Bluebird

Silos: A New Weapon for Farmers

Storage is helping farmers hold out for better prices

David Frazier/The Image Works

By Shruti Singh and Jeff Wilson

Drive along Route 63 in Iowa or I-74 in Illinois and you’ll see them by the score: shiny grain silos, built of galvanized steel, dotting the fields of these top two corn-growing states.

The nation’s farmers have built up oilseed and grain storage capacity to its highest level in two decades. On-farm storage in silos (also known as bins) climbed to 12.5 billion bushels in December 2010, the most since 1989, according to the latest estimates from the U.S. Agriculture Dept. Bin makers GSI Holdings and Brock Grain Systems (controlled by Warren Buffett’s Berkshire Hathaway) say farmers are adding still more storage. Both companies expect a strong 2012 as a result.

The silos are the farmers’ most potent weapon in a struggle to loosen the grip of the agro-corporations—including Cargill,Archer Daniels Midland (ADM), and Bunge (BG) —which have long acted as middlemen, buying grain and oilseeds from farms to process themselves or to sell at a markup to customers such as ethanol manufacturers, livestock producers, dairy farms, and food companies. Farmers who lacked enough storage had to sell their autumn harvest immediately to the middlemen, who had the upper hand when it came to pricing.

The farmers are gaining more leverage. Grain prices were low a decade ago. In the last quarter of 2011, cash corn prices traded at their highest level. U.S. farm income reached a record $100.9 billion in 2011, the USDA estimated on Nov. 29.

Terry Jones, who grows corn and soybeans on 7,000 acres in Iowa, is building grain silos with the extra money that higher corn prices and selling some land put in his pocket. The third-generation farmer now owns more than 3.5 million bushels of storage capacity, including 400,000 bushels’ worth that he started building last year and will finish in 2012. Some years, corn can rise by as much as $1 a bushel between the end of the harvest and the following summer, says Jones. He’s also developed contacts with livestock producers and ethanol mills that call him directly when their corn supplies run short. “I like it when they call me because we know we are going to get a good price,” he says.

“The increase in on-farm storage plus stronger farmer balance sheets has shifted power toward the farmer,” says David Nelson, a global commodity strategist in Chicago for Rabobank International. In Decatur, Ill.—ADM’s hometown and a U.S. corn processing center—buyers paid an average premium of 18.2¢ a bushel above the Chicago futures price to take delivery of corn in October. That’s the highest October price in at least four years, data compiled by Bloomberg show. A year earlier, buyers were paying a 2.8¢ discount below futures. The processors “are having to bid up corn to get corn out of someone’s hand,” says Tim Lenz, who farms 2,600 acres of corn, soybeans, and wheat in Strasburg, Ill. Lenz is holding about 60 percent of his corn crop in his bins, up from 40 percent a decade ago, when he first added storage. Grain storage is “not going to allow them to get cheap corn at the glut of harvest,” he says.

Cargill has built more silos for its own use and helps construct bins for farmers who contract to sell the company their grain. Gary Schmalshof says he sold corn to Cargill for $7.40 a bushel in September, up from $6 a year earlier. “They were afraid that corn would go into the bins, and they couldn’t access it,” says the Illinois farmer, who last month was storing 70 percent of his 550,000-bushel harvest in his bins. Rising grain costs and tighter supplies curbed profits in late 2011 for ADM, whose shares dropped 4.9 percent last year. The S&P Consumer Staples Index, of which ADM is a member, rose more than 10 percent.

Neither ADM nor Cargill would comment on how more silos affect grain prices. Bunge Chief Executive Officer Alberto Weisser cautions that using silos to wait for the best price is a hard game to win consistently. “It’s a tricky decision for farmers to own storage,” he says. “It only makes sense for very large farmers.”

For now, the farmers are savoring the power those silos bring. “I like the control,” says Steve Ruh, a farmer in Sugar Grove, Ill., who built storage in 2009 and more again this year. “This allows me to market 12 months out of the year instead of half that time.”

 

The bottom line: U.S. farmers are tapping record income to build more storage silos, lessen the power of middlemen, and help them time the market.

 

Pacific Northwest in revolt

In Portland, Occupy activists vow to 'shut down the banks'

November 17, 2011 | 11:27 am

 

Four days after their eviction from two downtown parks, hundreds of Occupy Portland protesters massed Thursday morning near a bridge that is one of the city's most important mass transit connectors, then made their way to a rally on the Willamette River waterfront. Seattle protesters, meanwhile, were squaring off with the mayor over recent use of pepper spray against activists.

In Portland, Ore., about 15 protesters who refused to budge were arrested at the Steel Bridge during the morning commute, with large numbers of police blocking access and then leading activists away in handcuffs without serious incident.

The bridge reopened after the remaining protesters began streaming across a pedestrian walkway below, eventually joining a waterfront rally on the other side of the river targeting large corporate banks -- one of several such rallies underway across the country.

FULL COVERAGE: Occupy protests around the nation

A number of organized labor activists joined Thursday's protests, highlighting upcoming cuts to staff at Portland's unionized transportation bureau at a time when the Steel Bridge -- the symbolic center of the morning protest -- is in need of repair.

"The Steel Bridge rates about a 30 on a scale of 100 in bridge safety in this country, while the public workers that do maintenance on this bridge are being cut," Occupy Portland organizer David Osborn said in an interview.

Later Thursday, small groups of activists planned ad hoc "civil disobedience" actions targeting large corporate banks across Portland.

A number of nonprofits across the city were planning to join in; the Central American Solidarity Committee said it would highlight banks' funding of an immigrant detention center, while groups such as Rising Tide and the Animal Defense League said they would focus on financing of such projects as coal export terminals and mountaintop strip mines.

Angus Maguire of We Are Oregon, which is one of the major organizers of a coalition that includes more than two dozen Oregon unions and nonprofit groups, said his organization works with unemployed people facing foreclosure of their homes. "The goal is to join with other cities to highlight the economic emergency that we're in as a nation, and the fact that Congress is continuing to fail to really do anything to put Americans back to work," Maguire told The Times by phone from the rally.

Elsewhere in the Northwest, organizers of Occupy Seattle said Mayor Mike McGinn's apology Wednesday for the pepper spraying of protesters a day earlier didn't go far enough.

McGinn had said in a statement that he has ordered the Police Department to review the incidents and make sure that "appropriate commanders" are on scene with "appropriate levels of police resources" at future protests.

The mayor singled out the widely publicized case of 84-year-old Dorli Rainey, a well-known Seattle activist, who was among those blasted with the eye-stinging spray. A picture of her face streaming with pepper spray and antidote, taken by Seattlepi.com photographer Joshua Trujillo, has spread quickly across the country.

"To those engaged in peaceful protest, I am sorry that you were pepper sprayed. I spoke to Dorli Rainey (who I know personally) to ask how she was doing, and to ask for her description of events," McGinn said. "I also called in Seattle Police Chief John Diaz and the command staff to review the actions of last night. They agreed that this was not their preferred outcome," the statement said.

Occupy Seattle leaders, in their own statement, said they had notified the city of their intended march and route and it should not have been necessary to greet them with overwhelming force.

"Given that the police blocked our passage and then used pepper spray indiscriminately suggests that it is not Occupy Seattle that is unwilling to work with the city, but rather that SPD is not willing to work with Occupy Seattle," they said.

Rainey told the Associated Press that she had been on a bus when she saw the protests and decided to take part. Police, she said, began shoving their bicycles at the marchers and then opened up with pepper spray. She has no plans to withdraw from the protests, she added. 

Occupy Seattle announced that Rainey will be the keynote speaker at a "Voices of the Revolution" rally set for Saturday at Westlake Park, scene of the movement's initial encampment.

"I'm pretty tough, I guess," Rainey said.

Oak Land

Op-Ed Contributor

Trouble Beside the Bay

By ISHMAEL REED

Published: November 8, 2011

Alex Merto

 

JEAN QUAN may be the first in many categories — the first Asian-American and first woman to be mayor of Oakland — but she is far from the city’s first chief executive to face off with its police force. While dozens of mayors around the country have had to deal with Occupy movements, only Ms. Quan has seen the initially peaceful protests turn into street violence and even a general strike — a turn almost wholly attributable to the brutality of the city police.

In their zeal to fight back, however, the protesters, many of them white out-of-towners, have left locals unsure of who really has their best interests at heart.

On Oct. 25 the world saw an Oakland police force that blacks have had to deal with for decades — even before the Black Panthers organized to protest the shooting of a black youth in the 1960s, a time when the police were said to be recruited from the South because they knew how to handle African-Americans. In a video watched worldwide, an officer in riot gear fired a tear gas canister at a protester; the victim, an Iraq War veteran, later underwent surgery for his wounds. When some occupiers went to help him, another canister was lobbed at them.

That same night officers allegedly used rubber bullets during an assault on campers in Frank H. Ogawa Plaza. If so, that would violate the department’s rules of engagement. Those rules were adopted in 2003, after the police assaulted antiwar protesters at the Port of Oakland, even injuring some longshoremen who happened to be passing by.

The force’s viciousness, particularly against blacks and Latinos, is legendary. In one recent case, a group of officers known as the Riders, who racked up an impressive list of drug takedowns, were accused of brutality, kidnapping and planting evidence on their road to arrests. Another officer, nicknamed “Audie Murphy,” after the sharpshooting war hero and film star, shot four suspects and killed three. So little has been done to reform the force that a federal judge has threatened to take the entire department into receivership.

Many of Oakland’s officers don’t even live in the city, but rather its suburbs, a fact that helps maintain a strong “us versus them” worldview. (At a recent community meeting I proposed that the city study a plan, developed by Detroit, that rents foreclosed homes to police officers for as little as $1,000, to keep them in the city.)

The police still have influence in City Hall, though: their union repeatedly and vocally criticizes elected officials, including the mayor. For years it opposed making officers pay toward their pensions like other city workers. (The union agreed to start contributing in July.)

Mayor Quan initially supported the police after the Oct. 25 clashes. Keith Olbermann called for her resignation; so did Michael Moore, who made a nuisance of himself by barging into Oakland Highland General Hospital, demanding to see the injured veteran (who had already been transferred to another hospital). Support for the protests grew, with statements of sympathy coming in from Cairo and Düsseldorf, Germany.

Such pressure may explain why Ms. Quan later apologized for the use of excessive force by the police, and is now trying to take a hands-off approach to the matter. Needless to say, the police department has been critical, saying it was “confused” by her latest moves.

All of this has left Oakland’s blacks and Latinos in a difficult position. They rightly criticize the police, but they also criticize the other invading army, the whites from other cities, and even other states, whom they blame for the vandalism that tends to break out whenever there is a heated protest in town: from the riots after the murder of Oscar Grant by a transit police officer in 2009, to the violence of the last two weeks downtown and, most recently, near the port.

Someday we may discern the deeper historical meaning of these latest events. For now, what’s striking are the racial optics. How did Asian-Americans respond to the sight of a diminutive Asian-American mayor being hooted off the stage by a largely white crowd at an Oct. 27 rally? And where was the sympathy when, in years past, unarmed blacks and Hispanics were beaten or killed? Why did it take the injury of a white protester to attract attention?

Meanwhile, those hurt most by the protests are local business owners and workers, many of them minorities. Jose Dueñas, the chief executive of the Hispanic Chamber of Commerce of Alameda County, blamed the Occupy movement for stalled economic activity. “We’ve got no events planned, people are pulling back,” he told a local newspaper. “We don’t blame them.” The cash-strapped city has spent over $1 million so far in occupation-related costs.

Local activism has been pushed aside as well. Even as Occupy Oakland has occupied the Bay Area headlines, hundreds of black, white and Latino parents met to oppose plans to close five schools in black neighborhoods. The following day there was hardly a single line of newsprint about the meeting.

The Occupy movement has important things to say. But in its hurry to speak, it risks shutting out those who have been waiting their turn for a long time.

Ishmael Reed is the author of “Blues City: A Walk in Oakland.”

The wealth divide

Op-Ed

The bottom 60% in the U.S. has never had more than 11% of the wealth.

 

Jeff Bisdee walks in a march in Pittsburgh organized by Wall Street protestors, Occupy Pittsburgh, on Nov. 2. The march was to show support for Occupy Oakland, Calif.. (Gene J. Puskar / AP Photo)

By Joyce Appleby

November 7, 2011

We hear a great deal these days about the top 1% and the bottom 99% in the American economic pyramid. But we also need to consider the 11%.

From 1776 to the present, the bottom 60% of the American population, as USC historian Carole Shammas has documented, has never had more than 11% of the country's wealth. We may embrace the American dream of broad prosperity and wealth equity, but we have never been close to achieving it.

There has been an explosion of studies examining inequality in the United States recently. They have been both illuminating and, at times, confusing. Sometimes people refer to the top 1% and bottom 99% using income, and at other times the studies look at wealth. Sometimes they have focused on individuals, sometimes on households, where there might by two or three earners.

Does it matter? Yes. Let's start with the difference between income and wealth. The top 1% of today's earners make more than $700,000 annually, and the top 1% in terms of wealth have assets of more than $9 million.

There's a big difference between the two kinds of money. Income lasts only as long as you have the job, and it has a tendency to get spent once it's earned. Income taxes, which are hard to evade on earnings, come out of it, as do the expenses of daily life. But wealth is forever, as long as the possessor can resist risky investments and live on the income from it rather than the principal. Many of the returns on acquired wealth come from capital gains, which are taxed at a lower rate of 15%. Other returns are sheltered from taxes in a variety of ways.

It is a lot better for the pocketbook, it turns out, to have a trust fund than to work as a stock trader, especially in a downturn like ours. Enduring wealth also translates into enduring political power in our system.

And what about wealth for the rest of us? How are we faring? Let's consider the situation of those American households in the second quintile of wealth, those who find themselves in the 60th to 80th percentiles in comparison with other American households. This group took a serious hit in the Great Recession. For most middle-class families, the biggest items in their strongboxes are their homes and their retirement savings — 401(k)s and the like. Our persisting crisis has put 23% of mortgage-holders underwater, meaning they owe more on their houses than they are worth. Even the 77% of mortgage-holders who aren't underwater have taken a substantial reduction in the worth of their property, as have those 30% to 40% of homeowners who have no debts or encumbrances on their houses. And retirement savings have also been battered by an unpredictable stock market and low interest rates on savings accounts.

Inequality as an issue has simmered just beneath the surface of public concern over the last quarter of a century as the median income of American households has fallen by about 4%. The wealthiest Americans have experienced a very different reality. Consider the top one-tenth of 1%. For the two decades before the recession, the American economy saw greater productivity and more wealth generation, but despite the predictions of supply-siders, little of that wealth trickled down. Instead, it redounded in a hugely disproportionate way to the benefit of the 13,000 households in the top 10th of the top 1%.

Never in the history of the United States has there been such a concentration of wealth in the hands of a small elite. We now rank 27th in the least-equal countries, falling between Portugal and Chile.

But let's get back to the bottom 60% of American households and how they have never enjoyed more than 11% of the country's wealth. Doesn't that figure suggest we should review the content of the American dream and emphasize what is actual rather than illusory? We have a constitutional government, widespread enjoyment of personal freedom and government policies that protect opportunity. Perhaps the current public conversation about the 1% and 99% can focus on the fundamental question of how long political equality can survive amid such economic inequality.

Joyce Appleby is an emeritus professor of history at UCLA and the author of "The Relentless Revolution: A History of Capitalism."

Speaking of Wall Street

The Geography of Occupying Wall Street (And Everywhere Else)

By NATE SILVER

October 17, 2011, 10:57 am

The nascent movement known as Occupy Wall Street had its largest single day of protests on Saturday. And a funny thing happened: most of the action was far from Wall Street itself.

No, I don’t mean at Zuccotti Park — which is not, technically, on Wall Street. Nor do I mean Times Square — all of 19 minutes away from Wall Street on the ‘C’ train — where large crowds of protesters gathered on Saturday.

Instead I mean Europe, where crowds in cities like Rome, Barcelona and Madrid were estimated at 200,000 to 500,000 per city (more, probably, than the protests in the United States combined). And I mean California and other parts of the western United States, where crowds were proportionately much larger than in the Northeast or elsewhere in the country.

Leaving aside Europe, where the Occupy protests merged, not always seamlessly, with those sponsored by left-wing groups, the distribution of protests throughout the United States may reveal something about the political orientation of the protesters.

The way that I studied this was to search through hundreds of local news accounts for credible estimates of the crowd sizes for each gathering. Where possible, I used estimates provided by reporters or public safety officials rather than the protesters themselves as they are less subject to exaggeration. In some cases, there were multiple estimates of the size of the protest in a given city — they ranged, for instance, from about 5,000 to 15,000 for the New York protests — in which case I used the median estimate.

This exercise is meant, in part, to provide a comparison to the crowds that gathered for the first widespread Tea Party protests on April 15, 2009, for which I adopted a similar approach and came up with an estimate of at least 300,000 protesters across the country.

Saturday’s Occupy protests were probably smaller than that. Over all, I was able to find estimates of crowd sizes in about 150 American cities, ranging from the thousands of the protesters that turned out in New York to the roughly 10 who turned out in Juneau, Alaska — or the one protester who represented the movement in Myrtle Beach, S.C.

Nevertheless, based on the median estimates for the cities, I arrived at an overall total of about 70,000 protesters who were documented as having been active on Saturday throughout the United States.

This is very probably an underestimate — there were some protests that were noted in news accounts but without any firm estimates of crowd size. But I’m fairly certain that I captured most of the larger protests. The true overall figure might have been somewhere on the order of 100,000 protesters. That’s pretty big, but not as big as the largest day of Tea Party protests in 2009, nor other recent protests like the pro-immigration gatherings of 2006, which accounted for about 500,000 people in Los Angeles alone.

It should be cautioned that the comparisons are not quite apples to apples. Although Oct. 15 was a focal point for many protesters, the Occupy groups are far more decentralized than even the Tea Party movement and the extent to which a concerted effort was made to turn out a large crowd varied a lot from city to city. Some cities also had larger gatherings before the ones held on Saturday.

(People who want to see or expand upon the raw data can find it in an Excel spreadsheet here. Disclaimer: it is provided ‘as is’ and I am unlikely to do any further work on crowd-counting.)

Nevertheless, the data is in reasonable enough shape that we should be able to make some inferences about the types of cities in which the largest numbers of protesters were gathered. They tended to be in West.

Over all, about 38,000 protesters — more than half of the documented total — turned out in the Western Census Bureau Region, which accounts for about 23 percent of the country’s population. On a per-capita basis, the West drew about two-and-a-half times more protesters than the Northeast, four times more than the Midwest, and five times more than the South. And it wasn’t necessarily in large cities — although places like Los Angeles and Seattle had large crowds, so did the wine-and-cheese town of Santa Rosa, Calif., and the college town of Eugene, Ore., among others.

This could be due to a number of factors. Perhaps it has something to do with race, for instance. Cities where African-Americans make up a majority of the population, like Detroit, New Orleans and Cleveland, have tended to have underwhelming numbers of protesters and poorly organized Occupy groups. (There are plenty of those cities in the South, the Northeast and even the Midwest — but not really in the western United States).

Or maybe it has something to do with technology: Much of the organizational activity for the Occupy movement has taken place online, and the West Coast is particularly tech-savvy.

I suspect that more than anything, however, it reflects the politics of the protesters. Specifically, they tend to be more liberal than they are Democratic partisans. Take liberalism, subtract the Democratic Party, and the remainder might look something like Occupy Wall Street.

Oregon, for instance, which had among the highest per-capita rate of protesters on Saturday, has the fourth-highest fraction of self-identified liberals. But it also has a large number of independents — and its share of proud Republicans — so its partisan balance between Democrats and Republicans is fairly average.

By contrast, a state like West Virginia has a large number of Democrats but few liberals — and there were almost no accounts of protest activity there.

So perhaps the protesters are more ideologically minded than they are interested in partisan politics. In fact, they may be relatively disengaged from “politics as usual.” In a somewhat informal New York magazine survey of 100 protesters in Manhattan, only 39 percent reported having voted in the 2010 midterm elections.

All of this could create headaches for the Democratic Party — and for the protesters — if it tries to co-opt the Occupy movement.

Then again, there are some parallels between the Occupy protests and the Tea Party, which especially at first was more representative of a certain strand of conservatism than it was the Republican Party. The Tea Party has become somewhat unpopular now — but Americans had warmer views of it initially, something which is now true of the Occupy protests.

Perhaps it’s the lack of overt partisanship that people are responding favorably to.

Perhaps, even, ‘post-partisanship’ will emerge from the left and right of the country rather than from the center.

So far, despite Occupy Wall Street’s name, its energy seems to be coming from the left coast.

Foodies, Get Thee to Occupy Wall Street

 

Ryan Harvey/Flickr

Because Big Food makes Big Finance look like amateurs.

—By Tom Philpott

The Occupy Wall Street protests grew out of anger at the outsized power of banks. But as they've expanded nationwide, the uprisings have evolved into a kind of running challenge to the way power is concentrated in all aspects of our economy—concentrated into the hands of people with an interest in maintaining the status quo.

No doubt, the financial sector is a stunning example. This MoJo chart shows how the 10 largest banks came to hold 54 percent of US financial assets, up from 20 percent in 1990. As big banks gobbled smaller banks and became megabanks, they managed to extract more and more wealth out of the economy. Even after the epochal meltdown and bailout, the financial sector now claims fully a third of US corporate profits. They've invested a chunk of that windfall in what is probably Washington's most formidable lobbying machine—which is precisely how they managed to slither away unscathed despite the economic carnage they caused.

But other economic sectors are similarly concentrated, and have a comparable grip on public policy. Consider the industry I cover. Our national food policy is both in desperate need of reform and utterly trapped under the heel of industry influence. So, as Occupy Wall Street evolves, food policy should be on the plate. Here are four reasons why:

1. The food industry is a big fat monopoly.
Agribusiness is concentrated to a point that would make a Wall Street master of the universe blush. Vast globe-spanning corporations, many of them US-based, dominate the industry.  

Let's start with "inputs," the stuff farmers buy before they plant their crops. As of 2007, six companies owned 75 percent of the global pesticide market, and four companies sold half of the globe's seeds, ETC Group reckons. Here's the kicker: Three of them—Monsanto, Syngenta, and Dupont—are on both lists. The agrichemical makers have transitioned into seed barons, genetically engineering their major seed lines to resist their own herbicides.

Three companies process more than 70 percent of beef in the US; four slaughter and pack more than 58 percent of our pork and chicken.

Monsanto is an interesting case. In addition to being the planet's largest seed vendor, with 23 percent of the market, it licenses its patented genetically modified traits to other companies. Think of the physical seed as the hardware and traits as the software. In the trait market, Monsanto holds a near monopoly: By 2007, according to ETC Group, 87 percent of the acreage dedicated to genetically engineered crops contained crops bearing Monsanto traits.

Okay, so farmers rely on a small handful of firms for their inputs. But it turns out the same thing holds true when they harvest and sell their crops. Just four companies—Cargill, Archer Daniels Midland, Bunge, and Louis Dreyfus—control up to 90 percent of the global trade in grain. In the United States, three of those firms process 70 percent of the soybeans and 40 percent of the wheat milled into flour. The bulk of corn and soy grown by US farmers ends up feeding animals in vast factories, and here, too, the consolidation is dramatic: Three companies now process more than 70 percent of all beef, and just four firms slaughter and pack upwards of 58 percent of all pork and chicken.

By 2002, just four companies produced 75 percent of cereal and snacks, 60 percent of cookies, and half of all ice cream.

Finally, let's look at the supermarkets. Walmart opened its first grocery-selling "superstore" in 1988. Today, it controls 2,750 superstores and more than a quarter of the US grocery market. As a result, the combined market share of the four largest grocery players has doubled, from less than 20 percent in 1992 to nearly 40 percent today.

And, despite acres of shelves groaning with thousands of products, only a few large companies stock supermarkets. By 2002, the USDA reported, four companies churned out 75 percent of breakfast cereal, 75 percent of snacks, 60 percent of cookies, and 50 percent of ice cream.

2. The food industry screws farmers, its own employees, and the environment.
In antitrust theory, when four players control more than 40 percent of a market, they're said to wield "market power"—that is, they can manipulate the prices they charge consumers and the terms on which they deal with their suppliers. So, rather than raise prices, the food industry has slashed costs—at the expense of workers, farmers, and the environment.

The meat industry provides a stark example. Today, you can grab a McDonald's McDouble burger or a McChicken sandwich for a dollar. As I noted above, just a few companies process the great bulk of meat consumed in the United States. How can they do that profitably, when McDonald's is practically giving burgers away? Simple: screw the workers.

Some 80 percent of the antibiotics sold in the United States go to livestock facilities, the FDA reports.

From 1976 to 2009, according to USDA figures, the inflation-adjusted average hourly wage of meatpacking workers plunged, as did union membership among meatpacking employees. Predictably, working conditions deteriorated. (See our recent Hormel Foods exposé: "The Spam Factory's Dirty Secrets.") In 2005, Human Rights Watch issued a damning report titled "Blood, Sweat, and Fear," which concluded:

Employers put workers at predictable risk of serious physical injury even though the means to avoid such injury are known and feasible. They frustrate workers' efforts to obtain compensation for workplace injuries when they occur. They crush workers' self-organizing efforts and rights of association. They exploit the perceived vulnerability of a predominantly immigrant labor force in many of their work sites. These are not occasional lapses by employers paying insufficient attention to modern human resources management policies. These are systematic human rights violations embedded in meat and poultry industry employment. [Emphasis added.] 

Farmers, too, got the shaft. As a few big hog processors like Smithfield gobbled market share and began raising millions of their own pigs, pork prices tanked and tens of thousands of farms went belly up, despite an increase in the total number of hogs being slaughtered. In 1992, America had 240,000 hog farms, the USDA reports, but only 60,000 of them remained by 2007. Similar trends have hit the poultry industry.

Meanwhile, shunting livestock production into huge factory-style facilities has led to a massive concentration of toxic animal waste. Using data collected by the EPA, the Environmental Integrity Project recently showed that animal factories routinely emit levels of particulate matter, ammonia, and hydrogen sulfide that are well above acceptable health limits. A good deal of that manure ends up in groundwater, too, fouling drinking water supplies and fish habitat.

Finally, to keep their animals alive and growing fast under dire conditions, the meat industry laces feed rations with antibiotics. The FDA recently revealed that 80 percent of the antibiotics sold in the United States go to livestock facilities. Nearly every US public health and farm oversight agency has acknowledged that the practice contributes heavily to the rise of antibiotic-resistant human pathogens—vicious superbugs like MRSA, a resistant form of staphylococcus that kills now more Americans than AIDS does.

3. Wall Street's greed leaves millions to starve—literally.
One obvious reason that Occupy Wall Street should focus on food is that Wall Street itself focuses on food.

As I reported last month, two recent UN reports directly implicate commodities speculators for driving up the price of key food staples like rice and wheat—leaving tens of millions of people around the world hungry in order to make a buck. A new study (PDF) reaching the same conclusion has emerged from the New England Complex Systems Institute—and was reviewed by two Harvard economists and an official from the Federal Reserve Bank of Boston.

Sure, these analyses note, US and European biofuel programs have played a role in all this by (foolishly) diverting key food staples into car fuel. But Wall Street took the biofuel craze to a whole new level. Olivier de Schutter, the UN's Special Rapporteur on the Right to Food, puts it bluntly:  

The promotion of biofuels and other supply shocks were relatively minor catalysts, but they set off a giant speculative bubble in a strained and desperate global financial environment. These factors were then blown out of all proportion by large institutional investors who, faced with the drying up of other financial markets, entered commodity futures markets on a massive scale.

And here's what the New England Complex Systems Institute team had to say:

The two sharp peaks in 2007/2008 and 2010/2011 are specifically due to investor speculation, while an underlying upward trend is due to increasing demand from ethanol conversion.

When the first speculative shock hit food markets in 2007, "at least 40 million people around the world were driven into hunger and deprivation as a result," de Schutter writes. The bubble burst with the 2008 Wall Street meltdown but has since reinflated as Wall Street returned to profitability and its speculative ways. In real terms, global food prices are now hovering above their former peak in 2008, meaning misery for millions of people globally.

How did the global food supply become a Wall Street profit center? In a July 2010 Harper's article called "The Food Bubble: How Wall Street Starved Millions and Got Away With It," journalist Frederick Kaufman laid out the story (PDF). It all started with a financial instrument Goldman Sachs conjured up in back in 1991 to allow the its clients to invest in the commodities market without having to pick specific winners. Here's how Kaufman describes it.

[Goldman's financial engineers] selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known thenceforward as the Goldman Sachs Commodity Index. Then they began to offer shares.

For years, the Goldman Sachs Commodity Index was a stable, boring instrument that didn't draw much attention as investors chased flashier instruments like tech stocks and real estate. But it generated enough client fees to inspire other firms, including AIG, JP Morgan, and Bear Stearns, to roll out similar food-centered instruments, Kaufman reported.

By 2005, the tech bubble had long since burst, and real estate had reached dizzying heights. And the Commodity Futures Modernization Act of 2000—the same Clinton-era legislation that "introduced obscure financial derivatives like 'credit default swaps' into the American lexicon and ultimately caused the collapse of mortgage and stock markets," notes blogger Eric Michael Johnson—had deregulated derivatives markets. With this backdrop, President Bush and Congress began to ramp up US corn ethanol production in an absurd attempt to kowtow to the mythical notion of energy independence. This gave Wall Street the story it need to sell investors en masse on commodity crops. Suddenly, billions of dollars were flowing into the food funds, and crop prices soared.

Goldman Sachs designed its customers' food betting so the bank would make money regardless of food prices.

When those prices crashed again in 2008, Kaufman reports, Goldman's clients who had bet on ever-rising prices lost money, but the firm itself didn't. It had rigged the instrument so that the bank made money no matter what. The subsequent rebound has left global food prices well above levels justified by supply and demand factors, according to the United Nations.

In a sense, the dramatic rise in commodity prices could at least benefit farmers around the world. After all, until 2005, crop prices had been falling or stagnating for 30 years. But the upswing has mainly benefited the agribusiness giants I mentioned above. That's because, as crop prices rise, the prices for inputs like agrichemicals and genetically modified seeds rise in tandem, keeping farmers squeezed.

The price of farmland has also jumped, as (yes) speculative cash swept into heartland real estate. (See chart.) That means a windfall for farmers who own their land but rising rents for those who lease.

In Africa, rising food prices have inspired hedge funds, institutional investors, and nations like Saudi Arabia and China to gobble up farmland for export crops at a time when domestic populations are going hungry.

What can be done to curb food speculation? The Dodd-Frank financial reform law signed by President Obama required the Commodity Futures Trading Commission to rein in speculation in ag markets. But as the New York Times' Gretchen Morgenson reported last month (hat tip, Tom Laskway), the commission has proposed rules that "might actually encourage speculation in the commodities markets."

This suggests that the political system is so shot through with finance sector cash that it's incapable of properly regulating Wall Street's food fetish.

 

4. Our politicians are in bed with agribusiness.

Like the big banks, the handful of companies that dominate our food system dedicate loads of cash to throwing their weight around in DC.  

From 1998 through 2011, the agribusiness sector dropped $1.4 billion on lobbying, reports the Center for Responsive Politics. That's considerably less than the finance and health sectors, but enough to put it sixth on the CRP's list of clout-wielding sectors, beating out defense contractors ($1.3 billion) and trial lawyers ($366 million).

"Not only is there lack of support," complained the  USDA's chief slaughterhouse inspector, "but there's outright obstruction, retaliation and abuse of power."

So what does the industry get in return? A 2010 study by the Union of Concerned Scientists and Iowa State University gives us a taste. The researchers polled more than 1,700 employers of the USDA and FDA, the two federal agencies overseeing food and ag companies, on the topic of industry influence. The results are chilling:

Hundreds of survey respondents identified undue corporate influence as a major problem. More than 620 respondents (38 percent) agreed or strongly agreed that "public health has been harmed by agency practices that defer to business interests."…And more than 300 respondents (25 percent) said they personally experienced corporate interests forcing their agency to withdraw or significantly modify a policy or action designed to protect consumers in the past year. When asked that same question about Congress and non-governmental interests, more than 260 respondents (24 percent) and more than 240 respondents (22 percent) said yes, respectively.

One of the respondents, a USDA veterinarian named Dean Wyatt who manages the agency's slaughterhouse inspectors, spoke bluntly. "Upper level management does not adequately support field inspectors and the actions they take to protect the food supply," he told the pollsters. "Not only is there lack of support, but there's outright obstruction, retaliation and abuse of power."

And evidently, data-fudging to protect industry interests is commonplace:

…190 respondents (16 percent) said they witnessed officials selectively or incompletely using data to justify a specific regulatory outcome. One-hundred-and-five respondents (10 percent) said agency decision makers inappropriately asked them to exclude or alter information or conclusions in an agency scientific document. Ninety-eight respondents (9 percent) said agency managers asked them to provide incomplete, inaccurate or misleading information to the public, regulated industry, media or government officials.  

Plenty of observers were hopeful that industry influence over federal watchdog agencies would decrease dramatically with the exit of George W. Bush. But the poll detected only a "very small" reduction of influence-wielding under Obama.

Another way to gauge industry influence is to look at particular cases. Take the genetically modified seed industry dominated by Monsanto, Dupont, and Syngenta. According to a 2010 report (PDF) from Food & Water Watch:

These companies and organizations spent more than half a billion dollars—$547.5 million—lobbying Congress between 1999 and 2009, the most recent full year of available data. The firms employed more than 100 lobbying firms in 2010 alone, as well as their own in-house lobbyists. Lobbying expenditures rose 102.8 percent from $35.0 million in 1999 to $71.0 million in 2009.

That's money well spent. As I've written before, the GM foods industry has enjoyed a rather laissez-faire regulatory environment since it emerged in the 1990s, despite steady public pressure for more oversight.

That tradition continues under President Obama. In January, the USDA green-lighted Monsanto's genetically modified alfalfa after signaling that it would place restrictions on the crop to protect organic farmers from genetic contamination. The Wall Street Journal later reported that the White House had intervened to force the decision, "as part of the administration's review of 'burdensome' regulation."

And in July, the USDA declined to regulate genetically modified turf grass, issuing a decision that opens the door for a whole slew of novel crops to avoid even minimal oversight. This, despite the agency's admission that the novel grass will likely contribute to the herbicide-resistant "superweed" problem and contaminate non-GM grass crops.

The hands-off approach to GM crops evidently extends to other corners of the administration. Indeed, in some agencies, the attitude is downright boosterish. Regarding the labeling of foods containing GM ingredients, a notion with strong public support, a State Department officially has publicly sided with the industry line, the Des Moines Register reports. Speaking at a panel organized by CropLife America, the main agrichemical/GM seed industry trade group, State Department economic specialist Jose Fernandez told the crowd what it wanted to hear: "If you label something there's an implication there's something wrong with it."

The Register adds: "The State Department has been working along with the Agriculture Department to encourage foreign countries to permit the production and use of biotech crops."

On the potentially scary problem of livestock being pumped with antibiotics, regulation has been practically nonexistent, even though, as I've pointed out before, the USDA, FDA, and Centers for Disease Control and Prevention have all acknowledged the dangers of essentially neutering the best weapons we've got against outbreaks of bacterial disease in humans.

What we're left with is a system of government oversight crumbling in the face of industry influence, an election-year atmosphere of anti-regulatory zeal, and a political system polarized to the point where it is incapable of addressing the problem. At times when our leaders have proved unwilling or unable to defend the public interest, a social movement like Occupy Wall Street becomes vitally important.

That's money well spent. As I've written before, the GM foods industry has enjoyed a rather laissez-faire regulatory environment since it emerged in the 1990s, despite steady public pressure for more oversight.

That tradition continues under President Obama. In January, the USDA green-lighted Monsanto's genetically modified alfalfa after signaling that it would place restrictions on the crop to protect organic farmers from genetic contamination. The Wall Street Journal later reported that the White House had intervened to force the decision, "as part of the administration's review of 'burdensome' regulation."

And in July, the USDA declined to regulate genetically modified turf grass, issuing a decision that opens the door for a whole slew of novel crops to avoid even minimal oversight. This, despite the agency's admission that the novel grass will likely contribute to the herbicide-resistant "superweed" problem and contaminate non-GM grass crops.

The hands-off approach to GM crops evidently extends to other corners of the administration. Indeed, in some agencies, the attitude is downright boosterish. Regarding the labeling of foods containing GM ingredients, a notion with strong public support, a State Department officially has publicly sided with the industry line, the Des Moines Register reports. Speaking at a panel organized by CropLife America, the main agrichemical/GM seed industry trade group, State Department economic specialist Jose Fernandez told the crowd what it wanted to hear: "If you label something there's an implication there's something wrong with it."

The Register adds: "The State Department has been working along with the Agriculture Department to encourage foreign countries to permit the production and use of biotech crops."

On the potentially scary problem of livestock being pumped with antibiotics, regulation has been practically nonexistent, even though, as I've pointed out before, the USDA, FDA, and Centers for Disease Control and Prevention have all acknowledged the dangers of essentially neutering the best weapons we've got against outbreaks of bacterial disease in humans.

What we're left with is a system of government oversight crumbling in the face of industry influence, an election-year atmosphere of anti-regulatory zeal, and a political system polarized to the point where it is incapable of addressing the problem. At times when our leaders have proved unwilling or unable to defend the public interest, a social movement like Occupy Wall Street becomes vitally important.

Tom Philpott is the food and ag blogger for Mother Jones.

 

Can sack of onions save a farm?

Irene-ravaged property looks to eBay to raise money.

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By Lisa Fickenscher @LisaFickenscher

October 16, 2011 5:59 a.m.

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Would anyone buy a 50-pound bag of onions on eBay for $150,000?

Farmer Chris Pawelski of Orange County, N.Y., who posted the ad, may be hoping for the impossible, but that's because he's exhausted all of his other options.

Hurricane Irene flooded 48 of his 51 acres, leaving him with $200,000 in debt and the real possibility that he'll lose his farm, which supplies several New York City supermarkets with the cooking staple.

“I'm trying to get attention,” he said.

The first auction, which he launched earlier this month, had a starting bid of $300,000. It generated 2,300 hits, but no takers. Now he's asking for half that amount for a bag that would ordinarily cost just $10 wholesale. Though he's received lots of sympathy from eBay users, none so far have offered what he needs: a bundle of cash.

A fourth-generation family business, Pawelski Farm is located in the Black Dirt region of the Hudson Valley. As an added incentive for would-be buyers, Mr. Pawelski's eBay offer also includes a five-gallon bucket of black dirt.

Read more: http://www.crainsnewyork.com/article/20111016/SMALLBIZ/111019900#ixzz1b3SO3RXV

brilliant, this

October 2, 2011, 8:00 pm Shifting the Suburban Paradigm

By ALLISON ARIEFF

 

Allison Arieff on design and architecture.

Tags:

housing, single-family homes

Marion Belanger + 20×200.comNow that the housing market has bottomed out, what’s next? New ways of thinking about “home” are overdue.

Is there anything made in America that’s less innovative than the single-family home? While we obsess over the new in terms of what we keep in our houses — the ever-increasing speed and functionality of our Smartphones, entertainment options built into refrigerators, sophisticated devices that monitor, analyze and report on our sleep cycles, even the superior technology of the running shoes we put on before heading out the flimsy fiberboard door — we’re incredibly undemanding of the houses themselves. These continue to be built the same way they have for over a century, and usually not as well. Walls and windows are thin, materials cheap, design (and I use the term loosely) not well-considered. The building process is a protracted affair, taking far too long and creating embarrassing amounts of building waste (over 50 percent of all waste produced in the United States, in fact).

But the lack of innovation extends beyond the high-tech. Not so long ago homes were designed to make the most of their surrounding climate and terrain. Vernacular forms like the shotgun, in places like New Orleans, served a purpose that went far beyond aesthetics — they encouraged natural cooling by improving cross-ventilation. In Texas and New Mexico, thick adobe walls similarly kept heat in during the winter, and out during the summer. Houses were sited and windows placed to maximize or minimize sun exposure as needed.

No longer. Today, it’s essentially the same floor plan, sheetrock and construction that’s used coast to coast. Glossy brochures with stock images of smiling families advertise “Spanish Gothic” or “Tuscan Villa,” but what’s really on offer is the same dumb box with a stage set of a façade tacked onto the front. The reasons behind the advertised vernacular styles have long since disappeared, their function surrendered to ornament.

It’s not that the means don’t exist for better building. There have been significant advances in homebuilding: smarter, safer, more sustainable materials that contribute to healthier and more energy-efficient structures (less expensive to heat and cool); precision building technologies that reduce construction time and waste; and more enlightened planning principles that recognize the social, economic and health benefits of building homes within denser, more walkable neighborhoods (important as sprawl is associated with high levels of driving, which contributes to air pollution, and air pollution leads to morbidity and mortality).

Why? The reasons are complicated. Incentives received by commercial builders for doing the right thing are not extended to residential builders. But it’s also true that the homebuilding industry isn’t interested in risk or change, despite (in spite of?) dramatic slowdowns in residential construction, an anticipated surplus of thousands of homes, a market besieged by foreclosures and still-dropping home values. Even though there’s increasing demand for more diverse housing — especially smaller, more energy-efficient homes and multifamily units in more walkable communities — too many homebuilders are inexplicably committed to the status quo.

For many in the homebuilding industry, the current scenario is seen not as a call to action but as a temporary problem of the market (I found the same thing to be true in the world of shopping-center builders, who pine for — and fully expect the return of — a go-go consumer culture that is likely gone for good). To address current market realities, they don’t look to innovation but rather to an easier fallback strategy: a new marketing plan.

Five years ago, at the crest of the housing boom, I worked on a team consulting with a master planned-community developer who had asked us to help “revolutionize the way our homes are sold.” The developer had little interest in the work we proposed — namely, to revolutionize the way their homes were designed and built. That company, like most of its competitors, laid off nearly half its work force the following year, and ended or delayed most of its future development projects. Devoting energy to how best to market its inventory hadn’t been the most forward-thinking strategy for them then — nor would it be now.

But that’s what most developers continue to do. I read just last month about Fulton Homes, a homebuilding company that seems to be weathering the housing market better than its peers by selling homes the same way they’d sell clothing or computers, like any other retail product. In Builder online, Fulton’s vice president of operations, Dennis Webb, said, “If the buyer wants it, give it to him.”

Fulton hasn’t really changed anything about the homes they produce, regardless of what has happened over the last several years. They’ve simply hired more sales guys. No doubt you can “like” them on Facebook. In the short term, this has been a prudent move … but what about next year? The year after that?

Blu HomesDedicating millions to creating a better consumer experience for purchasing high-end single-family homes (like this one by Blu Homes) doesn’t help address the real crisis in housing the U.S. is facing.

Then there’s a company like Blu Homes, which has demonstrated a clear commitment to merging housing and high tech — to the tune of a $25 million investment, in fact. They recognized the tremendous inefficiencies in home-building and have developed 3D technology that allows for personal customization (clients can click a mouse to alter floor plans, choose green features and select finishes), as well as a proprietary building process and innovative steel-framing technology that allows their homes, as their Web site explains, “to be built to the highest aesthetic and environmental standards and be delivered quickly and economically nationwide.”

But following a long line of V.C. types dabbling in housing, Blu has set its sights on a small slice of an already niche market — high-end modern prefab, which accounts for maybe half of a percent of the less than 5 percent of architect-designed homes in the country. Devoting this much R&D and software development to so few homes feels akin to installing a $250,000 solar array on a garden shed. Why not devote that energy to transforming cookie-cutter developer homes?

Lake FlatoWith Lake Flato’s partially prefabricated Porch House, traditional vernacular architecture is more about functionality, less about decoration.

I like what Texas’s Lake Flato is doing in this arena, combining vernacular style with precision building technology for their Porch House. Though the firm is building custom one-offs, they are also working on a number of larger projects — one, in Louisiana, involves building nine homes on two blocks of infill property in a historic Baton Rouge neighborhood. The concept is centered around making better use of backyards (less lawn, more sustainable garden) and using the traditional architecture vernacular for that area — the “shotgun” house.

Lake FlatoThinking about how homes work together is key to the future of suburban communities. How can these neighborhoods become denser, more walkable and less resource-intensive?

And even more promising in terms of scale is KB Home’s announcement of the ZeroHouse 2.0, a greener version of the company’s standard home, which is expected to eliminate monthly electricity charges for homeowners. Model homes featuring the ZeroHouse 2.0 package (it should be but isn’t yet standard) open this month in Tampa, San Antonio and Austin. (Now, if KB would just start talking with the architects at Lake Flato.)

KB HomesKB Homes’ new ZeroHouse 2.0 is a step in the right direction on sustainability. But energy efficiency should be standard, not part of a home-design options package.

Even more prudently, a company like Blu could be directing all that R&D to multi-family housing, currently identified as the only bright spot in residential architecture and, to my mind, the only real path to truly sustainable housing.

As architectural designer Aron Chang discusses in one of the more intellectually rigorous and thoughtful pieces on suburbia that I’ve read of late, which appeared in Places journal last month, it’s time we focus on “suburbia’s essential component” — the freestanding single-family house.

Chang writes, “The disconnection between the rising diversity of housing needs and the monotony of housing production speaks to the tenacity of the postwar American dream — the enduring allure of the detached house with front lawn and backyard patio — as well as to the profitability of catering to these aspirations.”

Chang sees this moment — with millions of houses now in foreclosure, many deteriorating or abandoned — as one to seize, and I couldn’t agree more. It is possible, he considers, that once the economy revives we will simply return to home-building-as-usual:

But right now we have an opportunity to rethink suburban housing: to make it responsive not to dated demographics and wishful economics but rather to the actual needs of a diversifying and dynamic population — not only to the so-called traditional households but also to the growing ranks of those who prefer to rent rather than buy, who either can’t afford or don’t want a 2,000-square-foot-plus detached house, who are retired and living on fixed incomes and maybe driving less, who want granny or nanny flats, who want to pay less for utilities and reduce their carbon footprint, and so on.

Housing can’t be equated with high-tech: a home is, or was, a long-term investment not beholden to the dizzying speeds of change and innovation that drive say, Apple, which must continually reinvent and redefine its product to meet consumer demand. But housing is woefully behind the times, and now it needs to see opportunity in crisis, not wait it out by launching pop-up shops and interactive Web sites that empower consumers to such revolutionary things as customizing bathroom tile and kitchen backsplashes.

I don’t care if we’re talking Le Corbusier, Cape Cods or Corinthian columns, we can’t make any progress in housing until we stop thinking about the home as decorative object and begin considering it as part of a larger whole. How does it work on the street? In the neighborhood? How is it served by transit? Is it adaptable, allowing for the housing of extended families or the hosting of an entrepreneurial endeavor? Can the owner build an accessory dwelling (a.k.a. granny flat) to do so? (Most zoning, homeowners’ associations and CCRs don’t allow for it currently.) What needs to happen to zoning, to financing, to our very notions of resale value to change the suburban condition — and by extension, the American Dream as we know it?

We’re beyond the point of a fresh coat of paint and a new sales pitch. If we’re going to continue to hold on to the single-family home, we need to transform it. There is a demand for smaller, more energy-efficient homes in less car-dependent neighborhoods; all aspects of the industry, from designers to lenders to planners to consumers, should meet it. In this era of anti-government fervor, subsidizing the American Dream isn’t an option; transforming it is the only one we’ve got.

Meanwhile on Wall Street

Op-Ed Columnist

The Bankers and the Revolutionaries

By NICHOLAS D. KRISTOF

Published: October 1, 2011

AFTER flying around the world this year to cover street protests from Cairo to Morocco, reporting on the latest “uprising” was easier: I took the subway.

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Nicholas D. Kristof

The “Occupy Wall Street” movement has taken over a park in Manhattan’s financial district and turned it into a revolutionary camp. Hundreds of young people chant slogans against “banksters” or corporate tycoons. Occasionally, a few even pull off their clothes, which always draws news cameras.

“Occupy Wall Street” was initially treated as a joke, but after a couple of weeks it’s gaining traction. The crowds are still tiny by protest standards — mostly in the hundreds, swelling during periodic marches — but similar occupations are bubbling up in Chicago, San Francisco, Los Angeles and Washington. David Paterson, the former New York governor, dropped by, and labor unions are lending increasing support.

I tweeted that the protest reminded me a bit of Tahrir Square in Cairo, and that raised eyebrows. True, no bullets are whizzing around, and the movement won’t unseat any dictators. But there is the same cohort of alienated young people, and the same savvy use of Twitter and other social media to recruit more participants. Most of all, there’s a similar tide of youthful frustration with a political and economic system that protesters regard as broken, corrupt, unresponsive and unaccountable.

“This was absolutely inspired by Tahrir Square, by the Arab Spring movement,” said Tyler Combelic, 27, a Web designer from Brooklyn who is a spokesman for the occupiers. “Enough is enough!”

The protesters are dazzling in their Internet skills, and impressive in their organization. The square is divided into a reception area, a media zone, a medical clinic, a library and a cafeteria. The protesters’ Web site includes links allowing supporters anywhere in the world to go online and order pizzas (vegan preferred) from a local pizzeria that delivers them to the square.

In a tribute to the ingenuity of capitalism, the pizzeria quickly added a new item to its menu: the “OccuPie special.”

Where the movement falters is in its demands: It doesn’t really have any. The participants pursue causes that are sometimes quixotic — like the protester who calls for removing Andrew Jackson from the $20 bill because of his brutality to American Indians. So let me try to help.

I don’t share the antimarket sentiments of many of the protesters. Banks are invaluable institutions that, when functioning properly, move capital to its best use and raise living standards. But it’s also true that soaring leverage not only nurtured soaring bank profits in good years, but also soaring risks for the public in bad years.

In effect, the banks socialized risk and privatized profits. Securitizing mortgages, for example, made many bankers wealthy while ultimately leaving governments indebted and citizens homeless.

We’ve seen that inadequately regulated, too-big-to-fail banks can undermine the public interest rather than serve it — and in the last few years, banks got away with murder. It’s infuriating to see bankers who were rescued by taxpayers now moan about regulations intended to prevent the next bail-out. And it’s important that protesters spotlight rising inequality: does it feel right to anyone that the top 1 percent of Americans now possess a greater collective net worth than the entire bottom 90 percent?

So for those who want to channel their amorphous frustration into practical demands, here are several specific suggestions:

¶Impose a financial transactions tax. This would be a modest tax on financial trades, modeled on the suggestions of James Tobin, an American economist who won a Nobel Prize. The aim is in part to dampen speculative trading that creates dangerous volatility. Europe is moving toward a financial transactions tax, but the Obama administration is resisting — a reflection of its deference to Wall Street.

¶Close the “carried interest” and “founders’ stock” loopholes, which may be the most unconscionable tax breaks in America. They allow our wealthiest citizens to pay very low tax rates by pretending that their labor compensation is a capital gain.

¶Protect big banks from themselves. This means moving ahead with Basel III capital requirements and adopting the Volcker Rule to limit banks’ ability to engage in risky and speculative investments. Another sensible proposal, embraced by President Obama and a number of international experts, is the bank tax. This could be based on an institution’s size and leverage, so that bankers could pay for their cleanups — the finance equivalent of a pollution tax.

Much of the sloganeering at “Occupy Wall Street” is pretty silly — but so is the self-righteous sloganeering of Wall Street itself. And if a ragtag band of youthful protesters can help bring a dose of accountability and equity to our financial system, more power to them.

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.

Paralyzed by the post office

Digital Domain

Reading the Writing on the Envelope

By RANDALL STROSS

Published: October 1, 2011

 

Jack Ohman

The Postal Service is in a losing race with technology, but the nation has yet to face the problem head-on.

THE Pony Express was famous for moving mail at astounding speed. Missouri to California in only 10 days! A triumph. 

It was also short-lived. Established in 1860, it lasted only as long as the territory it covered lacked the telegraph. Humans and horses could not match the speed of electrical signals. So when the transcontinental telegraph was completed in 1861, the company’s three investors reacted swiftly. It was shut down after only 18 months.

Now, 150 years later, the United States Postal Service is engaged in another race with technology, one it can’t possibly win. But because the service is a quasi-independent government agency, it continues to maintain the huge human and mechanical infrastructure that was assembled for a pre-Internet age.

The Postal Service proudly proclaims just how big it is. It has 574,000 employees, making it the nation’s second-largest civilian employer, after Wal-Mart. The service runs 215,625 vehicles, the world’s largest civilian fleet. Those vehicles traverse 1.25 billion miles annually and consume 399 million gallons of fuel. Its carriers serve 151 million homes, businesses and post office boxes.

And the Postal Service can’t resist a tacit little boast at the end of that long list of big numbers: It receives zero tax dollars for its efforts.

Bravo! But one could point out that this is the same Postal Service that posted multibillion-dollar deficits in the 2007, 2008, 2009 and 2010 fiscal years; another is expected to be reported for the 2011 fiscal year, which ended Friday. It is curious that 2006, the year before this dismal run of losses, happened to be the very year when total mail volume peaked. In 2006, some 213.1 billion pieces were processed. In 2010, the total was just 171 billion.

Stamped mail is the category that has declined most steeply in the last decade — 47 percent since 2001. “Standard” mail, the official euphemism for junk mail that until 1996 was called third class, dropped only 8 percent over the same period.

The decline in mail volume has been accompanied by widening losses: $8.5 billion for 2010, and a projection of nearly $10 billion for 2011.

The Postal Service, to its credit, acknowledges that it faces what Patrick R. Donahoe, the postmaster general, calls a new reality. In releasing results for the quarter ended June 30, the service described how “electronic diversion continues to cause reductions in first-class mail.” Revenue from first-class mail declined 8.7 percent from the period a year earlier.

The postal unions avert their eyes. They say that the service ran into trouble solely because Congress has required huge payments for future retirees’ health care costs. Silly me: I thought funding benefits fully was a good thing.

On its Web site, the American Postal Workers Union disputes  the notion that “hard-copy mail is destined to be replaced by electronic messages.” Mail volume was down, it says, because its principal component — advertising — had fallen in the recession. “As the nation and the world emerge from economic stagnation, hard-copy mail volume will expand,” it asserts. But that, of course, ignores the rise of the Internet, and its ever-growing use for checking bills or sending payments — with no need for that army of 500,000.

The Internet can’t be used to tele-transport packages, of course, and our use of package delivery services, including the Postal Service’s, has grown with e-commerce. But the Postal Service is running large deficits, bumping up against the $15 billion limit it is permitted to borrow, and is on the brink of default unless Congress comes to the rescue.

Is this where the Postal Service wants to make its stand, as a package delivery service, one among several providers? Does anyone really care whether the Postal Service or U.P.S. drops the package at the doorstep?

A. Lee Fritschler, a professor of public policy at George Mason University and a former chairman of the Postal Regulatory Commission, says our Postal Service should be viewed not as a communications medium but as a broadcasting medium, spraying identical messages, in the form of “standard” mail, far and wide. If Congress had to bail out the Postal Service, it would effectively be subsidizing the private interests that use the service to distribute advertising cheaply. “Why on earth should our government be subsidizing a broadcast medium?” Professor Fritschler asks.

Some say subsidies are perfectly defensible if the service fulfills a noble civic function. Richard R. John, a historian at the Columbia University Graduate School of Journalism, points out that the post office ran a deficit during most years between the 1830s and the 1960s. But today, when junk mail is predominant, “postal management is unable to articulate a compelling vision of the public good,” he says.

In 1861, it was easy to decommission the Pony Express, a technologically obsolete, privately owned delivery service. A century and a half later, we have a delivery service whose raison d’être is rapidly vanishing before our eyes. This one is owned by all of us, however, and we are paralyzed, unable to decide what to do.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.