2010 - %3, October

Mexican Cartels Hurting Silver Mining

| Fri Oct. 22, 2010 2:22 PM EDT

As one of the world's largest silver producers, Mexico stood to gain from a global rise in silver prices. Instead, some mining companies are finding that it's just too dangerous, or expensive, to keep up business as usual. Cartel members rob and ransom workers, try to sell drugs to employees, coerce mine-owners into money laundering, and are now stealing raw ore and selling it to other countries. As the Latin American Herald Tribune recently reported:

In one recent operation against the nation’s cartels, the arrest of the reputed money manager of the crime syndicate La Familia Michoacana, it was discovered that that organization sold 1.1 million tons of illegally extracted iron ore in China for $42 million.
The theft of minerals in the western state of Michoacan has increased in recent years as that area has come under the control of La Familia, the Mexican Attorney General’s Office said.

In response, certain mining firms are choosing to stop exploration projects. Mexico's Chamber of Commerce says the threats are not just to mines in established areas, but those in more isolated places where cartels grow opium poppies and marijuana. Security costs are up 5 to 10% over last year, one firm reported. Canada's Goldcorp—under fire for not providing promised jobs and services to local peoples—has gone so far as to build a private airstrip near its mines to prevent ore shipments being hijacked on Mexican highways. Such is the cost of business in Mexico. The question is if there will come a point for the majority of mining firms in Mexico when the security costs and collateral damage are higher than any potential profits. Already cartels have shut down schools and brought city life to a standstill. Some think they may do the same to Mexico's already struggling economy if they keep interfering with Mexico's major industries.

 

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Friday Cat Blogging - 22 October 2010

| Fri Oct. 22, 2010 1:33 PM EDT

Today's installment of catblogging features rare video footage of Domino doing — well, let's be honest: doing something not very exciting. But new! For her. And I just happened to have my camera around when she did it. That's sort of rare, so today you get rare Friday Cat Vlogging.

To make up for the lack of actual excitement in the video, however, note that my personal video creation skills have taken a great leap forward. Unlike my past crude efforts, this one includes a sophisticated opening title and an actual edit with a diagonal transition. Thanks, Microsoft Movie Maker!

In other pet-related news, Chad Orzel is writing a sequel to How To Teach Physics To Your Dog, so he's running a contest that will benefit the DonorsChoose fundraiser to support public school students and teachers. Here's the deal: Chad's book is full of animal characters, and he promises to name one of them after the biggest donor to his fundraising drive. But what if we all made donations in Inkblot's name? Simple arithmetic would make this the biggest donation, and he'd be forced to recognize this and feature Inkblot in his book. Right? I mean, the guy's a physicist, after all. So head on over there and give til it hurts. The kids it will help are all well and good, but this is really for Inkblot. He'll be watching.

Speaker Boehner, I Presume?

| Fri Oct. 22, 2010 1:00 PM EDT

In anticipation of House Minority Leader John Boehner's possible ascension to Speaker of the House, special interest groups have flooded his campaign coffers with cash. During the just-concluded third quarter, Boehner for Speaker—the Ohio Republican's joint fundraising committee, which aims to put the House in Boehner's hands—pulled in $1.9 million, while his own re-election committee took in $2.3 million, according to the Federal Election Commission. To put that figure into perspective: current Speaker Nancy Pelosi has raised $304,000.

Many of Boehner's contributors, including big energy and industry groups, have been on the losing end of the legislative battles of the past several years, and are hoping for a Republican takeover that reverses that trend. They're also traditional allies of the GOP, so it's not surprising that these interests would send money Boehner's way.

But the New York Times points out that:

[a]bout half of the 29 PACs that gave to Boehner for Speaker did not contribute to him or his leadership PAC during the 2008 election cycle, a telling sign of the newfound interest in Mr. Boehner’s power. About a third of the more than 160 PACs that directed donations to his personal campaign committee had not given to him in 2008 either.

Meanwhile, the Minority Leader is doing his best Don Vito impression and spreading the wealth to needy GOPers:

Mr. Boehner, in turn, has used his own fund-raising success to spur members of his caucus. At the final meeting of the Republican conference in late September, before Congress adjourned for the midterms, Mr. Boehner took out a $1 million check to the Republican Congressional campaign committee and placed it on the podium, according to Republican aides who were there. He vowed not to deposit it unless his fellow members came up with $3 million in pledges themselves. Members began lining up, with Mr. Boehner even calling out some by name. Soon they had exceeded his goal.

Republicans will likely argue that Boehner's fundraising prowess demonstrate how valuable he is to the party. But it actually demonstrates how much value his corporate donors expect to get from his elevation.

Quote of the Day: Social Security

| Fri Oct. 22, 2010 12:35 PM EDT

From Robert Reischauer, former director of the Congressional Budget Office, talking about Social Security:

It's quite a manageable problem.

Yep. We could solve Social Security for all time in about a day of easy negotiations if both Democrats and Republicans were actually serious about solving it. The required set of benefit cuts and revenue increases would be so minor, and would phase in over such a long period, that virtually no one would even notice.

Too bad we're not serious about it.

Google's Tax Bill

| Fri Oct. 22, 2010 12:17 PM EDT

After reading a recent Bloomberg article about how Google reduces its corporate tax rate by shuttling money between Ireland, the Netherlands, and small Caribbean islands, Tim Fernholz wonders if this betrays Google's "Don't Be Evil" motto:

So is this action evil? If Google's definition of not being evil is 'doing more than the average corporation to support the public interest,' then sure it is. It's one thing to take advantage of legitimate tax law, but exploiting these loopholes for the sole purpose of paying less tax violates the spirit of the law, if not the letter. That would be fine if Google was content as a typical business, relentlessly pursuing profit with no thought to the public interest. They simply shouldn't pretend they're somehow better than the Exxons and Goldman Sachs of the world.

Put me down on the "not evil" side. There are, obviously, some tax dodges that are egregious enough to qualify as pretty close to evil. But declaring revenue in whatever country gives you the best tax treatment? No matter how many clever names we make up for this, the fact is that virtually every company with foreign operations does this. It's just routine. Google's motto is "Don't Be Evil," not "Don't Be An Idiot."

More generally, I think that taking full legal advantage of tax laws is rarely unethical. We all do it. I think that the mortgage interest deduction is bad policy, for example, but I never miss an opportunity to declare it. Ditto for any other deduction I can get away with, regardless of how I feel about it from a philosophical point of view. I'd be happy to see the tax code changed, but in the meantime I certainly don't feel bad for refusing to be a high-minded sucker while everyone else follows the actual existing law.

The scandal here isn't that Google is doing what it does. The scandal is that our tax laws allow it. Articles like the Bloomberg piece on Google serve a purpose, but that purpose shouldn't be to pretend that Google is doing anything wrong. The purpose should be to wake people up to how our tax code works. Answer: not very well. If there's any evil here, it's in Congress, not Silicon Valley.

Fixing the Budget

| Fri Oct. 22, 2010 11:39 AM EDT

Reihan Salam is unmoved by Michael Kinsley's argument that the country is broke and we need to modestly raise taxes on high earners to fix things:

Before asking taxpayers — any taxpayers — to dig deeper, I’d gently suggest that we look at public bureaucracies. If the Milwaukee Public Schools spend twice as much as choice schools to deliver the same results in terms of reading and math scores, I'd say MPS can dig deeper, ideally by restructuring compensation and giving workers more autonomy. If one-fifth of public dollars spent on infrastructure are essentially wasted, as Barry LePatner argues in his brilliant new book Too Big To Fall, which I'll discuss in greater detail soon, I'd say the bureaucracies we've placed in charge of public construction projects can dig deeper, ideally by doing a better job of sharing data and using life cycle assessments. If we could reduce Medicare expenditures by 8% per year by creating a competitive pricing system, I'd say the federal government can dig deeper by making a commonsense reform that will leave the quality of Medicare unchanged if not markedly improved.

I'm fine with this as a general idea. But let's look at these three examples. (1) There's no magic to cutting school spending. We can do it by paying teachers a lot less and wiping out programs for disabled kids. That might not be as good an idea as it sounds like — and in any case has very little to do with the federal budget. (2) Focusing more on infrastructure maintenance is probably a good idea. But it's hardly a panacea. (3) Competitive pricing reduces Medicare expenditures 8%, not 8% a year. And that's only assuming that the AEI study that produced this number is right.

My point here isn't that Reihan is wrong about making government more efficient. Of course he's not. It's that whenever you dig into this stuff, there's always less than meets the eye. My guess, for example, is that our infrastructure spending ought to go up, not down. We probably need to spend more on maintenance and more on new projects. And reducing Medicare expenditures is a huge problem, not a quick efficiency fix. Efficiency is a legitimate issue, but Medicare's problem is mainly that we pay people too much and demand too much medicine. What's more, proposals like AEI's for increasing Medicare efficiency are all frankly speculative. We should give them a try, but we should also treat them with the same skepticism that we'd treat any untested new idea.

The plain fact is that budget numbers simply never add up without tax increases. Not even close. We took a nice holiday from history for eight years under George Bush, cutting taxes and increasing spending and figuring that everything would come out fine in the end. But it didn't, and the bill is coming due.

How should we pay it? Well, the income of the rich has doubled or more over the past 20 years and their tax rates have gone down. Restoring their old tax rates, which quite plainly didn't produce economic stagnation, is part of the answer. Making government more efficient is a good idea too, though actual ideas for doing this usually stumble pretty badly when anyone tries to put them into practice. And getting Medicare under control is Job 1. But that's sure not going to happen any time soon after the Republican demagoging of Medicare cuts that's marked the current election season.

Tax increases are coming eventually for both the rich and the middle class. It's the only way to make the sums work. And since the rich have seen their incomes rise so much and have benefited the most from tax cuts in the past, their taxes are going to go up more. Nothing else really makes sense.

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Our Media Future

| Fri Oct. 22, 2010 10:48 AM EDT

I don't care much about whether Juan Williams deserved to be fired, but this part of the Bill O'Reilly segment that got him in trouble is actually pretty revealing. Here's the setup from O'Reilly's monologue:

OREILLY: Today on “The View,” the ladies addressed the shootout I had with them last Thursday when I said that building a mosque near Ground Zero is inappropriate because Muslims killed us there. That caused Whoopi Goldberg and Joy Behar to walk off the set. Of course, what I said is absolutely true, but is insensitive to some. In a perfect world, you always say Muslim terrorists killed us, but at this point, I thought that was common knowledge. I guess I was wrong.

And here's the subsequent discussion with Williams:

WILLIAMS: Wait a second though, wait, hold on, because if you said Timothy McVeigh, the Atlanta bomber, these people who are protesting against homosexuality at military funerals, very obnoxious, you don’t say first and foremost, we got a problem with Christians. That’s crazy.

O’REILLY: But it’s not at that level. It doesn’t rise near to that level.

WILLIAMS: Correct. That’s — and when you said in the talking points memo a moment ago that there are good Muslims, I think that’s a point, you know?

O’REILLY: But everybody knows that, Juan. I mean, what, are we in 3rd grade here or what?

WILLIAMS: No, you don’t — but you got to be — this is what Barbara Walters was saying —

O’REILLY: I got to be careful, you just said it. I got to be careful. I have got to qualify everything 50 times. You know what, Juan? I’m not doing it anymore. I’m not doing that anymore.

Italics mine. So O'Reilly has simply decided that he doesn't feel like referring to "Muslim terrorists" anymore when the subject is Muslim terrorism. Too much work, I guess. He's just going to say "Muslims" and have done with it.

By analogy, I guess I can now say that Bill O'Reilly has an "immigrant problem" and be done with it. Sure, he says his problem is really only with "illegal immigrants," but whatever. Everybody knows that already, and I don't really feel like qualifying everything anymore. Hopefully O'Reilly doesn't mind.

Feel free to come up with other examples in comments. There's a million of 'em, and they do wonders for keeping public conversation in a permanent state of roiling hatred. I can't wait until we're all doing this all the time. It should be awesome.

Who Will Win the Campaign Spending Arms Race?

| Fri Oct. 22, 2010 9:32 AM EDT

Corporate-backed Republican groups have taken the lead in terms of outside spending for the vast majority of the election cycle. But labor unions are making an 11th-hour push to catch up, aided in part by the Citizens United decision that liberated both corporations and unions to use their own funds for ads. The Wall Street Journal reports that the American Federation of State, County, and Municipal Employees has now overtaken every other group—excluding the political parties—in terms of total spending it’s promised to make:

The 1.6 million-member AFSCME is spending a total of $87.5 million on the elections after tapping into a $16 million emergency account to help fortify the Democrats' hold on Congress...The union is spending heavily this year because "a lot of people are attacking public-sector workers as the problem," said AFSCME President Gerald McEntee. "We're spending big. And we're damn happy it's big. And our members are damn happy it's big—it's their money," he said.

AFSCME’s $87.6 million total in pledged election spending puts it ahead of both the Chamber of Commerce, which has promised to spend $75 million, and Karl Rove’s American Crossroads at $65 million.

But with only 10 days left in the election, it’s unclear whether labor has enough time to close close the gap. The New York Times points out that in terms of money spent so far, the Chamber of Commerce is the "top non-party spender," spending $21 million in ads and other electioneering communications as of mid-October, as compared to AFSCME’s $7.9 million (or the SEIU’s $10.6 million). And while the Chamber has committed most of its money to ads, a good chunk of AFSCME’s pledged total will also go toward its get out the vote operation and "member to member" communications within the union itself, as opposed to the public at large. As The Washington Independent's Jesse Zwick points out, determining "who's the biggest spender" in any election depends to a large degree on which numbers you look at and how you spin them.

Even if individual labor unions like AFSCME trump some of the biggest corporate-backed groups in terms of total spending in the end, they might not be celebrating the brave new world of campaign finance. The SEIU opposed Citizens United and pledged not to take advantage of the decision, arguing that corporations would vastly outspend the unions. After originally backing the ruling, the AFL-CIO has recently made similar noises. Though AFSCME has gone all out at the last minute, given the grim political landscape, they might not want to be forced into the same spending arms race the next time around.

Grim Outlook for Arctic Sea Ice

| Fri Oct. 22, 2010 8:16 AM EDT

The National Oceanic and Atmospheric Administration released its Arctic Report Card on Thursday, and the news for sea ice isn't good. Record temperatures have sped up the melting of Arctic sea ice so much, the report concludes, that a "return to previous Arctic conditions is unlikely."

The reports notes that the rate of warming in the Arctic slowed down some in 2009, but the first half of 2010 has brought warming to a "near record pace." That in turn has caused near-record sea ice loss so far this year.

More on the report here. Here's what the seasonal melting between March and September of this year looked like:

Eco-News Roundup: Friday October 22

| Fri Oct. 22, 2010 6:52 AM EDT

Blue Marble-ish stories that got published on our other blogs instead.

Running on Empty: EPA wants to regulate truck emissions, but enactment may be under GOP rule.

HOV Lane: Women living near tollbooths had healthier babies after E-Z passes started.

Little White Lie: Companies are using health care reform as an excuse for 'inevitable' cuts.

Individual Liberties: Is requiring health coverage for everyone anti-Libertarian?

Cash on Delivery: Kevin Drum's birth cost around $1,000. Today, it's 10 times that.

Mid-Term Madness: Energy companies are spending big on mid-terms.

Burn, Baby, Burn: Trash burn pits in Iraq aren't just unhealthy, they're illegal.

Pyramid Scheme: Herbalife has taught tea party leaders its tricks.