a day out of poverty.

“Over the next 30 to 40 years the confluence of the challenges described in this report provides the opportunity to move towards a sustainable economy and a better world for the majority of humanity, or alternatively the risk of social, economic and environmental failures and catastrophes on a scale never imagined,” the scientists said.

The 133-page report, which Sulston describes as a summary of work done over the last two years, comes against a backdrop of austerity-hit governments reducing subsidies for renewable energy, global car companies falling over themselves to meet demand for new cars in rapidly growing economies like China and Brazil, and increasing pressure to exploit vast reserves of gas locked in rocks around the globe through the controversial process known as ‘fracking’.

But the scientists insist the goals in the report are realistic. They argue lifestyle choices, human volition and incentives enshrined in government policy can make a significant difference to patterns of consumption.

They cite the growing appetite for recycling in the developed world, Britain’s policy-driven switch to lead-free fuel in the 1980s, and the seemingly prosaic example of air traffic control as examples of where international cooperation can work.

Sulston said governments realised quickly that the consequences of not managing air traffic could be catastrophic: “They said ‘this is dangerous; we’ve got to cooperate’.”

The scientists say developed and emerging economies should stabilise and then start reducing their consumption of materials by increased efficiency, waste reduction and more investment in sustainable resources.

Carbon dioxide emissions are 10 to 50 times higher in rich countries compared to poor nations, they say. Rising greenhouse gas emissions are almost certainly responsible for increasing global average temperatures, leading to rising sea levels and more extreme weather, climate scientists say.

Voluntary programmes to reduce birth rates, education for young women and better access to contraception urgently need political leadership and financial support.

Professor Sarah Harper of Oxford University, another of the authors, said the issue of population had fallen off the development agenda in the last 10-15 years but it should be reinstated and coupled closely with environmental challenges, starting at the Rio+20 United Nations Conference on Sustainable Development to be held in Rio in June.


The trend to urbanisation remains intact. Some 50% of the world’s population, which surpassed 7-billion last year, is living in cities. The world’s population is forecast to rise to 10-billion before flattening off and the urban proportion is forecast to increase to 75% by the end of the century.

Eliya Msiyaphazi Zulu, a report author and Executive Director of the African Institute for Development Policy research group, said the need for education about family planning and improved access to contraception was most acute in Africa, which is forecast to contribute 70% of the average population growth.

He said all the evidence points to African women wanting fewer children and argued the main reason for high fertility in a country like Niger was the fact that half of all women are married at the age of 16.

The scientists also supported growing calls for a revision in how we measure economic growth. “We are extremely wedded to the idea that GDP increases are a good thing,” saidJules Pretty, Professor of Environment and Society at the University of Essex and another of the authors.

He argued that GDP measures many of the ‘bads’ in terms of the well-being of the planet as well as the ‘goods’, adding: “There is an urgent need for policy change.”

The scientists present some startling statistics. A child from the developed world consumes 30-50 times as much water as one from the developing world. Global average consumption of calories increased about 15% between 1969 and 2005, but in 2010 almost 1-billion people did not get their minimum calorie needs.

Minerals production rocketed in the 47 years up to 2007; copper, lead and lithium about fourfold and tantalum/niobium, used in electronic gadgets, by about 77 times.

For developed countries, Sulston said the message of the report boils down to something quite simple: “You don’t have to be consuming as much to have a healthy and happy life”.

But will politicians and consumers respond?

“It is a brave politician who is prepared to tell Western consumers to consume less to let the developing world consume more,” said Tim Lang, Professor of Food Policy at City University in London. “But we need such bravery now, urgently.”

Lang, who was not involved in the study, welcomed it saying: “The West over- and mal-consumes its way to diet-related ill-health from a diet with a high environmental impact. The evidence is there but will politicians and consumers listen and change?”

Edited by: Reuters


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New report lifts the lid on how rich nations use financial intermediaries to dodge climate change commitments to world’s poor

BRUSSELS , 19 April, 2012: A new Eurodad report reveals how rich nations are using a complex web of private funds and financial intermediaries to wiggle out of pledges to provide $100 billion a year to help developing countries cope with the devastating effects of climate change.

Overreliance on the private sector could spell disaster for the world’s poorest,” said Javier Pereira, who authored the report for Eurodad, the European Network on Debt and Development. “Leveraging money through financial intermediaries cannot be used as a substitute for providing sufficient public resources directly to countries who, through no fault of their own, are suffering most from global warming,” he added.

A commitment by the world’s richest nations, and biggest polluters, to mobilise $100 billion a year by 2020 was one of the few concrete achievements of the Copenhagen Climate Change summit in December 2009. Governments, however, have failed to meet their interim commitments and are now looking to use much smaller amounts of their own money in order to leverage private funding to make up the bulk of the $100billion.

The idea is that development banks and financial institutions, such as the European Investment Bank and the International Finance Corporation, use public money to invest in financial intermediaries working in developing countries to attract private investors. By investing in an African bank, for instance, they believe they can trigger flows up to ten times higher than the initial investment.

While Eurodad’s report acknowledges that supporting private-sector investments can have a useful, if limited, multiplier effect on public funds, it casts serious doubts on claims made about their leveraging potential and reveals that it is often impossible to know where the public money ends up.

These tools only work with very large and mostly Northern companies and the investments are unlikely help those who are most in need,” Pereira added. “The average size of the loans provided by the IFC is above € 15 million and it’s just not possible to pretend that investments of this size will help smallholders in developing countries cope with climate change.”

Eurodad says that international development institutions should make sure financial intermediaries are more transparent and accountable; their investments have to be properly integrated into the national strategies of developing countries; and they must be used effectively to help those most at risk adapt to climate change, notably through support for small, local businesses, rather than Northern-based multinationals.

We are not suggesting developed countries and international organisations should stop using financial intermediaries altogether, but given the evidence this should only be a small part of the solution,” said Eurodad’s Director Jesse Griffiths .


The report, “Cashing in on climate change? Assessing whether private funds can be leveraged to help the poorest countries respond to climate challenges” is available at:

For further details or comment, contact:

Javier Pereira, Eurodad policy and advocacy officer, on or Tel: + 32 2 894 46 47; Mobile : +32 488 570 654; or

Jesse Griffiths , Eurodad director, on or Mobile : +32 491 429 697 (in Washington DC ).

Eurodad (the European Network on Debt and Development) unites 49 non-governmental organizations from 19 European nations working on issues related to debt development finance and poverty reduction.

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UC picks Richmond for lab biosciences campus

In this post last week, GJEP voiced concerns over the new synthetic biology lab to be built in the San Francisco Bay Area. Today, the site for the lab has been announced. As the project moves ahead, a lot of conversations yet need to happen regarding the real implications of the lab. Some see it as a boon for local economies; others express serious reservations about land-use, jobs, worker health and safety, and the broader implications of synthetic biology for the transition to a truly climate-friendly, just, and equitable world. Stay tuned to Climate Connections for news on community responses to the lab, and ongoing issues locally and globally. — GJEP

Cross-posted from SFGate

Henry K. Lee, Chronicle Staff Writer

(01-23) 10:47 PST RICHMOND — The University of California said today it has chosen a site in Richmond for a new biosciences campus of the Lawrence Berkeley National Laboratory.

The Richmond Field Station, which UC already owns, “presents the best opportunity to solve the lab’s pressing space problems, while allowing for long-term growth and maintaining the 80-year tradition of close cooperation with the UC Berkeley campus,” lab officials said.

The field station is located near Interstate 580 in the southeastern part of the city. Richmond beat out Alameda, Albany, Berkeley, Emeryville and Oakland to win the campus.

UC will now develop environmental impact studies and seek final approval from the U.S. Department of Energy, which contracts with UC to run the lab.

“Each city, community, and their developer partners presented extremely thoughtful and well-formulated proposals for us to consider,” said lab director Paul Alivisatos.

The new lab and its spinoff businesses could transform the surrounding area in Richmond into a thriving scientific hub, with a proliferation of cafes, restaurants and other businesses catering to the hundreds of scientists and researchers expected to work there.

Richmond officials hailed the selection and planned to hold a news conference to discuss the next steps.

“I would like to thank the Richmond City Council for their enthusiastic support for this important economic development project, the many city of Richmond staff members who worked to provide technical support in the decision-making process, and the Richmond community for providing the warm welcome mat that was undoubtedly a major factor in their decision,” said City Manager Bill Lindsay.
Read more:

Richard Brennaman also comments critically on some of the lab site’s environmental concerns at Eats, Shoots, and Leaves.

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Filed under Bioenergy / Agrofuels, budget fight & ecological crisis, Climate Change, Climate Justice, False Solutions to Climate Change, Green Economy, Synthetic Biology

Alameda County Police Beat Students at Occupy Cal, Berkeley

When UC Berkeley students set up tents to establish an Occupy encampment yesterday afternoon, the University police and Alameda County Sheriff’s Department did not hesitate to tear it down. But their actions met immediate protest, to which they responded with brutality. Throughout the afternoon and into the evening, protesters gathered and police sent wave after wave of reinforcements. To see one of several incidents of police brutality, watch this:

By the end of last night, 3000 students had gathered at Sproul Plaza, where the free speech movement was born, and had launched a proposal for a statewide student strike.

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Revealed – the capitalist network that runs the world

by Andy Coghlan and Debora MacKenzie

Cross-posted from New Scientist

AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).

“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”

Previous studies have found that a few TNCs own large chunks of the world’s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy – whether it made it more or less stable, for instance.

The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.

Concentration of power is not good or bad in itself, says the Zurich team, but the core’s tight interconnections could be. As the world learned in 2008, such networks are unstable. “If one [company] suffers distress,” says Glattfelder, “this propagates.”

“It’s disconcerting to see how connected things really are,” agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.

Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system’s behaviour, he says, requires more analysis.

Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Sugihara says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.

One thing won’t chime with some of the protesters’ claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. “Such structures are common in nature,” says Sugihara.

Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, “is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups”. Or as Braha puts it: “The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy.”

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.
When this article was first posted, the comment in the final sentence of the paragraph beginning “Crucially, by identifying the architecture of global economic power…” was misattributed.

The top 50 of the 147 superconnected companies :

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company
* Lehman still existed in the 2007 dataset used
(Data: PLoS One)         

The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)


Filed under budget fight & ecological crisis, Corporate Globalization, Occupy Wall Street, Politics

Occupy Oakland Violently Evicted…for Now (article and photos)

– Report and photos by Jeff Conant

GJEP’s Oakland office is directly across the street from the site of Occupy Oakland — a large public park in front of Oakland City Hall, officially called Frank Ogawa Plaza, but renamed Oscar Grant Plaza by the protesters, in honor of a local African-American youth shot down by transit police two years ago. When I arrived to work this morning, our downtown office building was under extra security, the intersection of Broadway and 14th Street was closed to traffic, and a phalanx of police had cordoned off the square. I learned that the plaza had been cleared by police in the pre-dawn hours; reports of the use of tear gas and flash grenades remain unconfirmed.

Oscar Grant Plaza from above, 9 a.m.

Oakland Local, the most sympathetic and reliable local news sources, reports:

Early this morning, a multi-agency task force, led by Oakland police, with help from Hayward, Emeryville, UC Berkeley, Pleasanton, and other agencies, retook Frank Ogawa plaza, which had been renamed “Oscar Grant plaza” by Occupy Oakland demonstrators. The tent city which had stood for 14 days was depopulated; empty tents and debris lay strewn around the lawn in the wake of the police action. As many as 75 arrests were made, and there were reports of tear gas, and rubber bullets being used. Many downtown businesses are closed, and others disrupted. Around 8:30 am, people began gathering around Broadway and 14th, where a police perimeter remained, yelling and making obscene gestures in a show of anger and frustration.

The Occupy Oakland site, for the past two weeks, has been a vibrant and diverse encampment, made up of over 100 tents pitched right at the foot of Oakland City Hall, where occupiers and visitors made music, set up a library, medical tent, childcare center (I brought my three year-old once for an afternoon of sidewalk chalk and drumming), served meals, and generally brought life to the heart of downtown. An article in the Oakland Tribune contrasted the occupation to the site across the Bay in San Francisco, which was plagued from the first by that city’s unwillingness to allow the protestors to camp. A spokesperson for the city of Oakland told the Tribune  on October 19, “this happens to be a cause that a lot of city officials are sympathetic toward.”

Following, a series of photos shot at the dismantled encampment three hours after the eviction.


Filed under budget fight & ecological crisis, Land Grabs, Occupy Wall Street, Posts from Jeff Conant