Tag Archives: China

Anti-ESG Activists Come To Intel

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A shareholder proposal asking Intel to square its business in China with its ESG commitments looks like a Trojan horse.

The proposal (Proposal 7, p. 130) argues that “Intel’s environmental promises and human rights commitments are belied by its cozy relationship with China, a country that is controlled by the dictatorial and inhumane Chinese Communist Party.”

Doing business with China, which is the largest greenhouse gas emitter in the world and which commits genocide against ethnic minorities – [sic] runs counter to everything that Intel claims to stand for. It is therefore critical that the Board commission and publish a third party review that includes experts who are fully aware of the dangers that China poses to ensure that Intel’s actions as a company live up to its words.

It’s brought by the Free Enterprise Project at the National Center for Public Policy Research, a conservative organization that has been around since the Reagan era, with longstanding ties to the American Legislative Council (ALEC) and the State Policy Network. The Center also counts among its allies the National Legal and Policy Center (NLPC), which last year scored a small victory at 3M when one of its proposals on China and human rights garnered an impressive 12 percent support. Intel is a new target for these groups, who claim to be outraged by the company’s about-face apology on Xinjiang in 2021 as well as its sponsorship of the 2022 Olympics.

These days, the Free Enterprise Project is (predictably enough) all about “Woke Capitalism,” a product of “the Left’s Radical ESG Agenda” that will result in “the leftist capture of American corporations.” Or, as they put it in their 2022 Investor Value Voter Guide, “the ESG boosters, both in and out of C-suites, want to make our lives poorer, less reliable and less safe, while enriching the enemies of the West, for no possible good outcome except their own self-aggrandizement.” This is the reasoning behind their opposition to everything from DEI to decarbonization.

This year’s Proxy Preview from As You Sow includes an entire section dedicated to bad faith proposals that sound an awful lot like this one and are in reality “anti-ESG.” The Free Enterprise Project and its allies tend to copy

verbatim the resolved clauses of their ideological opponents, or use language in resolved clauses that makes the resolutions appear to support sustainability objectives—although the rest of the proposals cite right-wing opinion pieces and argue against their purported goal.

The objective is to find a point of leverage, call out corporate hypocrisy, and demonstrate that ESG commitments are a costly and destructive diversion of company resources.

When it comes to human rights in China, right wing activists see that this strategy can get results: “this human rights issue – involving both slave labor and genocide of the minority Muslim Uyghur population at the hands of the CCP – animates factions from both the political right and left.” That’s from the Free Enterprise Project Investor Value report, cited above. As You Sow concurs:

The ideas in anti-ESG resolutions have no traction with investors—nor with many companies—and on average earn 4 percent support or less. The sole exception concerns doing business in China, where the left and right agree that China’s authoritarianism is deeply problematic, as is its persecution of the Uyghur people.

That “exception” helps explain the self-righteous, combative tone of the Free Enterprise Project proposal, and the copy-paste approach they and the NLPC have taken for this year’s proxy season:

Proxy Monitor data showing human rights proposals submitted by the National Center for Public Policy Research and the National Legal and Policy Center.

The question before Intel shareholders is what practical effect voting for this proposal might have. The board of directors opposes it, for all the usual reasons, so it is unlikely to pass; but it could garner enough support to qualify for re-submission. That would bring the Free Enterprise Project back again next year.

More importantly, the proposal would require that Intel engage “experts who are fully aware of the dangers that China poses.” Those are not necessarily human rights experts or even China experts, but people who qualify as experts because they are “fully aware” — that is, ideologically aligned on China with the National Center for Public Policy Research. Think Peter Navarro (or worse): that’s who would be engaging with the company, and whose views the company would “publish.” This doesn’t sound like a constructive way to push the company to raise human rights standards (or improve its business performance); it just sets the stage for right wing bluster, fake outrage, and ideological preening.

It is difficult for me to vote against any measure that asks companies to do more in the area of human rights, and I am disappointed by the Intel board’s boilerplate response. They could do so much better. But in this case I am voting with them and against Proposal 7.

Update. The proposal received 4.31 percent support at the 11 May Annual Stockholders’ Meeting, falling short of the 5 percent needed to qualify for re-submission next year. For more on Trojan Horse proposals, see the brief write-up in this 2021 report (page 59) from Glass Lewis, which I had not read before I wrote this post.

Will the 118th Congress See A Green Right Coalition?

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Yesterday’s post about Nancy Pelosi’s remarks on China belongs to one strand of a larger story that’s coming into focus.  It’s a story about China and human rights, to be sure, but also about what role human rights issues will play in the transition to renewables and in the politics of the transition.

House Republicans on the Natural Resources Committee have already cited reports of human rights abuses in China and in the Democratic Republic of Congo (where Chinese companies control cobalt mining operations) as an argument for boosting extraction of critical minerals here in the US. As the gavel passes in the coming year, their position is likely to attract even more support.

In fact, the 118th Congress could see the emergence of a Green Right coalition: hawkish on China, touting the magic of markets, openly hostile to the administrative state, and more interested in achieving energy dominance (to borrow a phrase from the Trump years) than in paying lip service to a just transition (as some Democrats do).  The incoming Chair of the House Energy and Commerce Committee, Cathy McMorris Rodgers, plans to “outcompete China on climate:” that phrase sums up a whole political and geopolitical agenda. 

The program could be a political winner: anti-China, pro-growth, industry-captured climate policy may accelerate organized labor’s rightward drift; and the Green Right may even enjoy an uneasy honeymoon period with more left-leaning advocates of permitting reform.

Over the past year or so, as Joe Manchin tried but failed to advance his permitting deal, reformers have shown themselves ready to take an axe to environmental law, they have regularly dismissed public opposition as NIMBY whining, and some of them have done more public advocacy for extractive industry than seasoned lobbyists and flacks could ever dream of doing. 

Pelosi on the Moral Authority to Talk about Human Rights in China, or Anyplace

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Asked this morning about Republican plans to create a Select Committee on China in the coming year, Speaker Nancy Pelosi noted that there is already a bipartisan, bi-cameral committee on China and made this “statement” about human rights.

Corporate America has [been] largely responsible for the situation we’re in, in terms of the trade deficit and the rest…but from a standpoint of values, from the standpoint of economy, and from the standpoint of security, China poses a challenge to us….We want to work together on climate issues and the rest, but, but we cannot have our workers disadvantaged by China having prison labor manufacture products or contribute to the manufacture of products that just provide unfair competition for us….My statement is that if we refuse to talk about human rights in China because of economic issues, we lose all moral authority to talk about human rights anyplace in the world.

Predictably enough, the press conference moved on quickly from there. A follow-up question on legislation to ban TikTok failed to elicit anything more on US economic interests and human rights in China. Here’s video of the moment:

Save the Wild UP December Gala Keynote Address

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This is the text I prepared for my remarks at the Save The Wild UP December Gala. My talk deals with the ethics of Lake Superior mining, connecting it with climate change, the loss of the wild and the dawn of the Anthropocene. It’s also a reflection on human ingenuity and human responsibility. The half-hour keynote makes for a long blog post, but I hope readers will find something here worth sharing and discussing.  

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When you invited me to speak tonight, I tried almost immediately to come up with names of people who might be better suited to the task. In this crowd, I ought to be listening and trying to catch up.

I’m an outsider, and a latecomer to boot. Some of you were here when Kennecott and Rio Tinto first staked their claim to the Yellow Dog Plains. I didn’t fully appreciate the extent of the new mining activity in this area and all around Lake Superior until about 2012. That was right after Ken Ross and I had finished making 1913 Massacre, our documentary about the Italian Hall disaster.

I was so caught up in the story our film tells that I was under the impression that copper mining — sulfide mining — was a thing of the past in the Upper Peninsula.

Very near the end of 1913 Massacre, there’s an interview with an Army veteran who’s sitting at the counter of the Evergreen Diner, drinking a coffee and smoking a cigarette. He says that after the copper mines closed in 1968, attempts to re-open them failed because people were “bitching about the environment and all that shit and the water and the runoff.” The camera, meanwhile, is exploring the industrial damage left behind by the mining operation.

This is the one moment in the film where we had to bleep out some bad language before Minnesota Public Television would air 1913 Massacre on Labor Day in 2013. The only time anyone in our film curses is when the subject turns to protecting the water and the environment.

That these two things — a destroyed, toxic landscape and a hostility toward people who care about the environment — exist side by side; that people can watch a mining company leave a place in ruins, poison its waters, damage it to the point that it’s now a Superfund site, with high levels of stomach cancer and fish that can’t be eaten, and direct their anger and curses at people trying to prevent it from happening again: our film presents all that as part of what we’ve come to call “mining’s toxic legacy.”

The Army veteran went on to say — this part didn’t make it into the film — that people who bitch about the environment are “people from out of town.” He wasn’t complaining about environmental regulation or about big government; he was complaining instead about out-of-towners, strangers who make it tough for regular guys to make a living.

Strangers can be people from faraway, or just people from whom you feel estranged: people who don’t share your ways or speak your language; and it would be possible to talk at some length about the way the mining operations in the Keweenaw estranged people from each other and from the place they live.

Everywhere it goes, it seems, mining divides and displaces people. It’s never just about extracting ore from the ground. Mining is development and the power to direct it.

When strangers come to town or when people feel estranged, we need translators, guides and mediators. This is one reason why it’s so important to have a local, grassroots organization dedicated to the shared interests people have in the nature and culture of the Upper Peninsula.

You might look like the underdog right now. But I think you’ll agree that there’s a pressing need for a more responsible, inclusive and respectful conversation about development in this place. Save the Wild UP is in a great position to lead it.

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Back home in Brooklyn, I have a fig tree. I planted it last spring. I just finished wrapping it for the winter. I love the work the fig tree involves — the care it involves — because it connects me to the memory of my grandfather and the fig tree he kept. My tree connects me to my family tree (my roots), to history, and in my imagination the tree belongs as much to history as it does to nature. The life of my tree depends almost entirely on my care. I sometimes wonder if there is anything wild about it.

There is a wild fig. The ancient Greeks even had a special word for it: φήληξ. They seem to have derived its name from another word (φῆλος) meaning “deceitful,” because the wild fig seemed ripe when it was not really so. The ancient world knew that wildness is tricky. It can deceive and elude us, or challenge our powers of discernment.

Nature, we claim, is our dominion, as if it (naturally, somehow) belonged to history, the world of human activity. Our economy organizes nature to produce natural resources. But the wild represents a living world apart from history and another order of value altogether.

We can’t assimilate the wild into an engineered and technical environment: it will cease to be wild the instant we try. The wild begins where engineering and ingenuity stop, at the limits of human authority and command. So “wild” is sometimes used to mean beyond the reach of authority, out of control.

But what’s wild is not alien. Sometimes the wild calls out to us, usually to ward us off. The wild is almost always in flight from us, leaving tracks and traces for us to read. It always responds to us, as wild rice and stoneflies respond to the slightest change in water quality, offering guidance if we are attentive and humble enough to take it.

The wild marks the limits of our powers, our ingenuity and ambition, and before it we ought to go gently.

We have not.

The headlines tell us that our carbon-intensive civilization, which brought us so many material advantages, is now hastening its own demise. We are entering an entirely new era of human life on earth. Some scientists and philosophers talk about the end of the Holocene and the beginning of the Anthropocene — the dawn of a new geological epoch of our making.

The story beneath the headlines is a record of loss. A map of the terrestrial biosphere shows that today only a quarter remains “wild” — that is, “without human settlements or substantial land use” — and even less is in a semi-natural state. Data from the Mauna Loa Observatory tell us that this year was the last time “anyone now alive on planet Earth will ever see” CO2 concentrations lower than 400 parts per million. Those levels started rising in the 1700s with the industrial revolution, spiked dramatically in the postwar period and have climbed steadily higher. Since 1970, the populations of vertebrate animals have dropped by 52 percent. The same report by the World Wildlife Fund tells us that freshwater animal species have declined by 76 percent since 1970.

That precipitous drop in freshwater species should set off alarm bells, especially here, on the shores of one of the largest freshwater lakes in the world. Since the 1970s, Lake Superior surface-water temperatures have risen and ice cover has dramatically reduced. Walleye can now live in more areas of the lake than ever before. There’s an earlier onset of summer stratification. By mid-century, according to the National Wildlife Federation, Lake Superior may be mostly ice-free in a typical winter.

Now I know it’s the holiday season and these aren’t exactly tidings of comfort and joy, but they are tidings all the same. And what they announce is this: we are responsible. We’re responsible for all this destruction of the wild — of the whole web of life — and for the changes sweeping over us. Denial will not let us off the hook.

Responsibility is not just about being held accountable for the damage you’ve done; it’s also about taking steps to limit damage, repair the broken world, reclaim it and make things better. We have that responsibility to ourselves and to future generations.

“Loss belongs to history,” writes the political philosopher Sheldon Wolin, “while politics and life are about what is still to be done.” But, he’s careful to remind us, loss still has a strong claim on the way we live now and on our future plans. The loss of the wild gives us a new responsibility that should inform our politics and our lives at every turn, direct the investments we make and the activities we sanction, and give rise to new conversations about what to do.

Saving the wild is now bound up, inextricably, with saving the human world — for ourselves and for future generations. We can appreciate in a new way Thoreau’s famous statement: “in wildness is the preservation of the world.”

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Knowing all this, why don’t we act? Why haven’t we acted?

One answer to this question has to do with the word “we,” and our underdeveloped capacity for coordinated, collective action.

Mark Carney, Governor of the Bank of England, suggested another good answer in a speech he gave back in September to a group of insurance industry executives. Not exactly a bunch of tree huggers, but actuaries, people interested in accounting for risks and costs.

Carney talked about the future in terms of horizons, near versus long term. When we focus only on the near term, we don’t account for the true cost of our activities. That’s why for Carney, climate change is a “tragedy of the horizon,” or the tragic consequence of our inability to see and plan and take steps beyond the near term. Since “the catastrophic effects of climate change will be felt beyond our immediate horizons” — beyond the business cycle and the quarterly earnings reports, beyond the political cycle and the current election — we have deferred the cost of fixing the problem to future generations.

We’ve organized things — markets, politics, institutions — so that near-term interests win out over longer-term well-being and more sustainable arrangements.

Nowadays, if you look out at the Lake Superior horizon, you might see all the way to China. An unsustainable scheme of Chinese urbanization and economic growth fueled much of the new mining activity around the lake, and especially the exploration and exploitation of copper-rich deposits. Over the last decade or so, copper was used not just to build and wire new Chinese cities, many of which today stand empty; it was used mainly for collateral on loans. As much as 80 percent of the copper China imported was used to back loans. Today, as China unravels and the price of copper plunges, commodities investors are expressing remorse. Nickel’s down, too. The rush for Lake Superior minerals now seems to have been reckless — part of a larger market failure, with unforeseen risks and costs current and future generations are likely to incur.

Or look at the Polymet project in Minnesota. It’s an exaggerated case of not accounting for the long-term costs of mining. Currently, the Polymet Environmental Impact Statement says that water treatment will go on “indefinitely” at a cost of 3-6 million dollars a year. There is no way, so far as I know, to multiply 3 or 6 million dollars by a factor of indefinitely; and even the company’s most concrete prediction is 500 years of water treatment. Just to put that in perspective, the state of Minnesota has only been around since 1858: 157 years.

How is it possible that a proposal like this can be taken seriously? They promise jobs, a fix to a near-term problem; but there’s something else at work here as well: technology or, rather, misplaced faith in technology and human ingenuity. We make technology a proxy for human responsibility.

But technological advances that create efficiencies or solve problems for mining companies can carry hidden social and environmental costs: for example, a study done after the Mount Polley spill last year concludes that “new technologies, deployed in the absence of robust regulation” have fostered a “disturbing trend of more severe tailings failures.” Recent events in Brazil underline the point.

Great machinery, even full automation, will never amount to responsible stewardship. New technologies can have unintended consequences, distancing us from each other and from our responsibilities. Things corrode, repairs are made or not, entities dissolve, contracts are broken, obligations are forgotten, empires decline and fall, even within definite time horizons.

The industrial development that mining brings distorts horizons in another way. One theme of Tom Power’s research on the economics of the Lake Superior region and on what he calls wilderness economics is that “protecting the quality of the living environment…lays the base for future, diversified economic development.” Over-reliance on mining — and mining that damages or threatens the living environment — hinders economic diversification and makes the economy less resilient. It also requires us to discount the value of water and land it puts at risk, a value that is only going to increase over the long term, as freshwater becomes ever more scarce and as carbon capture afforded by peatlands and forests becomes more critical.

To allow that calculation for the nonce is not to concede that the market value of these wild places is their true value. The living world, creation and generation, is more than a bundle of ecosystem services, a tap and a sink for human activity. That way of thinking won’t save the wild; it is bound to open the door to the very forces that have already destroyed so much of it.

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Let’s not lose sight of the larger point: if you take the long view, looking forward into the future and out across the horizon, protecting the land and water in this region actually looks like a more attractive investment than extracting all the ore from the ground.

That makes the capture of government by mining and extractive industry — from Marquette County to the state and federal levels — all the more troubling and deplorable. It directs investment and development down these risky and unsustainable paths, where short-term interests of multinational corporate actors are paramount and enjoy the full protection of law. The coercive power of the state, which ought to place constraints on corporate actors, is used mainly to benefit them. When things go south, society ends up bearing the cost.

This grassroots effort challenges that whole topsy-turvy arrangement. We have to continue to challenge it, at every opportunity, in every forum, recognizing that the results we’re looking for probably aren’t going to come on a quarterly basis or anytime soon. We have to lengthen our horizons.

At the same time, we have to re-open the conversation about how we are going to organize ourselves in this place, so that what remains of the wild UP can flourish and the people living here can thrive.

It’s imperative, too, that Save the Wild UP stay connected with other groups around the lake facing similar challenges. To take just one example: Kathleen’s recent Op Ed in the Star Tribune about Governor Dayton’s visit to the Eagle Mine. That made a difference to people in Minnesota: it was widely shared and talked about. People connected with it.

I have to believe that there’s power even in these little connections — and in conversation, cooperation and community. There is power where we come together, when we are no longer strangers and no longer estranged from each other. There would be power in an international congress where people from all around Lake Superior gathered to talk about responsible development. This isn’t the power the mining companies and the state can wield; it’s another kind of power, coordinated, collective, non-coercive, one we as a society have not done enough to realize.

We’re going to need that power to meet this current set of challenges.

Now you may have noticed that I keep using the word “we,” and I’m conscious that by including myself here I might be overstepping and intruding. But maybe that’s why I keep coming back to the UP: deep down, I know this is not a faraway or a strange place but a familiar place, where I have a stake in things — where we all have a stake.

The “wild UP” that we are organized to save is not just wilderness, waterfalls, wolves and warblers. It is the stage of humanity’s tragic predicament. It marks a boundary that we cross at our great peril. It can be a vital source of economic and social renewal.

Ultimately, saving the wild UP is about realizing the power and political authority we all have, everyone in this room, people across the UP and around the lake, to govern ourselves and make decisions about the future we want. What do we see on the horizon? What do we want for our children, grandchildren, our great-grandchildren and so on down the line? What do future generations require of us? What do we owe them?

That’s a conversation we need to keep having. And that’s why this organization deserves all the support we can give it, because Save the Wild UP connects us and shows us that we can be both powerful and responsible at the same time.

Thanks for listening so patiently, and thanks again for inviting me to the Gala.

delivered 5 December 2015

The Hysteria of H.R. 761

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The authors of the National Strategic and Critical Minerals Production Act (H.R. 761) complain that we depend on China — can you believe it? China! — for rare earth minerals that are “vital to job creation, American economic competitiveness and national security.” But the Act, which passed in a House Committee on Natural Resources vote on May 15, 2013 with bipartisan support, will effectively ease regulation of foreign multinational mining companies operating in the United States, including those who mine here and market U.S. minerals in — yes, you guessed it — China.

Bureaucratic delay puts “good-paying mining jobs…at the mercy of foreign sources,” according to the Act. Our security and prosperity are threatened from without, so we need to protect ourselves from within; and we are asked to believe that the surest way to do that is to replace careful assessment and regulatory oversight of risky mining operations with new efficiencies. The Act laments the weight of “onerous government red tape”: if only Atlas would shrug.

The authors of this act do not even try to disguise their contempt for the role of government in regulating industry and the “environmentally responsible development” they purport to uphold. Citing a report by international mining consultancy Behre Dolbear Group (with offices in Beijing, Chicago, Guadalajara, Hong Kong, Sydney, and Ulaanbaatar, Mongolia, among other places, where, presumably, its teams of advisors and engineers steadfastly champion the strategic and economic interests of the United States), they note that “the United States ranks last with Papua New Guinea out of twenty-five major mining countries in permitting delays, and towards the bottom regarding government take and social issues affecting mining.”

That last clause about “government take” and “social issues affecting mining” gets sneaked into the sentence here without consideration for the social effects mining operations have: society here is just in the way of business and taxes or takings are just a burden. This is reckless thinking, but it’s carefully smuggled into discussions of the Act with the distracting reference to Papua New Guinea. That line snorts mockery and imperial contempt, and it’s intended to shame and prompt outrage — like the newspaper headlines the ranking inspired: The Wall Street Journal: “U.S., Papua New Guinea at Bottom of List for Mining Permit Delays.” Mineweb: “Protracted Permitting Delays Depress U.S. Mine Investment.” The Hill: “U.S. Wins Race to the Bottom on Mining Permits — Again.” The comparison with Papua even figured into an article by M.D. Kittle in the Wisconsin Reporter: “Wake Up, Environmentalists: Your Cell Phone Was Mined Somewhere Else.”

Needless to say, these newspaper discussions aren’t balanced by any appreciation of the complex social, environmental and human rights issues around mining in Papua New Guinea (or the United States). The promoters of H.R. 761 certainly aren’t going to invite debate on the situation in Papua — where growth in the mining sector has brought corruption, violence, and environmental devastation. Their intention is clear: they want to hold up Papua as one of those foreign and dirty places, a slow, corrupt and silly place, a little, squalid, underdeveloped and dark place. Certainly not an efficient place.

Lest the Chinese enslave us or we end up living like pygmies in grass huts, we have to make it easier for big mining companies to give Americans jobs. That is the hysteria just under the surface of H.R. 761. The legislation is so broadly and poorly written, and either so cynical or so ill-conceived, that any mining operation will be able to claim its protection from regulatory oversight. The “strategic and critical” exemption from government interference and delay will be repeatedly invoked, as it was by Republican Chip Cravaak in 2011, who at the time represented Minnesota’s 8th district in the U.S. House.

Before his defeat in 2012, Cravaak advanced the claim that exploiting the copper and nickel resources of the Boundary Waters Canoe Area in Minnesota would be “necessary for U.S. strategic interests.” According to a 1978 law, those areas can only be mined in case of national emergency; but Polymet, a Canadian company, has been working since 2006 to obtain permits for an open pit mine in Superior National Forest. They negotiated a land exchange and loan scheme to get around the prohibition. Cravaak waved the stars and stripes for them on the Hill. Meanwhile, Toronto-based Polymet made a deal with the Swiss company Glencore to sell its American metals on the global market. At the time, Elanne Palcich noted, demand was especially strong in China and India.

Haul Road to China

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Ore Truck
The mid-day flight from Marquette to Detroit last week was delayed for a few hours, and while we waited I had a pleasant conversation with a man who was on his way back to San Jose, California. He’d been in the Upper Peninsula visiting his father and staying in a cabin that’s been in his family for several generations. “It’s a little red cabin,” he said, “the one you see in all the postcards and stuff.” I’m not sure I’ve ever seen the place, but I’ve been to the UP enough to know from his description roughly where the cabin is. It wasn’t until we were on our way to Detroit a few hours later that it dawned on me: his family cabin is situated right on the new Eagle Mine haul road.

Once the mine is in operation, ore trucks will pass by 100 times every day, making 50 trips down County Road 550 to US 41 via Sugarloaf Avenue and Wright Street. At the Humboldt Mill, the big trucks will dump their loads, turn around and make their way by the same route back to the mine. So much for those quiet family retreats to the picture-postcard cabin. He might as well turn the place into a diner or gas station, or open a 7-11.

Haul roads and trucking routes have been a point of contention ever since the Eagle Mine was planned, and they are now a bigger issue than ever, with the City of Marquette announcing last week that it wanted a new environmental review of any plan to haul ore down the Big Bay Road, through woods and over blue-ribbon trout streams, past the NMU campus, and into the town’s commercial district. It seems people in Marquette are finally realizing with horror what’s going to happen to their beautiful city and the nearby wilderness areas once those trucks start hauling ore out of Eagle.

Rio Tinto huffed and bluffed about their haul route for years, and when plans for County Road 595 fell through, they huffed and bluffed some more about the multi-million dollar investment they would make to upgrade existing roads. Who knows what Rio Tinto told Lundin Mining about infrastructure when they sold the Eagle Mine; but (as I noted in a previous post) Paul Conibear, Lundin’s CEO, did not seem fully in possession of the facts, or was not very forthcoming about what facts he possessed, when he said that good roads were one of the things that made the Eagle Mine so attractive.

An old timer in the Upper Peninsula once told me with pride that you can drive US 41 south all the way from the Keweenaw to Miami, Florida. He could not have imagined where that same road now leads. The ore trucked down US 41 will likely end up in China, where urbanization on a scale and at a pace we can hardly imagine is driving demand for materials like the copper and nickel that northern Michigan has in abundance. Rio Tinto’s business strategy depends on rapid Chinese and, more broadly, Asian urbanization (and with the imminent opening of Oyu Tolgoi — which will ship copper from Mongolia directly to Chinese smelters — the road from Eagle must have seemed an awfully long and unnecessarily expensive haul). The Chinese government’s ambitious plans to move hundreds of millions of people into megacities and move the country to a consumer economy shape the business decisions of mining companies and will also help determine the price Michigan copper and nickel fetch. That’s why analysts who foresee a further Chinese slowdown or predict the bursting of the Chinese credit bubble advise shorting Rio and other big mining stocks.

An article about Chinese urbanization in the Times last month characterized it as a risky, large-scale, “top-down” social experiment which has already exacted huge costs: across China, rural villages are being razed, temples torn down, farmers forced from their land and moved into high-rise towers, fields and farmland paved over — often by government fiat. A little imagination and you can see the Marquette haul road as a remote extension of that effort, and it doesn’t take much imagination at all to appreciate that the road will exact its own social and environmental costs. The truck route from mine to mill will carve a noisy, busy, dirty industrial corridor along Big Bay Road and right through the city of Marquette — threatening wildlife all along the route and permanently changing the way people live around the Lake. Everything is at risk of becoming roadkill.

The Social Costs of the Hardware Revolution – A Postscript

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For now, this can be only a short postscript to what I had to say earlier today about the CNN Money article by John Hagel and John Seely-Brown on “the hardware revolution.” It has to do with a question that occurred to me as I read, and to which I don’t yet have anything like an adequate answer. That will take some research. But I at least want to articulate the question.

Startups and smaller companies can now play in the hardware space in part because the barriers to entry have been lowered, Hagel and Seely-Brown observe. There are a number of factors at work here. New and cheaper technologies from 3D printers to more user-friendly software put the design and manufacture of hardware within reach of smaller companies. And “a new class of factories” will produce the smaller orders that new entrants and entrepreneurs typically require:

New infrastructural elements have also helped new hardware products move from the hobbyist’s basement to the startup garage. Before, to get a contract manufacturer’s attention, you had to commit to producing high volumes (say 50,000 or more units). But a new class of factories — mostly in China and Mexico — will manufacture batches as small as 5,000 units. By filling low-volume orders, these factories have filled an important structural hole in the market: They allow entrepreneurs to launch new products for small consumer groups with little investment.

My question is whether conditions and, for that matter, sourcing practices in this new class of factories, and the more fluid hardware market they serve, are not going to be terribly difficult to monitor. We’ve seen how challenging it is even to ensure fair labor practices in large-scale manufacturing facilities in China used by major global technology brands; now, as smaller-scale manufacturing facilities proliferate and Mexico becomes a technology “quicksourcing” destination for American companies, the problem will no doubt be aggravated.

The reasons for this are probably obvious. I would frame the issue in a few ways. First, how much visibility do these smaller players actually have into their supply chains? Second, how much leverage do they actually have with their manufacturers, since they are only placing small orders, and, depending on their success, may or may not be repeat customers? Third, there’s a question about whether these small businesses — the small hardware startups placing orders and, for that matter, the manufacturing facilities taking them — have the capacity to take on the human rights challenges that seem inevitably to accompany outsourcing.

In other words, the social costs of the hardware revolution deserve some careful consideration.

Land of the Lotus Eaters (A Note from the Road)

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Today for lunch in Liuzhou we had pork lung and pear soup, lotus root, eggplant in a delicious sauce, fish, duck, and tofu with beef and peppers, rice, and tea made from a fruit that tasted like raisin. It was 15 dollars for 6 of us and one of the best meals I’ve ever had.

Shooting went well at the AIDS clinic. The hospital looks like an old asylum, built a long time ago alongside the big river that runs through Liuzhou. We interviewed HIV+ AIDS counselors, the doctor who runs the small AIDS ward, and filmed counseling sessions with patients. We also did a pro forma interview with the head of the hospital, who was accompanied by a local party official. The official coached him a little and indicated his approval of the hospital chief’s answers, but mainly he just sat there and watched, making his stupid presence felt.

The party bungled AIDS and is trying now to make it better; they are trying to gather real data as opposed to the manipulated data that makes it up the central government, single party chain. And now the Chinese government provides ARVs to all HIV+ Chinese. One obstacle encountered by groups like the one we are with (AIDS Care China) is that it’s very difficult for them to raise money or register as an NGO; the party, our translator explained, discourages too much in the way of “civil society.”

Loch right now is shooting a “home visit” to an HIV+ family, accompanied by two female counselors and our translator. They wanted to keep the group small, and the Westerners to a minimum, so Kevin and I were left behind. Loch is bringing a gift of cooking oil and some other household necessities. These are very poor people.

China is filled with them. It’s huge, sprawling, teeming, chaotic, often bizarre. Many of the cities here in Guanxi province are new, as are the roads. Most people are friendly. You get the feeling everywhere that China is the future.I’m not so sure the future looks too bright.

But, here we are.

-from my Blackberry, in Liuzhou.

China Has the Bomb

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There’s a character in Ingmar Bergman’s 1963 film Winter Light who loses his faith in God (and, ultimately, the will to live) after reading in the newspaper that China has The Bomb.

Or at least that’s what his wife says. Jonas Persson himself is a quiet man, despondent, broken, unable to articulate the cause of his despair. Or, more precisely, he’s never given a chance. Even when Jonas comes alone to see Pastor Tomas, the priest doesn’t listen: Tomas himself is so broken-hearted by the loss of his wife and so crushed by God’s silent indifference to his suffering that he lashes out angrily at the poor man and drives him away. So we have to take the wife’s word for it: it’s the Chinese bomb.

How far we’ve come since 1963. Nowadays we are more likely to be driven to despair by the thought that the Chinese have all our money. Have we grown more used to God’s silence, or inured to the threat of nuclear annihilation? Or is it that in witnessing the ruin of our financial markets we detect something very much like what Jonas saw and feared in Red China’s acquisition of the Bomb? Are we seeing into the abyss?

To be sure, the fear is out there, powerful and real. Just the other day, while reading the paper on the subway, I myself had an experience of dread (that’s the right word) as I read the details of Hank Paulson’s cozy relationship with the Chinese. I have been trying to explain it to myself ever since. “America is in an all-hands-on-deck emergency that’s as trying as war,” Frank Rich (no alarmist) writes in today’s column. He feels the dread, too: “the abyss is widening,” he writes; we are in the grip of an “economic terror”.

But what is the content of that terror? When I learned, for instance, that Rene-Thierry Magon de la Villehuchet committed suicide after Madoff’s scheme was exposed, I assumed that he took his life because he, too, had been exposed and disgraced. But now I am not so sure, and I wonder if he might have seen in his own financial ruin something about himself, about humanity or about God, even, that was too hard to bear. Unfortunately, Monsieur de la Villehuchet did not favor us with an explanation or an Eli, Eli before he parted this vale of tears. He was no Job — debating, reasoning, praying and pleading in sackcloth and ashes for some insight into the mysterious ways that had led him from riches to ruin.

We may consider wealth a hedge against the radical contingency of our earthly existence, but why react with despair, terror, dread or animal fear when we learn that the hedge — or the hedge fund — collapses? You can tell me that it’s because we have our priorities all wrong, because we are easily lulled into a false sense of security, or because our limited ideas of happiness and well-being leave us ill-equipped for the real uncertainties of life. I won’t argue.

Nor am I trying to be deliberately obtuse about the whole thing. Paulson lets the Chinese dictate terms to him; I might feel outrage because I think he’s acting recklessly and putting the country in hock to our former Cold War enemies, but — really — why dread?

Maybe it’s the fear that we’ve crossed some threshold or point of no return, and that the world as we know it is about to pass. The easy ride is over; the long march of long-suffering humanity is about to begin — again. We may have silenced God, but we have not secured ourselves a place outside of history; we are exposed and we will shake against the wind.

China enters the Eisenhower Era

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To alleviate the strain placed on its economy by the world financial crisis, China is planning an “infrastructure spending spree,” according to an article in today’s Wall Street Journal.

The $586 billion stimulus package unveiled this week will go mostly toward building highways, railroads and airports — to connect rural areas with cities, make industry operate more efficiently and help farmers bring goods to market. The plan will give China 53,000 miles of highways; the U.S. Interstate system developed by Eisenhower and realized in the last half of the last century stretches 47,000 miles. The Chinese plan sounds distinctly 20th century, designed to stimulate the economy without too much regard for the environmental impact.

Meanwhile, here in 21st century America, our political leaders and their economic advisers are also touting infrastructure investment as a way to shore up our failing economy. It remains to be seen whether there will be enough pressure on our leaders to make smart choices and the right investments, to convert our existing, inefficient infrastructure to more energy-efficient, sustainable purposes.