Spill Report Spin Zone

The National Oil Spill Commission released a chapter of its final report on the Deepwater Horizon oil spill on Wednesday night. The report directed much of the blame for the incident at BP, Halliburton, and Transocean, the three companies directly involved in the drilling at the time of the explosion. But the report also makes it clear that there were broader failures—in the industry and government oversight—that precipitated the disaster.

And that was just one chapter of the report; the rest is expected to outline more broadly the causes of the disaster and the advisable reforms to avert a similar catastrophe in the future. But those who opposed the temporary drilling moratorium that the Obama administration put in place (and later lifted) are using the report to claim that the pause on drilling to assess safety was not necessary. Here's Sen. Mary Landrieu (D-La.) calling the time-out "excessive, over-reactive and uncalled for," among other things:

These findings seem to support what we’ve said all along: that the blowout was caused mainly by human error among the companies managing and servicing that particular rig, not by any faulty mechanical system or equipment failure. The administration’s response to this tragedy—to impose a moratorium on all other deepwater drilling in the Gulf—was excessive, over-reactive and uncalled for, in much the same way as if the government were to ground all commercial flights pending investigation of a single plane crash. Nothing in these findings justifies the shutdown of an entire industry because of one mishap. I eagerly look forward to reading the Commission’s full report.

That's really not what the chapter says at all. Actually, here's exactly what it says:

The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.

A Wee Question

Here is a question for you. Suppose that you lead a comfortable middle-class life. Let's say that you're in your 30s, married, two children, and you make $100,000 per year. I offer you a fair coin flip with the following possible outcomes:

  • Heads: You will be stripped of most of your assets and will earn $30,000 per year for the rest of your life. That's all you get, and neither friends nor family can top it up for you.
  • Tails: You will earn $1 million per year for the rest of your life.

Treat this as a serious question. Would you take me up on my offer to flip the coin?

Fiji Water Sued for Greenwashing

Despite selling, you know, water, Fiji Water is not the most transparent corporation. The company, the subject of a groundbreaking investigative feature we ran in 2009, is now the target of a lawsuit for deceptively marketing itself as "carbon-negative." A US District Court class-action suit filed by a Newport, California, firm on behalf of a Santa Ana woman named Desiree Worthington accuses Fiji Water of using a practice known as "forward crediting": essentially, giving yourself credit for carbon reductions that haven't happened yet.

In the lawsuit, Worthington argues that she paid more for Fiji Water specifically because it advertised itself as a carbon-negative product. She says she expected that the "carbon-negative" label meant that Fiji was currently taking more carbon out of the environment than it was producing. This is consistent with the company's view: Fiji Water claims on its website to have been "a carbon-negative brand" since 2008, "under which we will continue to offset 120% of our emissions" (emphasis mine). However, under the forward crediting model, the offsets do not need to be currently occurring, they can simply be anticipated actions. Indeed, Fiji Water has said in a press release that the offsets necessary to make it "carbon-negative" will not be realized until 2037.

Scott J. Ferrell, lead counsel for the class-action suit, told me that "We want Fiji Water to stop distorting its environmental record to push sales of overpriced bottled water. It is unconscionable for Fiji Water to charge double the price of its competitors by convincing consumers that drinking Fiji Water helps the environment, when in reality the opposite is true."

The Great Middle Class Swindle

Matt Yglesias isn't buying my story that skyrocketing Wall Street earnings—and the skyrocketing incomes of the super-rich in general—are basically coming out of the pockets of the working and middle classes:

I think what Kevin’s story keeps missing is a plausible causal account of how a tiny number of financiers have been able to hoover up money from the median wage earner....I can tell you a story about how a tiny number of financiers have been able to hoover up money from the broad class of rich people in the 80th-99th percentile who own the bulk of the financial assets in the country by swindling them. I can tell you a story about how a tiny number of financiers have been able to hoover up money from the broad class of rich people via the income tax and “bailouts.” But the median wage earner seems harder to me.

....Here’s another story. A lot of the median wage earner’s money has been hoovered up by the health care system. If we had single payer health insurance in the United States then increases in per capita health care spending would exhibit themselves as higher taxes....The last part of my story is monetary policy. It used to be the case that monetary policy errors were two-sided. Sometimes wages grew too fast (inflation) and sometimes they grew too slowly (recession), but since 1980 we’ve only ever erred in one direction and experienced three labor market recessions and zero outbursts of inflation.

As it happens, swelling health care benefits aren't enough to account for more than a small amount of middle class income stagnation over the past three decades. The arithmetic just doesn't work out. But Matt is right that the weakest part of my story is coming up with a good causal account of how the top 1% sucked up so much money from the middle classes. But I think it's a mistake to get overly wonky and look for some kind of geometric proof of how this happened. You're just never going to get that. You're never going to be able to point to a specific policy at time X that caused a specific transfer of income share at time Y.

As another blogger put it, "It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw." Except it's not just the banks. It's their super-rich clients, too.

Still, I don't think that a plausible story of causation is really all that hard. First, take a look at middle class income stagnation. What caused that? Matt already pointed to one cause: monetary policy since the late 70s that's kept inflation low at the cost of keeping labor markets persistently loose. To that, I'd add several other trends that have marked the past three decades: trade policies that accelerated the decline of U.S. manufacturing; domestic deregulation policies that squeezed workers; stagnation in the minimum wage; immigration policies that reduced wages at the low end; and a 30-year war against labor that devastated unions and reduced the bargaining power of the working class.

On the merits, you can argue for or against any of these individual policies. But there's very little question that collectively they are (a) policies strongly promoted by business interests and the rich, and (b) they suppressed middle class wages. Note that a few of these policies are global in nature, which explains why some other advanced countries also saw a certain amount of middle-class wage stagnation, but that all of them were promoted very aggressively in America, which explains why we saw more of it than most countries.

Now, if these policies hadn't been in place, middle class wages would likely have grown at about the same rate as the overall economy—just as they did in the postwar era. But they didn't, and that meant that every year the money that would have gone to middle class wage increases instead went somewhere else. It was a vast and steadily growing pool of money, and the chart on the right gives you an idea of its size by 2005. It comes from Jacob Hacker and Paul Pierson, and it shows how much income would have gone to different groups if their income had grown at the same rate as the broad economy. The bottom 80% lost $743 billion by growing more slowly. The top 1% gained $673 billion by growing more quickly. That's a pretty close match. And the upper middle class, in the 80th-99th percentile? They didn't score the huge payoffs of the super rich, but they did fine, posting a net gain of $126 billion. In other words, the well off mostly don't seem to have suffered at the hands of the super rich. Instead, the money gained by the top 1% seems to have come largely from the bottom 80%.

But what's the mechanism? What are the policies that allowed this pool of money to flow into their hands? Again, you can point to several things. Just to name a few: reduced high-end marginal tax rates on income and capital gains; relentless financial deregulation; weak antitrust enforcement leading to industry consolidation; the emergence of high-speed trading profits available only to well-connected financial firms; crippling of the IRS's ability to audit high earners; a persistent strong dollar policy; and the ability of the rich to make big financial bets backstopped by government bailouts. All of these are policies promoted largely by business interests and the rich.

There's no indisputable smoking gun here. As I said, you're just never going to get that. What we have, however, is still very, very suggestive. The argument goes like this. (1) For three decades we've had wage suppression in the middle classes, largely as a result of policies promoted by the rich. (2) Conversely, the well off in the 80th-99th percentile have mostly kept up. Their incomes haven't skyrocketed, but they've done fine. This is important since political opposition from this class is generally pretty effective and probably would have derailed the entire project. (3) The aggregate pool of money lost by the working and middle classes is suggestively similar to the amount gained by the super-rich. (4) A wide variety of policies have coalesced that have allowed the super-rich to funnel this money in their own direction. As Tyler Cowen put it, "It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw." Except it's not just the banks. It's the banks and all their super-rich clients.

A U.S. Army noncommissioned officer prepares to lower the American flag during a transfer-of-authority ceremony at Observation Post Mace, as U.S. and Afghan National Army troops look on Kunar province, Afghanistan, Dec. 21, 2010. The soldiers are assigned to the 101st Airborne Division's 1st Squadron, 32nd Cavalry Regiment, 1st Brigade Combat Team. OP Mace is the northernmost observation post in Afghanistan’s Kunar province, which borders Pakistan. U.S. Air Force photo by Capt. Peter Shinn

Demographics and Destiny

I've seen this before, but today Daniel Gros reiterates the point that Japan, far from being an economic basket case, has actually done pretty well given its aging population:

Policymaking is often dominated by simple “lessons learned” from economic history. But the lesson learned from the case of Japan is largely a myth. The basis for the scare story about Japan is that its GDP has grown over the last decade at an average annual rate of only 0.6% compared to 1.7 % for the US.

....But this picture of stagnation in many countries is misleading, because it leaves out an important factor, namely demography.

How should one compare growth records among a group of similar, developed countries? The best measure is not overall GDP growth, but the growth of income per head of the working-age population (not per capita). This last element is important because only the working-age population represents an economy’s productive potential....When one looks at GDP/WAP (defined as population aged 20-60), one gets a surprising result: Japan has actually done better than the US or most European countries over the last decade. The reason is simple: Japan’s overall growth rates have been quite low, but growth was achieved despite a rapidly shrinking working-age population.

I know this interpretation has its critics, but I've always found it pretty persuasive. As any corporate CEO can tell you, growth hides a multitude of sins. And while in theory it should be possible to gracefully transition to slow or flat growth, in reality it's almost always very, very painful. All the little problems that you could ignore and all the encrusted barnacles that you could shake off suddenly become enormous impediments that gum up the works and make it nearly impossible to maintain your existing infrastructure.

In any case, Gros says that Italy and Germany are headed in the same direction as Japan (Russia is already there), while France, the UK, and America are in relatively good shape. And although Gros doesn't mention it, there's another country in the rapidly aging camp too: China. By 2030 they'll have a greater proportion of the elderly than the United States. This is one reason why I'm skeptical of alarmism about China's imminent takeover of the world. I don't doubt that China will continue to grow and flex its muscles, but in the long term they have a demographic time bomb to deal with that's worse than ours, and they'll have to tackle it as a considerably less wealthy country than us. It doesn't mean they're doomed, but it does mean that their path to world domination has a few roadblocks in its way.

UPDATE, January 7, 7:30 p.m.: Gulet Mohamed "was not detained at the behest of the United States government," Philip Crowley, a State Department spokesman, told reporters on Friday. "We are aware of his detention. We have provided him consular services, and we are ensuring his well-being, as we would for any citizen in detention." Mother Jones will have more as this story continues to develop. Keep reading below for why Mohamed's family and lawyer think the US was involved.

Gulet Mohamed, an American teenager detained in Kuwait who claims to have been brutally interrogated there, was arrested and questioned by Kuwaiti security on behalf of the US government, his lawyer and family members charged on Thursday.

Mohamed, a 19-year-old from Alexandria, Virginia, called the New York Times' Mark Mazzetti and Salon's Glenn Greenwald this week via a cell phone another inmate smuggled into the prison where he is being held. In the interviews, Mohamed recounted being severely beaten. He said he was forced to stand for hours, and that interrogators threatened to torture him with electricity and imprison his mother. 

Questions that Kuwaiti interrogators asked Mohamed "indicated a level of knowledge about his family and actions" that could only have been obtained from American law enforcement, the teen's lawyer, Gadeir Abbas, told the two reporters at a sparsely attended press conference Thursday afternoon. In fact, he added, interrogators mentioned a specific, off-the-cuff conversation Mohamed had at a mosque in the US some time ago—a conversation that he claimed they could only have learned about through surveillance. Since the idea that Kuwaiti intelligence forces are spying on US mosques strains credulity, Abbas and Mohamed's family believe American officials were passing information to the Kuwaitis.

Mohamed's case is an example of "proxy detention," Abbas said. Instead of the US detaining and interrogating Mohamed, or using extraordinary rendition to send him to be tortured in Egypt or Syria, the government is "taking one step back and trying to accomplish the same goal: the unlawful torture and detention abroad of an American citizen by a country that is known to engage in human rights abuses," Abbas argued. 

Salon's Greenwald has suggested that Kuwaiti interrogators' questions about Anwar al-Awlaki, the American cleric and Al Qaeda propagandist who is in hiding in Yemen, are further evidence of American involvement in Mohamed's detention. Al-Awlaki has "become an obsession of the Obama administration," Greenwald wrote Thursday, and "the idea that [Kuwait] would do this to an American citizen without the American government's knowledge, if not its assent and participation, is implausible in the extreme."

In a letter to the Justice Department sent Thursday, Abbas wrote that  "the manner of his detention and the questions asked of Mr. Mohamed indicate to him that he was taken into custody at the behest of the United States." The Justice Department did not respond to a request for comment.

The King's Speech

I saw The King's Speech last night. Seemed like a pretty good movie, though the Wikipedia entry on George VI certainly suggests that director Tom Hooper stretched the truth a wee bit. But I'm curious: did anyone else think it a little jarring that he chose a German symphony1 as the background music for the scene where King George reads the speech declaring war on Germany? Or was that a deliberate choice with a significance that escapes me?

1A good German symphony! Beethoven's 7th. But still German.

Seed Fish

Photo by Bill Walsh, courtesy Oregon State University.
Seems to me that for every unit of effort we put into protection and restoration of wilderness, nature responds 100 fold. We stand on the shoulders of a healing giant.
Here's one way that works. Elegant research just published in PLoS ONE  answers one of the more pressing questions in marine ecology: Do marine protected areas (MPAs) work to restock depleted fisheries outside the protected zones? The notion's called spillover.  From the paper:
While there is mounting evidence for localized spillover, there have been no empirically documented cases of MPAs seeding unprotected sites, which has impeded acceptance of this management tool. Seeding is a form of population connectivity, which, in marine metapopulations, is characterized by the dispersal of planktonic larvae among local populations. Recent empirical efforts to track larval dispersal have demonstrated localized self-recruitment, but have not documented larvae seeding distant or commercially fished sites. 

Photo by Sarah McTee, courtesy Oregon State University.Photo by Sarah McTee, courtesy Oregon State University.
The study focused on populations of yellow tang (Zebrasoma flavescens) off the Big Island off Hawai’i. These fish are important players in their world, helping to promote coral growth by browsing on coral competitors, marine algae. But the tangs are also one of the most popular aquarium fishes and the top export from Hawai'i. Ten years ago the fishery was on the brink of collapse. 
So in 1999 the state of Hawai'i established a network of nine marine protected areas along the west coast of the Big Island, which effectively prohibited fish collecting on 35 percent of a 150-kilometer/93-mile coastline. The fishery quickly recovered. But did nature respond with spillover into the unprotected areas?
Here's what the investigators were up against trying to answer that question: 
Determining patterns of larval dispersal is especially challenging due to the minuscule sizes of larvae and the vast ocean environment through which they travel... Therefore, we applied a new genetic parentage method to directly determine how far and to what extent the larvae of an abundant coral-reef fish disperse from their natal populations.   

24-day-old yellow tang larva. Photo courtesy Syd Kraul.24-day-old yellow tang larva. Photo courtesy Syd Kraul.The researchers used a new Bayesian approach—a powerful statistical amplifier—to assess the genetic results on more than 1,000 adult and juvenile fish collected from nine reefs around the Big Island.  Amazingly (on what must surely have been a wildly exciting day or three in the lab), they found four parent-offspring pairs:

[W]hich is remarkable given the approximately 54-day pelagic larval duration and the large number of yellow tang around the Island of Hawai'i... All identified offspring were found between 15 and 184 kilometers to the north of their parents, suggesting that ocean currents played a substantial role in larval dispersal.

Nature's 100-fold effect?

Juvenile yellow tang about the size at settlement out of the pelagic zone onto the reef. Photo by Sarah McTee, courtesy Oregon State University.Juvenile yellow tang about the size at settlement out of the pelagic zone onto the reef. Photo by Mark Hixon, courtesy Oregon State University.
There's so much exciting research coming together in this paper, including the identification of the oceanographic conditions driving the larvae away from their parents' territories. As the authors point out, the work is also relevant to the vital connectivity between oceans and people:
In addition to demonstrating the seeding effect of MPAs, documenting connectivity among marine populations has an important social and economic role. The identification of connectivity between distant reef fish populations on the Island of Hawai'i demonstrates that human coastal communities are also linked: management in one part of the ocean affects people who use another part of the ocean. Understanding connections at all levels is the foundation for truly effective ecosystem-based management.
The paper:

♥ Mark R. Christie, Brian N. Tissot, Mark A. Albins, James P. Beets, Yanli Jia, Delisse M. Ortiz, Stephen E. Thompson, Mark A. Hixon. Larval Connectivity in an Effective Network of Marine Protected Areas. PLoS ONE. 5(12): e15715. DOI:10.1371/journal.pone.0015715.

I ♥ open access papers.
Crossposted from Deep Blue Home.

House v. EPA, Round One

That didn't take long. On the first day of the 112th Congress, a group of Republican members—and one Democrat—offered a bill to block the Environmental Protection Agency from regulating planet-warming gases under the Clean Air Act.

E2 Wire flagged a note in the Congressional Register that Rep. Marsha Blackburn (R-Tenn.) yesterday introduced a bill to amend the Clean Air Act, though the description didn't include much detail. A spokesman for the representative confirmed to Mother Jones that the new bill is exactly the same as HR 391, which Blackburn and others filed in January 2009. She's introduced a measure just like it, though the new text isn't posted yet.

The measure is just over one page in length, and would alter the Clean Air Act to specifically exclude greenhouse gases from regulation. It goes so far as to specify that carbon dioxide should not be considered pollution at all. "The term 'air pollutant' shall not include carbon dioxide, water vapor, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride," the bill states.

In case that wasn't enough, it goes on: "Nothing in the Clean Air Act shall be treated as authorizing or requiring the regulation of climate change or global warming." The measure has 45 Republican co-sponsors and one Democrat, Rep. Dan Boren of Oklahoma.

This is, of course, another tactic for subverting the Supreme Court's 2007 determination that greenhouse gases could be regulated under the Clean Air Act if those gases are determined to pose a threat to human health. The EPA formally made that finding nearly two years ago, and is now following through with new regulations, which began phasing in on Jan. 2. Another option that Fred Upton (R-Mich.), chair of the Energy and Commerce Committee, has floated would use the Congressional Review Act to block the EPA rules from going into effect. Upton is, notably, not a cosponsor of Blackburn's bill.

This is likely only the opening salvo in the fight against EPA regulations in the House this year.