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Pittsburgh steeled to be host city

2009-09-25T15:53:00.000-07:00

By Kevin Connolly BBC News, Pittsburgh

Summit venues are not chosen by accident.

When the Obama administration had to decide which American city should host the G20 gathering, a great deal of thought went into the selection of Pittsburgh, Pennsylvania.

One White House team was on the phone to the Mayor's office making sure the city had the right kind of convention facilities, the right number of hotel rooms and a big enough airport to deal with the 33 national delegations which have somehow ended up being invited to this gathering of the 20 richest nations on earth.

Another was ensuring that the Pittsburgh story told a positive story about Obama's America.

And the White House thinks the city passed both tests with flying colours.

The logistical effort required to host such a huge event is well under way, as is the security operation designed to contain the protesters who will inevitably assemble to make sure their concerns are somehow written into the story of the meeting.

Revival

And the symbolism?

Well, the population of Pittsburgh seems remarkably on-message. Local politicians, business leaders and folks in cafes and bars will all tell you the same story.

Pittsburgh - the grimy old steel town that was a powerhouse of American heavy industry and made its money under choking clouds of smoke from its mills and mines - is no more.

In its place is a clean, green example of regeneration. A city where pleasure cruisers carry tourists between the wooded banks of its three rivers and where people make a living in services such as health and education or in hi-tech business.

No-one puts it better than Frank Coonelly, president of the city's baseball team the Pittsburgh Pirates: "It's a remarkable transformation, not just of the economy but of the city itself from an industrial steel town to a city that now really is driven by hi-tech and service sectors.

"People who think of Pittsburgh as a smoky steel town, when they come in here this week they'll see quite a different thing."

It feels like the perfect message for the Obama administration to send out from a city which is about become the backdrop for 1,000 TV reporters from around the world.

Hidden costs?

On paper, Pittsburgh is a text-book example of how a globalised economy works.

Old manufacturing jobs migrate to cheaper labour markets, so your steel is made in India and China.

Your population educates itself; then moves into the cleaner, more sophisticated service sectors of tourism, healthcare and education.

The problem is that not all Americans agree these policies are working in their interests.

Just a short drive from the city, in the Mahoning Valley of Northern Ohio, plenty of people are troubled by the new world economic order.

While economists may shudder at anything that sounds like the opening shots of a trade war, a meeting of the local United Autoworkers Retired section in Lordstown was delighted by the news that the Obama administration has imposed a tariff on imports of cheap Chinese tyres.

Manufacturing woes

Dave Green, president of the Union Local 1714, argues that businesses in countries like China can only undercut their American rivals because they do not pay the same wages as US companies or operate under the same environmental and safety regulations.

His point: America needs a manufacturing base and cannot afford to allow more manufacturing jobs to migrate to lower wage economies.

"Made in the USA used to really mean something," Mr Green says.

"It used to mean something to my grandparents and my parents as well and we've kind of lost that. It's decimated our jobs here.

"Akron just 40 miles west of here used to be the rubber capital of the world. Ride through Akron now, they make very few tyres. We want fair trade, not free trade."

In nearby Warren they also see globalisation as a process in which the upside to Americans - cheap consumer goods from Asia - is vastly outweighed by the downside, which is a steady of haemorrhaging of jobs to the very people who make those cheap goods.

In his family's restaurant, the Saratoga, Jim Economos lists the industries that have closed.

"We used to make all the water fountains for the world, we used to make compasses, we made kitchen cabinets, we made all the electrical parts for GM and all different kinds of steel.

"Hopefully they'll be coming back, but everyone is closing up or moving out," he adds.

Pros and cons

So, very close to Pittsburgh with its stirring symbolic story of regeneration and post-industrial prosperity lies this other America of the Mahoning Valley where they see the costs of globalisation in their closed-down factories and derelict buildings on Main Street.

What they do not see for the moment is any benefit to balance that cost.

As one local said: "We can't have an economy where we just serve each other meals and dry clean each other's clothes. We have to start making things again."

The hard-working chamber of commerce in Warren is sending a representative down to Pittsburgh for the G20 talks.

It would be nice to think he might get a little face time with one or two of the world leaders gathering there. He has a story worth listening to.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8271496.stm

Published: 2009/09/23 22:35:34 GMT

Emphasis on Growth Is Called Misguided

2009-09-23T13:06:00.000-07:00

September 23, 2009

By PETER S. GOODMAN, New York Times

Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.

In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.

“What you measure affects what you do,” Mr. Stiglitz said Tuesday as he discussed the study before a gathering of journalists in New York. “If you don’t measure the right thing, you don’t do the right thing.”

According to the report, much of the world has long been ruled by an unhealthy fixation on swelling the gross domestic product, or the quantity of goods and services the economy produces. With a singular obsession on making G.D.P. bigger, many societies — not least, the United States — failed to factor in the social costs of joblessness and the public health impacts of environmental degradation. They allowed banks to borrow and bet unfathomable amounts of money, juicing the present by mortgaging the future, thus laying the ground for the worst financial crisis since the 1930s.

The report is more critique than prescription. It elucidates in general terms why leaning exclusively on growth as an economic philosophy may yield unhappiness, and it suggests that the incomes of typical people should be weighed more heavily than the gross production of whole societies. But it sidesteps the thorny details of slapping a cost on a ton of pollution or a waylaid career, leaving a great mass of policy choices for others to resolve.

Some Americans may reflexively reject the report and its recommendations, given its provenance: it was ordered up last year by President Nicolas Sarkozy of France, whose dissatisfaction with the available tools of economic assessment prompted him to create the Commission on the Measurement of Economic Performance and Social Progress. Tuesday’s briefing was held in an ornate room at the French consulate. The official French statistics agency is already working to adopt the report’s recommendations. Mr. Sarkozy plans to bring it with him to the G-20 summit meeting in Pittsburgh this week, where the leaders of major countries will discuss a range of policy issues.

But whatever one’s views on the merits of European economy policy, and wherever one sits on the ideological spectrum, these appear fitting days to re-examine how economists measure vital signs — particularly in the United States.

By most assessments, the American economy is now growing again, perhaps even vigorously. Many experts expect a 3 percent annualized rate of expansion from July through September. As a technical matter, the recession appears to be over. Yet the unemployment rate sits at 9.7 percent and will probably climb higher and remain elevated for many months. In millions of households still grappling with joblessness and the tyranny of bills, signs of health served up by the traditional economic indicators seem disconnected from daily life.

This was precisely the sort of contradiction Mr. Sarkozy sought to unravel when he created the commission, tasking it with pursuing alternate ways of measuring economic health.

To head the panel, he picked Mr. Stiglitz, a former World Bank chief economist whose best-selling books amount to an indictment of the Washington-led model of global economic integration. Mr. Sarkozy also selected Mr. Sen, a Harvard economist and an authority on poverty.

The resulting report amounts to a treatise on the inadequacy of G.D.P. growth as an indication of overall economic health. It cites the example of increased driving, which weighs in as a positive within the framework of economic growth, as it requires greater production of gasoline and cars, yet fails to account for the hours of leisure and work time squandered in traffic jams, and the environmental costs of pollutants unleashed on the atmosphere.

During the real estate bubble that preceded the financial crisis, the focus on economic growth helped encourage overbuilding and investment in real estate. Mr. Stiglitz argues that the single-minded focus on growth gave American policy makers a false sense of assurance that their policies were virtuous, as they allowed financial institutions to direct virtually unlimited sums of money into real estate and as consumer debt levels built with unrestrained momentum.

Credit enabled spending, and spending translated into faster growth — an outcome that was intrinsically good, and never mind how long it might last or the convulsions that would accompany the end of easy money.

A growth-oriented policy encouraged homeowners to borrow as if money need never be repaid, and industry to produce products as if the real cost of pollution were zero, Mr. Stiglitz added.

“We looked to G.D.P. as a measure of how well we were doing, and that doesn’t tell us whether it’s sustainable,” he said at the briefing. “Your measure of output is grossly distorted by the failure of our accounting system. What began as a measure of market performance has increasingly become a measure of social performance, and that’s wrong.”

Instead of centering assessments on the goods and services an economy produces, policy makers would do better to focus on the material well-being of typical people by measuring income and consumption, along with the availability of health care and education, the report concludes.

Many of these prescriptions will no doubt resonate with policy makers and ordinary people.

Indeed, the difficulty comes in turning these general principles into new means of measurement. The report notes that its authors concur on the big picture, but diverge on the methodologies to be employed when it comes to factoring in the value of a better education and cleaner skies.

The old mode of measurement has taken a beating, and yet the new one, it seems, is still a work in progress.

Will investors show an appetite for local food?

2009-09-22T11:06:00.000-07:00

Green venture capitalists are sought to back organic growers, independent food merchants, farmers markets and restaurateurs

By Cyndia Zwahlen, The Los Angeles Times

September 22, 2009

The Let's Be Frank food trailer parked most days outside the old Helms Bakery complex in Culver City is no ordinary lunch wagon.

The San Francisco company that operates the hot-dog vendor serves franks and sausages made from cows that ate only grass or pigs that were raised humanely. Customers also can choose turkey or soy dogs, all on buns from L.A. Breadworks.

The small business was funded in part by venture capitalist Peter Rogers and his Dry Creek Ventures, which targets clean energy, water and food businesses.

Such small local food outfits, especially those that are gentle on the environment, are key to the long-term health of the economy but need formal access to local investors to succeed, says social venture-capitalist and entrepreneur Woody Tasch.

Shifting capital to organic farmers, independent food entrepreneurs, farmers markets and restaurateurs will pay off in stronger local economies, a healthier environment and improved supplies of affordable, healthful food, Tasch said.

He founded Slow Money Alliance last year to spearhead the creation of regional networks of local investors that want to put their money into local enterprises.

"We've had the life sucked out of our society and economy by financial markets run amok and globalism run to extremes," Tasch said. Slow Money is "part of a network emerging of people who want to repair the damage."

The Brookline, Mass., nonprofit, which was inspired by the Slow Food International local-food movement, had its first national meeting in Santa Fe, N.M., two weeks ago. Investors, investment bankers, entrepreneurs, farmers and others from around the world debated how best to build the networks. A team of five Southern California members, including chef and entrepreneur Gordon Smith of San Diego, will lead the efforts to build a regional network in the Southland.

Tasch says he feels a sense of urgency in shifting capital to local food businesses. He believes that the agriculture and food industry is ultimately as unstable and vulnerable to collapse as the global credit markets turned out to be.

Supermarkets full of cheap food have blinded people to the risk much as the 10%-plus annual returns on their stock portfolios lured people into a false sense of financial security before the recent global financial markets collapsed, he said.

"We have an industrial food system that is as imbalanced as the credit markets are, in terms of loss of biodiversity and aquifer depletion and soil depletion, leading to food systems as vulnerable to a massive correction as the credit markets are," said Tasch, author of "Inquiries Into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered."

What is slow money?

A network of investors, donors, entrepreneurs and others committed to building and steering major new sources of capital to local food systems. More broadly, it's part of a larger questioning in the wake of the financial craziness of the last X number of years, part of an emerging dialogue of fundamentally rethinking how to repair some of the problems of globalization and, including, markets gone crazy.

How can slow money help small local businesses?

Local food systems are just one pillar of local economies. Small businesses that have more direct, strong connections to their local customers and investors from the region are going to be more resilient and stronger businesses. This is all about building relations on local and regional levels of enterprises on one side and investors on the other.

Are you creating these networks from the ground up?

It's a big job, and it needs to happen relatively quickly for our health and security in face of future shocks of various kinds. Depending on how much money starts coming through Slow Money, we would be seeking to put that network in collaboration with existing networks and intermediaries to the extent possible. Where needed, we are also very willing to create new ones.

You want to create new capital markets to invest in sustainable, local, food-related businesses?

That's the beauty and challenge of what we are doing with Slow Money. It's not a typical fund structure. We didn't go to market to raise a $100-million fund. We are actually gathering a lot of people with us and looking at how can we do this on a mass scale.

How can we take it forward and have maximum impact in the shortest amount of time? Because I feel a real sense of urgency. There is a chance we can actually get organized around this and then move as fast as we can in other sectors.

Many small-business owners are struggling in the recession. Why should they take the time and possible risk to find more local places to invest their money?

This is a transition. This is not one-size-fits-all. But it's a direction people know deep down we need to go in, so people just need encouragement and to take whatever small steps they can.

People shouldn't feel like they have to jump overboard, but let's realize as a society and economy that we are very imbalanced right now, dependent on distant sources of supplies from people we don't know. It sounds like I am an isolationist, and I don't mean it that way. But an element to this is we are not in control; we are not creating what we need.

Where can a small-business owner or entrepreneur find slow-money investors?

Well, individual investors around the United States are just starting to, let's say, recognize the need to do this and are already expressing the desire to. There is no organized structure for doing this, and that is exactly what we are trying to figure out how to set up.

We have had five regional workshops around the country, including in Point Reyes, Calif., and that's just the beginning of the process, to sort of support the desire that is already being expressed around the country for people to come together in regions and begin to create a slow-money marketplace or fund or exchange, whatever you want to call it.

It's a lot easier to raise a single fund and invest in a portfolio and go home. But we have this desire, the intention, to try to support the evolution of this quickly. We need slow money, quickly.

smallbiz@latimes.com

Fool's Gold, By Gillian Tett

2009-09-12T15:43:00.000-07:00

How the geeks broke the banks

Reviewed by Stephen Foley

Friday, 1 May 2009

At some point during Gillian Tett's absorbing 15-year gallop across the Wild West of the world's financial markets, the reader will find themselves snapping away from the page and saying, "Hang on a minute. This is nuts."

Would that we had had this narrative in real time. We are familiar enough with the chain reaction of explosions that began two years ago, deep in the credit markets, closing in on the real economy until they blew up our pensions, house prices and job prospects. But the question of when the time- bombs were set – and by whom, and how –remains a subject of bewilderment to victims all around the globe.

In bewilderment and loss, there is the natural inclination to lash out, to rip apart the institutions of capitalism and give in to the temptations of the mob. The employees of collapsed insurer AIG feel the need to hire private security to protect their homes in the US, and the British public smiles a tolerant smile on news that "protestors" had thrown bricks through the window at the home of Fred Goodwin, former boss at Royal Bank of Scotland.

The sub-title of Fool's Gold panders to this, suggesting "unrestrained greed" will be what gives this narrative drive, but thankfully – and unsurprisingly for those who have followed her journalism, or her academic background in anthropology – Tett's book is much more challenging than that. The story is told from the perspective of a tight-knit team of bankers at the US powerhouse JPMorgan, whose pioneering work in the 1990s included the invention of the credit default swap, probably the most important credit derivative. Theirs is the "dream" of Tett's sub-title, that by allowing banks to swap their loan risk to other investors, the business of finance could be made safer, and banks freed up to offer more credit to businesses that needed it.

The bout of excess that their inventions unleashed is different in many ways from the testosterone-dripping 1980s, which spawned Wall Street tell-alls such as Liar's Poker or Barbarians at the Gate, books populated with "big swinging dicks" and "masters of the universe". Tett makes the best of some hi-jinks at a JP Morgan brainstorming retreat (golf buggies raced around the hotel lawn) and wacky "bow-tie days" in the office, but the point about this Wall Street bubble is precisely that it was inflated by geeks operating in the least flashy area of finance.

We are taken back to the mid-1990s, a period of intellectual ferment. For centuries, banks had lent money to clients only after carefully judging the risks and setting aside capital to cover potential losses. Default risk was seen as an inevitable part of banking. But that changed thanks to credit derivatives, which allowed that risk to be turned into a financial product which could be sold as if it were shares, bonds or oil. If that sounds complicated, it was – and trading "risk" was only possible because of computer models that factored in all sorts of assumptions about the economy and the borrowers in order to to come up with a plausible price.

It is somewhere through Tett's patient explanations of each new invention – the CDOs, the CDOs of ABS – that the reader will have their "Hang on a minute" moment. Eventually, the risk of all the loans being made to real businesses and mortgage holders had been sliced and diced so many times that finance had become, literally, detached from reality. Trouble is, the models simply did not predict that so many of underlying loans could go bad all at once. It seems obvious in retrospect, that the lenders cared so much less about the quality of the borrower now that they were selling the risk to someone else. But that wasn't in the models.

Tett was appointed to cover the capital markets for the Financial Times in 2005. With an outsider's eye, she was soon warning that what most people assumed was a backwater was in fact harbouring a profoundly new and bloated kind of finance, whose risks were being dangerously underestimated. Her warnings came too late, of course, but her account of the road to catastrophe has been keenly awaited.

The one downside of her approach is that we are never with those most culpable for the catastrophe. The team at JP Morgan never made CDOs out of mortgages, and are baffled that anyone could even create a model convincing enough to price such a thing. Similarly, JP Morgan decides to insure against losses on the super-safe slices of CDOs that it keeps on its own books, just in case, and everyone if baffled to discover that Citigroup does not take out such insurance.

JP Morgan is the one major bank to have emerged with its reputation actually enhanced. No wonder its executives have been happy to assist Tett's work. Citigroup, once the largest bank in the US, looks like it is about to be effectively nationalised. Its story will also need to be told. The same goes for the credit rating agencies, the "priests in the medieval church", in Tett's fine description, who spoke a financial Latin "which few in their investor congregation understood" but who conferred "guidance and blessings". One suspects that, given a fair hearing, the individuals inside these institutions, too, would have a more complicated tale to tell than one of "unrestrained greed".

Ever the anthropologist, Tett sketches a system in the grip of a great error, emanating outwards from a cadre of elite traders who were able to repel any attempt to monitor, question or restrain them. Greed is in there. Fear, too, of being left behind by the competition. We know there was fraud, and wilful negligence. There was also a lack of inquisitiveness in journalism, and poverty of imagination among regulators. Fool's Gold resists simple answers to a complex disaster – and so should we.

Stephen Foley, 'The Independent''s North American business correspondent, was named Business and Finance Journalist of the Year at the British Press Awards.

Definancialisation, Deglobalisation, Relocalisation

2009-09-02T15:28:00.000-07:00

Dmitry Orlov

This talk was presented at The New Emergency Conference in Dublin, on June 11, 2009.

Excerpt: How to lose all your money (but have something to show for it)

Most of the wealth is in very few private hands right now. Governments and the vast majority of the people only have debt. It is important to convince people who control all this wealth that they really have two choices. They can trust their investment advisers, maintain their current portfolios, and eventually lose everything. Or they can use their wealth to reengage with people and the land in new ways, in which case they stand a chance of saving something for themselves and their children. They can build and launch lifeboats, recruit crew, and set them sailing.

Those who own a lot of industrial assets can divest before these assets lose value and invest in land resources, with the goal of preserving them, improving them over time, and using them in a sustainable manner. Since it will become difficult to get what you want by simply paying for it, it is a good idea to establish alternatives ahead of time, by making resources, such as farmland, available to those who can put them to good use, for their own benefit as well as for yours. It also makes sense to establish stockpiles of non-perishable materials that will preserve their usefulness far into the future. My favourite example is bronze nails. They last a over a hundred years in salt water, and so they are perfect for building boats. The manufacturing of bronze nails is actually a good use of the remaining fossil fuels - better than most. They are compact and easy to store.

Lastly, it makes sense to work towards orchestrating a controlled demolition of the global economy. This calls for a new financial skill set: that of a disinvestment adviser. The first step is a sort of triage; certain parts of the economy can be marked "do not resuscitate" and resources reallocated to a better task. A good example of an industry not worth resuscitating is the auto industry; we simply will not need any more cars. The ones that we already have will do nicely for as long as we'll need them. A good example of a sector definitely worth resuscitating is public health, especially prevention and infectious disease control. In all these measures, it is important to pull money out of geographically distant locations and invest it locally. This may be inefficient from a financial standpoint, but it is quite efficient from the point of view of personal and social self-preservation.

Dmitry Orlov was born in Leningrad and immigrated to the United States at the age of 12. He was an eyewitness to the Soviet collapse over several extended visits to his Russian homeland between the late eighties and mid-nineties. He is an engineer with a BS in Computer Engineering and an MA in Applied Linguistics. Orlov describes in his book Reinventing Collapse "the waning days of the American Empire". He explains how the US administration finds itself mired in political crisis, how its foreign policy has come under sharp criticism; and why the economy is in steep decline. Orlov believes that these trends mirror the experience of the Soviet Union in the early 1980's. By examining the circumstances of the demise of the Soviet superpower, Orlov offers clear insights into how the world might prepare for coming events.

Peak Oil’s Marketing Problem

2009-08-31T14:11:00.000-07:00

August 27, 2009

jenny goldstein, Earth Matters

This week’s Op-Ed in the New York Times titled “Peak Oil is a Waste of Energy” by energy consultant Michael Lynch was a virtual pandora’s box, judging from the number of comments left by readers. Any op-ed piece is self-evidently open for dispute, and dispute this one the New York Times’ readers did. I’m almost as fascinated by the smart, and largely negative, reactions to the piece as I am by Lynch’s anti-peak oil rhetoric itself.

Many scientists and social scientists take M. King Hubbert’s infamous bell-shaped “peak oil” curve as gospel on the planet’s finite oil reserves. And why not? If you trust that we are extracting oil at a faster rate than the earth produces it, then oil is a non-renewable resource. So it makes sense that at some point we, the oil drinkers, will hit rock-bottom and understandably, we want to know when that day will come.

The equation behind peak oil that Hubbert originally devised back in 1956 is deceivingly simple, though widely misunderstood. As Kenneth Deffeyes explains in his entirely readable Beyond Oil: The View from Hubbert’s Peak, Hubbert’s peak oil theory rests on the assumption that our ability to produce oil is linearly dependent on the fraction of oil remaining. In other words, the less oil that is left in the earth, the less we will be able to produce because what remains is harder to get at. What remains also ain’t cheap, though Hubbert never said much about prices.

What follows from this is Hubbert’s theory as an elegant equation. Without putting it in proper algebraic terms, Hubbert’s peak oil theory tells us that the peak of oil production occurs when half of a region’s oil has been recovered, and half remains. When a given geographical region’s—whether it’s the United States’, Saudi Arabia’s, or the world’s—cumulative oil production in relation to the fraction of oil remaining is plotted over time, beginning with any date on which the cumulative production of that region is known (e.g. in 1972 the US had produced a cumulative 100 billion barrels of oil), what emerges is a symmetrical bell-shaped curve. I happen to be extraordinarily bad at math, so I leave it at this: back in 1956, Hubbert predicted US oil production would start to decline in the 1970s. It did. When petroleum geologists apply his theory to global oil production, they come up with a year sometime…in our lifetime. The significance of this, however, is not that oil will disappear overnight or even seem less abundant. It’s that the real cost of oil will continue to increase.

As a skeptic of this proposition, Lynch calls attention to the fact that peak oil theory does a shoddy job of accounting for many other factors that influence global oil production, such as fluctuating demand, localized political disputes, and the discovery of new, however hard to reach, oil fields (see: current economic crisis, Nigeria, and 23,000 feet off the coast of Brazil for corresponding examples). He’s right, Hubbert never took any of those things into his calculations. Nor did Hubbert account for rising carbon dioxide in the atmosphere as a near-direct result of oil production and yet we still know how that’s turned out.

But peak oil isn’t just a theory, it’s also a gimmick. We’re missing the point if we debate the validity of the former rather than the latter. Lynch sets out to debunk peak oil, the theory, to which you either agree with his refuting points or stick squarely to Hubbert (so long as you know what Hubbert actually proposed), and concludes by advocating for low oil prices. It remains to be seen how successful he was at debunking Hubbert’s theory; I’m not sure that he was. But regardless of the holes in Hubbert’s theory, peak oil, the gimmick, still serves to remind us that some day the oil will be gone, out of our reach, or most likely of all, extraordinarily expensive. Peak oil, as a way of understanding the real costs–political, economic, environmental–embedded in oil production regardless of the day’s market price per barrel, needs to live on. Perhaps the gimmick has gotten stale, or never had a good ad campaign behind it anyway. Maybe it’s time for a new marketing strategy. Just don’t change peak oil’s point.

Jenny Goldstein

A native of New York and current resident of Santa Monica, CA, Jenny Goldstein is also a doctoral student in geography at the University of California, Los Angeles. She writes on and researches the interactions between local and global food systems, the politics of taste within the international coffee industry, and environmental conservation and development. She has conducted fieldwork in Rwanda, Ethiopia, Japan, and California. You can find her website at www.rootingforfruit.com.

Guest Blog: SMALL Farmers CAN Feed the World

2009-08-05T15:24:00.000-07:00

Wednesday, August 5, 2009

By John Ikerd

The fundamental problem with the recent Wall Street Journal piece ("Farmers Can Feed the World") is that it focuses only on the narrow, short run effects of his scientific specialty -- crop genetics -- while ignoring its long run economic and social consequences.

First the hunger problem exists not because of a lack of food, or inherent ability to produce food, but because of a lack of economic opportunity among those who are hungry. The market economy, which Borlaug exalts, provides food in relation to peoples' ability to pay, not in relation to their needs.

People are hungry because they are poor and Borlaug's proposed solutions to hunger only contribute to their continuing poverty. That's why there are more hungry people in India today than before his Green Revolution, even thought India has become a net "exporter" of grain. The few farmers who can afford the high-tech seed, fertilizers, and pesticides are producing grain for more profitably export markets, while depriving the poor of the land needed to feed their own families.

I just talked with a young Indian agricultural writer who was describing the massive farmer suicide problem in India, a direct consequence of Green Revolution cropping technologies which have deprived India's small farmers of the ability to feed their families. I recently served on the review committee for PhD student at an Indian university which documented rising levels of malnutrition in India which is highest in areas where Green Revolution technologies are most common.

Borlaug conveniently ignores the indisputable fact that genetic engineering gives giant multinational agribusiness corporations control over food production and these corporations are in business to make money for their stockholders, not to ensure that the poor people of the world, and thus the hungry, are able to feed themselves.

Even more important, corporate competition, by depressing domestic food prices, forces poor farmers off the land they use to produce for food for their families. Poor farmers need some amount of cash income, which they traditionally have received from selling their meager crop surpluses. The devaluation of their surpluses deprives them of the cash income they need to survive on their farms. This forces them into the cities where they are unable to find employment that will allow them to feed their families -- even though domestic food prices are lower. Borlaug conveniently ignores the complexities of life in the largely rural subsistence societies. He just assumes that if more food is produced there will be less hunger. His own Green Revolution has proven him wrong.

So what about the ability of people to feed themselves with organic or other sustainable farming systems and with more local and regional food systems. First, a sustainable agriculture is not an alternative, it is an absolute necessity for the future. The one thing we know for sure is that we can't feed a growing population with a fossil energy dependent, environmentally degrading food system in an increasingly polluted world that is running out of fossil energy.

The synthetic chemical fertilizers and pesticides upon which Borlaug's high-tech production systems depend all rely heavily on fossil energy and all pollute the environment and degrade the natural productive capacity of the land. The corporations that support Borlaug's work aren't interested in developing farming systems that reduce the dependence of society on fossil energy or chemical inputs. In fact, they do everything they can to discourage the development of such systems, because depend on selling commercial inputs to make profits. Borlaug focuses only on short run productivity, not on long run sustainability.

In addition, our current global food system is largely a consequence of cheap fossil energy. As fossil energy becomes more scarce and more costly, our food systems, as well as all other segments of our economy, are going to be more local and regional by economic necessity.

Finally, there are a host of studies that indicate that farmers can produce as much or even more per acre using organic and other sustainable farming practices; it's just takes more innovative, creative, knowledgeable, caring farmers. Sustainable farming is more management intensive because sustainable farming requires that farmers understand nature and work with nature, rather than use chemicals and machines to conquer nature. So what's wrong with having more farmers? The corporations don't want more sustainable farmers because sustainable farming shifts farming profits from corporate stockholders to farmers.

If you don't think that local, organic food systems can feed masses of people check out Riverford Organics website http://www.riverford.co.uk/. They serve 50,000 customers each week with local foods. Sustainable local foods system are not about going back to the past, as Borlaug claims, they are about moving forward to address the realities of the future.

If we were really serious about addressing problem of hunger we could helping farmers everywhere develop sustainable farming systems to feed themselves and to provide wholesome, affordable foods for people in their own local and regional markets. Unfortunately, there is more profit for corporations and more wealth and fame for scientists in the extractive and exploitative practices of a corporate, global, industrial agriculture.

John I.
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John Ikerd
5121 S. Brock Rodgers Rd.
Columbia, MO 65201
phone: 573-874-0408
email: JEIkerd@centurytel.net
website: http://web.missouri.edu/~ikerdj/

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Author of: "Sustainable Capitalism"
Kumarian Press http://www.kpbooks.com
"A Return to Common Sense"
R. T. Edwards http://www.rtedwards.com/books/171/
"Small Farms are Real Farms"
Acres USA http://www.acresusa.com/other/contact.htm
and "Crisis and Opportunity: Sustainability in American Agriculture"
University of Nebraska Press http://nebraskapress.unl.edu

A Growing Need, the Need to Grow

2009-08-05T13:59:00.000-07:00

Driven by a combination of a need for security and a desire for a better lifestyle a growing percentage of Americans are finding their way back to the land.

This is the perspective of Makina which believes there is a growing market opportunity to develop new types of vibrant communities tied directly to natural resources.

The development model that Makina is pursuing focuses, at the most basic level, on opportunities where communities can be sustainably established through the use of appropriate technologies and practices. Beyond that Makina looks for opportunities where the community can be tied to a natural resource and a strong market for that resource.

Because preserving the economic value of the resource is a key to the project’s success, Makina looks for unique solutions in the development of the land that preserves and enhances the sustainability of the resource by protecting the environment and providing for a vibrant place for people to live and work.

Makina is currently is working with a land owner in Washington State who owns a 700 acre parcel in South Puget Sound.

The site has many attributes which fit the model including substantial water rights, quality soils and micro-climate and access to major markets of the Seattle metropolitan area.

It is a beautiful site nestled in the fork of two rivers, surrounded by forest land.

The project is in the pre-development phase. It currently contemplates the following plan elements:

· A branded organic field and greenhouse produce operation.

· A grass fed beef operation and an organic fed poultry operation.

· The residential development set outside the prime resource land.

· Arrangements with various agencies for wildlife protection and stream embankment protections.

· A residential ownership model whereby the residents own a share of the farm corporation.

Makina is in the due diligence phase testing both the farming and residential assumptions and working with the owner to optimize ownership and operational values.

It is Makina’s intent to perfect the development plan with the owner and bring equity investment to the project and adequately capitalize the project.