Category Archives: Human Rights

Scanlon on Tolerance and Territorial Rivalry

From “The Difficulty of Tolerance” in Toleration. An Elusive Virtue:

Any society, no matter how homogeneous, will include people who disagree about how to live and about what they want their society to be like. (And the disagreements within a relatively homogeneous culture can be more intense than those within a society founded on diversity like the United States.) Given that there must be disagreements, and that those who disagree must somehow live together, is it not better, if possible, to have these disagreements contained within a framework of mutual respect? The alternative, it seems, is to be always in conflict, even at the deepest level, with a large number of one’s fellow citizens. The qualification “even at the deepest level” is crucial here. I am assuming that in any society there will over time be conflicts, serious ones, about the nature and direction of the society. What tolerance expresses is a recognition of common membership that is deeper than these conflicts, a recognition of others as just as entitled as we are to contribute to the definition of our society. Without this, we are just rival groups contending over the same territory. The fact that each of us, for good historical and personal reasons, regards it as our territory and our tradition just makes the conflict all the deeper.

Three Questions for the Michigan DEQ on the Back Forty Project

Earlier this month, the Michigan Department of Environmental Quality announced its intention to permit the Back Forty Project, an open-pit gold and zinc sulfide ore mine that Aquila Resources, a Canadian company, plans to develop near the headwaters of the Menominee River. In response to the MDEQ’s request for public comment by November 3rd, I’ve submitted these three questions. I’m posting them here so that others might consider them in the run up to the public meeting with the MDEQ in Stephenson, Michigan on October 6th.

  1. In determining that the Back Forty Project application meets the requirements for approval under Part 632, did MDEQ take into account the cumulative effects of sulfide mining throughout the Lake Superior watershed? We know that the Back Forty project poses a significant risk to the Menominee River all by itself. With the mine in close proximity to the river, a flood, berm collapse, subsidence or a slide could destroy the Menominee River; to answer these serious concerns by asking the company to add a “synthetic, manmade liner under their waste/tailing rock facility,” as the DEQ has proposed, is to trivialize them. Other development that the mine will inevitably bring, including haul routes, power lines, lights, fueling stations, exhaust and machine noise, will leave a large industrial footprint and disturb the Menominee River and its environs in countless ways. At the same time, this mine will heighten the risk, in the long term, of large-scale environmental destruction posed by the resurgence of sulfide mining not just in Michigan’s Upper Peninsula, but in Minnesota and Canada as well — all around the lake and throughout the Lake Superior watershed. Has the DEQ completed or participated with neighboring state agencies and tribal authorities in a scientific study of the cumulative impacts of sulfide mining around Lake Superior? Has the DEQ issued guidance on how cumulative environmental effects should factor into its decision-making process for permitting new mines in Michigan?
  2. Has MDEQ made any determination about the human rights implications of its decision to allow the Back Forty project to go forward? Human rights are not outside the DEQ’s bailiwick, no matter how hard it may try to exempt itself. Witness Flint. In the present case, the DEQ’s oversight is inextricably bound up with the state’s obligation to protect human rights abuses by third parties. Aquila’s Back Forty project is sure to disturb, and likely to desecrate, lands traditionally belonging to the Menominee and still held sacred by them; and making provisions for archaeological recovery and preservation of mounds and other sacred sites does not adequately address the basic human rights issues involved here. The headwaters of the Menominee River are central to the tribe’s creation story, marking the place where the Menominee people originated. Their very name derives from manoomin, or wild rice, which will not survive changes in sulfate levels or degradation of overall water quality. As tribal member Guy Reiter has said, “It’s no different than if an open-pit sulfide mine was put in Bethlehem for the Christians.” Seen from this perspective, the Back Forty is not only an affront to Menominee history; it also puts the cultural survival of the Menominee people at risk. How will the DEQ factor such human rights considerations into its decision-making process?
  3. What has the DEQ done to restore trust in its authority, and reassure the Menominee and people living downstream from the Back Forty project in Michigan and Wisconsin that it will exercise appropriate care? The Flint water crisis cast a long shadow, and reinforced the perception that “politics and poverty are big factors” in DEQ decision making. “The same attitude of disregard for citizens and the environment has repeated itself in DEQ decisions across our state for well over a decade,” said Marquette attorney Michelle Halley after news of the Flint water crisis broke; controversy over the renewed Groundwater Discharge Permit issued by MDEQ at Eagle Mine and legitimate concerns about lax oversight at Eagle East help make her case. Like all government agencies, the Michigan DEQ should operate in sunlight. Already, however, troubling questions have been raised about the transparency of the Back Forty permitting process. For example, Al Gedicks, Executive Secretary of the Wisconsin Resources Protection Council, asks why the DEQ appears to be in a “rush” to grant the Back Forty permit. So as things now stand, the DEQ enjoys de jure authority in Michigan under Part 632, but it is unclear whether the DEQ still enjoys de facto authority, which could only derive from demonstrations of regulatory competence. How does MDEQ intend to quell public concern that it is compromised or incompetent, and reassure the public that it is a responsible steward?

Laudato Si’ on Mining

The views of mining we find in the new papal encyclical Laudato Si’ clearly reflect the Latin American experience — centuries of plunder and absconded wealth, industrial development and economic underdevelopment, violence and ruin, degradation of the land and destruction of communities where mining is done. But in its careful attention to issues of water, water access, and the condition of the world’s poor, the encyclical raises serious questions about mining and the ethics of mining everywhere in the world.

Laudato Si’ explicitly addresses mining in three places, raising the very same issues that I’ve been writing about here, in connection with the new mining around Lake Superior. So I thought I would set out these passages for consideration now, with the intention of returning to them after I have had a chance to read the encyclical more carefully.

The first explicit mention of mining in Laudato Si’ comes at 29, which deals with the “serious problem” of “the quality of water available to the poor.”

Underground water sources in many places are threatened by the pollution produced in certain mining, farming and industrial activities, especially in countries lacking adequate regulation or controls. It is not only a question of industrial waste. Detergents and chemical products, commonly used in many places of the world, continue to pour into our rivers, lakes and seas.

At 51, one of the most powerful passages in the entire encyclical looks at the role of mining in creating an “ecological debt” of the global north to the global south, where raw materials are taken from the land for markets that serve the wealthy, industrialized north:

Inequity affects not only individuals but entire countries; it compels us to consider an ethics of international relations. A true “ecological debt” exists, particularly between the global north and south, connected to commercial imbalances with effects on the environment, and the disproportionate use of natural resources by certain countries over long periods of time. The export of raw materials to satisfy markets in the industrialized north has caused harm locally, as for example in mercury pollution in gold mining or sulphur dioxide pollution in copper mining.

Quoting a 2009 Christmas Message from the Bishops of Patagonia-Comahue Region of Argentina, Laudato Si’ goes on to explain that the industrialized world has incurred this debt because mining and other companies

operate in less developed countries in ways they could never do at home, in the countries in which they raise their capital: “We note that often the businesses which operate this way are multinationals. They do here what they would never do in developed countries or the so-called first world. Generally, after ceasing their activity and withdrawing, they leave behind great human and environmental liabilities such as unemployment, abandoned towns, the depletion of natural reserves, deforestation, the impoverishment of agriculture and local stock breeding, open pits, riven hills, polluted rivers and a handful of social works which are no longer sustainable.”

Finally, at 146, the encyclical addresses the way mining projects degrade and destroy land that indigenous communities regard as “sacred space,” often displacing them and threatening their very survival:

it is essential to show special care for indigenous communities and their cultural traditions. They are not merely one minority among others, but should be the principal dialogue partners, especially when large projects affecting their land are proposed. For them, land is not a commodity but rather a gift from God and from their ancestors who rest there, a sacred space with which they need to interact if they are to maintain their identity and values. When they remain on their land, they themselves care for it best. Nevertheless, in various parts of the world, pressure is being put on them to abandon their homelands to make room for agricultural or mining projects which are undertaken without regard for the degradation of nature and culture.

Can Mining Be Saved?

TeslaGigafactory

The Tesla Gigafactory, currently under construction in Storey County, Nevada.

Andrew Critchlow, Commodities Editor at The Telegraph, speculates in a recent article that Elon Musk and Tesla might “save the mining industry” by ushering in a new age of renewable energy. Domestic battery power production at the Tesla Gigafactory (now scheduled to go into production in 2016) is bound to create such demand for lithium, nickel and copper, Critchlow thinks, that the mining industry will find a way out of its current (price) slump and into new growth, or possibly a new supercycle.

“Major mining companies are already ‘future proofing’ their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry,” writes Critchlow; and the “smart commodity investor” will follow suit, with investments in “leading producers” such as — this is Critchlow’s list — Freeport-McMoRan, Lundin Mining and Fortune Minerals.

It’s a credible scenario, but it’s also terribly short-sighted. The big switch over to domestic solar power and battery storage Musk is hyping in the run up to the opening of the Gigafactory would no doubt give miners a short-term boost, but it will also take a lasting toll on the places where copper and nickel are mined, raise serious human rights concerns, and put even more pressure on the world’s freshwater resources.

After all, the copper and nickel used to make Tesla’s batteries are going to come from places like the Democratic Republic of Congo, where Lundin and Freeport-McMoRan operate a joint venture at Tenke Fungurume, and which has been at the center of the recent debate in the EU parliament over conflict minerals; Peru, where protests against Southern Copper Corporation’s Tia Maria project led the government to declare a state of emergency in the province of Islay just last Friday; or the nickel and copper mining operations around Lake Superior that I’ve been following here, where there are ongoing conflicts over free, prior and informed consent, serious concerns that sulfide mining will damage freshwater ecosystems and compromise one of the largest freshwater lakes in the world, fights over haul routes, and repeated complaints of lax regulatory oversight and political corruption.

Rice farmers clash with riot police in Cocachacra, Peru. The fight is over water. (AP Photo/Martin Mejia)

These are just a few examples that come readily to mind. It wouldn’t take much effort to name others (Oyu Tolgoi, Oak Flat, Bougainville) and to see that the same problems arise, to a greater or lesser degree, no matter where copper and nickel mining — sulfide mining — is done.

The mining industry and commodities investors have historically tended to minimize and marginalize the environmental and social costs of sulfide mining; so it’s really no surprise that Critchlow should argue that increased demand by battery producers is all it will take to “save” mining. Leave it to others, I guess, to save the world.

But the supply and demand model is reductive and misleading, even for those looking to make a fast buck. A recent Harvard study of company-community conflict in the extractive sector summarized by John Ruggie in Just Business suggests just how costly conflict can be. A mining operation with start-up capital expenditures in the $3-5 billion range will suffer losses of roughly $2 million for every day of delayed production; the original study goes even further, and fixes the number at roughly $20 million per week. Miners without authentic social license to operate lose money, full stop. So Critchlow’s is at best a flawed and myopic investment strategy that ignores significant risks. It also appears to shrug off legitimate human rights claims, and turn a blind eye to environmental degradation, and deadly violence of the kind we’re seeing in Peru right now. That’s irresponsible, if not downright reprehensible.

A Macquarie Research report cited by Critchlow claims that the switch away from fossil fuels to battery power in the home is all but inevitable. But if we make the switch to renewables and fail — once again — to address the ethics of mining, what exactly will we have saved?

The Breach at Mount Polley Represents a Failure of Governance

The Imperial Metals Corporation’s Board of Directors claims “ultimate responsibility” for the company and its business operations, but we have yet to learn exactly how the Board will exercise responsibility after the Mount Polley disaster. It’s not even clear the Board is capable of responding to the spill with anything but the public displays of emotion and concern we’ve already seen, weak assurances that the disaster has been “stabilized” and vague promises to do better next time. None of that amounts to taking responsibility.

Deregulation, lax regulation and staffing cutbacks on the government side are being blamed for the breach of the tailings pond. There are charges of collusion: “The government isn’t inspecting the mines, and the mining companies know it,” says consultant and advocate Glenda Ferris. But the breach at Mount Polley also represents a failure of internal or corporate governance at Imperial Metals: the board does not appear qualified to deal with the risks the mining company’s operations actually entail.

The Mount Polley breach has shown just how big those risks are, and how extensive are the responsibilities they carry. Imperial’s operations have created an environmental catastrophe (in the words of Phil Owens, Professor at University of Northern British Columbia). The last assessment I saw reported that Imperial Metals has released over 10 million cubic meters of water and 4.5 million cubic meters of toxic waste into surrounding rivers and waterways. The sudden rush of toxic waters was so powerful it took down trees in its wake.

There are important human rights considerations here as well, now that Imperial has compromised access to clean water throughout the region for who knows how long. Reassurances from Imperial Metals president Brian Kynoch that the water “in our tailings” is “very close to drinking water quality” are an insult to the intelligence, and make a mockery of serious human rights claims.

It’s not a question whether the mining company is a “bad actor,” or whether it’s “unfair” to portray them that way, as British Columbia energy minister Bill Bennett complained earlier today. It‘s a question of competence: who’s seated at the boardroom table before anything like this happens, and whether they are able to meet the serious responsibilities that go along with running a mining operation.

No one on the Imperials Metal board has environmental or human rights credentials. The company’s sulfide mining operations — and those of any mining company — require people with both. They should have a boardroom seat as well as a real say in how business gets done and how to mitigate mining’s risks. Until then, talking about “ultimate responsibility” is just guff.

 

“It Is Claiming that Gives Rights Their Special Moral Significance”

This passage from Feinberg’s “The Nature and Value of Rights” (here’s a Google books link ) helps me to frame and think further about what I said in my previous post on John Ruggie and respect, so I want to set it down here as a kind of postscript.

Where I used the word “demand,” which carries some sense of asking (like the French demander), and talked about respect as something we “ask” of others, Feinberg settles on the more legalistic “claim,” and most writers follow him. I can probably do the same and allow his work to inform what I have to say about “the power of asking.”

Claims are, after all, a kind of asking, a crying out (cf. Latin clamare); they call for an answer, and I think this becomes tolerably clear later on in the same essay, where Feinberg talks about “valid” claims; and in the passage below, where Feinberg offers the thought that  that “‘human dignity’ may simply be the recognizable capacity to assert claims.”

I would probably want to flip that point around or jostle it a little, to emphasize the role of recognition and the critical role second persons play in recognizing the dignity of first persons. If “it is claiming that gives rights their special moral significance,” then it’s fair to suggest that “moral significance” is something mutually created by those who make claims and those who recognize them, or at least recognize another’s capacity to make them.

Even if there are conceivable circumstances in which one would admit rights diffidently, there is no doubt that their characteristic use and that for which they are distinctively well suited, is to be claimed, demanded, affirmed, insisted upon. They are especially sturdy objects to “stand upon,” a most useful sort of moral furniture. Having rights, of course, makes claiming possible; but it is claiming that gives rights their special moral significance. This feature of rights is connected in a way with the customary rhetoric about what it is to be a human being. Having rights enables us to “stand up like men,” to look others in the eye, and to feel in some fundamental way the equal of anyone. To think of oneself as the holder of rights is not to be unduly but properly proud, to have that minimal self-respect that is necessary to be worthy of the love and esteem of others. Indeed, respect for persons (this is an intriguing idea) may simply be respect for their rights, so that there cannot be the one without the other; and what is called “human dignity” may simply be the recognizable capacity to assert claims. To respect a person then, or to think of him as possessed of human dignity, simply is to think of him as a potential maker of claims. Not all of this can be packed into a definition of “rights”; but these are facts about the possession of rights that argue well their supreme moral importance.

Is Respect Really All That Simple?

Last week, John Ruggie addressed the UN Global Compact Leaders Summit, where a “new global architecture” for corporate sustainability was unveiled and celebrated. Ruggie started out by talking about the special challenges — the “problems without passports” — that the world’s “tightly-coupled” systems present, and the inadequacy of our “largely self-interested politics” to address them. This was not, however, the brief he’d been given, so he had to move on; and I hope he’ll have more to say on the topic in the future. Instead, Ruggie had been asked, he said, “to say a word about respect,” and — not surprisingly — he took the opportunity to talk about the UN Guiding Principles on Business and Human Rights, and how the framework helps companies meet their obligations to respect human rights.

I have been asked to say a word about respect, specifically about respecting human
rights. Its meaning is simple: treat people with dignity, be they workers, communities in which you operate, or other stakeholders. But while the meaning is simple, mere declarations of respect by business no longer suffice: companies must have systems in place to know and show that they respect rights. This is where the UN Guiding Principles on Business and Human Rights come in. [pdf.]

Fair enough, but I found myself pausing here, and wondering whether the meaning of “respect” is really so simple as Ruggie makes it out to be, or at least whether “treat people with dignity” is sufficient guidance.

I understand that Ruggie’s intention here is largely rhetorical: we all know what respect means, but we need more than fine words, declarations and definitions. We need practical and consistent ways of acknowledging, checking and demonstrating human rights commitments — “systems” like the UN Guiding Principles.

Still, there are good reasons to start unpacking — and challenging — this simple definition, if only to ward off misconceptions.

First, to say that “[to] respect” human rights means “[to] treat people with dignity” (and leave it at that) invites confusion, because it passes the semantic buck from respect to dignity. If we are to treat people “with dignity” — if that’s our definition of respect — then we had better have a good working definition of dignity to govern or temper our treatment of others.

Of course, the word “dignity” is a staple of human rights discourse, so we’ve got to make allowances for shorthand here. If we don’t — if we want to take the long route and spell things out — we will most likely find our way back to Kant’s moral theory. I’m not going to attempt a summary here except to say that for Kant, dignity imposes absolute and non-negotiable constraints on our treatment of other people. Our dignity derives from our moral stature as free, rational and autonomous agents — ends in ourselves — and cannot be discussed in terms of relative value (or usefulness, or any other relative terms). It must be respected: in other words, dignity imposes strict and inviolable limits, absolute constraints, on how we treat others and how others treat us.

Most obviously people may not be treated merely as means to our ends; and that caveat is especially important when it comes to business, where, for starters, people are valued and evaluated as priced labor or “talent,” in terms of services of they perform or as “human resources.” To respect the dignity of people — “be they workers, communities in which you operate, or other stakeholders” — is to recognize them as persons (or ends in themselves) and not just mere functions in an efficiency equation.

This is hasty pudding, but suffice it to say that in the Kantian idea of dignity there is the suggestion that respect follows from our recognition of others as persons: this is an idea suggested by the word “respect” itself, which comes from the Latin respicere, to look back, to give a second look. Every person deserves a second look — or I should say, demands it. Recognition is something we demand of others and others demand of us.

I like to put it this way: respect is always the first, and sometimes the only thing we ask of each other. How we respond to this demand will depend in all cases upon whether we understand that our dignity as persons makes us mutually accountable or answerable to each other in the first place. So before we can talk about how we “treat” others — before we jump, with Ruggie, to considerations of behavior — let’s take a couple of steps back, and make sure that when we talk about respect we are also talking about recognition as well as accountability.

Of course all of this may be implied in Ruggie’s definition, and I wonder if recognition and accountability are just other ways of saying that companies must “know and show” that they respect human rights. My concern is that when you gather business leaders at the UN and tell them that to respect human rights is to treat people with dignity, you may leave them with the mistaken impression that dignity is something they have the power to confer on others, rather than something that makes them answerable to others. Dignity is not something the mighty can grant or deny the meek, and respect is not another word for benevolent gestures companies might make toward communities, workers and other stakeholders. Where people stand, business must yield.

Labor Day, 2013: Will Big Mining Do Better This Time Around?

On Labor Day, I’ll be in New York City, so I won’t be able to see the television broadcast premiere of 1913 Massacre on Twin Cities Public Television. How many will tune in? How will the broadcast cut of the film look and play on TV? Above all, I wonder, what connections will the Labor Day TV audience draw between 1913 and 2013? My comments here run this holiday weekend on MinnPost.

Many people Ken and I met in mining towns around Lake Superior while filming 1913 Massacre urged us to see the positive contributions the mining companies had made to the region. Some insisted that the Woody Guthrie song that had introduced me to the story of the Italian Hall disaster and brought me to Calumet and the Upper Peninsula in the first place had gotten it all wrong. The greedy bosses, company thugs and violent social strife that Woody sang about in “1913 Massacre” did not fit the story they knew. “We all got along just fine,” they protested.

When the mines were running, the towns thrived. The big department stores downtown were open. The churches (and the bars) were packed to capacity. Everybody worked hard and the work was sometimes dangerous, but on Saturday nights, the streets were jammed and the atmosphere festive. The company put a roof over your head then sold you the house at terms you could manage. The copper bosses built libraries, sidewalks and schools, gave land grants for churches, and even furnished luxuries like bathhouses and public swimming pools. The men who ran the mines weren’t just robber barons from Boston; they were public benefactors.

But there were limits to their benevolence. The mining captains regarded the immigrant workers – Finns, Slavs, Italians — as charges placed in their paternal care. They knew what was best for these new arrivals. They discouraged organizing. Faced with strikes on the Iron Range in 1907 or on the Keweenaw in 1913, they adamantly refused to negotiate, brought in scabs to do the work and Waddell and Pinkerton men to deal (often brutally) with the strikers. Even after the tragic events of 1913, Calumet and Hecla Mining Company would not recognize the union for decades.

The Keweenaw miners were on strike again in 1968 when C & H made a calculated business decision to pull out. No more jobs, pensions cut short; the good times were over. They left the waters poisoned and the landscape littered with industrial wreckage and toxic mine tailings.

The companies driving the new mining boom around Lake Superior these days promise to do better. They are dedicated to corporate social responsibility. They practice “sustainable” mining, tout their environmental stewardship and declare their respect for human rights. They have community outreach programs and promise to make substantial, long-term investments in the economic development of the regions where they come to mine. They work closely – some would say too closely – with regulators to create environmental impact statements and plan for responsible closure of their mines. They are eager to gain social license.

For the most part, these big multinationals operate with the support of organized labor and politicians who want to create jobs — and what politician doesn’t want to do that? But the high-paying, highly-technical mining jobs are unlikely to go to local residents; and the new mining is likely to have detrimental effects on local economies, as the economist Thomas M. Power has shown in studies of Michigan and Minnesota. Mining may provide some short-term jobs, but it can also drive away creative professionals and knowledge workers, destroy entrepreneurial culture, diminish quality of life and damage long-term economic vitality.

So promises of good times and plentiful jobs need to be treated with circumspection. Polymet has repeatedly scaled back its job predictions for its huge, open-pit sulfide mining project near Hoyt Lakes, Minnesota, and the company’s own figures suggest that only 90 of the promised 360 jobs – just 25% — will go to local communities. Local is, moreover, a relative term. Mine workers today tend not to live in mining towns; they will commute an hour or more to work. And hiring will always be subject to swings in metals prices, which are now dependent on two new factors: continued Chinese growth (and urbanization) and the entry of big financial firms into metals warehousing and trading.

There are limits to big mining’s benevolence as well. The last time I flew into Marquette airport, a glossy Rio Tinto poster advertised the company’s commitment to “build, operate and close Eagle Mine responsibly.” Nobody had bothered to take the sign down after Rio Tinto had done an about-face and sold Eagle, a few months earlier, to Vancouver-based Lundin Mining for dimes on the dollar. Rio Tinto’s commitments lasted only until it was time to flip their property. Overnight, Eagle Mine had become a “non-core asset” and the surrounding community none of Rio Tinto’s responsibility.

In Wisconsin, Gogebic Taconite has drawn the line between company and community much more starkly, with help from a paramilitary firm called Bulletproof Securities. Black-masked guards, dressed in camouflage and armed with semi-automatic weapons, protect the mining company’s property from trespassers and environmental protesters. Imagine what they might do in the event of a strike.

gogebicguard

Bulletproof Securities patrols Gogebic Taconite’s property in northern Wisconsin.

Hazards of the Copper Antimarket

A couple of weeks ago, I wrote a post connecting Chinese urbanization with the new mining around Lake Superior. Chinese demand for copper — which is used in everything from large scale infrastructure projects to new housing construction — is likely what brought Rio Tinto to the Upper Peninsula in the first place. But the copper extracted by Rio’s successor Lundin Mining, which took ownership of the controversial Kennecott/Eagle Mine in Michigan’s Upper Peninsula just last week, or Polymet, which is developing a mine in Minnesota near the Boundary Waters Canoe Area Wilderness, won’t be shipped directly from the US to China. Instead, it will travel a long and circuitous route from Lake Superior through a tightly-controlled system of warehouses, and now the copper those warehouses hold will be the property of big financial firms.

This new arrangement — copper’s new holding pattern — entails new risks for the global financial system, the American economy and the places where copper is mined.

A story in the Times this past weekend reported that Goldman Sachs, Morgan Stanley and other big Wall Street players are already manipulating the market for aluminum, and developing Bank Holding Companies that will mix finance with global commerce in new ways. By hoarding aluminum and exploiting the rules of the London Metals Exchange — which the banks owned until just last year, when the LME was sold to a group of Hong Kong investors — Goldman and other banks are set to make billions of dollars without actually moving aluminum into the market. Copper, as the story noted, is “next up.”

Last winter, the SEC approved two new copper-backed Exchange Traded Funds, one from JPMorgan, which was the first of its kind, and a second from BlackRock. These new Copper ETFs not only permit but require JPMorgan and BlackRock to take possession of and physically store tons of copper in warehouses. It’s an audacious plan that will “ultimately allow JP Morgan, Goldman Sachs and BlackRock to buy 80 percent of the copper available on the market on behalf of investors and hold it in their warehouses.” A few firms will essentially control the world copper market — or to establish what rightly deserves to be called an antimarket. (The term is historian Fernand Braudel’s, and has been popularized by Manuel DeLanda).

Big copper consumers like Southwire and Encore registered their dissent, but SEC officials capitulated after heavy lobbying by too-big-to-fail finance. The SEC even said it shared the view put forward by the banks, that the new funds would “track the price of copper, not propel it, and concurred with the firms’ contention — disputed by some economists — that reducing the amount of copper on the market would not drive up prices.” Robert B. Bernstein, an attorney representing the copper consumers, suggested in a letter to the SEC last year that this took too narrow a view, and that copper prices were not the only thing to worry about. Bernstein argued that the investment houses’ hoarding of copper will disrupt the copper market, impede economic recovery, and work “contrary to the public interest.”

The public interest had some defenders at yesterday’s Senate Banking Committee hearing on Financial Holding Companies, where ETFs and the banking practices behind them came under scrutiny. Chaired by Senator Sherrod Brown and featuring expert testimony from Saule Omarova, Joshua Rosner, Timothy Weiner and Randall Guynn, the hearing touched several times on how the control of metals markets by financial players like Goldman and JPMorgan will affect the American consumer and greatly heighten the risk of another financial crisis like the one in 2008 — and necessitate another bailout by American taxpayers of firms that are too big to fail (but seem, oddly, hellbent on failure).

At the hearing’s end, Sherrod Brown said we need “to ask ourselves what it does to the rest of our society when wealth and resources are diverted into finance.” It was a good summary comment, because the hearing raised a whole host of questions about the social hazards this diversion entails.

For instance, what effect will these ETFs and financial manipulation of the global copper market have on the communities where copper is mined? Yesterday’s hearing didn’t directly address the point. Randall Guynn tried to suggest that a bank-controlled mine in a bank-controlled market where the bank warehoused and manipulated the price of the metal being mined would create a reliable and steady labor market. But others warned that the speculative bubble will inevitably burst, and that will leave both investors and communities in the lurch. Even while the boom lasts, workers and communities are likely to be powerless against giant commodity-extracting, -holding and -trading financial conglomerates with lobbying power, friends in high places and apologists like Randall Guynn.

Will the cornering and squeezing of the copper market by big finance exert new pressures to relax environmental controls? Why not, especially since multinational miners already complain about the delays caused by prudent environmental assessments? Both Omarova and Rosner asked us to imagine a scenario in which the Deepwater Horizon catastrophe happened on an oil rig owned by JPMorgan; now, with banks moving aggressively into copper, a mining catastrophe like the Bingham Canyon collapse (which I wrote about here) could send shockwaves throughout the entire financial system. “If we saw a catastrophic event at non-financial facility,” Joshua Rosner told the Committee, “the impact to the [financial] institution and the Fed would be catastrophic.”

Omarova stressed the complexities of these commodity markets, and expressed serious doubts that regulators “can oversee risks caused by Bank Holding Companies and this mixture of commerce and banking.” Rosner echoed these concerns: “to suggest regulators have ability to manage holding companies is to ignore all the areas regulators failed to oversee in 2008,” he said. Worse, the banks themselves would be incapable of predicting, controlling or even appreciating the risks to which they are exposed.

I made a similar point about JPMorgan’s inability to manage its exposure to human rights risks in the wake of the London Whale episode.

The new mix of banking, speculation and holding of commodities, said Saule Omarova, may make another London Whale more likely, and worse. So history may be about to repeat itself. Omarova went on to suggest that in making their moves into the commodities markets, Goldman, JPMorgan and the other firms playing this dangerous new game seem to have adopted a business model pioneered just a little over a decade ago, by Enron. That observation prompted Senator Elizabeth Warren’s dark comment: “This movie does not end well.”

Moses Called The First Strike

Cross-posted from my blog at 1913 Massacre:

People from all parts of Europe made their way to Calumet at the end of the nineteenth and the start of the twentieth centuries. The copper-mining town attracted so many immigrants — Germans, Italians, Croatians, Slovenians, Cornish, Irish, Swedes, Norwegians — that it’s sometimes jokingly referred to as “the smelting pot.” Finns would eventually outnumber them all.

Many who came here from Finland to work in the mines and start a new life also brought with them, or quickly became versed in, dangerous ideas. In 1913, Finns were known as agitators, radicals, socialists. They organized in Keweenaw mining communities and in Hancock they published a newspaper called Tyomies, or The Workingman. Even their preachers espoused the social gospel, railing from the pulpit against the unfair treatment and indignities the miners endured, and advocating a more just ordering of society.

Most of the men, women and children killed at Italian Hall on Christmas Eve, 1913 were Finnish-Americans. They were not all agitators and strikers or strikers’ wives and children; in fact, we interviewed people whose families were firmly against the strike and wanted the Western Federation of Miners run out of town, but nevertheless lost children in the mayhem at the Hall. The tragedy cut across the divisions of the strike even as it deepened some of them and created new ones.

A wreath-laying ceremony in Calumet yesterday to honor the Italian Hall dead included a delegation from Finland. The ceremony was part of this year’s FinnFest, an annual celebration of Finnish-American heritage and culture. (1913 Massacre is screening twice at FinnFest.) The Turun Metsankavijat Wind Band played the Finnish and American national anthems along with other, solemn music.

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Before the wreaths were laid by David Geisler, Calumet Village President, and Pertti Torstila, Finland’s Secretary of State in the Ministry for Foreign Affairs, Reverend Robert Langseth delivered an invocation.

Langseth began quietly. He acknowledged each official on stage, then talked about the Finnish preacher who had led his parish during the strike of 1913-1914. After a pause, he thundered out the words of a sermon delivered a century ago:

MOSES called the first strike! Against the Pharoah.

Then he began to elaborate on his social gospel theme. Langseth cited the book of Micah —

What does The Lord require of you?
To act justly and to love mercy,
and to walk humbly with your God.

— and he spoke eloquently and passionately about justice and the need for reconciliation. It was beautiful. People in the crowd were visibly moved and weeping. The ceremony had invited us to mourn and honor the dead. Reverend Langseth was asking us to do even more: to respect and honor each other.

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