By NICHOLAS D. KRISTOF
SolidarityEconomy.net via NYTimes

Feb. 4, 2012 - A BATTLE between a class of fourth graders and a major movie studio would seem an unequal fight.

So it proved to be: the studio buckled. And therein lies a story of how new Internet tools are allowing very ordinary people to defeat some of the most powerful corporate and political interests around — by threatening the titans with the online equivalent of a tarring and feathering.

Take Ted Wells’s fourth-grade class in Brookline, Mass. The kids read the Dr. Seuss story “The Lorax” and admired its emphasis on protecting nature, so they were delighted to hear that Universal Studios would be releasing a movie version in March. But when the kids went to the movie’s Web site, they were crushed that the site seemed to ignore the environmental themes.

So last month they started a petition on Change.org, the go-to site for Web uprisings. They demanded that Universal Studios “let the Lorax speak for the trees.” The petition went viral, quickly gathering more than 57,000 signatures, and the studio updated the movie site with the environmental message that the kids had dictated.

“It was exactly what the kids asked for — the kids were through the roof,” Wells told me, recalling the celebratory party that the children held during their snack break. “These kids are really feeling the glow of making the world a better place. They’re feeling that power.”

The opportunities for Web naming-and-shaming through Change.org caught my eye when I reported recently on sex traffickers who peddle teenage girls on Backpage.com. I learned that a petition on Change.org had gathered 86,000 signatures calling for the company to stop accepting adult ads.

My next column was about journalists being brutalized in Ethiopian prisons. A 19-year-old college freshman in Idaho, Kelsey Crow, read the column and started a petition to free those journalists — and in no time gathered more than 4,000 signatures.

Does that matter? Does Ethiopia’s prime minister, Meles Zenawi, care what a band of cyber citizens thinks of him? Skepticism is warranted, but so far Change.org petitions have seen some remarkable successes.

Ecuador, for example, used to run a network of “clinics” where lesbians were sometimes abused in the guise of being made heterosexual. A petition denouncing this practice gathered more than 100,000 signatures, leading Ecuador to close the clinics, announce a national advertising campaign against homophobia, and appoint a gay-rights activist as health minister.

The masterminds of the successful campaigns aren’t usually powerful or well-connected. Mostly, they just brim with audacity and are on a first-name basis with social media.

Take Molly Katchpole. Last fall, as a 22-year-old nanny living in Washington, D.C., she was peeved by a new $5-a-month fee for debit cards announced by Bank of America, with other banks expected to follow. She took an hour to write a petition, her first.

“After a month it had 306,000 signatures,” Katchpole told me. “That’s when the banks backed down.” Bank of America and other financial institutions withdrew plans for the fee.

Soon afterward, she started a second petition, protesting a $2 charge imposed by Verizon for paying certain bills online. In 48 hours it had attracted more than 160,000 signatures — and Verizon withdrew the fee.

Katchpole parlayed her successes into a job with a new advocacy group, Rebuild the Dream, which seeks to improve the economic well-being of middle-class families.

As for Change.org, it is growing explosively. Founded in 2007, it is a B Corporation — a hybrid of a for-profit company and a charity, seeking to make profits for social good — and began to soar a year ago. It is now growing by one million members a month.

“We’re growing more each month than the total we had in the first four years,” said Ben Rattray, 31, the founder. He said that 10,000 petitions are started each month on the site, and that each success leads to countless more copycat campaigns.

Change.org has grown from 20 employees a year ago to 100 now, in offices on four continents. By the end of this year, Rattray plans to have offices in 20 countries and to operate in several more languages, including Arabic and Chinese. He recognizes that the site may be blocked in China, but shrugs.

“If ultimately we’re not getting leaders to ban our site, we’re not doing our job,” he said.

Meanwhile, what about those 14 kids in Wells’s fourth-grade class? I asked them what their next initiative on Change.org would be. They are still discussing options, but one possibility is to reduce waste by calling on companies to stop bombarding the public with telephone books and instead distribute them only to people who request them.

It’s absurd to think that 14 fourth graders could accomplish anything so sensible. But then again, they’ve already shown that the Web can turn the world upside down.

I invite you to comment on this column on my blog, On the Ground. Please also join me on Facebook and Google+, watch my YouTube videos and follow me on Twitter.

More in Opinion Sun. 8pm (8 of 24 articles) Editorial: Politics and the Supreme Court

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The Essentials for the Necessary

Transition to a Renewable Energy Economy

By Jon Rynn
SolidarityEconomy.net via AlterNet.org

Jan 28, 2012 - Fossil fuels are going to disappear, whether we like it or not. Petroleum, natural gas, and coal are becoming scarcer, harder to extract and a greater danger to the global climate.

If we proceed with business-as-usual, energy companies will take advantage of increasing scarcity to dominate the world economy by vacuuming up more money from the 99%. They will be able to ally with military and financial institutions to construct an energy-military-financial complex that could eventually reduce most of the rest of us to a form of debt peonage.

On the other hand, if we could possibly elect a government that does what governments do best – build infrastructure – we can avoid a world of global warming and economic collapse by building enough wind farms, solar panels, and geothermal systems to power our economy and ignite a sustainable, broad-based period of economic growth. Of course, this will require a sea-change in the direction of the political system, along the lines of the Occupy movement, but there is too much at stake to throw up our hands in despair.

The unfolding energy drama presents progressives with several dilemmas. Some are suspicious that oil scarcity can be used as a ruse by the oil companies and speculators to spike prices. Roger Altman recently argued that a larger supply of fossil fuels will lead to less international tension. More generally, progressives sometimes fear that advocating for less oil use will be seen by the public as an attack on the American Dream of a car in every garage and a single family home for every family.

But in addition to problems of scarcity and extraction, fossil fuels are bringing us towards extremely dangerous climate change. We need to have some answers or else the Right will simply keep up with the chant of “Drill baby drill.” It's time to counter with, “Build, build, build!"

Dirty fuels Create an Unsustainable economy

The question of the future of the supply of fossil fuels is not an easy one to answer. Oil producing nations, for instance, are not at all transparent about their supplies. Technologies constantly change, and so do environmental hazards. However, if we look at the current state of fossil fuel industries, it should be clear that we are in trouble.

1) Natural gas. Natural gas production is being kept alive by the development of hyrdrofracturing technology, or “fracking." As AlterNet has reported, an official with New York State stated that fracking will contaminate water supplies. His is only the most recent statement of a widespread concern about the dangers of this new practice. France has temporarily banned fracking, and New York State is considering how to proceed, but one would hope that the possibility of making New York City uninhabitable because of contaminated water would focus minds considerably.

Beyond environmental concerns, the corporate hype surrounding fracking as a “game changer” is false. Even the Energy Information Administration, generally a cheerleader for the industry, predicts that with fracking American natural gas production will increase by only 31 per cent by 2035. That increase probably won’t even cover growth of the economy, and even so there is talk of exporting natural gas, which will decrease the amount available for domestic use even further. The problem is one that is endemic to the current fossil fuel industry – the conventional methods of extraction are leading to precipitous drops in production as fields are sucked dry, so extreme extraction is the only route left.

2) Oil. The environmental situation is at least as bad in the case of petroleum production, as we saw in the Gulf of Mexico in 2010. Despite industry trumpeting of new technological breakthroughs, the underlying fact is this: oil companies would not be oil-fracking, drilling multi-mile pipes underwater, exploring the Arctic and cooking tar sands if they could do what they did for the first 100 years of the oil age -- drill into pressurized deposits of oil that are conveniently situated below solid, dry, accessible land. The energy gained compared to the energy needed to discover oil has collapsed from 1200 to 5 in the last 100 years. By contrast, wind energy now returns 25 times the energy needed to provide it.

Despite all of the new oil extraction techniques, global production of petroleum has stagnated since about 2005. This plateau in production is referred to as “peak oil” by activists who are concerned about how a civilization that requires oil for its transportation needs will survive if the supply should start to shrink precipitously. As scarcity leads to higher gasoline prices, economies stop growing, which leads to less demand for gasoline and then, temporarily, lower prices, until demand lifts the price again, and the cycle repeats itself.

Meanwhile, in a desperate attempt to stave off the inevitable, societies encourage dirtier and dirtier methods of extraction. Nigeria, a major oil exporter, illustrates this irony. The problem of peak oil is exacerbated by the decrease in exportable production, because big exporters like Nigeria and Saudi Arabia keep using more oil for their own use. When the Nigerian government tried to eliminate gasoline subsidies, riots ensued, a process that has repeated itself throughout the oil-producing nations, thus decreasing the amount of oil available for oil importers. This rioting occurred at the same time that Nigeria’s oil rich delta experienced a terrible oil spill, an area that endures an Exxon-Valdez-sized spill every year.

The Canadian tar sands may be the worst of all fossil fuel disasters, not only because thousands of miles of forest and large deposits of water are destroyed, but because the extra carbon emitted from these formations may mean “game over” for the climate, to use eminent climatologist James Hansen’s phrase. The reason Hansen is so worried about the tar sands is because his scenario for avoiding the worst of global warming is to stop using coal, but only if oil production peaks and declines, as peak oil activists predict. If more, dirtier oil flows, then you could shut down all the coal plants and the biosphere would still be in big trouble.

3) Coal. Coal use, at least in the U.S., is indeed declining , although not fast enough – and it is still increasing rapidly in China.  But even coal is experiencing supply problems, as China has to import 40 percent of its supplies. The data on coal is even less reliable than the data for petroleum, but some experts have predicted a peak in production as early as 2020. Meanwhile, coal, like oil and increasingly natural gas, continues to wreak death and destruction on its environment.

4) Nukes and biofuels. Uranium is not a fossil fuel, but it is a fuel, as are biofuels, which also have very negative consequences for the environment. Fukushima may have begun to sound a death knell of the nuclear power industry. Even the French nuclear industry, which generates 80% of France’s electricity, has had to lay off employees because contracts to build nuclear power plants have been cancelled. It is becoming clear that biofuels usually cause more damage than benefits, by replacing food production, encouraging deforestation, and increasing pollution. The challenge for humanity is to stop using fuels and to only use renewable sources of energy from the sun, wind, and earth.

Transitioning to a renewable energy society

For progressives, the fossil fuel crisis provides a great opportunity for equitable, sustainable economic growth. Since energy impacts all sections of society, all parts of the economy must become more just in order to solve the problem. Nowhere is this more evident than in the case of petroleum. While it would be much easier if Sammy and Susie Suburban could wake up in the future and drive their electric cars in just the same way they drive their oil-powered ones, this scenario seems very unlikely.

The best way to reduce and eliminate the use of petroleum is to increase the density of town, suburban, and city centers, so that people can choose to walk, bike, or take electric trains such as subways and light rail, and so that slow, low-range actually-existing electric vehicles can cover the shorter distances needed. To make dense city centers attractive, however, a good educational system is required. As the current candidate for Senate in Massachussets, Elizabeth Warren, has argued, much of the expansion of the suburbs and the increased expenditure of family income has occurred in order to live in a good school district. Thus, because of the interconnected nature of the modern economy, it might turn out that the single most important way to solve the energy crisis is to improve urban schools!

The technology now exists to supply all the electricity we need by constructing wind farms, solar panels, and energy-efficient buildings. If progressives want to argue for the positive benefits of government, then they can advocate for a multi-trillion dollar program of government-led new energy infrastructure, which would employ tens of millions of people and rebuild the key to our economic prosperity, our manufacturing base.

It is exactly because the energy, military, and financial elites will benefit from fossil fuel scarcity that progressives need to tackle the problem head on. In rebuilding the infrastructure, the economic fortunes of the 99 percent can be revived as well.

Jon Rynn is the author of the book Manufacturing Green Prosperity: The power to rebuild the American middle class, available from Praeger Press. He holds a Ph.D. in political science and is a Visiting Scholar at the CUNY Institute for Urban Systems. In the spring he will be participating in a global teach-in (globalteachin.com), incorporating these and other issues. © 2012 Independent Media Institute. All rights reserved. View this story online at: http://www.alternet.org/story/153704/

How the U.S. Lost Out on iPhone Work

By CHARLES DUHIGG and KEITH BRADSHER
SolidarityEconomy.net via New York Times

Jan. 21, 2012 - When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.

Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.

This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.

Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

‘I Want a Glass Screen’

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.

In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.

But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

In Foxconn City

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.

Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Foxconn, in statements, declined to speak about specific clients.

“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”

The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.

Foxconn employees, in interviews, have challenged those assertions.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.

But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.

“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.

But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.

“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”

Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”

Middle-Class Jobs Fade

The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.

It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.

“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”

At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.

“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”

Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.

But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.

Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.

There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.

After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.

Paydays for Apple

As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.

Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.

The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.

A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.

While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.

After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.

Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.

“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”

Innovation’s Losers

Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.

Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”

At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.

Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.

What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.

In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.

“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”

The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.

Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.

There wasn’t even a tiny scratch on the screen.

David Barboza, Peter Lattman and Catherine Rampell contributed reporting.

Big New Solar Array For Green-Driven Raleigh

By Kristy Hessman
SolidarityEconomy.net via EarthTechling.com

Although North Carolina is the 10th most populous state in the U.S., it it ranks just 22nd in installed photovoltaic (PV) solar capacity, according to the National Renewable Energy Laboratory. But don’t blame the city of Raleigh for that. Raleigh recently turned on a 1.3-megawatt (MW) solar photovoltaic array. It’s said to be the largest utility-scale solar power project on government property in the state.

The solar array sits on a 10-acre site and is a coordinated effort between the city of Raleigh, Progress Energy Carolinas, Southern Energy Management and NxGen Power. The solar PV array is expected to generate an estimated 1.7 million kilowatt-hours of electricity per year. The system is also expected to decrease overall carbon dioxide emissions by more than 1,300 tons annually, the same amount of emissions from the use of about 140,000 gallons of gasoline, according to Southern Energy Management.

Sustainability efforts are taking place throughout the city of Raleigh, and not just in the solar sector. The city has identified a number of areas in which it can incorporate sustainable measures to provide a better place to live for future generations. Those initiatives include preparing for a variety of green transportation options like participating in Project Get Ready. The program prepares for the availability of electric plug-in and hybrid vehicles.

The city has also created a citizens Environmental Advisory Board and adopted a specific set of fossil fuel reduction goals. Using the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) ratings, the city has enacted a standard for energy efficiency for all city-owned buildings. Those include the requirement that all additions and new buildings over 10,000 square feet achieve silver-level LEED certification. City officials have also endorsed the U.S. Conference of Mayors Climate Protection Agreement to develop a greenhouse gas emissions reduction strategy for the city.

Smaller changes are also going on at the city level in an effort to save energy. Those include changing out older lights to new, energy-efficiency LED lighting; greening of the city’s vehicle fleet; supporting the creation of green jobs; backing teleworking programs; and making use of water-saving techniques like rainwater harvesting, water re-use and tiered water rates.

Raleigh’s efforts are a reminder that while discussions about energy, climate change and the environment often take place at a global, national and state levels, municipalities are striking out on their own to make significant efforts at becoming more green. Just a few months ago, the city of Austin, Texas, made the move to become powered solely by renewable energy sources. The city’s libraries, recreational facilities and police and fire stations all run from 100 percent green energy. A total of 400 million kilowatt hours comes to Austin from wind farms throughout west and south Texas.

But no city can hold a candle to Greensburg, Kan., and its green efforts. When a tornado destroyed the town a few years back, the city rebuilt with all green in mind. All of the town’s buildings are LEED-Platinum certified except one – it’s LEED Silver.

Article printed from EarthTechling: http://www.earthtechling.com

Meet Occupy Wall Street's Favorite Banker

By Ryan Holeywell
SolidarityEconomy.net via Governing Magazine

Jan 4, 2012 - Try to find a bank president that’s beloved by supporters of the Occupy Wall Street movement. It’s not impossible. You’ll just have to travel to North Dakota.

Meet Eric Hardmeyer, who bears the unlikely distinction of being perhaps the only banker in America who, in addition to being embraced by Wall Street protesters, has been exalted by the likes of Michael Moore, Mother Jones magazine, and the Progressive States Network, among other progressive stalwarts.

That’s because Hardmeyer heads the Bank of North Dakota (BND), the country’s only publicly-owned state bank. The institution, located ironically enough in a solidly red state, has become the darling of progressives who have become frustrated with corporate banks they say helped cause the financial crisis and resulting credit crunch.

Now, state lawmakers nationwide are pushing for the North Dakota model to be replicated in their home states. Since 2010, state lawmakers in at least 16 states have introduced bills to create a state bank, something similar, or study the issue, according to a study by the National Conference of State Legislatures. So far, momentum is slow. The movement has yet to produce another Bank of North Dakota, but advocates are hoping to raise the issue again in 2012 legislative sessions. Their pitch: publicly-owned banks can help create jobs, generate revenue for the state, strengthen small banks, and lower the cost of borrowing for local governments by offering loans below market rate.

Hardmeyer, who was named bank president in 2001, hasn’t always been such a well-known figure. But his profile has been raised over the last year – including in Bloomberg BusinessWeek -- and now he regularly fields calls from state lawmakers and other officials inquiring about his institution. “There hasn’t been a big push anywhere that I’m aware of until recently,” said Hardmeyer in a late December interview with Governing.  “They’re interested in how it works, why it works, [and] what the roadblocks are.”

The bank was formed in 1919 with $2 million in bonds as a response to farmers who found they couldn’t get credit from out-of-state banks in Chicago, Minneapolis and New York. Today, the bank helps implement state economic development programs, lends money to businesses, serves as the depository of state funds and also functions as a "banker's bank" that performs tasks like check clearing for smaller institutions.

Much of the renewed interest in the bank stems from the same frustration driving the Occupy Wall Street movement, and Hardmeyer’s institution has come to represent something of an anti-bank. After all, advocates argue, the best way for taxpayers to occupy a bank is to own it. Instead of being bailed out by the government, Bank of North Dakota actually pays dividends to the state that shore up its coffers. Bloomberg Businessweek reported that since 1945, it has sent $555 million to the state general fund.

Instead of tightening up lending in response to the recession, BND actively tries to facilitate loans that traditional banks shy away from. “With this institution [and] its mission, it comes with a higher degree risk than what a traditional bank might be willing to tolerate,” Hardmeyer said.

When floods destroyed affordable housing in Minot, N.D. last year, the bank developed programs to help finance rebuilding. And as the western half of the state struggles with strained infrastructure in the wake of an oil boom, BND programs are helping to ensure capital is flowing to fund much-needed projects.

Yet BND doesn’t operate as a charity, and its finances are remarkably strong. Bloomberg Businessweek reported that it earned a profit of $62 million in 2010 – the seventh consecutive year it turned a record profit – and it has profited every year since at least 1971. Standard & Poor’s just increased BND's credit rating. The returns on its assets have consistently been larger than those of similarly-sized private banks, and a smaller portion of its loans have gone delinquent, according to a report by the Federal Reserve Bank of Boston. The bank has likely benefited more successful lending, lower costs and its tax-exempt status.

Yet most North Dakotans interaction with the bank is minimal. The institution operates from a single location in Bismarck, doesn't have ATMs, and doesn’t generally serve as a consumer bank. It lacks federal oversight, its loans aren’t insured by the FDIC, and its staff members are considered state government employees.

What it does do is partner with smaller, local banks throughout the state on various loan programs. In a typical transaction, a smaller bank would originate a loan, and BND could guarantee part of it or buy down the interest rate. The effect is that a business loan that might otherwise not have been made – or that might have only happened at a high interest rate -- can suddenly be offered at a reasonable price, prompting business growth and job creation.

The main intent is for the bank to serve as an economic development tool, said Hardmeyer. It works closely with the state’s commerce department, economic development corporations, and the legislature to develop programs that serve the mission. It’s overseen by a triumvirate of state officials that include the governor, the attorney general, and the agriculture commissioner, while the legislature sets its budget.

Many BND fans see North Dakota’s economy, currently enjoying a best-in-the-country jobless rate of just 3.4 percent and believe a similar publicly-owned bank could help fix financial problems elsewhere. But Hardmeyer himself downplays that optimism, pointing out that although his bank plays an important role in the state economy, North Dakota's boom likely has more to do with the energy sector. The Fed concurs: “With the possible exception of the Great Depression, BND’s contributions to stabilizing the state economy and finances appear to have been relatively minor.”

Still, advocates remain undeterred in their desire for public banks. “I’d much rather have my risk be put in a public institution than trust these bankers in Wall Street, who have proven themselves untrustworthy,” said Marc Armstrong, executive director of the Public Banking Institute, one of the issue's leading champions.

But there are serious challenges to the creation of a new state bank. One is the initial cost of capitalizing one. Another is the opposition from existing banks. The president of the community banks' trade association calls the model “socialistic.”

“Why don’t we just relabel the state capitols the Kremlin?” Camden Fine, president of the Independent Community Bankers of America, told Bloomberg BusinessWeek. (Ironically, the Fed wrote that BND may actually be strengthening the role of community banks in North Dakota and limiting the presence of the big banks that they often struggle to compete with).

Meanwhile, the big banks would inevitably fight the measure, since they don't want to lose out on the opportunity to serve as the depository for state funds. “They’re the biggest lobby every in the history of mankind,” Armstrong said. In a conference call with activists last year, North Dakota State Sen. Tim Mathern said that if the bank didn’t exist, the state likely wouldn’t be able to create one in today’s political climate.

And there are some potential downsides to a state-owned bank. One of the greatest concerns is that a state official could somehow become involved in making lending decisions. That doesn’t happen in North Dakota, Hardmeyer insists, stressing the bank’s independence and the business-first mentality of its bankers.

Critics also say that public banks created today could disrupt the economy, since public funds would likely be withdrawn from existing commercial banks. And they cite the ever-present risk to state taxpayers of guaranteeing the deposits.

It's no surprise that several public banking efforts have stalled relatively quickly.

A Massachusetts commission that generated significant attention recommended against a state bank in August, citing the start-up costs, risks, and existing network of quasi-public lenders. And last year, California Gov. Jerry Brown vetoed legislation calling for a study to consider the viability of a state bank.

Yet backers of public banks remain optimistic. They argue that the concept is so different from the existing idea of banking that they it will likely take several legislative sessions for the movement to gain steam.

The DVD of Michael Moore's Capitalism: A Love Story featured the Bank of North Dakota. A short introduction on BND's creation is provided in this clip below.

This article was printed from:

Workers at the Evergreen Cooperative Laundry in Cleveland

Worker-Owners of America, Unite!

By GAR ALPEROVITZ
SolidarityEconomy.net via NYT Op-Ed

Dec 14, 2011, College Park, Md.- THE Occupy Wall Street protests have come and mostly gone, and whether they continue to have an impact or not, they have brought an astounding fact to the public’s attention: a mere 1 percent of Americans own just under half of the country’s financial assets and other investments. America, it would seem, is less equitable than ever, thanks to our no-holds-barred capitalist system.

But at another level, something different has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.

Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions.

And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation, “green” institutional laundry services and a commercial hydroponic greenhouse capable of producing more than three million heads of lettuce a year.

Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California’s public pension authority, helps finance local development projects; in Alaska, state oil revenues provide each resident with dividends from public investment strategies as a matter of right; in Alabama, public pension investing has long focused on state economic development.

Moreover, this year some 14 states began to consider legislation to create public banks similar to the longstanding Bank of North Dakota; 15 more began to consider some form of single-payer or public-option health care plan.

Some of these developments, like rural co-ops and credit unions, have their origins in the New Deal era; some go back even further, to the Grange movement of the 1880s. The most widespread form of worker ownership stems from 1970s legislation that provided tax benefits to owners of small businesses who sold to their employees when they retired. Reagan-era domestic-spending cuts spurred nonprofits to form social enterprises that used profits to help finance their missions.

Recently, growing economic pain has provided a further catalyst. The Cleveland cooperatives are an answer to urban decay that traditional job training, small-business and other development strategies simply do not touch. They also build on a 30-year history of Ohio employee-ownership experiments traceable to the collapse of the steel industry in the 1970s and ’80s.

Further policy changes are likely. In Indiana, the Republican state treasurer, Richard Mourdock, is using state deposits to lower interest costs to employee-owned companies, a precedent others states could easily follow. Senator Sherrod Brown, Democrat of Ohio, is developing legislation to support worker-owned strategies like that of Cleveland in other cities. And several policy analysts have proposed expanding existing government “set aside” procurement programs for small businesses to include co-ops and other democratized enterprises.

If such cooperative efforts continue to increase in number, scale and sophistication, they may suggest the outlines, however tentative, of something very different from both traditional, corporate-dominated capitalism and traditional socialism.

It’s easy to overestimate the possibilities of a new system. These efforts are minor compared with the power of Wall Street banks and the other giants of the American economy. On the other hand, it is precisely these institutions that have created enormous economic problems and fueled public anger.

During the populist and progressive eras, a decades-long buildup of public anger led to major policy shifts, many of which simply took existing ideas from local and state efforts to the national stage. Furthermore, we have already seen how, in moments of crisis, the nationalization of auto giants like General Motors and Chrysler can suddenly become a reality. When the next financial breakdown occurs, huge injections of public money may well lead to de facto takeovers of major banks.

And while the American public has long supported the capitalist model, that, too, may be changing. In 2009 a Rasmussen poll reported that Americans under 30 years old were “essentially evenly divided” as to whether they preferred “capitalism” or “socialism.”

A long era of economic stagnation could well lead to a profound national debate about an America that is dominated neither by giant corporations nor by socialist bureaucrats. It would be a fitting next direction for a troubled nation that has long styled itself as of, by and for the people.

Gar Alperovitz, a professor of political economy at the University of Maryland and a founder of the Democracy Collaborative, is the author of “America Beyond Capitalism.”

Building a Bridge to Renewable Energy

By Darren Quick

SolidarityEconomy.net via Gizmag.com

Bridges are generally exposed to the elements, meaning they generally get a nice dose of sunlight often coupled with some fairly strong crosswinds. For these reasons this “Solar Wind” bridge design would seem to make a lot of sense. The proposed bridge would harness solar energy through a grid of solar cells embedded in the road surface, while wind turbines integrated into the spaces between the bridge’s pillars would be used to generate electricity from the crosswinds.

The brainchild of Italian designers Francesco Colarossi, Giovanna Saracino and Luisa Saracino, the Solar Wind concept was designed for the Solar Park Works – Solar Highway competition that asked entrants to modernize sections of a decommissioned elevated highway stretching between Bagnera and Scilla in Italy.

The road surface would replace traditional asphalt with 20 km (12.4 miles) of “solar roadways” consisting of a dense grid of solar cells coated with a transparent and durable plastic coating providing 11.2 million kWh per year. The designers say this system, combined with the 26 wind turbines integrated underneath the bridge generating 36 million kWh per year, would provide enough electricity to power approximately 15,000 homes.

In addition to the “solar roadways,” the top surface of the bridge would also include a “green promenade” along its length comprising solar greenhouses for growing local produce. Drivers would be able to stop along the bridge to buy some fresh fruit and veggies while enjoying panoramic bridge views (an idea which strikes us as "a bridge too far" for this concept).

The Solar Wind entry was awarded second prize in the Solar Park Works – Solar Highway competition and the design clearly has merit. The integration of wind turbines into the underside of high altitude bridge exposed to constant strong winds seems like a particularly good idea – given that this could be achieved from a structural engineering point of view. Let's hope someone will see the concept and run with it.

Trialed off the Coast of Australia

(Click Drawing to see how it works)

By Ben Coxworth
SolidarityEconomy.net via Gizmag.com

Dec 5, 2011 - Anyone who has ever been scuba diving in a bull kelp forest will tell you - the stuff does not stand still. The marine aquatic plant consists of a long skinny-but-tough stem (or stipe) that is anchored to the sea floor and topped with a hollow float, from which a number of "leaves" (or blades) extend to the surface.

The result is a seaweed that extends vertically up through the water column, continuously swaying back and forth with the surging waves.

The researchers at Australia's BioPower Systems evidently looked at that kelp, and thought, "what if we could use that swaying action to generate power?" The result was their envisioned bioWAVE system, which could soon become a reality, thanks to a just-announced AUD$5 million (US$5.1 million) grant from the Victorian Minister for Energy and Resources.

At the base of each bioWAVE system would be a triangular foundation, keeping it anchored to the sea floor. Extending up from the middle of that foundation would be a central column, topped with multiple blades - these would actually be more like a combination of the kelp's blades and floats, as they would be cylindrical, buoyant structures that just reach to the surface. The column would join the foundation via a hinged pivot, allowing it to bend or swivel in any direction.

Wave action (both at the surface and below) would catch the blades and push them back and forth, in turn causing the column to move back and forth relative to the foundation. This movement would pressurize fluid within an integrated hydraulic power conversion module, known as an O-Drive. The movement of that fluid would spin a generator, converting the kinetic energy of the waves into electricity, which would then be delivered to shore via subsea cables. The video below illustrates how the system would work.

According to BioPower, each system could be installed in the ocean using standard vessels without any special equipment - all components would be towed and then sunk into place. The O-Drive would be easily detached and replaced, so the whole assembly wouldn't need to be pulled out of the water for servicing. Additionally, the system would automatically detect unusually large swells, at which point it would flood the blades, causing them to lie down flat against the seabed for protection - this should allow for lighter, less expensive construction materials, as the blades wouldn't need to be designed to take the full force of violent conditions.

As an added bonus, unlike many other wave power systems, very little hardware would be visible above the surface. This should help with public acceptance of the technology.

The $5 million grant will go towards an AUD$14 million (US$14,365,000) four-year pilot demonstration unit, to be installed at a grid-connected site near Port Fairy, Victoria. Some other funds have already been obtained, leaving $3.6 million still to be raised.

While the 250-kilowatt pilot system would operate in 30-meter (98.5-foot)-deep waters, the planned 1-megawatt commercial-scale units would work at depths of 40-45 meters (131-148 feet), each one running four O-Drives in parallel. A number of such units could be located in one area where the depth and wave action are ideal, creating "wave farms."

We wish BioPower luck with the endeavor, and will be watching its progress with interest.

War: The Wrong Jobs Program

By Mark Engler
SolidarityEconomy.net via Foreign Policy in Focus

More than 40 years ago, long before anyone had ever heard of Barack Obama, before the collapse of Bear Stearns, and before contemporary debates about bailouts and debt ceilings, two authors, Paul Baran and Paul Sweezy, considered a tricky problem. In times of downturn, the government must spend to stimulate the economy. Yet getting the political establishment to agree on one particular program of spending seemed nearly impossible.

Baran and Sweezy phrased the conundrum as a question: "On what could the government spend enough to keep the system from sinking into the mire of stagnation?"

After assessing the political realities that steer America's power elite, they could find only one response. It was not what typically comes to mind when we think of economic stimulus or government-led job creation.

Their answer: "On arms, more arms, and ever more arms."

The authors did not approve of military spending as a strategy of economic development.

But, even at the very outset of the Cold War, they saw the deep hold that it had on decision-makers in Washington, DC.

We can see the continuing hold it has today. This fall, responding to high and persistent unemployment, President Obama called for a federal jobs act. Among its measures, the act proposed investment in schools and infrastructure. Conservative opponents responded with cries of derision. The critics charged that the plan "doubles down on a failed government stimulus strategy." It means "adding more money to the same broken system" they said. Finally, they insisted, “It comes to a point that you can’t keep borrowing in a futile attempt to stimulate the economy when the increased debt itself is weakening the economy.”

Obama's proposals were considered political non-starters, certain to be stonewalled by the Republican Congressional majority. But for all the right-wing insistence that government should end stimulus spending, cut federal budgets in order to reduce the deficit, and generally leave the market to its own devices, our country already has a massive spending program, and it enjoys strong bipartisan support. America's jobs program is its military—and the immense industry that provides the military with services and armaments.

Our country's existing jobs program goes by many names: The Permanent War Economy, Military Keynesianism, The Iron Triangle, Perpetual War. The real question it raises is not whether the government should spend. It is whether the government has been spending well.

Thanking the Russians for Making Capitalism Work

Scholars have long debated whether massive outlays on the armed forces can pull a country from a recession, or whether ongoing spending of this type is a drain on private enterprise. The views of two thinkers, an economist and an engineer, have come to define opposite poles in the discussion.

Michal Kalecki was a Polish economist, influenced by Marx, who saw Hitler's plunder of Europe from his post at the Oxford Institute of Statistics. Kalecki spent much of the 1930s studying capitalist business cycles and observing the way in which government spending could influence them. In doing so, he arrived at conclusions quite similar to his more-often-remembered contemporary, John Maynard Keynes. In fact, some argue that, based on priority of publication, Keynesianism should not be called Keynesianism, but “Kaleckianism.”

Following World War II, Kalecki sought to understand Nazi Germany's successful rise from the depths of the Great Depression to achieve full employment by the late 1930s. Theories popular at the time—and embraced by many U.S. Republicans of the era—held that military spending necessarily occurred at the expense of other sectors of the economy. The Wall Street Journal would later express this position, stating in 1980 that "'Defense spending…. is the worst kind of government outlay, since it eats up materials and other resources that otherwise could be used to produce consumer goods.''

Countering such ideas, Kalecki examined how military buildup could actually serve as a stimulus to other industry. Starting with his 1943 essay, “The Political Aspects of Full Employment,” he began to theorize what has become known as “Military Keynesianism.” Kalecki argued that private capital preferred military spending over other forms of government investment because it contributed to private profits without competing with business activity in more conventional economic markets.

This would prove an influential proposition. Baran and Sweezy, Harry Magdoff, and other Marxist writers from the 1960s on elaborated on Kalecki's ideas. Conventional economists had regarded war and militarism as aberrations, phenomena external to their models for how commerce should normally function. ("Peace reigns supreme in the realm of neoclassical economics," Magdoff noted in 1970.) But such assumptions did not square with a reality in which war was almost constant. The Marxists showed how vast arms spending, even during "peacetime," had become an essential state support for the economy. As one pair of writers working in this tradition wrote in 1972, "Without militarism the whole economy would return to a state of collapse from which it was rescued by the Second World War."

It was not just voices on the left stating this position. Business leaders themselves acknowledged the advantages of military buildup. In a speech given by Harvard economist Sumner Slichter to a convention of bankers in October 1949 (and cited more recently by authors John Bellamy Foster, Hannah Holleman, and Robert McChesney), the speaker contended that Cold War arms spending made severe depression "difficult to conceive." The prolonged conflict, Slichter said

increases the demand for goods, helps sustain a high level of employment, accelerates technological progress and thus helps the country to raise its standard of living…. So we may thank the Russians for helping make capitalism in the United States work better than ever.

Elevating Inefficiency to a National Purpose

Although Kalecki would influence many with his economic theories, a contrary view would come from an industrial engineer and longtime Columbia University professor. Seymour Melman was raised in the Bronx during the Great Depression. That downturn, he would later say, "made a deep impression on me then and to the present day because whole neighborhoods were clearly made impoverished. Unemployment was rampant, and almost any day if you walked out on the street you'd see, in one or another side street, the belongings of a family out on the sidewalk."

Melman put himself through college by working 15-hour overnight shifts in his uncle's knitting factory. He lived briefly on a kibbutz in Israel as a young man, and he also served two years in the military, getting a first-hand look at the workings an institution he would later criticize in detail. Initially interested in the social sciences, he ended up pursuing graduate studies in industrial engineering at Columbia, where he went on to teach for many decades.

Skilled at examining the industrial operations of different sectors of the economy, Melman became involved in the 1950s in analyzing a newly emerging realm: the Military-Industrial Complex. Subsequently, for more than 40 years, Melman would serve as an outspoken critic of massive public investment in the military, charging it with producing a growing weakness in America's civilian manufacturing capabilities. He would also become a leading proponent of "economic conversion," the idea that defense assets and infrastructure should be converted to more productive non-military uses.

In 2003, near the end of his long career, Melman wrote: "[A]t the start of the twenty-first century, every major aspect of American life is being shaped by our Permanent War Economy." Because he used language similar to that employed by analysts of Military Keynesianism, Melman might seem as if he were part of a similar school of thought. But, in fact, he considered himself staunchly opposed to their line of thinking. The theorists of Military Keynesianism examined how arms spending had been deeply integrated into the economy, providing a government support for business; Melman, in contrast, regarded military expenditures as a crippling drain on the country's economic health.

In a 1991 article in The Nation, he stood by his 1974 assessment of the "economic consequences of military state capitalism":

Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose…. Industrial productivity, the foundation of every nation's economic growth, is eroded by the relentlessly predatory effects of the military economy.

In his analysis, Melman emphasized both the opportunity costs of military spending and the manner in which defense industries take up "economic space," depleting the resources available to the rest of the economy. In 1995, he argued, "The Cold War has bled our civilian economy by preempting capital resources, taking the lion's share of top scientific talent as well as federal research and development funds, and appropriating government funds that would otherwise have been available for the development of our infrastructure."

In an interview from the same period, Melman noted that approximately 30 percent of the country's scientists and engineers worked for the military, directly or indirectly. "The loss to the civilian economy," he said, "is incalculable.”

In 2006, historian Thomas Woods, writing for the libertarian Ludwig von Mises Institute, penned a fascinating tribute to the late engineer. In Woods' view, "Melman’s normative conclusions"—that government should undertake a thorough-going program of economic conversion for the benefit of civilian society—"were altogether conventional and uninteresting, and far removed from libertarianism. But his positive analysis was anti-statist to the core, and provides us with an array of important and typically neglected costs of large military establishments."

As it turns out, both liberals critical of the arms industry and free market enthusiasts wary of big government could agree when Melman paraphrased sociologist C. Wright Mills' wary appraisal of conventional wisdom in Washington: "Military Keynesianism," Melman wrote, "has become the 'crackpot realism'… of the American economy."

The Glamour of Guns Over Butter

In the decades since their debate commenced, neither the intellectual kin of Kalecki nor members of Melman's "depletionist" school have decisively prevailed. Those who have reviewed the evidence point to some weaknesses in each approach. Economists such as David Gold suggest that Military Keynesians may have overestimated the overall stimulus provided by government spending on the military—especially as the American economy has grown ever larger. On the other side, analysts contend that the depletionists go too far in their assessment of how the military saps the private sector.

Yet, ultimately, the differences between Kalecki and Melman may be less important than the common ground they share. Marxist analysts of Military Keynesianism, after all, never argued that arms spending was a particularly productive use of public funds. Nor did they endorse it as a way to keep the capitalist economy afloat. They merely highlighted the political realities that make it the most acceptable form of government spending for monied elites, and to the way in which the strategy becomes entrenched once pursued.

This point has been acknowledged by observers across the political spectrum. Libertarian Robert Higgs points to a 1944 book, As We Go Marching by John T. Flynn, in which the author describes militarism as "the one great glamorous public-works project upon which a variety of elements in the community can be brought into agreement.” Flynn then warns, presciently, that, "Inevitably, having surrendered to militarism as an economic device, we will do what other countries have done: we will keep alive the fears of our people of the aggressive ambitions of other countries and we will ourselves embark upon imperialistic enterprises of our own."

Today's arms contractors are geniuses at spreading production facilities over a wide range of Congressional districts, and they are not hesitant to spend millions for lobbying and campaign contributions. As a result, they have deftly reinforced the loyalty that elected officials feel toward military spending projects in their home states. And they have locked the country into an economically tragic pattern of public spending. For while it is debatable whether the military crowds out more productive activity in the private sector, it is clear that it leaves far less room in government budgets for social programs.

The trade-off of "guns versus butter," now used as a textbook example in economics of an either-or choice that nations face, has been invoked by a wide range of lofty orators. Eisenhower famously remarked, "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed." Martin Luther King, Jr. added, "We hear all this talk about our ability to afford guns and butter, but we have come to see that this is a myth… [W]hen the guns of war become a national obsession, social needs inevitably suffer."

A "Badly Under-Resourced" Military?

Melman may have had intellectual disputes with economists such as Kalecki, but his true adversaries were not theorists. They were defense hawks who not only agreed with the proposition that the military was propping up the economy, but who advocated for tax dollars to be devoted to this very purpose. Such figures continue to exist today. They include Martin Feldstein, the former chief economic advisor to President Reagan who argued in a 2008 Wall Street Journal op-ed that the Pentagon should be a primary recipient of government stimulus funds.

Also among their number is the American Enterprise Institute's Frederick Kagan, who insists, "Defense spending has long been recognized as one of the single strongest stimulants to any economy." Kagan's view of Pentagon budgeting is extreme enough to exhibit a certain through-the-looking-glass quality. Despite the historic expansion of military spending in the new millennium, Kagan considers today's military "badly under-resourced for nearly two decades by both Democratic and Republican administrations." Therefore, he sees few worthier recipients of public aid. When the military, he writes, "is so severely strained and billions of dollars in stimulus money are being sloshed around, refusing to give some of that money to the best and bravest Americans who need it badly—to say nothing of demanding that their budget be cut—is just wrong."

Although the stimulus debate of 2008 and 2009 brought out some Military Keynesian arguments, the stakes have since been raised. In the wake of the debt ceiling compromise negotiated between President Obama and Congressional Republicans in August, the guns-versus-butter dilemma has become starker than ever.

Eisenhower may have always been right on a metaphorical level about arms merchants stealing bread from the hungry. Yet the trade-off has not always been so direct. In past years, politicians have often chosen both to fill Pentagon coffers and to support a measure of social spending, even if it meant sustaining budget deficits.

Current demands for austerity have changed that. The debt compromise not only mandated an initial round of budget cuts, it also charged a congressional “super committee” with finding between $1.2 trillion and $1.5 trillion in further reductions to the 10-year federal budget. If lawmakers do not meet this requirement by the end of November, the deal will "trigger" an automatic $1.2 trillion in cuts, half of which would come from "defense and security." To avoid these automatic cuts, hawks will be pushing hard to instead put social programs on the chopping block.

Given the Military Industrial Complex's canny instincts for self-preservation and the loopholes included in the compromise agreement, there is some doubt about how severe cuts at the Pentagon would actually be, even in a most extreme case. Nevertheless, the threat of a budget squeeze has been real enough to prompt an aggressive counter-offensive by arms lobbyists.

In mid-September the Aerospace Industries Association (AIA) launched the "Second to None" campaign, designed to "educate the public on [the] impact of indiscriminate budget cuts." According to AIA President and CEO Marion Blakey, the debt agreement "dangles a Sword of Damocles over our national security." Furthermore, he says, "the cuts to defense proposed in the ‘trigger’ deal are so draconian that it’s hard to believe they are even on the table."

Wary of openly embracing pork-barrel politics, politicians and their beneficiaries in the arms industry have traditionally avoided being too overt about touting the economic benefits of a given defense initiative. Hawks have usually been careful to put national security at the fore, and to keep the Keynesian implications of their endeavors in the background. But now, with public concern about unemployment at the center of national debate, arms merchants have increasingly made job creation one of their key selling points.

Loren Thompson, chief operating officer at the industry-funded Lexington Institute, has been a vocal spokesperson in this drive. Writing for Forbes, Thompson warned that "Defense Cuts Could Destroy A Million Jobs." He painted President Obama's jobs bill as especially counterproductive, since "the cuts mandated by the Budget Control Act to reduce deficits could grow bigger if the president’s jobs bill passes." As a result, Thompson writes, "the government could end up destroying many thousands of good [defense] jobs to create lots of not-so-good jobs in areas like construction. What kind of a tradeoff is that?"

Elsewhere Thompson asked, "Does Washington really believe that building a new bridge in Kentucky creates jobs, but a defense plant or military base there does not?"

The Economic Value of a School

In fact, there are good reasons to hold that allocating funds to build a bridge—or to open a hospital, or to staff a school—is a superior path to creating jobs than spending the same amount of money on arms. These reasons are based in morality and public interest, as well as in economics.

First, the moral argument. In the 1960s student activists at MIT were calling for an end to military research on campus, which was consuming an increasing portion of the university's attention. However, as Stuart Leslie relates in his book The Cold War and American Science, not all of their peers were convinced. One graduate student, dismissive of protests, told The New York Times: "What I’m designing may one day be used to kill millions of people. I don’t care. That’s not my responsibility. I’m given an interesting technological problem and I get enjoyment out of solving it.”

Needless to say, building a bridge or hiring an educator has less dubious moral implications than supporting such military research. Bridges and schools also create long-term economic value, something most defense procurements cannot claim. An educated child becomes a more productive member of society. A bridge becomes part of the country's infrastructure, facilitating further commerce. On the other hand, when we build bombs, the best we can hope for is that they are never used.

Melman argued, "whatever else you can do with a nuclear-powered submarine that is almost as long as two football fields… you can’t wear it, you can’t live in it, you can’t travel in it, and there’s nothing you can produce with it.” Author and attorney Ellen Brown elaborates on this point, explaining the many quirks and inefficiencies that distinguish military spending from other economic activity:

Military spending is the very essence of "built-in obsolescence": it turns out products that are designed to blow up. The military is not subject to ordinary market principles, but works on a "cost-plus" basis, with producers reimbursed for whatever they have spent plus a guaranteed profit. Gone are the usual competitive restraints that keep capitalist corporations "lean and mean."… Yet, legislators looking to slash wasteful "entitlements" persist in overlooking this obvious elephant in the room.

Adding to these considerations is what Melman dubbed the "overkill" problem. To a certain extent, one could argue that building up a military arsenal served the economy by protecting private property, deterring foreign invasion, and allowing the nation to conduct its business in peace. But this notion became more and more dubious as the United States amassed ever-greater military might. By the time the U.S. armed forces were able to destroy every possible enemy nation many times over, the continued investment of billions of dollars per year in new military technology ceased to have nearly as much value.

Also worth noting is the fact that our "overkill" investments have a uniquely risky downside: With an army of soldiers and an unmatched arsenal of armaments sitting around, politicians are inevitably tempted to think they should be put to use. And that is an economically costly proposition indeed.

Doing Right On Jobs

What is true for the economy generally is also true in the realm of employment: When it comes to jobs, not only would it be a great day for our kids if the schools got all the money they needed and the Air Force had to a hold bake sale to buy a bomber—this would be a great day for American workers, too.

The most compelling recent study on this point was produced in October 2009 by Robert Pollin and Heidi Garrett-Peltier of the University of Massachusetts, Amherst. Using data from the Department of Commerce, the authors looked at four areas of investment: education, the military, renewable power, and fossil-fuel energy.

"By a significant margin," Pollin writes in a Boston Review article describing the report's conclusions, "education is the most effective source of job creation among these alternatives—roughly 29 jobs per $1 million in spending." This included both direct employment (of teachers and other personnel), jobs created indirectly by investment in this sector (those, say, of suppliers selling photocopiers or paper to the schools), and "induced" jobs (in businesses supported when teachers spend their salaries on other good and services). "Clean-energy investments are second, with about seventeen jobs per $1 million of spending. The U.S. military creates about twelve jobs, while spending within the fossil-fuel sector creates about five jobs per $1 million."

There are several reasons why military spending ends up near the back of the pack. The inefficiency of the "cost-plus" system is one. Pointing to another, analyst William Hartung of the Center for International Policy explains, "more of the military dollar goes to capital, as opposed to labor, than do the expenditures in the other job categories." He cites the example of the F-35 Joint Strike Fighter. With the cost of materials and other overhead high, a mere 1.5  percent of the money spent on each aircraft goes toward labor costs for manufacturing and assembling planes in the F-35's main plant in Fort Worth, Texas.

A third issue is "leakage." Military spending that takes place outside of the country—say, in Iraq, Afghanistan, Libya, or one of the many U.S. bases abroad—has less economic benefit for the United States, since some of the stimulus created instead benefits foreign economies. Green technology, as a counter-example, produces more significant ripple effects at home.

Nevertheless, Pentagon boosters such as Loren Thompson are not persuaded. They argue that military-related jobs tend to pay more, and therefore workers in this industry have a greater impact on the rest of the economy. Yet this is not true compared to education, Pollin notes, where average pay is higher than in defense. Nor is it, in itself, an adequate reason to support a given sector. No doubt, public efforts to spur employment must be attentive to producing jobs that pay living wages. But this cannot be the only measure of value for public spending.

Melman offered a wider vision for doing right on jobs. The years following World War II—when America converted much of its war-making industrial might into civilian manufacturing capability—loomed large in his proposals for a demilitarized society. Through the end of his life in 2004, he pictured military laboratories becoming public hospitals, bases becoming industrial parks and green spaces, and arms factories being retrofitted to make farm machinery or communications satellites. His was the noble prophecy of swords beaten into ploughshares, re-imagined for an America in its industrial prime.

Yet even if we undertake nothing so ambitious as what Melman dreamed, we can be smarter about what we choose to support with our public funds, and what we decide to cut from our government's budgets. "Arms, more arms, and ever more arms" is no path to a just society. And it is no worthwhile strategy for creating jobs.

Mark Engler is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books). He can be reached via the website http://www.DemocracyUprising.com. Research assistance provided by Eric Augenbraun.