United States
Where would globalization be without outsourcing?
Countries: China, India, United States
The once-thriving practice of outsourcing manufacturing may be thwarted by rising energy costs.
According to the Wall Street Journal, many U.S. manufacturers have halted plans to build factories overseas because the costs to transport goods back home have risen. Some, such as the heater manufacturer DESA LLC, are even considering moving production back to the U.S. "My cost of getting a shipping container here from China just keeps going up — and I don't see any end in sight," said DESA retail heating division president Claude Hayes. The company now considers itself lucky to have kept its old U.S. factories.
The return of DESA's heaters to the U.S. coincides with a new report by CIBC World Markets called "Will Soaring Transport Costs Reverse Globalization?" The report argues that high energy costs could potentially reverse the outsourcing that has occurred in some areas of manufacturing. Foreign trade cannot expect the same opportunities to develop markets in India as there were 30 years ago because of today's high energy costs. This situation could give countries closer to the U.S. like Mexico a little more appeal in the future than current economic giants such as China.
But do not expect outsourcing — the major transformer of world economies in the last 30 years — to go silently into the night. As Andrew Leonard points out in his article "Who Needs Tariffs When You Have Expensive Oil?" high energy prices do not affect all aspects of global trade, including the areas of telecommunications and computers. For example, the software industry in India will continue to thrive because it thrives on cheap Internet and not natural resources. So while some manufacturing may feel the pressure of high oil prices, American companies will continue to outsource in other ways.
Energy costs won't likely come down anytime soon. Could American manufacturing make a comeback?
Filling Up: Who's going to pay?
Rising gas prices are driving Californians to fill up in Mexico, according to the Wall Street Journal.
Gas is approaching $5 a gallon in San Diego — twice as much as it is in neighboring Tijuana. Many Californians not only filling up in Mexico, they're even installing extra-large fuel tanks in pickups and work vehicles for later use, often bringing back enough to sell in California for a large profit.
Suppliers of fuel tanks and San Diego auto shops are happy at the phenomenal business. For example, fuel tank company Transfer Flow made more than half a million dollars in May alone.
But many Mexicans are unhappy about the “gringo invasion," which has meant long lines at gas stations and diesel shortages. This week, the number of Tijuana stations offering diesel dropped significantly. Many stations are beginning to refuse to serve Americans.
Historically Pemex, the Mexican state oil monopoly, set gas prices along the border within a few cents of U.S. prices, deterring motorists from comparison shopping. But as gas prices have shot up in the U.S., Mexico has kept its prices down with massive government subsidies to keep gas affordable for Mexican citizens. But these subsidies are causing problems for the government's budget. In fact, an additional $20 billion dollar subsidy was added to the Mexican federal budget as an emergency measure in May, as part of an effort bolster the economy.
And because Mexico doesn’t have the refinery capacity to turn their own oil into gasoline, it imports a large percentage of its gas from the U.S.. So by subsidizing the fuel — and then reselling it to U.S. citizens at cheap rates — the Mexican government is losing money any way you look at it.
Pedaling Forward
A bike can change a life.
The benefits of a bike can range from awakening your inner child to being an eco-friendly commuter. In a developing country, however, the simple bike becomes a locally sustainable method of alleviating poverty and building healthy communities.
The bicycle means greater access to educational and economic opportunities. (Cool fact: A bike can go three or four times faster than the pedestrian and uses five times less energy.) But in communities where people make only a few hundred dollars a year, a bicycle that costs an average of $100 is financially out of reach.
To help bridge the gap, various organizations have sprung up as bicycle distributors for developing communities mostly in Africa.
World Bicycle Relief, an organization fighting the HIV/AIDS crisis in Zambia, describes the power of bicycles in its mission statement:
Simple, sustainable transportation is an essential element in disaster assistance and poverty relief. Bicycles fulfill basic needs by providing access to healthcare, education and economic development. Bicycles empower individuals, their families, and their communities. Our mission is to provide access to independence and livelihood through The Power of Bicycles.
Organizations like this depend on donated bikes, which they then ship to community-based organizations that employ and train locals as bike mechanics. In Namibia, the Bicycling Empowerment Network has bicycle workshops (called Bicycle Empowerment Centres) stocked with tools and bicycle parts that act as the hub for bike distribution and repairs.
Even grassroots groups in the U.S. have joined the cause. Bikes to Rwanda, a project supported by Stumptown Coffee in Portland, Ore., ships cargo bicycles to farmers in a Rwandan coffee cooperative.
With today’s gas prices, cycling is a more attractive alternative for residents of places from Amsterdam to Zambia. But bikes aren't limited to transport anymore. They can be modified to sharpen knives, double as an ambulance, and even filter and store water — all innovative adaptations geared towards positive social change.
The Green Economy: Creating Jobs For Those Who Need Them Most
The unemployed in the U.S. may be taking the next big steps to solve our climate crisis.
The U.S. House of Representative recently approved the Green Jobs Act of 2007, which provides $125 million dollars to fund national and state job training programs in green industries, such as energy efficient buildings and construction, renewable electric power, and energy efficient transportation. It also researches new jobs and skills that are created by growing renewable energy and energy efficiency industries. This research is then used to develop job standards and create training programs.
The Green Jobs Act would create jobs that allow people in poverty programs to become self sufficient. Priority for the training programs would go to veterans, displaced workers, and at risk youth. The Senate has passed a similar bill, and a conference committee is meeting to work out the different versions.
The Green Jobs Act was largely supported by the Ella Baker Center for Human Rights, as part of founder Van Jones’ Green Collar Job Campaign, which argues that the only way for a green economy to succeed is for all sectors of society to be equally involved and equally benefiting.
As Van Jones explains, “It’s not a hand out here; you’re really connecting people who most need work with the work that most needs to get done.”
The Wheel World
Ciclovía Documentary shot by Streetfilms
Bogotá, Colombia is holding a 70-mile long block party. And everyone’s invited.
Ciclovía — "bike path" in Spanish — is an event that closes down major roads for pedestrian use every Sunday and holiday from 7 a.m. to 2 p.m. Created in 1976, it rapidly grew from eight miles and 140,000 bicyclists to 70 miles and an average of 1.5 million weekly riders. Ciclovía is championed as a community building event that attracts people from all backgrounds for a day of biking, walking, skating and dancing in the streets.
In the above video, Bogota’s former park commissioner Guillermo (Gil) Penalosa discusses Ciclovía’s main appeal: social integration.
You will see people in $5,000 bikes and others in $50 bikes, and all having the same fun! Rich and poor, young and old, men and woman, tall or short... ALL!
Cited for “endless benefits” such as the improvement of personal and public health, Ciclovía has inspired other cities to develop similar programs, including Guadalajara, Mexico; Quito, Ecuador; Santiago, Chile; and Paris, where an expressway along the Seine is transformed into a pedestrian refuge one month out of the summer.
Cities in the U.S. are also developing similar programs, starting with El Paso, Texas. This Sunday Portland, Ore., is clearing 6 miles of roadway for six hours in its inaugural "Sunday Parkways." New York Mayor Michael Bloomberg announced his city's plans for Ciclovía-like event this August that would stretch from 72nd to the Brooklyn Bridge along Park Avenue.
Events such as Ciclovía are not only free, but they also bring all sorts of people together to get healthy and build a happy community. It seems like a no-brainer that every city should have a Ciclovía!
Emissions Trading: Good for all or good for none?
Last week Prime Minister of Japan Yasuo Fukuda announced on that as part of Japan’s innovative new program to reduce its greenhouse gas emissions 60-80 percent by 2050, Japan will invest in the global emissions trading market.
Yet the success of an emissions’ trading strategy is currently in hot debate.
Emissions trading is where a capped, or limited, amount of greenhouse gas emissions is agreed upon internationally, as in the Kyoto Treaty. Countries are then limited in the amount of pollution they can emit. Those countries emitting more than the cap are permitted to buy "credits" from those producing less. These credits allow the countries buying them to produce more than the agreed upon amount of pollution, and rewards the countries selling them for reducing emissions. The idea is that greenhouse gases will be reduced as time goes on because the allowed amount of gas will become smaller and the credits more expensive.
Yet some argue that because the accounting in emissions trading is not transparent and there is limited accountability, a tax based system would be more effective. Furthermore, recently researchers have found that the result of emissions trading has frequently been exporting carbon-intensive industries into developing countries. President Bush’s chief environmental adviser admits that emissions targets “cause a shift offshore” of pollutive industries. In other words, the U.S. and other developed nations are “saving” their emissions by forcing developing countries to account for them.
As factories in developing nations usually use more energy than those in the developed world, this leads to an overall increase in greenhouse gas emissions. The National Center for Atmospheric Research found that the U.S. ‘saved’ about 3 percent in carbon emissions over seven years by outsourcing to China, while in that same amount of time Chinese CO2 output rose 14 percent.
As a developed country, Japan stands to gain from this dedication to reducing emissions through increasing the emissions trading market. And while cutting their emissions by 60-80 percent is a costly challenge now, in the long run Japan will likely be a major player in establishing rules and norms for carbon trading, and could hugely profit in the future when they sell their credits.
Poor Children in Rich Nations
Congratulations: Children in the United States do not have the worst quality of life in the developed world. That honor is held by Britain — with the United States a close second.
— editorial in The Nation
Because the focus of alleviating child poverty is usually the developing world, it is easy to forget there are poor kids in rich nations, too. In fact, according to the UN’s 2007 overview of child well-being in rich countries, “there is no obvious relationship between levels of child
well-being and GDP per capita.”
It may be of a surprise that despite America’s vast wealth, the country has one of the highest child poverty rates in the developed world. In fact, the total number of children in the country in poverty has increased by one million from 2000 to 2006. According to Kids Count, a national and state-by-state effort to track the status of children in the United States, between 2000 and 2006 child poverty increased in 32 states and the District of Columbia.
The numbers are no better in the United Kingdom – recent figures showed that 2.9 million children in the U.K. are officially living below the poverty line – up 100,000 since 2005-06.
Although these children bear no responsibility for living in poverty, they are penalized by their governments’ neglect and disinvestment in poverty-reduction policies. As The Nation observes:
One can talk about military as opposed to social spending; about pro-business, oil-driven economies; about the distractions of patriotism and the culture of aggression; about valuing the imperatives of power above the duty of care. But however one chooses to name it, the deep, intractable connection between military adventurism abroad and the neglect of needs at home has never been more starkly evident. The pity is that it's so difficult to fight the problem, so hard to focus on a pregnant teenager too scared to ask for help or a child hungry at school when the casualty figures from Baghdad demand our attention. The fog of war may be most blinding for the folks back home.
Does Farm Bill Reveal U.S. 'Double Standards'?
Critics of the newly passed U.S. Farm Bill say the measure will hurt poor farmers in the rest of the world.
The $100-billion Farm Bill, which passed into law in May, increases crop subsidies, boosts conservation spending and expands the food stamp program. It also guarantees annual payments to farmers and pays farmers for any crops they sell for less than the federally regulated minimum price.
President Bush claims that the bill "provides a safety net for [U.S.] farmers … without encouraging overproduction and depressing prices.” But international agencies – and even members of the president’s own administration – railed against the measure.
Deputy U.S. Agriculture Secretary Chuck Conner said the measure “heads in the wrong direction in terms of our international obligations,” and expects trade partners “to protest in every way they can." Australia is already making plans to challenge the Bill through the World Trade Organization.
Oxfam America says that by encouraging large companies to overproduce, U.S. government subsidies lead to dumping – selling surplus goods in international markets at prices under the cost of production. The humanitarian agency says this undermines local production, threatens millions of farmers worldwide and clearly violates WTO rules.
Even before this Farm Bill, U.S. farm programs were criticized internationally for their trade-distorting subsidies. This bill further undermines our moral authority. Horst Koehler, an official with the International Monetary Fund, criticized the U.S. for its "double standards" about open markets.
Our hypocrisy not only damages our reputation, but makes the EU and other large exporters less likely to adopt the kind of policies that will help the world’s farmers.
Big Prices, Big Oil, Big Trouble?
The average price of a gallon of gas in the U.S. is now just shy of $4. Throughout Europe, drivers are paying upwards of $8 to $10 a gallon. With the rising price of crude oil futures, and the subsequent rise in prices for many other commodities, everyone should be feeling the squeeze.
Everyone is feeling it, that is, except for Big Oil. Major oil companies are posting windfall profits: Royal Dutch Shell and BP reported 25 percent and 63 percent net income increases, respectively, for the first three months of 2008. Exxon reported a record-setting $40.6 billion in net income for 2007. There is a rising fear that oil companies are simply passing the bill of higher crude prices onto consumers.
Congress appears to share these concerns. The Senate Judiciary Committee has called on executives of five major U.S. oil companies to provide some answers. “The people we represent are hurting, while your companies are profiting,” said Committee Chairman Sen. Patrick Leahy (D-Vt.). “We need to get some balance.”
These executives fired back, saying that their corporations are being targeted as scapegoats and that the effects of supply and demand are contributing to the rising price of fuel. Moreover, they reasoned that the high cost of development in the oil industry requires they make high profit margins today to prepare for expensive investments tomorrow. The oil execs also placed some of the blame back on Congress by arguing that bans on drilling in regions like the Arctic National Wildlife Refuge in Alaska are curtailing supply potential.
So where do we go from here — especially when publications like The Economist hint at the potential of $200-a-barrel oil.
Business Week suggests that Americans, and the world in general, will adapt. People will alter their habits to drive less. That's already happening, according to the New York Times, which reports that Americans are already taking fewer road trips and seeking out public transportation more than ever before.
Arctic Carve-Up
Contrary to opinions such as Senator Frank Murkowski's, the Arctic is not just “snow and ice.”
From Inuit tribes to the migratory caribou, the Arctic is full of life, especially during the summer. For energy-hungry nations, however, the Arctic is full of another element of interest: oil.
Beneath its melting icecaps lie the “world’s largest remaining untapped gas reserves and some of its largest undeveloped oil reserves,” says the WWF. In face of the current “oil shock,” the five nations that border the Arctic Ocean — Russia, Canada, Denmark, Norway and the U.S. — all want a slice of this lucrative “ice” spot.
Late last May, these five rival nations met in Greenland to resolve these competing claims. The convention reaffirmed rules laid out by the UN Law of the Sea Convention, which draws national boundaries based on geological features. The UN is expected to oversee decisions on Arctic control by 2020.
Climate change has a big role in increasing the appeal of the Arctic. Rising temperatures rapidly melt the Arctic ice, which increase drilling and shipping access during summer months. Eventually, this will even open up “a route through the Arctic Ocean linking the Atlantic and Pacific that would reduce the sea journey from New York to Singapore by thousands of miles,” says The Telegraph.
Absent from the meeting were environmental groups, who “said the closed-door meeting paved the way for a land grab by countries who have claims to the continental shelf at the pole,” according to The Guardian.
Environmentalists also object to the environmental dangers of drilling.
John Calder, the director of the U.S. National Oceanic and Atmospheric Administration’s (NOAA) Arctic Research Division, warns not only of the landscape destruction and negative impacts on the indigenous Arctic villages due to infrastructure development, but also the calamitous effects of oil accidents:
Oil spills are especially dangerous in the Arctic, because its cold and heavily season-dependent ecosystems take a long time to recover. Besides, it is very difficult to remove the damage from oil spills in remote and cold regions, especially in parts of the ocean where there is ice.
Jobs: Midwest Hit Hard
Guess which media outlet is offering an insightful "We the People" series covering unemployment in the Midwest and other pressing U.S. election-year issues? The Kansas City Star? Perhaps the Chicago Tribune or the New York Times? Try Al Jazeera.
In "Jobs," the Dubai-based publisher examines how Dayton, Ohio is dealing with unemployment after losing more than 250,000 jobs in the last eight years. Dayton has been hit hard by outsourcing of manufacturing jobs, rising employment and increased home foreclosures. As one person put it, "the people are here but the jobs are not."
Coming to America: Bangladeshi-Style Banking
A few weeks ago microfinance pioneer Professor Muhammad Yunus was in Queens, New York. No, he wasn’t soliciting funding or international support for his Bangladesh-based microlending institution. He was cutting the ribbon on the brand new Grameen Bank America building.
Thousands of miles away from the original Grameen Bank, the American version will function much like its Bangladeshi counterpart: loaning to groups of women rather than individuals. Like the women who first participated in Yunus’ innovative banking scheme, American borrowers will convene at one member’s house to collect weekly dues. This type of group-lending model increases accountability, since defaulting on your loan affects your peers' access to credit as well as your own.
The Grameen Bank targets women because they're more reliable borrowers. To date, Grameen America has loaned upwards of $250,000 dollars to more than 100 women who are using their $500 to $3,000 loans to establish or expand businesses ranging from floral arranging to house cleaning.
But Yunus has some skeptics to win over. Many question whether the Grameen model will resonate with Americans. Microfinance expert Saiful Islam says "Bangladeshis, Indians, Latinos will follow it, but I don’t know about others." In 1985, a similar program started by Yunus in rural Arkansas at the request of then-Governor Bill Clinton failed due to mistrust among participants, according to Shorebank's Mary Houghton, who helped advise the microfinance experiment in Arkansas.
It does seem somewhat of a strange fit: banking targeted to empower the poorest of the poor in one of the most prosperous countries in the world?
The United States does have its fair share of people living in poverty, however. Immigrants in particular have a hard time accessing credit and are more likely to use predatory lending agencies that charge steep interest rates. What's more, the Center for Financial Services and Innovation, reports that approximately 40 million American households are considered underbanked.
Also, contrary to public perception, microcredit is not aimed at the poorest of the poor. "It’s actually supposed to help those below a certain poverty line who are looking for self-employment as a route out of poverty," says Raj Desai of the Brookings Institution.
In that case, the U.S.-based bank may run into trouble. Approximately 1 out of every 11 Americans work for themselves, while about 1 in 4 in Bangladesh are self-employed.
Yunus will need time to prove that the American model can be successful. It may be that American women need more than greater financial access to climb out of poverty. But Yunus' large following and wide array of awards — including a Nobel Peace Prize — suggest he has a fighting chance.
Life Less Plastic
I recently came upon a blog by a Chicago woman committed to living as close to a plastic-free life as possible. Her journey to a life without plastic began last September, and over the months her postings about her adventures and increasing knowledge have gathered an audience in the thousands.
The statistics about our reliance on plastics are shocking: According to the U.S. Environmental Protection Agency, the amount of plastic in our waste stream has increased from less than 1 percent in 1960 to 11.7 percent in 2006. And, while Americans drank 50 billion bottles of water in 2006, 38 billion of those ended up in the trash, according to Fast Company magazine.
The anonymous blogger, whose blog is titled Life Less Plastic, explains that she's doing this for personal health reasons, as well to do better by the environment. Among her most popular posts is an entry describing "What I'm Doing to Be Mostly Plastic-Free," which includes:
10. Washing my dishes with Dr. Bronner's bar soap. It works! I'm not kidding!
11. Bringing my own stainless steel coffee mug to the coffee shop. This is important because paper cups are lined with plastic.
12. Bringing along a reusable water bottle or mug for water, and NEVER drinking bottled water.
13. Bringing my own takeout containers to restaurants in case I have leftovers. This sounds embarrassing, but no one has ever even noticed that I've brought my own container except for the people I'm with.
14. Not buying aluminum food cans, excluding canned tomatoes and vegetable broth, which I haven't been able to give up yet. Hopefully, I can/jar some tomatoes this summer and do away with this plastic use, though.
In a society where plastic is pervasive and packaging alternatives are few, even Life Less Plastic's author hasn't been able to do without medicine, which comes in plastic bottles; toothpaste; and even some packaged foods she hasn't been able to find in the bulk section of nearby supermarkets.
Plastics have been around for a while, but we are only beginning to understand their potentially negative consequences. Without plastic, we wouldn't have seen the advances in science and medicine we saw in the last century. However, as the Chicago blogger points out, there are a lot of ways to "live a life less plastic."
Declining Dollar Hurts Remittance Recipients
What impact is the U.S. economic slowdown having on developing countries? Matt Homer of the World Politics Review writes that the weakening U.S. dollar is having an adverse effect on individuals in developing countries relying on remittances for large parts of their income. A bigger problem, however, is that the negative impact of the declining dollar is likely to go beyond the individual level. For a number of developing countries, remittances make up a significant percentage of total GDP, and several countries are already expressing concern that a decrease in remittances could hurt their entire economies.
In Tonga, for example, remittances account for just over 32 percent of the country’s total GDP. Yet because up to 80 percent of all remittances come from sources in the U.S., there is concern that continued declines in the U.S. economy “will hit Tonga extremely hard.” Economists in Nicaragua are also predicting that “any decline in the amount of remittances will undoubtedly affect consumerism within the Nicaraguan economy.” While around 40 percent of Nicaraguans receive remittances, most of which come from the U.S., economists estimate that almost 90 percent of remittance money sent to the country is spent in the local consumer economy.
U.S. Economy Not So Great, Even Before This Recession
Our economy is shrinking, inflation is increasing, and it looks like it's time to tighten our belts and settle down for the worst. But were the times we are leaving really so great to begin with?
For the first time since we've been paying attention to such numbers, the median family income (from 2000 to 2007) has actually decreased during a period of economic growth. Real median family income more than doubled from the late 1940s to the late ’70s. It has risen less than 25 percent in the three decades since.
According to New York Times writer David Leonhardt, "the larger point is still crucial: the modern American economy distributes the fruits of its growth to a relatively narrow slice of the population."
A responsible economy wouldn't allow this to happen. What's going wrong?
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