Category: Economy

Keeping the faith

In a recent riveting analysis of decision making by President Obama, Praising the Hostage Takers, liberal Paul Leob painfully laments the President’s overweening zeal for compromise.
Will Obama ever hold the Republicans accountable for their reckless and destructive actions? No matter how outrageous their demands, he keeps giving them legitimacy, first resisting, then compromising, then praising the result as bipartisanship. He’s forgotten the basic lesson of negotiation — you don’t hand everything over before you start, particularly to people who have utter contempt for your values and goals. He’s also forgotten the importance of fighting for your principles, so people have a reason to support you.

As I write, top brass from both parties are scrambling to come up with something feasible by Monday morning.  Ultimately, the parties will strike an agreement on easing the deficit crisis, though it’s likely to be bad news for most of us, with options for changing the cost-of living formula for social security, applying a means test to both, and eliminating the mortgage deduction among those on the table.  Meanwhile, no tax increase on incomes above $250, 000.  It’s no secret there’s been a massive transfer of wealth going on to the upper class for some time, ultimately creating something like what you have in South America: you’re basically poor or well off.  The upcoming scenario simply expedites that trend.

In my own case, a retired prof with a still working spouse, my own income from social security and a retirement annuity invested in over the years has been declining even as inflation heats up and Medicare premiums and deductibles soar.  Meanwhile, I’ve not received any cost-of-living payout in social security due to inflation in the last two years. That doesn’t stop the Feds from taxing my social security heavily, as they count my wife’s income as total family income.  It’s worse for others.

The scandal is that fifty percent of Americans pay no tax at all.  Family size, mortgage exemptions, low wages, etc., contribute to this scenario.  Unlike South America, in our country, the poor get attended to and the wealthy get their loopholes.  Wall Street and the banks get their bailouts.  You and I, the middle class, we’re the pack mules

But I want to get back to Obama.  In campaigning for the presidency, he posed as the people’s protector.  On the other hand, he hasn’t walked the talk since getting elected. Loeb, gives us a disturbing litany of what the President has “compromised” away:

Obama’s almost pathological devotion to compromise started early in his presidency. Republicans and a handful of corporate-funded Democrats used the Senate filibuster to block action on issue after critical issue. Instead of calling them to account and marshalling public pressure against them, Obama responded as if their intransigence was reasonable, giving them instant political cover. He did this on health care, financial regulation, and attempts to pass a sufficiently large economic stimulus. On climate change, he tried to prove his reasonableness by allowing offshore oil drilling (just before the BP oil disaster) while securing not a single vote in return. Republican Lindsay Graham was planning to offer precisely this enticement to convince borderline Senators to support at least some price on carbon, and said Obama effectively killed the bill by leaving him with nothing to offer people Obama similarly refused to take a firm stand on ending the Bush tax cuts, which he could have simply let expire. He’s now retreating on the debt ceiling battle, saying he might have to sign off on a deal that cuts spending now a the vague promise of reforming taxes later.

Anything to get the deficit ceiling raised:  erosion of social security, betrayal of the environment, continuation of the Bush tax cuts, perpetuation of corporate loopholes, et cetera ad infinitem! Obama might take a lesson from Ronald Reagan, who raised the deficit several times during his presidency.  Up against it on several occasions, the Great Communicator would take his case to the American people.  And he always won.

Mr. President, call the Tea Party bluff.  No deficit agreement?  So be it! We’ll get through, but the Tea Party won’t.

Mr. President, if nothing else, exercise your Constitution option.  Raise the deficit!  Pay the bills!

We don’t need a Chamberlain buying peace for now, mindless of tomorrow. You don’t betray the American people to placate the opposition.

You want to be liked?  I tell you this: Keep your promises and to paraphrase Carole King, “they’ll come running.”

Food for thought

The news is quite predictable now, with its 24/7 coverage of unrest in the Middle East.  And the contagion is swelling _initially, Tunisia, then Egypt, now Yemen, Bahrain, and just recently, Libya.  Can Saudi Arabia, a critical source of the world’s oil, be far behind?

Most media report the unrest as an unprecedented quest for democratic government and the choices it provides to individuals.  I argue that this over simplifies, not the first time media has done this, of course.  The root causes rest in the economic and, more specifically, in sharply escalating costs for foodstuffs.  To cut to the chase, these are food riots.

According to the United Nation’s Food and Agricultural Organization (FAQ), food prices on the world market have risen 30% over those of a year ago.  In January, these increases reached their highest point in 20 years, plunging 44 million into the already swollen ranks of the impoverished.  According  to World Bank president Robert Zoellick, “It is poor people who are now facing incredible pressure to feed themselves and their families as more than half a family’s income goes just to buy foodstuffs.”

In Egypt,  56% of a person’s income is spent on food.  In Yemen, prices for wheat and wheat products have doubled over the past year.  Wheat dominates North African and Middle East imports of foodstuffs. Gulf countries import 100% of their foodstuffs, offset by oil revenues.

According to the FAQ, which traces monthly international prices of commodity products, including meat, dairy, cereals, oils, fats, and sugar, in just the last 3 months, sugar has risen 20%, oils 22%.  It’s worse with corn, now priced 73% higher than in June, 2010.

The contributing sources to these ills are multiple and largely of human mischief.  


1.  natural calamities:  2010 saw wildfires in Russia due to record breaking temperatures and prolonged drought.  Floods devastated Pakistan and Australia.  In Sri Lanka, floods destroyed 30% of its wheat harvest.  Drenching rains despoiled South Africa of much of its anticipated harvest. (I have written of the connection of volatile weather with global warming in an earlier post.) 


2.  escalating oil prices, driving up transportation costs. 


3.  diversion of cropland for production of biofuels to offset oil import costs.  In the  U.S., government grants oil companies a tax credit for each gallon of ethanol it produces, costing American taxpayers 6 billion dollars annually.  This has resulted in a 40% rise in corn prices on the world market.  

To these factors, I would like to add another often missed: the exponential increase in human numbers and its corollary, increased demand.  In the U. S,, one of the world’s fastest growing industrial nations, population increased from 130 million in 1940, to 150 million in 1950, and now doubled to a current 308 million.  

The UN anticipates a 9 billion world population in 2050, up from just under 7 billion presently. To feed everybody will require more land and water use and decimate forests still further.  Even if we were to succeed, many would remain malnourished and impoverished.  70 million, or two Californias, are added annually to the world’ s population.  While some take solace in declining fertility,  two thirds of Egypt’s population is under age 30.

And whatever happened to the Green Revolution with its high yield grain varieties, innovative pesticides and fertilizers?  The grim  reality is that its initial gains have been swamped by increases in human numbers.  Initially, a catalyst to its early promise was an increasing reliance on irrigation, with unforseen consequences for all in dropping water tables.  India, which became a food exporter, now imports rice, mostly from Australia,   Unfortunately, that windfall may be drying up quite literally.  Australia has cut its rice exports 90% because of prolonged droughts and more recent cyclones.

In China, the water tables are dropping 10 feet a year.  In the U. S, it’s worse, with water levels over past decades dropping 100 feet in Kansas, Oklahoma, and Texas.  By 2025, two thirds of the world’s people will live in locales lacking sufficient water.  Water, not oil, may well mitigate future conflict between nations.

Meanwhile, upheaval in North Africa and the Middle East signals warning of history’s tendency to repeat itself.  Tomorrow, the just returned exiled Muslim Brotherhood cleric Yusuf al-Qaradawi will address a mass rally in Cairo in Tahrir Square.   A brilliant articulator of purist Islam (100 books), he despises the West and loathes Israel.

Food prices?  More important than you thought: they can determine history, affecting us all.