Tag Archives: economic

California Farms Are Sucking Up Enough Groundwater to Put Rhode Island 17 Feet Under

by CarenSundberg Posted on July 16, 2014

Mother Jones

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California, the producer of nearly half of the nation’s fruits, veggies, and nuts, plus export crops—four-fifths of the world’s almonds, for example—is entering its third driest year on record. Nearly 80 percent of the state is experiencing “extreme” or “exceptional” drought. In addition to affecting agricultural production the drought will cost the state billions of dollars, thousands of jobs, and a whole lot of groundwater, according to a new report prepared for the California Department of Food and Agriculture by scientists at UC-Davis. The authors used current water data, agricultural models, satellite data, and other methods to predict the economic and environmental toll of the drought through 2016.

Here are four key takeaways:

The drought will cost the state $2.2 billion this year: Of these losses, $810 million will come from lower crop revenues, $203 million will come from livestock and dairy losses, and $454 million will come from the cost of pumping additional groundwater. Up to 17,100 seasonal and part-time jobs will be lost.
California is experiencing the “greatest absolute reduction in water availability” ever seen: In a normal year, about one-third of California’s irrigation water is drawn from wells that tap into the groundwater supply. The rest is “surface water” from streams, rivers, and reservoirs. This year, the state is losing about one-third of its surface water supply. The hardest hit area is the Central Valley, a normally fertile inland region. Because groundwater isn’t as easily pumped in the Valley as it is on the coasts, and the Colorado River supplies aren’t as accessible as they are in the south, the Valley has lost 410,000 acres to fallowing, an area about 10 times the size of Washington, DC.
Farmers are pumping enough groundwater to immerse Rhode Island in 17 feet of it: To make up for the loss of surface water, farmers are pumping 62 percent more groundwater than usual. They are projected to pump 13 million acre-feet this year, enough to put Rhode Island 17 feet under.
“We’re acting like the super-rich:” California is technically in its third year of drought, and regardless of the effects of El Niño, 2015 is likely to be a dry year too. As the dry years accumulate, it becomes harder and harder to pump water from the ground, adding to the crop and revenue losses. California is the only western state without groundwater regulation or measurement of major groundwater use. If you can drill down to water, it’s all yours. (Journalist McKenzie Funk describes this arcane system in an excerpt from his fascinating recent book, Windfall.) “A well-managed basin is used like a reserve bank account,” said Richard Howitt, a UC-Davis water scientist and co-author of the report. “We’re acting like the super-rich, who have so much money they don’t need to balance their checkbook.”

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California Farms Are Sucking Up Enough Groundwater to Put Rhode Island 17 Feet Under

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Restaurant CEOs Make More Money in Half a Day Than Their Employees Make in a Year

by BrandiePjo Posted on July 14, 2014

Mother Jones

Richard Drew/AP

Last year, according to a new analysis from the Economic Policy Institute (EPI), the CEOs of America’s top 25 restaurant corporations, including McDonald’s, Burger King, the Cheesecake Factory, Chipotle, and Jack in the Box, took home an average of 721 times the money minimum wage workers did, and 194 times the take-home of the typical American worker in a production or non-supervisory job. Restaurants and food services employ nearly half of all American workers who earn the federal minimum wage of $7.25 per hour (or less).

The report “confirms what we have long known,” Cherri Delesline, a McDonald’s crew member and mother of four in Charleston, South Carolina, told Mother Jones. Since November 2012, she and hundreds of other fast-food workers have gone on strike in 150 American cities and 80 foreign cities, demanding they be paid $15 per hour. “While CEOs make millions of dollars in profits, we still can’t afford to pay our rent or buy clothes for our children,” says Delesline, whose hourly pay is $7.35.

“It’s a picture of uncontrolled greed,” EPI vice president Ross Eisenbrey says. “How can it be that the CEOs are making more in half a day than many of their workers are making in an entire year—and yet they can’t afford to raise the pay of those workers?” CEO pay has been out of control across all business sectors since at least the late-1980s, he adds. From 1978 to 2013, for instance, average CEO compensation, adjusted for inflation, soared nearly 1,000 percent, while the typical worker’s pay increased by just over 10 percent.

Roughly 1 in 10 American workers are employed by restaurants, according to the National Restaurant Association. The industry, the trade group predicts, will see $683 billion in sales this year—up 17 percent over 2010. But a greater share of those revenues has been flowing to top executives. As this interactive graph shows, CEO compensation at America’s top restaurant chains has ballooned since 2008, while the annual take of their lowest-paid workers has largely flatlined. (This analysis assumes tipped workers reach the federal minimum wage through base pay and tips, although that isn’t always the case, as we’ve reported previously.)

While the recent strikes have pressured a few chains to consider raising their wages, some executives argue that raising pay would hurt business, and franchise owners say their thin profit margins can’t bear any increases. Just last week, Andy Puzder, CEO of the conglomerate that owns Carl’s Jr. and Hardee’s, told Yahoo! Finance that raising the federal minimum would force companies like his to raise prices and ultimately reduce job opportunities for young and inexperienced workers. You can’t solve the problem, he said, “by having the government artificially mandate a wage increase when there’s no economic growth to support that.”

Puzder—whose compensation totaled nearly $4.5 million in 2012, or 294 times what minimum-wage workers made that year—claimed that “if government gets out of the way, businesses will create jobs…Wages will go up and the country will go back to a state of prosperity instead of what we’re in now.”

Actually, the financial information company Sageworks reports that the restaurant industry fared pretty well during the recession, growing at about 5 percent annually since 2009. And the majority of fast-food workers aren’t teenagers: More than 60 percent are 20 or older, according to the Center for Economic and Policy Research. As Huffington Post‘s Jillian Berman points out, more adults are working in fast food not because they can live off the wages, but simply because they have no better alternatives.

Meanwhile, a new study finds that 61 percent of small business owners favor a minimum wage hike to keep pace with cost of living, supporting previous findings on the topic. Some national retail companies, such as Ikea and Gap, have also chosen to raise their starting wage. Likewise wholesale merchandiser Costco, where entry-level employees get $11.50 an hour. “We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment, and loyalty,” CEO Craig Jelinek said in a statement supporting of a bill that would raise the federal minimum wage—to just over $10.

Here’s a list of the 25 CEOs EPI analyzed, and what they made last year.

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Restaurant CEOs Make More Money in Half a Day Than Their Employees Make in a Year

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Here’s How Obama Wants to Spend $3.7 Billion on the Child Migrant Crisis

by FernandSmith Posted on July 8, 2014

Mother Jones

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On Tuesday, President Obama asked Congress for $3.7 billion in emergency supplemental appropriations to address the rapidly growing number of unaccompanied Central American children attempting to enter the United States. The Border Patrol apprehended 38,833 unaccompanied kids in fiscal year 2013, and it already has caught more than 52,000 in fiscal 2014.

More MoJo coverage of the surge of unaccompanied child migrants from Central America.


70,000 Kids Will Show Up Alone at Our Border This Year. What Happens to Them?


What’s Next for the Children We Deport?


This Is Where the Government Houses the Tens of Thousands of Kids Who Get Caught Crossing the Border


Map: These Are the Places Central American Child Migrants Are Fleeing


4 Reasons Why Border Agents Shouldn’t Get to Decide Whether Child Migrants Can Stay in the US

The requested appropriations include:

$1.8 billion to the HHS’s Administration for Children and Families: to provide more stable, cost-effective arrangements and medical care for unaccompanied children.
$1.1 billion to Immigration and Customs Enforcement (ICE): for the detention, prosecution, and removal of undocumented families, as well as transportation costs for unaccompanied children.
$432 million to Customs and Border Protection: for operational costs, an expanded Border Enforcement Security Task Force, and increased air surveillance in Texas’ Rio Grande Valley.
$295 million to the State Department’s (and other international programs’) Economic Support Fund: for the repatriation and reintegration of deported migrants, and to address the root causes of migration in Central America.
$62 million to the Department of Justice: for additional immigration judges and legal representation for the children.

Notably, Obama’s letter to House Speaker John Boehner did not include a request to alter the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2008. That law requires the Department of Homeland Security (DHS) to turn over unaccompanied children from countries other than Canada and Mexico to the Department of Health and Human Services (HHS), which temporarily houses them in shelters while it locates US-based family members or sponsors. (The kids are in removal proceedings throughout.)

Here’s the full letter:

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Emergency Supplemental Request to Congress (PDF)

Emergency Supplemental Request to Congress (Text)

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Here’s How Obama Wants to Spend $3.7 Billion on the Child Migrant Crisis

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India blames environmental activists for its economic problems

by CallieEomyavt Posted on June 14, 2014

India blames environmental activists for its economic problems

By

Salvatore Barbera

India’s economy is growing, but not as quickly as some pundits had forecast. You might guess that rampant corruption was curbing the country’s economic potential. Or maybe you would put some blame on worsening heat waves, which have been knocking out electrical grids. Or perhaps the crippling health effects of pollution from coal power plants?

Well, we’ve got some surprising news for you from India’s intelligence agency: Environmental activists like you must shoulder some of the blame. Your peeps in India have been accused of reducing the nation’s GDP by 2 to 3 percent every year. Reuters reports:

India’s domestic spy service has accused Greenpeace and other lobby groups of hurting economic progress by campaigning against power projects, mining and genetically modified food, the most serious charge yet against foreign-funded organizations.

The leak of the Intelligence Bureau’s report comes as Prime Minister Narendra Modi’s new administration seeks way to restore economic growth that has fallen to below 5 percent, choking off investment and jobs for millions of youth entering the workforce. …

“A significant number of Indian NGOs funded by donors based in US, UK, Germany and Netherlands have been noticed to be using people-centric issues to create an environment, which lends itself to stalling development projects,” the Intelligence Bureau said.

These included coal-fired power projects, genetically modified organisms, mega industrial projects including South Korean firm POSCO’s steel plant and Vedanta’s bauxite project both in Odisha, hyro-power projects in Arunachal Pradesh, the strategic state on the border with China.

Greenpeace, naturally, denies the accusations, describing them as an effort to silence dissent.

The timing of the leak is interesting, given that the country has a new prime minister — one who campaigned on a business-friendly, pro-development platform. Prime Minister Narendra Modi is a solar energy fan who has been talking nice about the environment, but he also appears set to push for the approval of highway projects delayed by concerns over wildlife and other environmental issues. Modi is a military hawk, and his new environment ministry has pledged to prioritize the granting of approvals for defense projects. It has already moved to hastily approve a stalled reservoir expansion that’s expected to force 250,000 people from their homes, despite pleas from local activists.

It looks like life is becoming more hostile for environmental activists in a nation with a long and rich history of protest. Because, you know. Economic growth.


Source
India spy agency says Greenpeace endangers economic security, Reuters

John Upton is a science fan and green news boffin who tweets, posts articles to Facebook, and blogs about ecology. He welcomes reader questions, tips, and incoherent rants: johnupton@gmail.com.

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India blames environmental activists for its economic problems

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STUDY: Economic Hardship Makes People More Racially Biased

by HattieSpellman Posted on June 12, 2014

Mother Jones

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The economic collapse of the late 2000s hurt most Americans—but not equally. In fact, according to a 2011 Pew study (visualized above), while median household wealth dropped by 16 percent for white Americans, it dropped a stunning 53 percent for African-Americans.

What accounts for this dramatic disparity? Traditional explanations tend to focus on structural economic factors, such as the fact that African American families had a higher proportion of their total wealth tied up in the vulnerable housing market, and that they were targeted by predatory lenders. But according to a new paper just out in Proceedings of the National Academy of Sciences, that may not be the full explanation. It looks as though a more subtle form of racial bias may have played a role as well—thanks to psychological factors that, in a recession, tend make those biases worse.

The new study is by Amy Krosch and David Amodio of New York University. Amodio in particular has extensively studied what are called “implicit” racial biases: Uncontrolled prejudices that manifest themselves in our split-second reactions to images or in other cognitive tests. According to one estimate, for instance, 75 percent of whites harbor these subtle, subconscious biases in favor of other whites, and against blacks.

The study adds a new twist to this large and well established literature on unconscious biases. It finds that when people are made to think about economic scarcity—as they inevitably are during a stressful recession—their subconscious perceptions of race change as well. In particular, they are more likely to internally visualize African American faces as being darker in color and more “stereotypically black”—perceptions related, in prior research, to the expression of higher levels of discrimination. The study even found that when asked to divvy up money between two people, white study participants allocated less money to an individual who was perceived as being more stereotypically black.

What might that mean in the real world? Racial biases, heightened by the downturn, might have filtered into “hiring or firing decisions, or decisions about home ownership loans, dealing with foreclosure, or other things that came out of the recession,” Amodio speculates.

The new study consists of four separate experiments, which bulwark this central conclusion using a variety of methodologies. In one of them, white study participants were asked to play a money allocation game. In some cases, they were told that it was possible to distribute up to $100 to a partner; in others, they were told that it was only possible to distribute up to $10. Either way, the participants were ultimately given the same amount of money—$10—to distribute. Thus, the scenario in which that $10 looked like only a small slice of the available pie (just 1/10 of the possible total) created perceptions of scarce resources. (The two scenarios were pretested on a different group of subjects to confirm that having only $10 out of a possible $100 to distribute made individuals feel that resources were scarce. It did.)

Afterwards, the research subjects were asked to looked at a series of images of paired faces. All of the images were actually based on the same original composite image, a mixed-race “morph” created from 100 black and 100 white faces, and then randomly degraded in quality by different patterns of visual noise. Here’s a helpful visualization, from the study, of how the process of creating the images worked:

Krosch and Amodio, “Economic scarcity alters the perception of race,” Proceedings of the National Academy of Sciences, 2014. David Amodio

Individuals were then asked to pick which version of the face was “black.”

“We let them choose which faces most accurately matched the image of a black person in their minds, from a range of subtly different face images across hundreds of trials,” says Amodio. The subjects’ choices were then all combined together to make two new composite images: One of the research participants’ perceptions of a black person under conditions of scarcity, and one of their perceptions under control conditions. This was the result:

Economic conditions affected how study participants perceived race. David Amodio.

Sure enough, in the “scarcity” experimental scenario, research subjects collectively produced a very different picture of what they thought that a black person looks like. Their version was judged, by independent observers, to be both darker in skin color, and also more “stereotypically black.”

“Together, our results provide strong converging evidence for the role of perceptual bias as a mechanism through which economic scarcity enhances discrimination and contributes to racial disparities,” the authors wrote.

That conclusion is underscored by the final experiment of the paper. In it, a new group of white research subjects were shown the two images above, and asked to divide $15 dollars between the fictional people pictured in them (in whole dollars; thus, giving each $7.50 was not a possible option). In this scenario, people generally tried to be relatively egalitarian, but they could not divide the money 100 percent evenly. At best, somebody had to get $8, and somebody had to get $7. Sure enough, the research subjects ultimately gave the person with the lighter colored, less “stereotypical” face more money.

We already knew, based on a large body of science, that subconscious racial biases filter into our behavior in innumerable ways. The new research presents striking evidence that in times when we’re all facing hardship, it can be even worse.

We recently interviewed David Amodio about the emerging science of prejudice on the Inquiring Minds podcast; you can stream below:

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STUDY: Economic Hardship Makes People More Racially Biased

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Thomas Piketty Says That r > g. But Is It, Really?

by CarleyFreehill Posted on May 14, 2014

Mother Jones

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I’ve mentioned before that I have a few misgivings about Thomas Piketty’s thesis in Capital in the 21st Century. One of my misgivings is pretty basic: Piketty argues that r (the return on capital) is historically greater than g (the economic growth rate). Since the rich own most of the capital, this means that the rich accumulate wealth faster than everyone else, which in turn means that rising income inequality is inevitable. But as capital accumulates, surely the return on capital should decline? After all, that’s what happens in every other market when there’s a glut of supply.

Piketty briefly addresses this objection, and concludes that although r will indeed decrease as capital accumulates, it won’t decrease much. But is that true? Larry Summers doesn’t think so:

Piketty’s rather fatalistic and certainly dismal view of capitalism can be challenged on two levels. It presumes, first, that the return to capital diminishes slowly, if at all, as wealth is accumulated and, second, that the returns to wealth are all reinvested. Whatever may have been the case historically, neither of these premises is likely correct as a guide to thinking about the American economy today.

Economists universally believe in the law of diminishing returns. As capital accumulates, the incremental return on an additional unit of capital declines. The crucial question goes to what is technically referred to as the elasticity of substitution….Piketty argues that the economic literature supports his assumption that returns diminish slowly (in technical parlance, that the elasticity of substitution is greater than 1), and so capital’s share rises with capital accumulation. But I think he misreads the literature by conflating gross and net returns to capital. It is plausible that as the capital stock grows, the increment of output produced declines slowly, but there can be no question that depreciation increases proportionally. And it is the return net of depreciation that is relevant for capital accumulation. I know of no study suggesting that measuring output in net terms, the elasticity of substitution is greater than 1, and I know of quite a few suggesting the contrary.

There are other objections to Piketty’s thesis, but it seems to me that this is one of the key criticisms—perhaps the key criticism. If r > g isn’t inevitably true, or even if it’s only slightly true (that is, r is only slightly greater than g), then everything falls apart. I suspect that this is going to be one of the main technical battlegrounds in the macro literature as Piketty’s theory gets hashed out over the next few years.

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Thomas Piketty Says That r > g. But Is It, Really?

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Whistleblower Suit Alleges Corruption, Cronyism, and Affairs in Gov. Susana Martinez’s Administration

by wqds234der Posted on May 8, 2014

Mother Jones

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A recently unsealed whistleblower lawsuit filed in New Mexico state court makes a series of explosive allegations against appointees of rising GOP star Gov. Susana Martinez, accusing high-ranking officials in her administration of public corruption, mismanagement, and intimidation. It claims that officials at the state’s economic development agency engaged in extramarital affairs that could expose the state to sexual harassment charges and that officials tried to silence employees who reported contracting violations and other wrongdoing.

The 22-page complaint—filed February 10 on behalf of two former state employees—claims that a company co-founded by Martinez appointee Jon Barela, secretary of the New Mexico Economic Development Department, secretly benefited from a state tax credit program. The complaint also alleges that aides to Martinez instructed a state employee to use his personal email for sensitive government work to avoid being subject to public records requests; that Barela and his deputy, Barbara Brazil, ignored waste and mismanagement at the state’s Spaceport project in southern New Mexico; and that Brazil ran several Dairy Queen franchises she had an interest in “while simultaneously being paid by the State of New Mexico.”

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Whistleblower Suit Alleges Corruption, Cronyism, and Affairs in Gov. Susana Martinez’s Administration

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Conservative Pro-Growth Policies Don’t Actually Produce Any Growth

by KatrinGascoigne Posted on May 7, 2014

Mother Jones

Michael Hiltzik draws my attention to something I missed when it first appeared a few weeks ago. Menzie Chinn decided to check out whether conservative pro-growth policies actually led to high growth, and the chart on the right shows the results. Chinn compared scores on the ALEC-Laffer “Economic Outlook” ranking to actual growth in 2013-14 and looked for a trend. There wasn’t one. “If there is any evidence,” he concludes after a more detailed look at the data, “it suggests that a higher ALEC-Laffer Economic Outlook score is associated with a worse economic performance.”

However, although a high ALEC-Laffer ranking may not stimulate any actual growth, Hiltzik points out that it does correspond to reduced taxes on the wealthy and slashed spending on state services that benefit the poor and working class. In other words, it may not affect growth, but it sure is a good deal for the rich. And that’s what counts, isn’t it?

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Conservative Pro-Growth Policies Don’t Actually Produce Any Growth

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The Housing Market Is Stalling, and Stagnant Wages Are to Blame

by GeorgiaLZS Posted on April 25, 2014

Mother Jones

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Although the economy has shown signs of life lately, growth is still pretty sluggish. The primary culprit appears to be housing: as Neil Irwin points out today, even after recovering from its Great Recession nadir, investment in residential property remains anemic compared to its average level over the past few decades. People just aren’t buying new houses—or refinancing old ones—fast enough to power a serious recovery.

The proximate cause for this is twofold. First, median incomes have been pretty sluggish: household income today is only about 2 percent higher than it was before the start of the recession. That’s just not enough income growth to get young couples confident enough to move out from their parents’ basement and strike out on their own. Second, as the Wall Street Journal reports, rising interest rates have killed off the refi market:

Mortgage lending declined to the lowest level in 14 years in the first quarter as homeowners pulled back sharply from refinancing and house hunters showed little appetite for new loans, the latest sign of how rising interest rates have dented the housing recovery.

….The decline in mortgage lending last quarter stemmed almost entirely from the slide in refinancing. Loans for home purchases were basically flat from a year earlier and down from the fourth quarter.

Mortgage loans were basically flat, which is bad enough. But refinancing is important too, since it puts money in people’s pockets, which they can use to either pay down debt or spend on consumer goods. Either one is good for an overleveraged economy. But now that’s coming to an end.

Housing is the single most important driver of economic growth. In the past, pent-up demand for new housing following a recession would eventually overwhelm financial trepidation, causing young families to start buying new houses. This time that hasn’t happened, and sluggish median incomes are almost certainly to blame (along with high debt levels among college grads, who are one of the prime markets for starter homes). The virtuous circle of rising incomes leading to new home buying—which in turn stimulates the economy and raises wages further—simply hasn’t happened. We are learning the hard way that there’s a stiff price to be paid when virtually all of the economic gains of a recovery go to the well off. Life may be good for them, but without broadly shared prosperity, the larger economy is stuck in a rut.

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The Housing Market Is Stalling, and Stagnant Wages Are to Blame

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Invading Crimea May Have Cost Russia $200 Billion So Far

by BrandyCremor Posted on April 17, 2014

Mother Jones

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Russia’s military actions are costing it dearly:

Russia’s annexation of Ukraine’s Crimea region last month and the instability it created in Russian financial markets were cited by government officials for record capital flight and sharply downgraded growth forecasts for the country. Finance Minister Anton Siluanov said that instead of projected 2.5% growth this year, Russia’s economy might show no growth at all.

….U.S. and European sanctions to punish Russia for occupying and annexing Crimea have so far targeted only a few dozen officials and businessmen. But the prospect of broader penalties, such as a Western boycott of Russian oil and gas, have scared investors into cashing out their ruble-denominated assets for hard currency and taking their money abroad. Russia’s foreign exchange reserves were drained of a record $63 billion in the first quarter of the year, Economic Development Minister Alexei Ulyukayev said Wednesday in an address to the lower house of the parliament.

….Russian stocks fell 10% last month, wiping out further billions in capital. The ruble has lost 9% of its value since the start of the year, boosting prices for the imported food and manufactured goods on which the Russian consumer market is heavily dependent. “The acute international situation of the past two months” was the cause, Ulyukayev said, referring to the Ukraine unrest.

That’s a helluva big drop in economic growth. Just by itself, it represents a cost of $50 billion. Add in the flight of cash and the stock market decline, and you’re somewhere in the neighborhood of $200 billion.

Is that enough to make Russia blink? Maybe not. But it hurts, and the prospect of losing even more has got be enough to give even Vladimir Putin a few second thoughts.

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Invading Crimea May Have Cost Russia $200 Billion So Far

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