Category Archives: Economics

DEA to Outlaw Cotton Growing. Says Fields are Indistinguishable from Opium Poppies.

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The US Drug Enforcement Agency announced today that it is banning the growing of cotton. The stated reason was that its agents are unable to tell the difference from afar between it and the poppy variety that yields the drug opium.

Cotton farmers disputed the claim, saying the “real force” behind the ban was the synthetic textile industry, which sees the inexpensive crop as a threat to their market share.

Poppy field (left) image source: http://transform-drugs.blogspot.com
Cotton field (right) image source: http://soilcrop.tamu.edu/

Well, not exactly, but hey, it could happen. It already has with another crop:

Hemp, an incredibly resilient, useful and valuable crop, is banned from being grown in the US. The cited reason is that the DEA can’t discern hemp plants from marijuana plants. (The conspiracy theory explanation is that the cotton industry sees hemp as an economic threat.)

A current multi-partisan Senate bill, S.3501, co-sponsored by arch-Republican/Libertarian Rand Paul, Democrat Jeff Merkley and our hero in the Senate, Independent Bernie Sanders, would legalize farming of hemp, clarifying that it is not a drug. (The amount of THC in it is negligible and you cannot get high from it.) Despite it being eminently sensible from both economic and environmental points of view, I wouldn’t give the bill a snowball’s chance in hell (or in a global-warmed cotton field) if not for Senator Paul’s sponsorship.

Lest you be getting your hopes (or your opposition) up, this would not change the legal status of marijuana.

 

 

 

 

 

 

 

 

 

Hemp is incredibly versatile. Until 1619, farmers in Virginia were required to grow it. During WWII, its growth was temporarily legalized because of the military need for products made from it, including rope and parachutes. The federal government promoted a “Hemp for Victory” program. Image source: http://hempproteinhealth.com/

Where’s the (true cost in) beef?

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EcoOptimism states we can simultaneously solve our economic and ecological problems while improving, rather than diminishing, our lives. One of the critical steps in finding the ways to do this is through a concept called true costing. This involves figuring out what all the costs of something are – not just what you pay directly, but also counting what you and everyone else pays indirectly. For instance, the true cost of gasoline is not only the price at the pump, but also the costs of, among other things, related air pollution, climate change and human health.  Last year, the Center for Investigative Reporting debuted a short animated video, “The Price of Gas,” showing just that.

If instead you want to calculate the true cost of driving as opposed to only the fuel, then the categories of costs (called external costs or externalities by economists) would include things like wear and tear on roads (paid in taxes), costs of accidents (paid in health and auto insurance, lost working time, lost life), cost of time spent in traffic jams (lost working and leisure time), cost of land devoted to roads, etc.

Unless those costs are figured in, you can’t make an accurate decision on whether to buy or do something. And free-market capitalism depends on the accuracy of prices and information. Without it, bad decisions are made.

Some true costs are really surprising. Vegetarians and environmentalists have long talked about the ecological impacts of eating meat. Now the Center for Investigative Reporting has posted a video, “The hidden costs of hamburgers,” showing in easily understood terms what those impacts – and their dollar values – are.

Image from “The Hidden Costs of Hamburgers”

A nearly simultaneous story reveals that when the Department of Agriculture rolled out an internal program suggesting that employees participate in “Meatless Mondays” – the idea that, for just one day a week, not eating meat would reduce environment impacts – the cattle industry raised a huge stink (insert your own methane joke here), saying it was “a slap in the face of the people who every day are working to make sure we have food on the table.” Note that the USDA program didn’t even address the benefits to personal health.  To my thinking, the argument against going vegy would be a lot stronger if there wasn’t also that pesky issue of cholesterol and heart disease – and the external costs that tend to accompany illness and death.

The USDA succumbed and withdrew the program. Once again, corporate self-interests prevailed over the public’s interest, over individuals’ health and over common sense. It’s almost enough to make the EcoOptimistic lose our optimism. (Especially when it seems eating certain fried industrial chicken sandwiches can be promoted as a socio-political statement!) But it’s going to take more than that to get us to back off. When enough folks understand the win-win-win aspects of shifts – of little tweaks — like these, common sense and self-interest will prevail.

Is there a design aspect to this? Dunno. Maybe in packaging and educating? As with many EcoOptimism areas, a major component lies in communicating the win-win-win scenario. (BTW, is it time for an abbreviation?  Constantly writing out or reading win-win-win is going to get annoying really fast. Does “triple-win” work? Evoking the triple bottom line makes sense.) How can designers get the word out?  As long as we have externalities (meaning we don’t at least have something resembling carbon pricing), there’ll be a need to make the costs apparent in other ways than the price at the register. The CRI video is one step. Perhaps a new cow parade, this time with messaging? And with a little, um, methane offgassing for added emphasis?

I’m not much of a tofu, let alone tofurkey, fan. But I can certainly go one day a week without meat (that’s easy – in fact, I prefer the idea of Meatless Weekdays), especially when it’s better not only for both me and the environment, but my wallet as well. I got no beef with that.

Bouncing Back, or Elastic Demand: The Historical Parallels Between Rubber and Renewable Energy

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If history truly does repeat itself, then perhaps we can take a chapter from World War II and fruitfully apply it to the 21st century. At the outset of hostilities, even before 1941, it became clear that the military had a significant supply problem with a particular material needed for mobility and other uses such as wire insulation: rubber.

Rubber had been originally sourced from rubber trees in the Amazon. (The rubber, or latex, is tapped from the trees in sort of the way that maple syrup is harvested.)

Harvesting latex from a rubber tree. Source: Wikimedia Commons.

With the development of the automobile, demand for rubber soared and a vicious Brazilian industry rapidly grew. But by the late 19th century, rubber seeds had been successfully exported to Southeast Asia and, from then on, the Brazilian sourcing of rubber declined dramatically from basically 100% to, by 1940, merely1.3%.

Playing the national security card

Which brings us to the start of WWII. The US was dependent on Asia for its rubber supply, and wars on two oceans cut off 90% of the supply. Franklin D. Roosevelt established the Rubber Reserve Company, forcing the major rubber companies to work together and all but conscripted the scientists and engineers in the field to develop reliable synthetic sources of rubber. That source: petroleum.

Germany had, out of necessity, actually produced synthetic rubber in WW1, but it was much more expensive than natural rubber and, therefore, manufacturing ceased when that war ended. Now, there was an immediate dire need for the US to advance that research and put it into cost-effective production.

The wartime effort prevailed (along with such conservation measures as lowered speed limits to decrease wear on tires) and by the end of the war the US was producing almost as much rubber as it had been importing.

 

Manufacture of natural rubber versus synthetic rubber. Source: Mindfully.org.

 

It’s not a perfect environmental parable since natural rubber was displaced by synthetic rubber, dependent on petroleum supplies that eventually had to be imported. The synthetic rubber manufacturing process, too, is not exactly a clean industry. (Not that natural rubber harvesting, as conventionally practiced, was all that sustainable either.) The point, though, is that the US recognized a severe problem of national security and determined that the response had to be stimulation of domestic industry. An all-out effort was initiated and, five years later, amidst wartime conditions, the problem was essentially solved.

The new rubber?

Ironically, seventy years later, it’s the petroleum whose supply is threatened. This time, though, it’s not only rubber production that is in jeopardy; it’s our entire industrial base as well as our lifestyles, that “American Way of Life.” And what’s our national response? Let’s frantically grab onto a diminishing supply of increasingly expensive and increasingly dirty fossil fuel sources and perhaps postpone the problem by a few years while doing nothing to address the core problem. And in going that route, those core problems become even harder and more painful to remedy – if indeed remedies are then still possible — later.

If we had the leadership we had in the 1940’s, it would be a different picture. Yes, speed limits would be reduced to conserve fuel (as they were, but only temporarily, in the seventies). But moreover, we’d see a national effort – one akin to a wartime effort, not our current haphazard and intermittent programs – to ensure our national security by simultaneously decreasing demand for fossil fuels and developing alternative sources.

The synthetic rubber initiative in the 1940s was a matter of life or death. Without alternative rubber production, the war may well have turned out differently. Is the need now for renewable energy significantly different? As then, we face endangered supply lines. On top of that, the supply currently endangered is itself finite and disappearing rapidly (we’ve used up 500 million years of accumulated fossil fuel in less than two centuries) and its usage is creating issues both local and global, and threatening our health, our food supplies and perhaps our survival.

Hubbert’s Curve (above, source: Wikipedia Commons) is a common depiction of imminent peak oil. But perhaps more illuminating and dramatic is this graph (below) from one of my favorite geek blogs, Do the Math. Over millions of years, the Earth slowly accumulated a stockpile of fossil fuels. We suddenly started extracting them only a century or two ago, and are using them up far faster than the planet can replace them. “Blowing through our inheritance” is what Do the Math author, Tom Murphy, calls it.

 


The enemy is different. It’s not as easily identifiable or as obviously evil as countries attacking us (leaving aside Middle East politics and terrorism), but it is at least as menacing. Our way of life is endangered not, as George W. Bush said, by action to fix a combined strategic, economic and ecological problem, but by inaction. Perhaps the big difference is that, at the end of this “war” effort, the outcome is not merely survival, but our flourishing: better, healthier and happier lives on a cleaner, healthier planet. Not acting puts everything at risk. In acting, on the other hand, there is very little to lose, and everything to gain. It’s the consummate win-win-win scenario and shying away from it is not merely foolhardy and shortsighted, but in fact unpatriotic.

So our role models are petroleum-based rubber and the atomic bomb?

Many say we need a contemporary Manhattan Project to develop renewable energy. Perhaps the concurrent rubber project, with its industry focus and strategic parallels, is a better model.

A big, and positive, difference is that, while there was really only one possible substitute for imported rubber, there are quite a few potential substitutes for petroleum. We use oil both as an energy source and as a basis for synthetic materials (like, ahem, rubber). However, we can generate energy from a number of renewable sources, and there are alternatives – existing or in development — to making plastics and other materials from petroleum.

 

Produce packaged, appropriately enough, in bioplastic. Source: Wikimedia Commons.

 

The question might be: how do we create the political environment, as WWII did for rubber, for renewable energy? Preferably, without a war. The strategic importance argument is there, but it hasn’t taken hold in the imperative way that synthetic rubber did. And if I am to be consistent in favoring the carrot over the stick, the demand should not arise from fear – though it’s a helluva motivator – but from desire. What’s needed to engage the next Manhattan or Rubber Project?