Tag Archives: greed

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.

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

Impossible or Indigenous in Peru

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In the post I wrote a couple of weeks ago about the Rio Tinto shareholder meeting, I mentioned a woman who spoke on behalf of the Mongolian herders whose livelihood is threatened by the Oyu Tolgoi mining project. Her name is Sukhgerel Dugersuren, and she is the Executive Director of the Mongolian NGO Oyu Tolgoi Watch. In her remarks, Dugersuren asked the company to recognize the herders as “indigenous” people (as the IFC does). That isn’t just a gesture of recognition or respect, a way of acknowledging that the herders were there first, or that they have a centuries-old claim to the land and the scarce water sources of the Gobi; it means that before moving ahead, the Oyu Tolgoi project would require – to use the language of the UN Declaration on the Rights of Indigenous Peoples (Article 32, paragraph 2) — their free, prior and informed consent.

I was reminded of Dugersuren and the case of the herders when I read yesterday morning that the Humala government in Peru now intends to exclude the Quechua people of the Peruvian highlands from “prior consultation” on mining projects.

President Ollanta Humala campaigned in 2011 on the idea of “social inclusion” and specifically on giving indigenous communities a voice in the consultation period before big mining projects begin. Prior consultation — the first law Humala signed upon taking office — codified into Peruvian law the idea of free, prior and informed consent. But only two years later, with $50 billion in mining projects over the next five years at stake, and with Canadian mining giant Newmont scaling back its investments and announcing a delay in its controversial Minas Conga project, it looks as if Humala wishes he could take it all back.

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Apparently Mines and Energy Minister Jorge Merino has prevailed; Deputy Minister of Culture Ivan Lanegra, who was in charge of administering the prior consultation law, is now making noises about resigning.

I haven’t yet seen anything like an official statement on the matter, but Humala and other Peruvian officials have already started offering reasons – if they can be called that — for excluding the Quechua from prior consultation. They read like a bizarre exercise in bad anthropology.

Attempting to legitimize its betrayal of the Quechua, the government resorts to revisionist history, crude caricatures and discredited ideas. So, we are told, the Quechua-speaking people of the Andes can’t be indigenous, because over the centuries, they mixed with Spanish colonizers (whose abuses the law of prior consultation was supposed to help remedy). To be indigenous would seem to require a weird exemption from history – to be at once the victim of colonial abuse in need of redress and yet to live in complete isolation or perpetual flight, and never to have had any contact with the Spanish.

The people of the Andes can’t be indigenous: they practice agriculture, we are told, which makes them not indigenous people but campesinos. “In the highlands,” said Humala, parsing the difference, “there are mostly agrarian communities … indigenous communities are mostly in the jungle.” The indigenous are not farmers, but jungle dwellers, presumably hunters and gatherers who have never cultivated the land. If they till the soil or produce, it seems, they must give up all claims to their heritage, or at least their legal status.

A third and final absurdity: the people of the Andes can’t be indigenous, because they “meet in public assembly” or, as Humala has noted elsewhere, they have “mayors” who represent them, and so they are not without a “voice.” To be indigenous is to be without representation, then — silent. It goes even deeper than that: it is to be without politics, or at least without the plaza or the public square. We are, I suppose, to imagine the indigenous living in an archaic and pre-political world, where assembly is unnecessary or the public world unknown.

You can see where all this is heading. It is virtually impossible to be indigenous, unless you live in a small foraging band of jungle dwellers without any political power, or even any idea of politics. Placing these restrictions on the law of prior consultation in Peru makes a travesty of free, prior and informed consent, which requires that states deal “in good faith with the indigenous peoples concerned through their own representative institutions”; the very existence of such institutions would appear to be grounds for exclusion from the law.

Even with a law in place and gestures of good will at the start, the “indigenous” in Peru now risk being defined out of existence, or of having their right to consent sacrificed for the sake of big mining and continued growth. That is why it was especially curious and telling, in ways that are not yet wholly apparent to me, when I read this morning that just yesterday Peruvian ambassador Gonzalo Gutierrez Reinel and the Mongolian Minister of Foreign Affairs L. Bold “met to exchange views on mutual partnerships, particular[ly] in the sectors of culture and mining”: it is not at all clear that “culture” will survive the incursion of big mining in either country.

Who’s Afraid of 953(b)?

Insanity! That’s how Thomas Sternberg, co-founder of Staples, describes Section 953(b) of the Dodd-Frank Act. “Incredibly wasteful,” adds John A. Allison IV, a director of BB&T Corp., the ninth-largest U.S. bank. For the past year or so, CEOs and business lobbying groups like the Business Roundtable and the National Investor Relations Institute have been fighting “tooth and nail” against 953(b). With the SEC preparing to issue its proposed rules sometime this spring, expect a lot more noise.

Why all the fuss over 953(b)? This section of Dodd Frank deals with disclosure of executive compensation – always a touchy subject. Specifically it would mandate public companies to disclose, in their SEC filings:

(A) the median of the annual total compensation of all employees of the issuer, except the chief executive officer (or any equivalent position) of the issuer;
(B) the annual total compensation of the chief executive officer (or any equivalent position) of the issuer; and
(C) the ratio of the amount described in subparagraph (A) to the amount described in subparagraph (B).

Issuers — public companies — advance a number of arguments against having to make this dread calculation. The one repeated most often is that it is cumbersome – a burden, just too difficult, a waste of everybody’s time and money. (They respond in the same way when they are asked to report on human rights, by the way.) But compensation data can’t be all that hard to gather, can it? What would it really take to calculate the median of the annual total compensation of all employees? Are we to take seriously the claim that companies do not have these numbers already available? And if they do not, isn’t that a sign of seriously poor fiscal management, or negligence? Time to demand better housekeeping.

Second, we are told, 953(b) disclosures wouldn’t be of value to investors; the measure is just politically motivated. “Everyone recognizes that this is a political disclosure, not an economic one,” writes Michael S. Melbinger, partner at Winston and Strawn; 953(b) is “intended to give unions and certain media folks a tool to bash corporate America”.

The unions and the media? Melbinger’s argument is specious at best. You can only bash corporate America, and these disclosures will only count against companies, if there is something disclosed that is embarrassing, or worse. And of course there is. The research of Duke University’s Dan Ariely suggests that these disclosures would reveal gross inequities: in the past 20 years, CEO pay has increased from 130 to about 350 times that of the average worker. Does that give people a bashing tool? Or does it reveal that ordinary people are regularly getting bashed by a bunch of corporate tools?

Third, some companies argue that the disclosures should be restricted to employee compensation in the United States. The fear is that employee compensation in foreign countries will drag down the median. Strange that companies that are usually so bold about their global reach or their smart outsourcing strategies are suddenly so shy. But shareholders (and customers) are increasingly concerned about the treatment of foreign workers – how much they are paid, and what their working conditions are – and are demanding transparency and accountability across the supply and service chain. Witness Apple.

These arguments are merely blinds. The question is whether the SEC, after so much heavy lobbying, will be able to see them for what they are. Maybe shareholder demands for greater transparency can eventually make up for any shortcomings of the SEC’s final ruling, but that will, of course, be a longer slog.

It would be difficult to argue that a CEO earning 350, 250, or 100 times the average worker is really a model of good corporate governance. A study [pdf] by Michael J. Cooper, Huseyin Gulen and P. Raghavendra Rau shows that highly paid CEOs are not necessarily more effective CEOs, and that CEO pay does not correlate with company performance. And a recent post by Christopher Swann and Agnes T. Crane gives the lie to the usual excuse for bloated compensation packages: the “global war for talent” has not brought global talent to the C-Suite; American companies still hire American-born CEOS, even though American CEOs have lagged behind their European-born peers in delivering performance.

In any case, we need a better understanding of how pay ratios and the hierarchies they perpetuate affect performance, especially in an environment where command and control hierarchies can seriously limit agility and hamper innovation. 953(b) provides a good opportunity to have that conversation.

Finally, my guess – and right now I don’t have any research to back this up, so I will have to rely on behavior I’ve observed – is that overpaid CEOs tend not to attract, retain or inspire innovative thinkers in their immediate circle. There are, of course, notable exceptions; and this is not to say that overpaid CEOs cannot preside over innovative companies. But like mafia bosses and politicians, most SuperCEOs tend to prefer polite indulgence or deference, even if what they are saying is wrong, ridiculous, or just plain boring. Talented people, on the other hand, need to follow their own course and will dissent, or just leave and start their own thing, rather than keep silent, tolerate gross inequities, or toady up to the big bad boss.

Same song, different verse – Bill Moyers on Woody Guthrie, Right Now

Cross-posted from my blog over at 1913massacre.com:

In the most recent essay for his new “On Democracy” series, Bill Moyers picks up on the news that the George Kaiser Family Foundation has acquired the Woody Guthrie Archives for 3 million dollars. Plans to open a new center in Tulsa are already underway. Woody’s papers, drawings and things will be returning to Oklahoma. The irony is not lost on Moyers:

What he wrote and sang about caused the oil potentates and preachers who ran Oklahoma to consider him radical and disreputable. For many years he was the state’s prodigal son, but times change, and that’s the big news. Woody Guthrie has been rediscovered, even though Oklahoma’s more conservative than ever – one of the reddest of our red states with a governor who’s a favorite of the Tea Party.

Times change, and the scene may change; the cast of characters remains essentially the same. In 1913 Massacre, the Oklahoma oil barons and their patsy preachers play the parts of Michigan mining captains, Boston stockholders and the thugs they hire to do their dirty work.

Woody saw right through their change of costume. He knew that the man who robs you with a six-gun is likely to be more honest than the man who uses a fountain pen. In Oklahoma, in Michigan, in California, all around the country, he sang about the beauty of ordinary people whose undoing he witnessed. And the simple message at the heart of his songs is just as radical today as it ever was.

You just have to listen.

Moyers discovers it in This Land Is Your Land:

This land is mostly owned not by you and me but by the winner-take-all super rich who have bought up open spaces, built mega-mansions, turned vast acres into private vistas, and distanced themselves as far as they can from the common lot of working people – the people Woody wrote and sang about.

So in the video essay he produced about Woody Guthrie and the prospects for democracy in America now, Moyers might as well be describing Calumet in 1913 or Tom Joad’s California: “gross inequality,” he says, is “destroying us from within”. The question is what we’re going to do about it, this time.