Tag Archives: social collapse

A World of Chinese Boxes

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“Total use for greater wealth.” That was the triumphant banner under which the newly formed Bureau of Reclamation would parcel out and industrialize the water resources of the western United States at the beginning of the twentieth century. Now, as we are forced to appreciate just how scarce and precious freshwater and other resources really are, and as industrial civilization itself verges on collapse, it reads more like a fool’s epitaph.

We are, of course, still in the grip of the old industrial-era logic. I see it clearly in the arguments advanced in support of Lake Superior mining. When not pushing the jobs argument — or when an economist like Thomas Power calls their bluff — mining industry proponents and apologists regularly appeal to the utility (and the necessity) of mining around Lake Superior.

“These minerals,” one Michigan labor leader explained to me, “are gonna be extracted at some time. They have to be,” he continued, because they are “important for a lot of uses.” An imperative, mining carries certain duties with it: “The world needs the minerals” of the UP, he went on to explain, “and I think we have a responsibility to develop it right, extract it right, and share it.”

At least he acknowledges that the ore extracted from Lake Superior mining operations is destined for international markets. On the Public Television show Almanac a couple of months ago, at the start of the comment period on the Polymet EIS, Executive Director of Mining Minnesota Frank Ongaro asked us to pretend that mining Minnesota “copper, nickel, platinum” would somehow make us less “import-dependent” on those metals “for everything we use, every day in our life.” That was pure jingoism, and these arguments are misleading.

Just consider the news lately around the falling price of copper, which hit an eight-month low last week. The biggest story by far has to do less with slowing Chinese demand for manufacturing and building, and more with the “use” to which copper imports are now put by Chinese players in the commodities market. According to a Reuters story focusing on these “secretive” Chinese funds, “traders estimate more than half of copper imports into China were to raise funds using the metal as collateral over the past two years.” In a tweet that Aaron Klemz shared with me, CNBC’s Deirdre Wang Morris said it was more like sixty to eighty percent of all Chinese copper imports that were being “used as loan collateral.”

A March 13 Reuters article on the last week’s sell-off of copper by Polly Yam, Fayen Wong and Melanie Burton quotes “traders who structure financing deals” saying that “the selling of copper was due to speculators not breaches of financing deals. ‘Speculators are the main driver.'” I suppose that’s meant to be reassuring.

In a typical copper financing deal, an importer puts down nearly the full value of the copper in yuan as a deposit to a bank for a letter of credit.
The importer resells the copper into the domestic market to raise cash that can be used for other investments such as real estate.
The importer can also strike a hedged deal where the metal is stored in a bonded [or LME] warehouse in China or overseas in return for a loan from a foreign bank. In both cases, the importers no longer are exposed to the copper price.

And in all cases, copper — mined everywhere at great risk to water, watersheds, wetlands and the surrounding environment — is not being put to anything like the productive uses that most people imagine, or mining companies promote. From this angle, Polymet looks like Glencore’s bid to bring Minnesota into a Chinese collateral game. Things get even weirder when you consider the case of Eagle Mine in Michigan, where Lundin Mining has secured a $600 million credit facility to mine Lake Superior copper that will ship to LME warehouses owned by big commodity players and banks, and then serve as an object of financial speculation or as collateral in return for loans. It’s a world of Chinese nested boxes: credit swaps and derivatives will be spun around loans to mine copper to back loans in a huge urbanization scheme designed to move the Chinese toward a consumer society — and so on. It’s an unsustainable scheme, and after last week some analysts believe it’s already unraveling.

Orwell wrote in the industrial era about the critical role of mining in the “metabolism” of civilization. Now, in our post-industrial world, it appears that new mining will only hasten the cancer of financialization.

Update, 19 March 2014: For more on this theme, see Tyler Durden’s discussion of copper and “hot money” flows into China, here and here. 

A Mining Renaissance?

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On the Almanac program I discussed in yesterday’s post, Kathryn Hoffman cited “42 exceedances of water quality standards” at Eagle Mine to make the point that reverse-osmosis technology isn’t as effective as mining proponents in Minnesota make it out to be. I was expecting some rundown of those exceedances in Codi Kozacek’s January 8th article about Eagle Mine on Circle of Blue; but Kozacek focuses, instead, on the Eagle Mine water-monitoring agreement Rio Tinto struck with Superior Watershed Partnership and Land Trust two years ago.

It’s not hard to see why. Kozacek seems to have traveled from Hawaii (where she’s based) to the UP to do some interviews and take some photographs: it appears she was there in summertime. But so far as I can tell she’s based her article on a “case study” jointly commissioned by Rio Tinto and the Superior Watershed Partnership, a piece of bespoke research entitled Unity of Place: Giving Birth to Community Environmental Monitoring.

In fact, the opening of Kozacek’s article documenting – or should I say celebrating? — this “unprecedented” water-monitoring agreement seems to be nothing more than a loose paraphrase of that publication, which tells the story of how the community around Eagle Mine gained “a measure of power over the mine. And it was Rio Tinto that gave it to them.”

Leave aside for the moment the preposterous idea that that power was Rio Tinto’s to give in the first place: the Unity of Place case study simply asks us to accept that business can and will decide the power society has over it, and Kozacek seems untroubled by the notion. That Rio Tinto sold Eagle Mine to Lundin Mining after descending from the heights to strike this unprecedented power-sharing agreement with the little people living around the mine does not give her pause, or raise questions about the mining giant’s good faith or much-touted commitment to the community around Eagle; and Kozacek only gets around to mentioning the sale to Lundin 28 paragraphs into her 34-paragraph story.

For the sake of balance, she includes a couple of interviews with “skeptics,” people who remain, to this day, distrustful of the water monitoring agreement but express the hope that it will have some good effect. She mentions the uranium leakage discovered at Eagle last year, which she offers as proof of the success of the program in alerting “the public to potential water quality threats,” quoting the Superior Watershed Partnership’s Jerry Maynard (who is also featured prominently in Unity of Place): the monitoring program, he says, “is gaining the trust and respect of the community….We want this to get out there—we want other mining communities to say ‘we want this too.’” But she fails to mention any other exceedances or violations – I guess she missed that episode of Almanac before filing her story — and apparently didn’t bother looking into the new water story now unfolding around Eagle Mine: the renewal of the mine’s groundwater discharge permit. (Michele Bourdieu has that story over at Keweenaw Now.)

My guess is that Kozacek is unfazed by any of these questions and complications, because the real story she wants to tell here is the story of a mining “renaissance”: she uses the word a few times in her article, once as a header and then twice in the body:

The Eagle Mine is viewed as either on the leading edge or the troubling future of a mining renaissance in Michigan’s Upper Peninsula, a region that has seen more mining bust than boom in the past 50 years. Just as in the oil and gas industry, improvements in mining technology are making previously overlooked ore bodies economically attractive. Rapidly developing countries, particularly China and Brazil, are driving demand for iron, copper, nickel, silver, and gold.

But many of the once booming mine communities in the U.P. and northern Wisconsin, operating with a fraction of their historical populations and downtowns darkened by empty storefronts, are eager for a mining renaissance.

Not a return of mining. Not a re-opening of the mines. Not a new mineral leasing, exploration and mining boom (which would have to be followed by yet another bust). A mining renaissance. It’s an odd word for someone writing about water issues to choose. I wonder if the ungainly use of the word “birth” in the subtitle of the Rio Tinto-Superior Watershed case study inspired Kozacek here: with the “Birth” of “Community Environmental Monitoring” advertised on the cover and on every recto page of that pamphlet, why not imagine a rebirth – and wouldn’t the word “renaissance” be so much more elegant? – of mining?

MinersAtVillanders

Renaissance miners, in the early 16th-century stained glass window of the Villanders parish church.

It’s at best an ugly parody of historical discourse, but I take it that it’s intended to give the new mining around Lake Superior a historical stature that it would otherwise seem to lack. In the second of the two paragraphs I’ve quoted here, Kozacek even imagines the area longing to emerge from a kind of Dark Age, or at least “darkened” downtowns, into renewed prosperity.

But in the first of those paragraphs, I must admit, she does a pretty good job of spelling things out. New extractive technologies have made it not only possible but “economically attractive” (read: highly profitable) for large multinational players to mine previously neglected or abandoned ore deposits, extract oil from tar sands and drill for natural gas by fracking. Chinese urbanization and rapid development in the BRIC countries continue to drive and raise demand for minerals and fossil fuels, as economic power shifts away from developed, Western economies.

Communities in the Upper Peninsula and all around Lake Superior are now feeling the pressures of these bigger changes. Whether they will bring renewal — or more boom and bust, or just catastrophic demise – is another question altogether.

Walleye and the End of the Known World

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Since the 1970s, Lake Superior temperatures have risen an average of five degrees Fahrenheit and ice cover has reduced by fifty percent. This makes the lake less hospitable to the fat siscowet or lake trout that favors its cold depths and more susceptible to invasive predators like the lamprey.

Walleye can now live in more areas of the lake than ever before. The Keweenaw Bay Indian Community, who run commercial fishing operations on Superior, have been raising walleye at their hatcheries since 2005, according to an article that ran last week in Scientific American.

Walleye

A canny adaptation, but it’s clear from the same article that continuing change will require something even greater — a whole new orientation.

“With the changes in temperatures,” the article says at its most thoughtful moment, “the intimate knowledge of the lake that tribes and other anglers have cultivated over the years no longer jibes with reality.” Evelyn Ravindrian, a KBIC natural resource specialist, puts it this way: “people used to know, ‘Well, whitefish will be here this time of day, this time of year.’ Now they have to look around.” This is the bit that stuck with me.

The lake that fishermen came to know intimately is vanishing. It is undeniably a loss, and I found myself wishing the article had more to say about it: the end of a long intimacy, a bereavement, a disorienting absence — the kind of thing one feels after divorce, death or displacement. The end of the known world. I suppose an article written along those lines wouldn’t have had much chance of making it into the pages of Scientific American; but it would have gotten much closer to the heart of the matter.

As the new environmental reality takes hold, a social and cultural reality slips away: all the things “people used to know” about the lake, the seasonal and circadian knowledge that they cultivated and shared and that bound them together, as a people, or simply as Lake Superior fishermen.

They probably took most of those things for granted: that’s the nature of cultural habits, local knowledge, familiar ties — all the things that make up our sense of place. We know where we are without even trying. Now people will have to “look around,” as Evelyn Ravindrian says. They’re in a new and unfamiliar place, even though they have lived around Lake Superior and fished its waters for as long as anyone can remember.

Thucydides on Catastrophe and Lawlessness

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On the plague of Athens in 430 BC. History of the Peloponnesian War (2.52): “the catastrophe was so overwhelming that men, not knowing what would happen next to them, became indifferent to every rule of religion or law.” Thucydides continues (2.53, Warner trans.):

In other respects also Athens owed to the plague the beginnings of a state of unprecedented lawlessness (ἀνομίας). Seeing how quick and abrupt were the changes of fortune which came to the rich who suddenly died and to those who had previously been penniless but now inherited their wealth, people now began openly to venture on acts of self-indulgence which before then they had used to keep dark. Thus they resolved to spend their money quickly and to spend it on pleasure, since money and life alike seemed equally ephemeral. As for what is called honour, no one showed himself willing to abide by its laws, so doubtful was it whether one would survive to enjoy the name for it. It was generally agreed that what was both honourable and valuable was the pleasure of the moment and everything that might conceivably contribute to that pleasure. No fear of god or law of man had a restraining influence. As for the gods, it seemed to be the same thing whether one worshipped them or not, when one saw the good and the bad dying indiscriminately. As for offenses against human law, no one expected to live long enough to be brought to trial and punished: instead everyone felt that already a far heavier sentence had been passed on him and was hanging over him, and that before the time for its execution arrived it was only natural to get some pleasure out of life.

A Second Note on The First CEO: the CEO As Agent of Historical Change

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Susy Jackson, an editor at Harvard Business Review, emailed me last week to tell me that she and her colleagues had discovered an illustration of the acronym “CEO” that predates the early instances discussed in my previous post on this subject.  Time to update that post and, while we’re at it, the entry on CEO in the Oxford English Dictionary. (I’ve emailed them to let them know).

A search through the HBR archives (one of Jackson’s colleagues described it as “not really very scientific, but fun”) turned up an article in the May June-1970 issue of HBR by Joseph O Eastlack, Jr. and and Phillip R. McDonald entitled “The Role of the CEO in Corporate Growth.” As we might expect, the article takes care to spell out and abbreviate the term in its first use: “chief executive officer (CEO)”; the speculation is that this was “standard treatment for a term that was thought to be known to HBR readers, but not so familiar that they could dispense with spelling it out altogether.” In 1970, after all, the CEO had just arrived on the scene.

A few thoughts about that entrance.

In my previous post I speculated that the term CEO may have come into wider use at HBR under the editorial direction of Ralph Lewis, who was appointed editor in chief in 1971, and oversaw several changes in editorial direction. This 1970 illustration of CEO predates that appointment; Edward Bursk was the editor in chief of HBR in 1970. Still, there’s no doubt HBR under Lewis’ direction helped define and disseminate the term.

Whether this more frequent recourse to the acronym in the pages of HBR was the result of Lewis’ policy or just a sign of the currency the acronym was gaining in management and governance discourse is hard to say. But it’s pretty clear that the wide acceptance of the acronym in the 1970s marks a shift – not just in editorial convention, but also in ideas about governance, leadership and power, within and without the corporation. By the mid to late 1970s, CEO is well on its way to becoming not just a convenient tag but an important construct of corporate power, social status and (by the 1980s) cultural celebrity.

The temptation to start painting on a broader canvas is almost irresistible. After all, big things are happening in the early 1970s, in business, in American society, around the world. When the figure of the CEO emerges in the 1970s, the heyday of the man in the gray flannel suit has reached its nadir. In America and throughout the industrialized West, the postwar boom – which witnessed the rise of the managerial class – has yielded to a grim post-industrial reality.

Indeed, the CEO will be one of the defining figures of the period that runs from roughly 1970 to 2010, the post-industrial period. In response to falling profit rates in manufacturing, we see during this period “a shift from productive enterprise to financial manipulation” (as Chomsky, summarizing economic historian Robert Bremmer, recently put it); I think it’s no coincidence that with the arrival of the CEO on the scene, the “financialization” of the economy has begun. (I understand the word is controversial; but let it stand for now: these are just broad strokes.)

The CEO emerges from this shift. He is its creature and creator – an agent entrusted with its execution – and the period of the CEO’s glory extends from the triumph of neo-liberalism during the Reagan-Thatcher era all the way to the financial crisis of 2008 and the institutional failures and social collapse it precipitates.

The Delta Response to Gamma Rats and Sociopaths

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Doug Casey may not believe, along with Margaret Thatcher, that there’s no such thing as society, but he seems to have given up on ours. An investor and a self-styled libertarian, Casey thinks the country is done: “All the institutions that made America exceptional – including a belief in capitalism, individualism, self-reliance and the restraints of the Constitution – are now only historical artifacts,” he wrote in a post this past week. The “moral rot” runs so deep, Casey argues, that there is no fixing the institutions; the rot has become institutionalized.

How did things get so bad? Casey has a simple answer, one that doesn’t require much reading of history or economic analysis: sociopaths. Sociopaths “are now fully in control of major American institutions. Their beliefs and attitudes are insinuated throughout the economic, political, intellectual and psychological/spiritual fabric of the US.” These “really bad actors” – Casey estimates that they make up about 4 percent of the population –“are drawn to government and other positions where they can work their will on other people and, because they’re enthusiastic about government, they rise to leadership positions. They remake the culture of the organizations they run in their own image.”

Casey is hardly the first to claim that sociopaths have taken over. The movie The Corporation popularized the trope. If in the wake of Citizens United corporations are persons, then (runs the argument) they are the kind who belong in a straitjacket. Since then, and especially since things went bust in 2008, it’s become popular to characterize CEOs and Wall Street investors as sociopaths; it borders on cliché. Casey’s simply transferred the argument to government: no surprise, really, that it is as dysfunctional and destructive as the other centers of power in twenty-first century America.

Casey recommends flight over fight. He argues that it makes better sense than ever to become an International Man (the initial caps are his: the International Man appears to have achieved an iconic status in his mind), and find a safe haven to keep one’s assets and one’s life out of the reach of the sociopaths. Casey sees this flight from society not as the act of a misanthrope, but a “gamma rat”:

You may recall the ethologist’s characterization of the social interaction of rats as being between a few alpha rats and many beta rats, the alpha rats being dominant and the beta rats submissive. In addition, a small percentage are gamma rats that stake out prime territory and mates, like the alphas, but are not interested in dominating the betas. The people most inclined to leave for the wide world outside and seek fortune elsewhere are typically gamma personalities.

I have to admit that the fantasy of becoming an International Man holds its attractions – a hoard of wealth, prime real estate, the finest mates (check their teeth and gums, just to make sure). But it is, ultimately, a fantasy of power and control that betrays a feeling of powerlessness and a loss of control.  The International Man would have us believe that he is a refugee, fleeing persecution, but he doesn’t ask for pity or succor; he demands privilege and exemption from all that is common.

He is shrewd and selfish, not heroic. Odysseus, arguably the first international man, was wily, but he suffered heroically because he longed for home. The gamma cannot be nostalgic; home is where he finds or makes his fortune, until the taxman catches up. He fancies himself a hobo or tramp, but he has investment assets, property and multiple passports. He wants to own but not owe – not nothing to nobody, nohow. He accumulates wealth but, it would seem, cares nothing for common wealth; that may make him rich, but it also makes him the enemy of prosperity.

If the International Man is iconic, he would appear to be an icon of idiocy, in the classical sense of that word. Arendt puts it this way in The Human Condition: “a life spent in the privacy of ‘one’s own’ ([in Greek,] idion), outside the world of the common, is ‘idiotic’ by definition.”

What else should we call a person who sees bad actors taking control, institutions failing, society collapsing, and decides to get out while he still can? What would be his motto? Ask not what you can do for your country, but what you can grab for yourself?

More importantly, what would it take to go beyond gamma – to delta, let’s say, where you can apply yourself to meaningful work, and to building the next society?

The delta understands social collapse and institutional failure not simply as a crisis, but as an opportunity to create something new. The delta wards off doom by doing humble work, tinkering, fixing and reclaiming. As I conceive it, delta is all about tikkun — doing the difficult work of “world repair,” not throwing one’s hands up in despair. It takes imagination. Poets, painters and teachers can be deltas; they give us new models to work with. So can inventors and entrepreneurs. In fact, I would put social entrepreneurs and socially responsible investors at the forefront of the delta group. And delta is on the rise: B-corporations, which work to produce public benefits, have won legitimacy in seven states; legislation in pending in seven others.

Deltas work at a remove from the dysfunctional centers of power, on the edges of organizations, independently and within small groups, where they can experiment and learn from each other. The delta looks for alternatives to the destructive power dynamics of the alphas and the betas – flatter organizations, fair dealing, transparency and collaboration. If the gamma is entirely self-directed, even to the point of idiocy, the delta is other-directed, altruistic, a maker of community. Deltas stay networked, because they recognize the limits of the self, and know that our lives and our liberty take on meaning only with and in relation to others, no matter how much we may fantasize about going it alone.