Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

4.07.2010

The Problem With Stories About Mine Disasters



This week, I've been hearing a lot about coal mining. Amanda recently read 'Germinal', Zola's epic story about coal mining in Second Empire France, and wrote a beautiful review of it. More than that, there has been a disaster in the coal mines here in America, that already has left several dead and wounded, and the chances don't look good for the rest of them.

Mining is actually a subject that I've been interested in for some time (I'd like to say this is because I'm a nice, humanitarian person, but unfortunately it's more selfish than that - the book-I-am-writing-but-will-never-finish draws on mining pretty heavily). From a metaphorical perspective, there is something powerful about it, something almost ressurectional in these groups of men and women descending down into the ground every day then rising up at the end, drawing their living directly from the breast of Mother Earth by main force. Before the industrial revolution, mining had an air of superstitious wickedness to it. Mining was a job in many communities for those outcast from real society, frequently even the work of slaves. And, the product? Well, Pluto and Hades were the patron gods of the riches drawn up from the earth, and the connection with Satan took a very long time to dissapear.

Of course, mining is the very lifeblood of our economy now, particularly coal mining. If it were to stop, if we were to shut down all mines our economy would quickly fall apart. Our lights would turn off, our factories would stop, all the complex, delicate web of modern civilization would dissapear.

Which makes disasters like the one this week even more painful to me. Like the image of Moloch in Fritz Lang's Metropolis, we, the 'overlanders' as it were, send human souls into the mouth of destruction, as a sacrifice to appease the gods of modern living. This is, it seems to us, unavoidable. Much like car accidents, mine accidents are simply a part of life, something tragic but that one expects will happen, simply because someone must keep the coal-fires burning. Sad, but almost banal in it's sadness. Another mine disaster, that's so unfortunate, man that'd be scary. A 5 minute byline on the news. A dramatic rescue, or a moment of sorrow when they find the bodies.

This is made worse for me because - and understand, please, that I don't believe this is intentional - of the way we cover these stories in America, because in the way we cover a mine disaster, one begins to see the outlines of the way that we protect ourselves from the horror of the system surrounding them. This morning on NPR, for instance, the story came on that they're still looking for these miners. A byline comes up about the awful safety record of the miners, and then a long description of a meeting 2 weeks ago of industry professionals, union leaders, and journalists, where they more or less celebrated how safe mining has become, how last year was the safest year ever of mining in America. The pathos of this was fully explored, the feeling that, yes, these people were sincere, EVERYBODY figured that disasters like happened at the Sago mine in Utah a few years ago were behind us as a country. Everyone was shocked when they heard the news. Everyone, of course, being those that were flown to Washington to drink and celebrate how damned nice we all are for trying to make sure miners don't get killed. The mining industry journalist they spoke to was devastated by the news, shocked.

How shocked can the owners have been? The owners who kept sending down miners into a mine so hopped up with coal dust and methane gas that they had more than citation per day last year. They were fined $900,000 last year for violations of safety codes. Of course, the problem is, that it is economically viable to run a mine fast and loose on safety rules, and just pay those fines. Safety, they say, takes time. Safety is important, but must be balanced with productivity. The company is only trying to stay competitive in a difficult market. The company is doing nothing that is too far out of band for the industry, and they've vastly improved over the last few years.

And the painful thing is (and again, I know there are reasons for this), I listened to a lot of running time talking to these mining experts, and how sometimes circumstances come together in unforeseen ways (yeah, I loved that one - see, yeah, methane + coal dust + oxygen + spark = boom. There, now you can 'foresee' it next time, jerks), and how they just don't understand how this could happen, and they're heartbroken. But then, there is only a few minutes, where they apologize for not notifying the families of the dead that they found the bodies of their loved ones. There is just a few minutes listening to mining families say 'yeah, well, we send him down every day knowing he might not come back up, but you just sort of have to get used to that. That's how it is, he's a miner.' The story on our nightly news yesterday shows these vague, indistinct images, taken from a helicopter, of a lot of people milling around a hole in the ground with machines. The horror, in all this, is that we were surprised, the story seems to say, that we really meant well, but it just didn't work out.

That's not the horror at all. This isn't a story about how good intentions go awry. It's a story about what happens when a spark hits fire and instantaneously entombs the living souls of men we take advantage of in order to have our lights turn on in the morning. It's a story about horror and isolation and the endless, endless dark, and desperately scrabbling for the emergency food and gas masks, and sitting under the ground waiting, waiting, for days you can't even count anymore, for hopefully someone to come for you. It's the story of sitting on the surface, watching a machine drill holes into the ground because the place where maybe, hopefully, their best guesses say, your husband, wife, son is is so full of methane that it isn't safe for rescuers to go on. It's the story of crawling around in half-collapsed passages, looking for your friends who are probably dead, calling into empty chasms, trying to hear in every creak of a pipe and echo of air  and metallic tapping some little morse code saying what you are increasingly sure isn't so, that you are not just digging up a corpse so it can be reburied somewhere else.

But there's a problem, there, and the problem is that in a mining story, there is a we and there is a them. Them is the miners, and we feel for them. We are the listeners, though, and the media speaks to our concerns, our needs, our worries. And it reflects our feelings, the vague sense of othering the incomprehensible, so that we can find a way to emerge still able to forget to turn off the light, and not feel that we've extracted the blood of some far off soul as a recompense for our carelessness. So, we talk about our story, the story of not being able to comprehend how awful it must be, the story of wondering how this happened, of not being able to comprehend how those distant someone's who must of caused this couldn't have been controlled by the regulators or congress, or whatever. And then, at the end, the story fades out over the sound of melancholy bluegrass music, the music of 'them', those poor guys far off who are dying (it's even worse when it's a Chinese mining disaster - those we hardly even notice, despite the mines powering our desire for fully stocked Walmarts). And we feel sad for them, and this sadness gratifies us, it is our sacrifice - it's all we know HOW to sacrifice.


There will be, now, a great deal of talk about resolving the underlying issues in mining. Talk will center on the amorphous word 'regulations', and 'stiffer penalties'. Talk is already surfacing calling these miners heroes, sacrificing themselves bravely for the greater good. But, none of this talk looks at the root issues. I am not an expert in mining, but from the outside, here is the problems that I see.

1) First and foremost, mining is a capitalist industry, and in capitalism, the only truly effective impediment to bad behaviour is the machinations of the market. And in this case, the coal industry, from a safety point of view, is more or less insulated from market effects. The market does a fine job of regulating price (assuming the presence of strong anti-trust regulation), and it has been very effective at this in terms of coal (too effective perhaps, which I'll talk about in a minute). But, the only way 'soft' issues like safety and ethics are regulated by a market are by offending the sensibilities of your customers. Well, unfortunately, you or I have no choice as to whom to buy coal from. We simply get power. Their 'customers' are big power companies, who, of course, have no control over the coal companies they will say, and therefore can't be responsible for the ethics of their suppliers. This isn't to say Adam Smith was wrong - simply Adam Smith assumed that cost/benefit could be measured. And it's pretty difficult to measure the cost of a human life. After all, the direct cost of someone in West Virginia dying, to me, the consumer, is pretty darned low, really. I have no idea how to fix this. The best solution we've come up with in the past for this sort of thing, is extremely heavy regulation - basically forcing the industry to do what we as a country think is right.

2) Coal is too cheap. It is very easy to just look at the bosses and say 'those bastards, what were they thinking?' But, the problem is, they are right in a sense - what they are doing isn't abnormal, and it would be difficult for them to be profitable on a large scale WITHOUT a 'gradual' approach to safety. They need to produce, and safety slows production. The problem is, ironically, that we demand cheap power on our side of the equation (and other countries are providing it with no particular concerns as to the safety of miners). When we demand cheap power, it must be produced cheaply. For it to be produced cheaply, there must be a plentiful, cheap supply of consumables. This pushes the market for coal down, speeding the frenzy for production, leaving less time for safety. This is what gets forgotten in debates, for instance, about renewable energy - yes renewable energy is more expensive in dollars, but that's because we don't figure the actual price of a coal-fired power plant, largely because much of the cost is immeasurable (don't even get me started on the 'cost' of pollution). If we were paying as much as we OUGHT to pay for coal-generated electricity, there would be a lot less power use, a lot fewer dead coal iners - and unfortunately a lot of angry constituents complaining to their congressmen, and a lot of people dying of heat stroke and hypothermia because they can't afford to run their heat/ac.

3) We, as citizens, are blind to the production process, and no longer have to worry about where our stuff comes from. This has been true, of course, throughout much of history, but the problem now is that, really, the mine disasters in West Virginia are only the tip of the iceberg. True, crushing, murderous poverty is now outsourced to other countries in the name of development and industrial growth, so, like I said if I we aired every dead miner in China, we'd spend a lot of time looking at dead miners (and dead industrial workers, and dead children from breathing in factory smoke, and dead rivers from being dumped into, and a whole lot of blood that goes into our happy meal toys). These things, though, are far away, now, and not our fault - it's not OUR fault, after all, that the Chinese government doesn't regulate it's industry, right? But again, this is the irony of the American position. We worked hard for years to spread the free market economy to the world, as the harbinger of freedom and opportunity. And then, when the market is unable to regulate human rights and ethics, we just shake our heads and figure those countries just aren't free enough.

Again, I don't mean this to be a diatribe. I do not know what the solution to these things is. I just don't know. I do know that in the meantime, we wake up each morning and ask human beings to get out of bed and hurl themselves into complex, devious murder machines, and then fret and feel confused when the blades draw one or two of them in and hack them to bits. Maybe, we say, maybe they just need a little thicker leather suit. Maybe they just need to be taught how to hurl themselves in properly. Maybe we need to move the blades a little so they aren't pointed directly at their vital organs. Maybe. Sure. Or maybe we need to work together to find a way to stop hurling men to their death.

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9.18.2009

Money versus Value

I have been reading Capital by Karl Marx, lately (well, listening - thanks Librivox!) which has my mind on Economics - NOT a subject I normally spend a great deal of time on. Perhaps wrongly so - economics seems boring, but it is also, particularly for the last few hundred years, the force that drives history.

I'm not an expert on Economics - I really know next to nothing - but it strikes me that the world economy in it's current form is unsustainable - either we all will degenerate into a sort of global feudalism where rich countries use poor countries as serfs, and military force is used to keep the rich country's economic needs fulfilled (we're kind of already there it seems, in many ways), or we'll have to transform. I'm kind of hoping for the second one.

Capitalism is complex, I know, and I won't pretend I understand it, but the central tenet of capitalism itself seems to be doomed in our current world: that a free market encourages competition, thereby bringing out the best possible products, the best possible profits, and the best possible world to humanity at large. Think about that for a minute. Think of what competition has chosen as the best products - think about furniture, for instance, where being not-rich means buying fiberboard junk that falls apart in a few years. Now, even assuming that these products ARE the best possible products - is the system that creates them really giving the greatest possible good to humanity? Is the greatest good a good that determines your relative well-being by which country you happen to be born in, how much melanin you have in your skin,  or whether you have a penis? If that's the best we can do as a race, I'm not sure we have much to brag about, really. The thing is that competition doesn't breed better products, it breeds better competitors. I work for Pearson, the largest educational publisher in the world now. Did they get there by being the best at what they did? No. Heck, Pearson started out building bridges, and really only got in education in the last quarter century. Pearson is great because it was clever, it knew how to buy up the right companies at the right time. Does that produce a measurable benefit to us as a race? No. On the contrary, consolidation is an extremely effective way to fight competition, but a terrible way to produce a vibrant, innovative community - Dilbert, after all, doesn't work in a small company, because if he did, they'd be out of business. Only the Fortune 500 can afford to bankroll incompetence.

[Side note - I don't mean to say that you CAN'T innovate in a multi-billion dollar corporation, anymore than you CAN'T hand out social justice from the seat of a dictatorship. It just happens to be far too easy to do the wrong thing and get away with it]

The thing is, this model doesn't just stifle innovation in large companies - it kills it off in small companies too. The dotcom bubble of the last decade was an excellent example of this. In the beginning of the internet (and to be fair, in a strong central culture throughout the internet's history) there was a central culture of innovators - some entrepeneurs, many simply people who loved technology and believed in what it could do. These people innovated, and created something truly transformational in our culture - to be frank, I've wondered over the last few years if, without the growth of computing and the internet, if the US as a worldwide imperial power would even still exist (but that's something to talk about another day). The dotcom bubble was the classical reaction to revolution - the string of people trying to riff of other people's good ideas. This can be good of course. Not EVERY company of the dotcom era was a bust. However, the business model in the dotcom era speaks of an essential weakness: many dotcommers tried to grow as explosively as they could on venture capital and limited revenues, so that they looked lucrative enough to get snatched up and bought by a bigger company. That's why they paid people with stock options, so that they would hang around and work to get the company sold, since they could sell their 'free' stock high and cash out. This pattern continues today even. The problem with it is that it confuses money with value - a successful business is one that can be sold off for money, not one that can create sustainable value. This is the problem that surrounds the Facebook and iPhone application market right now (do you REALLY think that Mafia Wars is the kind of business that will last 20 years? Really? How about PullMyFinger, one of the most popular apps on the iPhone? Are these innovation?).

The confusion between money and value is really gets to the root of the problem with Capitalism - like Utilitarianism in the 19th century, it is easy to measure, but impossible to measure accurately. A bank in this system can make billions of dollars annually, for moving stuff around from one pot of money to another. Seriously - the finance industry makes NO sense to me. Think of it this way: the most profitable company on earth is Exxon Mobil. In 2007, they made almost $41 billion in profit. Not in revenues - in profits. That's how much more we, as a world, paid Exxon than it needs to run. So, all of the world's profits serve three basic social purposes - to reward and encourage innovation, to allow for growth, and to provide a cushion for unforeseen problems. So, how much benefit have we, as a world, gotten for our $41 billion dollars? What innovation are we rewarding? Is that hte most valuable innovation on earth? Do we really WANT the oil industry to grow? Considering the inevitable future don't we want the exact OPPOSITE of that? And as for disasters, well sure, Exxon needs something, okay. But you know, I don't know how often Exxon really has a problem with a year in the red. If they're so worried about disasters, maybe they'd work harder to make sure they don't have oil spills without being browbeaten into it by the government and an angry public. Furthermore - has our energy dollar spending encouraged the best possible product? If you consider oil the best energy source on earth, sure. But it isn't - it can't be in the long term, because we ain't even gonna HAVE it forever. But that's jsut the thing - Capitalism produces the highest possible profits - NOT the highest possible VALUE. Money is a short term measure of success, because it is immediate and palpable. In the long term? Money is both meaningless and unpredictable. Having money may enable us to do good things, but in and of itself, it is not success, and to be perfectly frank, most human beings don't REALLY think that it is. It's fun. It feels good. It's easy. But it's not important.

Because, the thing is, money isn't a product. Money isn't a thing people can use. It's just a token, somethign that sits in your hand so that you can get what you want to use. Money is just a convenience, because converting the price of 20 gallons of gas into ducks or computer-repairman-work-hours is too complicated. We make a standard way to exchange the output of our labors, that's money.

But the thing is, Exxon has nothing that it needs to exchange $41 billion for. There is nothing exxon needs that costs that much. So what does it do with it? It hoards it, in which case the money becomes meaningless, or it jsut buys more of itself, and grows, an equally unprofitable activity in a world that frankyl doesn't NEED more Exxon. Or more Pearson. Or more WalMart. Or more McDonalds. Or more Microsoft. What the world needs is more of the things it DOESN'T have - but capitalism demands that we give our money only to the things we've already got - or we invest it, in which case we put it into companies that we feel will get us more money - not more value, just more money. Noone is investing in, say, Proctor and Gamble because they're holding out for the bottle of Crest that will change the world and fix our problems. They're investing in it, because they know everybody will keep having to buy toothpaste, Proctor and Gamble will end up with billions of dollars and nothing it needs, it will tehrefore buy more Proctor and Gamble for itself, and the cycle will perpetuate itself.

Unfortunately, this is more than just an annoyance. This doesn't mean only that we don't grow. IT means that slowly, very slowly, we're eating away at the value we have left. If all money eventually funnels out into mindless growth cows, and money is our measure of value, then all of the value produced by the world must slowly be sucked in by the exponentially growing corporate vampire companies that we feed. What this means is that the companies ending up gobbling each other up in an endless cycle of merger and acquisition, that must be fed by producing more products and extorting more profits - because a growth vampire no longer knows how to sustain itself except by the value it takes from others (Exxon, again, being a good example). Where does all this value come from? Someone must make it, someone must put some input into the system - well, there are only two forms of value in the world: human activity and natural resources. People must owrk more to make more sellable materials, and more must be pulled up from the earth to sell. Because that's the blood, that's what the vampires drink.

Where do we go from here? IS there anywhere to go from here? I don't know. I know I don't have a lot of readers here, but if you have any thoughts, I'd be thrilled to hear them.

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