Tag Archives: taxes

All Clear for the Mining Boom in Michigan’s UP, Unclear What That Portends

Just before the holidays I wrote a short post about the one-two punch that Michigan legislators delivered during the 2012 lame duck session. They rushed through legislation to make Michigan a “right to work” state despite widespread protests and they passed Emergency Manager Legislation in defiance of voters.

Most of the news coverage of these bills focused on the action in Lansing and effects this legislation might have in the Detroit auto industry. I wondered aloud (or at least on Twitter) what implications these bills might carry for towns and working people in the Upper Peninsula.

There’s a new mining boom underway in the region, with global giants like Rio Tinto and Orvana exploring, leasing, and re-opening old mines.

This map [pdf], put together by the Lake Superior ad hoc Mining Committee, shows all mines, mineral exploration and mineral leases in the Lake Superior Watershed as of 2010.

Mining-Activity-Lake-Superior-2011

The map merits some careful study. As you can see, there is already significant activity in the Upper Peninsula. On the Canadian side, especially around Thunder Bay and further north, there’s been a leasing boom. Lots of gold on the eastern shore; copper and nickel as you move further west. They’re also exploring for uranium in at least two places.

The new mining is going to put enormous pressure on the Lake Superior basin. There are the usual environmental hazards associated with mining — subsidence, toxic runoff, acid mine drainage. Mining puts the waterways – the Lake and the streams and rivers that feed it – at risk. And then there is the infrastructure that’s going to be built to support all those mines. Access roads and haul roads, like the proposed CR 595 in Big Bay, roads to get to those roads, gas stations to fuel the vehicles that run along those roads, housing to shelter the people who drive on those roads to get to work and haul the ore from the mines, and so on.

Governor Snyder and his cronies in the Michigan legislature are doing everything they can to encourage this new activity. Just before the holidays, the Governor signed a third lame-duck bill, addressing the taxes that mining companies operating in Michigan will pay. The new bill, brought by outgoing Republican representative Matt Huuki, relieves mining companies of up front costs.  Indeed, they will pay no taxes at all until they start pulling minerals from the ground. Even then, companies will pay only 2.75 percent on gross value of the minerals they extract. So a million dollar sale of Michigan’s mineral wealth on the copper exchange will yield the state a paltry $27,500 in taxes.

35 percent of these so-called severance taxes will go to a “rural development fund to support long-term economic development opportunities.”

A number of things aren’t clear to me. What, exactly, is meant by “economic development” here? What’s the best course of development for a rural region, and for the Lake Superior region? How will fueling the boom benefit the region over the long term? How much if any of this money will go to alleviating the environmental impact that all this new mining is bound to have? How is it possible to talk about rural development without taking responsible stewardship of the environment into account?

It’s also unclear what sort of working conditions in the new mines the “right to work” legislation might allow, and whether the Emergency Manager bill could be used to limit community oversight.

For now, at least, it looks like the big mining companies are running the show in the UP, and the vague promise of economic development — whatever that means — has trumped all else.

Are the Seventies Finally Over?

Adam Nagourney had a piece in yesterday’s Sunday Review about the changing political allegiances of the Sunbelt and how those changes might signify “an era’s end.”

The Republican Party has grown used to having “a lock” on the region stretching from Florida through the south, and to Western states like Arizona, Colorado Nevada and California; but with the nomination of Frostbelt candidates Mitt Romney and Paul Ryan, the region looks up for grabs.

“Pummeled by the collapse of the housing market,” the Sunbelt suburbs have “soaring” poverty rates; and that, according to Harvard’s Lisa McGurr, “will transform the ability of the Republican party to appeal to suburbanites with private, individualistic solutions.”

What’s more, the Sunbelt’s demographics are changing – to illustrate, Nagourney mentions Latino and Asian “enclaves” in Orange County, and Latinos moving in large numbers to Texas and Arizona – even as Republicans have been pushing an anti-immigrant agenda.

If this week’s Republican convention marks the end of an era, it’s the end of an era that began in the 1970s. Then, a demographic shift from the industrialized Frostbelt to the Sunbelt precipitated the political realignment now on the wane. The northeastern liberal elite lost its exclusive hold on power; the liberal state came under assault. And when the barbarians arrived at the government gate, we gleefully let them in. All across the country, Americans were fed up with taxes, had lost faith in government, and began to disengage from public life. By the end of the 1970s, writes Bruce Schulman:

Americans not only accepted that markets performed more efficiently, but embraced the previously outlandish idea that they operated more justly and protected freedom more efficiently than government. The entrepreneur became a national hero, and suspicion of business, a mistrust of unregulated corporations that had anchored American politics since the 1930s, all but vanished from American political discourse. (The Seventies, p. 249)

Those were the days when Milton Friedman assured us that business had no greater obligation to society than to “maximize shareholder value”. This doctrine went hand in hand with Friedman’s hostility to the liberal state, his contempt for the inefficiencies of government, and his contention that free enterprise, unfettered by regulation and unburdened by taxes, would deliver political freedom and prosperity. What’s most striking is that by the end of the Seventies the majority of Americans had enthusiastically came around to that point of view. We all but abandoned the commons:

The slow march of privatization had pervaded the entire Seventies. It complemented all of the decades’ changes in attitudes: impatience with taxes and centralized authority, experimentation with new forms of community [including self-taxing private entities like homeowners’ associations and Business Improvement Districts, which supplanted and suborned municipal governments], Sunbelt self-reliance, and the fiscal crises that deepened municipalities’ reliance on private funds. (249)

The push toward privatization and “Sunbelt self-reliance” in the Seventies was also a retreat from the idea that we rely on each other – a retreat from the idea of “society” itself.

Hurricanes like Katrina or the one bearing down on the GOP convention this week don’t just threaten Sunbelt serenity; they are crises that heighten and exaggerate the shortcomings of the Sunbelt ethic. The same could be said for the financial tsunami that overtook us in 2008, and forced many people in the Sunbelt from their homes. (Foreclosure rates are high throughout the region.)

Despite the impending hurricane and the financial storm most Americans are still weathering, it’s unlikely anyone on stage in Tampa this week will speak about the limits of Reaganesque self-reliance or the things markets cannot do. But we have obligations to each other markets sometimes threaten, and sometimes simply cannot help us meet.

I’d at least like to think that with the Sunbelt’s eclipse more than the electoral votes of a few states are in play. Maybe, just maybe, the Seventies are finally coming to an end.