REGARDING
www.apple-CF.com
http://www.flickr.com/photos/escapehelicopter/5183811836/
http://www.flickr.com/photos/escapehelicopter/sets/72157625282975715/show/
http://religionandtechnology.com/2010/11/16/iphone-4cf-conflict-free-iphone/
http://religionandtechnology.com/2010/08/25/notes-on-technology-cyberactivism-and-social-justice/
http://www.govtrack.us/congress/bill.xpd?bill=s109-2125
http://ccij.ca/media/news-releases/2010/index.php?WEBYEP_DI=6
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=4532548
http://www.anglogold.co.za/default.htm

PREVIOUSLY on SPECTRE : I DON’T CARE I WANT ONE
https://spectregroup.wordpress.com/2008/11/18/i-dont-care-i-want-one/

Begin forwarded message:

From: Apple Press Relations
Date: November 16, 2010 9:36:39 PM EST
To: cindy-wetlands-preserve.org
Subject: Alert: Fraudulent Conflict-Free iPhone Hoax Originating from Apple Address
Reply-To: press@apple-cf.com

FOR IMMEDIATE RELEASE

Contact: Caroline Hemmerskjold, Apple
Tel. (408) 676-7923
Email: caroline@apple-cf.com

CONFLICT-FREE IPHONE HOAX TOUTS FALSE, FACILE CONSUMER-BASED “SOLUTION”
Nov. 16, 2010

Apple wishes to inform the public that the so-called “conflict-free” iPhone, promoted today outside the Apple Store at Fifth Avenue in New York City, featured on the non-Apple website http://www.apple-CF.com, and noted in a spoofed media advisory to numerous New York City reporters, is fraudulent and fictitious, and entirely the imagination of the group of pranksters who created it.

To be perfectly clear, this product does not exist, and Apple has no connection to the group that promoted it. Furthermore, although Apple does have plans to certify its materials as conflict-free, this will by no means be any sort of solution to the situation of conflict in the Congo, nor in any way help bring an end to that conflict. Rather, the solution must be based in diplomacy.

In this regard, there is a law on the books – the “Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act,” Public Law 109-456, introduced by then-Senator Obama in 2005 – that demands, among other things, the appointment of a special envoy to the Great Lakes region. As of now, four years later, this has still not happened, and the Congolese continue to die by the tens of thousands.

There are various possible solutions to this problem, but it is up to you, not Apple, to accomplish them. Here are some things you can do:

Report the violation of Public Law 109-456 to the FBI. Visit tips.fbi.gov to do so, or call 1-800-CALLFBI (225-5324). Culpable parties involve not only the President and the White House, but the Secretary of State, who is in charge of enforcing that portion of this law that demands the withholding of aid to destabilizing nations.

You might consider performing a citizen’s arrest against the above parties. Any citizen can arrest someone committing a crime, if the crime is sufficiently grave. Millions of deaths in the Congo are, Apple believes, a very grave crime.

You might also consider performing a citizen’s arrest against shareholders and officers of the mining companies that have been implicated in pillaging the resources of the Congo and fueling the conflict in the Congo over the past 14 years. Why not start with John Paulson, the majority shareholder of AngloGold Ashanti, the mining company most responsible for financially supporting rebel groups and furthering the Congo conflict. His office is located at 1251 Avenue Of The Americas (at 50th Street), Floor 50.

We at Apple have acknowledged in the past that the conflict in the Congo, which has claimed many millions of lives, is fuelled in part by the provision of minerals that go into consumer electronic products, and not only Apple’s. However, so-called “conflict-free” certification is not a real solution, merely a very tiny part of a real solution. Regardless of whether Apple or other companies produce “conflict-free” products, the Congo conflict will not end until the U.S. government chooses to enforce its own laws.

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BABY COME BACK  | TEXAS v IRAN (cont.)

| PETROCURRENCY GLOSSARY |

the PETRODOLLAR
http://www.wisegeek.com/what-is-a-petrodollar.htm

“A petrodollar is a dollar earned by selling petroleum. Petrodollars flow into members of the Organization of the Petroleum Exporting Countries (OPEC) at a steady rate, and flow out at an almost equally steady rate as these countries invest petrodollars overseas. In fact, often money makes a round trip, flowing from a country like the United States to an OPEC member which in turn reinvests the funds in the United States. Prices for oil sales are generally given in United States Dollars (USD). In 1973, economist Ibrahim Oweiss wanted to come up with a term to describe the large volumes of currency changing hands as a result of oil sales. He coined the portmanteau “petrodollar,” referring to “petroleum” and the United States Dollar. People also use the term “oil money” or “petrocurrency” to describe petrodollars, although “petrocurrency” is also sometimes confusingly used to refer to the currency used by an oil producing country.

At various points in history, OPEC members have literally made more petrodollars than they knew what to do with. Rising oil prices resulted in such a flood of currency that these countries were unable to invest it on internal development projects. As a result, many nations started engaging in a practice known as petrodollar recycling, in which they promptly reinvest the currency in banks in regions like Europe and North America. Changes in oil prices can lead to ebbs and flows in the movement of the petrodollar and in the investment funds available to OPEC members. Some of these nations rely heavily on income from oil sales and are placed at a disadvantage when prices are depressed. In regions such as Dubai, the profound impact of petroleum sales on regional economies can be seen firsthand in the form of extravagant and rapid development reflecting the increasing wealth of some members of the population.

While the bulk of oil sales are conducted in USD and prices are quoted in USD, some countries have opted to sell in other currencies. The dominance of the USD in global commerce is credited in part to the petrodollar, and some theorists have suggested that changing economic trends may result in petrodollar warfare, in which there will be a push to denominate oil sales in other currencies. If, for example, the world switched to the petroeuro, based on the currency of the European Union, the United States Dollar might weaken as a result.”

for EXAMPLE
http://www.linkedin.com/in/josephevers
Investment Management industry, 2003 — Present (7 years )
“I created and ran a privately-held blackbox hedge fund based off of a proprietary, in-house FIX protocol implementation. We cribbed custom algorithms from bioinformatics, were the first to apply autocorrelation attacks to the market, and first to apply wavelets to price stochastics. As part of the management of this fund, we created our own international shipping arm to ease exploitation of petrodollar/petroeuro arbitrage. The chief chunks of our fund are global macro, managed futures and short bias, but you name it– options, swaps, rate agreements, bonds– we trade it in the course of a given week.”

PETRODOLLAR WARFARE
http://www.ratical.org/ratville/CAH/RRiraqWar.html
http://www.freepress.org/departments/display/13/2010/3954
Petrodollar warfare: Dollars, Euros and the upcoming Iranian oil bourse
by William R. Clark / August 05 2005

“This notion that the United States is getting ready to attack Iran is simply ridiculous…Having said that, all options are on the table.” — President George W. Bush, February 2005

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade. Similar to the Iraq war, military operations against Iran relate to the macroeconomics of ‘petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.



It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining strategic control over Iraq’s hydrocarbon reserves and in doing so maintain the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 information provided by former administration insiders revealed the Bush/Cheney administration entered into office with the intention of toppling Saddam.[1][2] Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. government in Iraq, establish multiple U.S military bases before the onset of global Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency ( i.e. “petroeuro”).[3] However, subsequent geopolitical events have exposed neoconservative strategy as fundamentally flawed, with Iran moving towards a petroeuro system for international oil trades, while Russia evaluates this option with the European Union.

In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the world’s governments – especially the E.U., Russia and China – were not amused – and neither are the U.S. soldiers who are currently stationed inside a hostile Iraq. In 2002 I wrote an award-winning online essay that asserted Saddam Hussein sealed his fate when he announced on September 2000 that Iraq was no longer going to accept dollars for oil being sold under the UN’s Oil-for-Food program, and decided to switch to the euro as Iraq’s oil export currency.[4] Indeed, my original pre-war hypothesis was validated in a Financial Times article dated June 5, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in U.S. dollars – not euros.

The tender, for which bids are due by June 10, switches the transaction back to dollars — the international currency of oil sales – despite the greenback’s recent fall in value. Saddam Hussein in 2000 insisted Iraq’s oil be sold for euros, a political move, but one that improved Iraq’s recent earnings thanks to the rise in the value of the euro against the dollar. [5]



The Bush administration implemented this currency transition despite the adverse impact on profits from Iraqi’s export oil sales.[6] (In mid-2003 the euro was valued approx. 13% higher than the dollar, and thus significantly impacted the ability of future oil proceeds to rebuild Iraq’s infrastructure). Not surprisingly, this detail has never been mentioned in the five U.S. major media conglomerates who control 90% of information flow in the U.S., but confirmation of this vital fact provides insight into one of the crucial – yet overlooked – rationales for 2003 the Iraq war.

Concerning Iran, recent articles have revealed active Pentagon planning for operations against its suspected nuclear facilities. While the publicly stated reasons for any such overt action will be premised as a consequence of Iran’s nuclear ambitions, there are again unspoken macroeconomic drivers underlying the second stage of petrodollar warfare – Iran’s upcoming oil bourse. (The word bourse refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.)

In essence, Iran is about to commit a far greater “offense” than Saddam Hussein’s conversion to the euro for Iraq’s oil exports in the fall of 2000. Beginning in March 2006, the Tehran government has plans to begin competing with New York’s NYMEX and London’s IPE with respect to international oil trades – using a euro-based international oil-trading mechanism.[7] The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project of U.S. global domination, Tehran’s objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.



From the autumn of 2004 through August 2005, numerous leaks by concerned Pentagon employees have revealed that the neoconservatives in Washington are quietly – but actively – planning for a possible attack against Iran. In September 2004 Newsweek reported:

Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is “busier than ever,” an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries…’

…administration hawks are pinning their hopes on regime change in Tehran – by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled “draft” or “working draft” to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration’s abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime’s promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there’s no evidence that it has won any backers at the cabinet level. [8]

Indeed, there are good reasons for U.S. military commanders to be ‘horrified’ at the prospects of attacking Iran. In the December 2004 issue of the Atlantic Monthly, James Fallows reported that numerous high-level war-gaming sessions had recently been completed by Sam Gardiner, a retired Air Force colonel who has run war games at the National War College for the past two decades.[9] Col. Gardiner summarized the outcome of these war games with this statement, “After all this effort, I am left with two simple sentences for policymakers: You have no military solution for the issues of Iran. And you have to make diplomacy work.” Despite Col. Gardiner’s warnings, yet another story appeared in early 2005 that reiterated this administration’s intentions towards Iran. Investigative reporter Seymour Hersh’s article in The New Yorker included interviews with various high-level U.S. intelligence sources. Hersh wrote:

In my interviews [with former high-level intelligence officials], I was repeatedly told that the next strategic target was Iran. Everyone is saying, ‘You can’t be serious about targeting Iran. Look at Iraq,’ the former [CIA] intelligence official told me. But the [Bush administration officials] say, ‘We’ve got some lessons learned – not militarily, but how we did it politically. We’re not going to rely on agency pissants.’ No loose ends, and that’s why the C.I.A. is out of there. [10]

The most recent, and by far the most troubling, was an article in The American Conservative by intelligence analyst Philip Giraldi. His article, “In Case of Emergency, Nuke Iran,” suggested the resurrection of active U.S. military planning against Iran – but with the shocking disclosure that in the event of another 9/11-type terrorist attack on U.S. soil, Vice President Dick Cheney’s office wants the Pentagon to be prepared to launch a potential tactical nuclear attack on Iran – even if the Iranian government was not involved with any such terrorist attack against the U.S.:

The Pentagon, acting under instructions from Vice President Dick Cheney’s office, has tasked the United States Strategic Command (STRATCOM) with drawing up a contingency plan to be employed in response to another 9/11-type terrorist attack on the United States. The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites. Many of the targets are hardened or are deep underground and could not be taken out by conventional weapons, hence the nuclear option. As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States. Several senior Air Force officers involved in the planning are reportedly appalled at the implications of what they are doing – that Iran is being set up for an unprovoked nuclear attack – but no one is prepared to damage his career by posing any objections. [11]

Why would the Vice President instruct the U.S. military to prepare plans for what could likely be an unprovoked nuclear attack against Iran? Setting aside the grave moral implications for a moment, it is remarkable to note that during the same week this “nuke Iran” article appeared, the Washington Post reported that the most recent National Intelligence Estimate (NIE) of Iran’s nuclear program revealed that, “Iran is about a decade away from manufacturing the key ingredient for a nuclear weapon, roughly doubling the previous estimate of five years.”[12] This article carefully noted this assessment was a “consensus among U.S. intelligence agencies, [and in] contrast with forceful public statements by the White House.” The question remains, Why would the Vice President advocate a possible tactical nuclear attack against Iran in the event of another major terrorist attack against the U.S. – even if Tehran was innocent of involvement?



Perhaps one of the answers relates to the same obfuscated reasons why the U.S. launched an unprovoked invasion to topple the Iraq government – macroeconomics and the desperate desire to maintain U.S. economic supremacy. In essence, petrodollar hegemony is eroding, which will ultimately force the U.S. to significantly change its current tax, debt, trade, and energy policies, all of which are severely unbalanced. World oil production is reportedly “flat out,” and yet the neoconservatives are apparently willing to undertake huge strategic and tactical risks in the Persian Gulf. Why? Quite simply – their stated goal is U.S. global domination – at any cost.

To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the summer of 2003 Iran has required payments in the euro currency for its European and Asian/ACU exports – although the oil pricing these trades was still denominated in the dollar.[13]

Therefore a potentially significant news story was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil bourse. This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). [Both the IPE and NYMEX are owned by U.S. consortium, and operated by an Atlanta-based corporation, IntercontinentalExchange, Inc.]

The macroeconomic implications of a successful Iranian bourse are noteworthy. Considering that in mid-2003 Iran switched its oil payments from E.U. and ACU customers to the euro, and thus it is logical to assume the proposed Iranian bourse will usher in a fourth crude oil marker – denominated in the euro currency. This event would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased).



Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve’s nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE – or purchase a barrel of oil for €45 – €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US “intervention” is not launched against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world – global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand credit via U.S. Treasury bills, and the dollar’s demand/liquidity value will fall.

It is unclear at the time of writing if this project will be successful, or could it prompt overt or covert U.S. interventions – thereby signaling the second phase of petrodollar warfare in the Middle East. Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia. What we are witnessing is a battle for oil currency supremacy. If Iran’s oil bourse becomes a successful alternative for international oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following (UK) Guardian article:

Iran is to launch an oil trading market for Middle East and Opec producers that could threaten the supremacy of London’s International Petroleum Exchange.

…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility. [emphasis added]

The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. “We would not have any comment to make on it at this stage,” said an IPE spokeswoman. [14]

During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros.[15] He stated this would be based on (1) if and when Norway’s Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EU’s proposed expansion plans were successful. Notably, both of the later two criteria have transpired: the euro’s valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries. Despite recent “no” votes by French and Dutch voters regarding a common E.U. Constitution, from a macroeconomic perspective, these domestic disagreements do no reduce the euro currency’s trajectory in the global financial markets – and from Russia and OPEC’s perspective – do not adversely impact momentum towards a petroeuro. In the meantime, the U.K. remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

The most recent news reports indicate the oil bourse will start trading on March 20, 2006, coinciding with the Iranian New Year.[16] The implementation of the proposed Iranian oil Bourse – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the previous two criteria as described by Mr. Yarjani regarding the solidification of a petroeuro system for international oil trades. It should also be noted that throughout 2003-2004 both Russia and China significantly increased their central bank holdings of the euro, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve Currency. [17] [18] China’s announcement in July 2005 that is was re-valuing the yuan/RNB was not nearly as important as its decision to divorce itself form a U.S. dollar peg by moving towards a “basket of currencies” – likely to include the yen, euro, and dollar.[19] Additionally, the Chinese re-valuation immediately lowered their monthly imported “oil bill” by 2%, given that oil trades are still priced in dollars, but it is unclear how much longer this monopoly arrangement will last.

Furthermore, the geopolitical stakes for the Bush administration were raised dramatically on October 28, 2004, when Iran and China signed a huge oil and gas trade agreement (valued between $70 – $100 billion dollars.) [20] It should also be noted that China currently receives 13% of its oil imports from Iran. In the aftermath of the Iraq invasion, the U.S.-administered Coalition Provisional Authority (CPA) nullified previous oil lease contracts from 1997-2002 that France, Russia, China and other nations had established under the Saddam regime. The nullification of these contracts worth a reported $1.1 trillion created political tensions between the U.S and the European Union, Russia and China. The Chinese government may fear the same fate awaits their oil investments in Iran if the U.S. were able to attack and topple the Tehran government. Despite U.S. desires to enforce petrodollar hegemony, the geopolitical risks of an attack on Iran’s nuclear facilities would surely create a serious crisis between Washington and Beijing.

It is increasingly clear that a confrontation and possible war with Iran may transpire during the second Bush term. Clearly, there are numerous tactical risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any “Shock and Awe” tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass.[22] The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 or 2006 in a desperate effort to prevent the initiation of euro-denominated international crude oil sales? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.

…If it [ U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation…There is a better way, as the constructive engagement of Libya’s Colonel Muammar Gaddafi has shown…Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all. [21]

A successful Iranian bourse will solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar’s hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ‘Operation Iranian Freedom,’ or perhaps another CIA-backed coup such as operation “Ajax” from 1953. Despite the impressive power of the U.S. military, and the ability of our intelligence agencies to facilitate ‘interventions,’ it would be perilous and possibly ruinous for the U.S. to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies warned of the possible consequences of a preemptive attack on Iran’s nuclear facilities:

An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran’s nuclear facilities by the U.S. or Israel would be likely to strengthen Iran’s international stature and reduce the threat of international sanctions against Iran. [23]

Synopsis:
It is not yet clear if a U.S. military expedition will occur in a desperate attempt to maintain petrodollar supremacy. Regardless of the recent National Intelligence Estimate that down-played Iran’s potential nuclear weapons program, it appears increasingly likely the Bush administration may use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq. If recent stories are correct regarding Cheney’s plan to possibly use a another 9/11 terrorist attack as the pretext or casus belli for a U.S. aerial attack against Iran, this would confirm the Bush administration is prepared to undertake a desperate military strategy to thwart Iran’s nuclear ambitions, while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades.

However, as members of the U.N. Security Council; China, Russia and E.U. nations such as France and Germany would likely veto any U.S.-sponsored U.N. Security Resolution calling the use of force without solid proof of Iranian culpability in a major terrorist attack. A unilateral U.S. military strike on Iran would isolate the U.S. government in the eyes of the world community, and it is conceivable that such an overt action could provoke other industrialized nations to strategically abandon the dollar en masse. Indeed, such an event would create pressure for OPEC or Russia to move towards a petroeuro system in an effort to cripple the U.S. economy and its global military presence. I refer to this in my book as the “rogue nation hypothesis.”

While central bankers throughout the world community would be extremely reluctant to ‘dump the dollar,’ the reasons for any such drastic reaction are likely straightforward from their perspective – the global community is dependent on the oil and gas energy supplies found in the Persian Gulf. Hence, industrialized nations would likely move in tandem on the currency exchange markets in an effort to thwart the neoconservatives from pursuing their desperate strategy of dominating the world’s largest hydrocarbon energy supply. Any such efforts that resulted in a dollar currency crisis would be undertaken – not to cripple the U.S. dollar and economy as punishment towards the American people per se – but rather to thwart further unilateral warfare and its potentially destructive effects on the critical oil production and shipping infrastructure in the Persian Gulf. Barring a U.S. attack, it appears imminent that Iran’s euro-denominated oil bourse will open in March 2006. Logically, the most appropriate U.S. strategy is compromise with the E.U. and OPEC towards a dual-currency system for international oil trades.

Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes…known instruments for bringing the many under the domination of the few…No nation could preserve its freedom in the midst of continual warfare. — James Madison, Political Observations, 1795

Footnotes:
[1]. Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’ Neill, Simon & Schuster publishers (2004)
[2]. Richard A. Clarke, Against All Enemies: Inside America’s War on Terror, Free Press (2004)
[3]. William Clark, “Revisited – The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth,” January 2003 (updated January 2004) http://www.ratical.org/ratville/CAH/RRiraqWar.html
[4]. Peter Philips, Censored 2004, The Top 25 Censored News Stories, Seven Stories Press, (2003) General website for Project Censored: http://www.projectcensored.org/ Story #19: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq http://www.projectcensored.org/publications/2004/19.html
[5]. Carol Hoyos and Kevin Morrison, “Iraq returns to the international oil market,” Financial Times, June 5, 2003
[6]. Faisal Islam, “Iraq nets handsome profit by dumping dollar for euro,” [UK] Guardian, February 16, 2003 http://observer.guardian.co.uk/iraq/story/0,12239,896344,00.html
[7]. “Oil bourse closer to reality,” IranMania.com, December 28, 2004. Also see: “Iran oil bourse wins authorization,” Tehran Times, July 26, 2005
[8]. “War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike,” Newsweek, September 27 issue, 2004. http://www.msnbc.msn.com/id/6039135/site/newsweek/
[9]. James Fallows, ‘Will Iran be Next?,’ Atlantic Monthly, December 2004, pgs. 97 – 110
[10]. Seymour Hersh, “The Coming Wars,” The New Yorker, January 24th – 31st issue, 2005, pgs. 40-47 Posted online January 17, 2005. Online: http://www.newyorker.com/fact/content/?050124fa_fact
[11]. Philip Giraldi, “In Case of Emergency, Nuke Iran,” American Conservative, August 1, 2005
[12]. Dafina Linzer, “Iran Is Judged 10 Years From Nuclear Bomb U.S. Intelligence Review Contrasts With Administration Statements,” Washington Post, August 2, 2005; Page A01
[13]. C. Shivkumar, “Iran offers oil to Asian union on easier terms,” The Hindu Business Line (June 16, ` 2003). http://www.thehindubusinessline.com/bline/2003/06/17/stories/ 2003061702380500.htm
[14]. Terry Macalister, “Iran takes on west’s control of oil trading,” The [UK] Guardian, June 16, 2004 http://www.guardian.co.uk/business/story/0,3604,1239644,00.html
[15]. “The Choice of Currency for the Denomination of the Oil Bill,” Speech given by Javad Yarjani, Head of OPEC’s Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain’s Presidency of the EU) (April 14, 2002, Oviedo, Spain) http://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm
[16]. “Iran’s oil bourse expects to start by early 2006,” Reuters, October 5, 2004 http://www.iranoilgas.com
[17]. “Russia shifts to euro as foreign currency reserves soar,” AFP, June 9, 2003 http://www.cdi.org/russia/johnson/7214-3.cfm
[18]. “China to diversify foreign exchange reserves,” China Business Weekly, May 8, 2004 http://www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm
[19]. Richard S. Appel, “The Repercussions from the Yuan’s Revaluation,” kitco.com, July 27, 2005 http://www.kitco.com/ind/appel/jul272005.html
[20]. China, Iran sign biggest oil & gas deal,’ China Daily, October 31, 2004. Online: http://www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm
[21]. “Terror & regime change: Any US invasion of Iran will have terrible consequences,” News Insight: Public Affairs Magazine, June 11, 2004 http://www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World
[22]. Analysis of Abu Musa Island, http://www.globalsecurity.org http://www.globalsecurity.org/wmd/world/iran/abu-musa.htm
[23]. Sammy Salama and Karen Ruster, “A Preemptive Attack on Iran’s Nuclear Facilities: Possible Consequences,” Monterry Institute of International Studies, August 12, 2004 (updated September 9, 2004)http://cns.miis.edu/pubs/week/040812.htm

KUWAIT FIREFIGHTER INTERVIEW
http://www.worldpress.org/Americas/3620.cfm
Interview with Author Frank Touby / September 9, 2010

Worldpress: In your book “Burning Sands” you write about your experience fighting the oilfield fires in Kuwait that Saddam Hussein lit 19 years ago. You got a position as a trainee oilfield firefighter with Safety Boss Ltd., of Calgary, Alberta, to essentially better entrench yourself as a journalist. Some of the scenes you describe are quite intense. Can you tell us a bit about that experience?
Frank Touby: It was the most fascinating and virtuous adventure of my life. We worked 14-hour days with no days off, and yet we were eager to get out there again at the start of each day. When we quenched a fire on a wild well that had been burning for five or more months we pinched off a toxic smoke trail that had stretched for thousands of miles around the earth. As the tail end of that noxious smoke stream trailed into the sky there was such a sense of exhilaration that came with participating in a truly worthy effort. I especially gained an appreciation for the skills and intelligence of farm boys, who provide most of the labor in the oil patch. They can operate almost any piece of heavy equipment for the first time just by looking at it. They are smart, dependable and energetic. I’m a guy whose career resulted from formal education and had an inclination to disregard such people whose work gets them dirty and who speak in less-than-correct English. Never again. On the other hand, these guys were so strong, so competent in their rightwing universes, that many of them couldn’t imagine others being truly needy of aid that government properly must provide. Not entirely their fault.

WP: Can you elaborate on that last point? What do you mean by “so competent in their rightwing universes…”?
FT: Sure. They were brought up in that rugged frontier milieu of independence, strength, self-made personhood and self-reliance. You look after yourself, your buds and your family in that model and everyone else does the same. So there is no need for crooked politicians or carpet-bagging bureaucrats to come in and tell you what to do with your land, your property and yourself. The men I worked with at Safety Boss, the blowout company, were Canadians mainly from Alberta and Saskatchewan. But it was very much the same with many of them. Mike Miller, the owner of Safety Boss, was not like that at all. He is a more urbane, philosophical man and a great, considerate leader. His company set a world record that likely will never be duplicated: 126 wild wells “killed” in five months. It probably won’t ever happen again because nobody will again set so many wells ablaze. There’s no point to it since it’s now proven that the wild wells can be quenched in a relatively short period of time. But nobody knew that at the time Saddam had his troops and sappers spend over a year preparing 700-plus wells to be torched.

WP: What did it teach you about the effects of war over resources?
FT: I must admit to having a jaded view that didn’t come from my experiences in Kuwait, but from events that transpired ever since. In short, I think war is almost a requirement to keep certain resources scarce and their prices high. Monopoly also serves that purpose—as it does with diamonds and with oil refineries that produce gasoline. War also accommodates the needs of the cabal Dwight Eisenhower warned us against as he left the presidency in 1961: “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” So far we have failed.

WP: How do you think the BP oil spill compares to the oil fires in Kuwait?
FT: Aside from being wild wells, they couldn’t be more dissimilar. While the desert in Kuwait was aflame with over 700 oil fires, BP managed to contaminate an area larger than that from a single well. Kuwait was heartless and malicious; BP, to the best of our knowledge, was heartless and incompetent. I fear the harm from BP will both overshadow the severity and outlast the harm from six months of wild wells in Kuwait.

WP: What do you think government’s role should be in getting developed countries off oil?
FT: There’s no excuse for our dependency on oil from any source. It’s solely caused by the control transnational corporations hold over governments. Alcohol (ethanol) is a better fuel than petroleum: higher octane, clean burning, endlessly renewable. It’s what the Model T Ford originally used before J. D. Rockefeller gave huge funds to the Women’s Christian Temperance League to get it outlawed, allegedly so his oil wells would be worth a fortune. (It’s detailed in David Blume’s book “Alcohol Can Be a Gas: Fueling an Ethanol Revolution for the 21st Century.”) Ethanol poses a threat to corporate monopolists because it can be produced by little guys, in contrast to the millions of dollars worth of refinery that it takes to produce gasoline. Ethanol doesn’t have to be made from corn grain, which is an atrocity since that’s a food crop. Almost any vegetable matter will work, including corn stalks that normally go to waste. Bulrushes, or cattails, are especially productive. Government’s role should be to encourage such oil replacements, but that won’t happen so long as corporatists control politicians and corporations are considered equal to real human beings in our laws.

WP: Do you have any ideas as to how people can break that corporate stronghold? Because you’re right; in the United States, for example, we’ve seen Congress’ attempt at an energy bill fail miserably. Certainly corporate influence had something to do with that.
FT: Yes. The situation in Canada is nearly the same as in the U.S. Corporations buy politicians and universities. The latter are the principal mechanisms of corruption since universities produce the civil service and also issue the various scientific dictates that are used to justify regulations favored by their corporate patrons. The effects of purchased politicians need no explanation. In Canada both the Liberal and Conservative parties are on the same corporatist pages, just as Republicans and Democrats are identically compromised in the States. Government ministries or departments, such as the regulators of pharmaceuticals and broadcasters, function as advocates for the corporations they’re nominally regulating. The solution is simple to state and perhaps impossible to remedy, short of a revolution either by law or by arms. It requires an end to corporate personhood: the ridiculous notion that a business corporation has human rights identical to those of real human beings. That was recently confirmed by the U.S. Supreme Court (Citizens United vs. FEC), which ruled that corporations mustn’t be denied the human right of freedom of speech by limiting the money they can spend on election campaigns. The result will naturally be that corporations can own any elections they choose. Enabled by government “regulators,” junk-food giants wreck the health of billions of people with unhealthful restaurant fare; farm and chemical oligopolies harm our food supplies; drug giants waste our health resources by ignoring or concealing unprofitable health alternatives while inventing new “diseases” and investing their research dollars on marketing schemes to sell prescription cures for such contrivances as “acid reflux disease” (aka, “heartburn,” effectively countered with baking soda); oil companies write their own environmental rules. Practically everything government regulates is now compromised by multinational corporations for their profit purposes. An intermediate step to remediate the harm might be to change tax codes in the U.S. and Canada, since both nations have well-established different tax categories for corporations than for individuals. Prohibit businesses from deducting any expenses and require them to report all worldwide revenues. It would have marked impact on each economy to start with, since many businesses and charities exist because of corporations’ abilities to write off related expenses. It would eliminate “charitable” deeds that are done in corporate names, but really those are promotional expenses. Corporations and all businesses can’t be expected to operate in any way except in their own interests. Regulation by government is needed to avoid oligopolies and other cancerous growths that strangle free enterprise or harm consumers and workers.
Universities should be prohibited from accepting funds from individuals or corporations to ensure their independence from corruption. They should be entirely funded by government, which has a responsibility to provide education just as it has to provide the military, healthcare, currency, police, fire departments, roads, regulation of enterprise and so forth. In other words, using the phrase of Seattle-based radio commentator Thom Hartmann, it’s incumbent on government to ensure and maintain “The Commons” that comprise civilization.

the PETROEURO
http://tradecrudeoil.coremach.com/capitalism-under-attack-petrodollars-petroeuros-and-the-iranian-oil-bourse/
Petrodollars, Petroeuros and the Iranian Oil Bourse
by Luigi Frascati / 2007

“This notion that the United States is getting ready to attack Iran is simply ridiculous […]. Having said that, all the options are on the table” (President George W. Bush, February 2005)

Who would have ever imagined it?
Forget about the Prophet Mohammed, Islam, the Koran, President Ahmadinejad and his nuclear program, Islamofascism and all the umpah-pah. The Mullahs do not like American Dollars anymore. As reported by Reuters UK ([http://rtv.rtrlondon.co.uk/2006-12-18/3e56a070.html]) Iran announced that it has ordered its Central Bank to start using Euros for foreign transactions, and to transform the nation’s Dollar-denominated assets held abroad into the single European currency. “The government has ordered the Central Bank to replace the Dollar with the Euro to limit the problems of the executive organs in commercial transactions,” government spokesman Gholam Hossein Elham told reporters.

Coming from OPEC’s fourth oil producer, this is a move that will undoubtedly have both deep economic reverberations and grave political consequences worldwide. It would certainly appear that rather than ‘wiping out Israel’ from the face of the planet, Iran is setting the tempo to wipe out American capitalism and influence everywhere. To understand the implications of such a move in financial affairs, one has to first revert to the importance of money in our economic systems and the effects that the ravages of inflation have over it.

Money is one of man’s most amazing inventions. Imagine the difficulty of our daily lives without those metal coins and coloured pieces of paper. To make any kind of transaction – from shopping for groceries to purchasing a real estate asset – you would have to find someone who had what you want and who wanted what you have, and then the two of you could barter. In a world with thousands of products, one would spend most of the time looking for trading partners and devoting very little time to actually earn an income. The alternative to avoid having to find trading partners would be for each and everyone of us to do a little bit of everything by ourselves.

But with money on the scene everything becomes more straightforward, simple and less time-consuming, and all of us can increase our productivity by and through specialization – that is doing what we do best, and then trade with our partners. As a direct and proximate consequence of our increased productivity, each of us can therefore become richer. It is easy to lose sight of the very basic economic point that we all owe a large part of our high living standards to the existence of money, its possession and the spending power that stems out of it. But there is a catch: money works best when its value is stable over time. And this is nowhere more true than in international trade.

Economically speaking, the power of the American Dollar and its influence in economic and financial affairs worldwide was born during the United Nations Monetary and Financial Conference held at Bretton Wood, New Hampshire in July 1944. The Conference was attended by the delegates of all 45 allied nations directly and indirectly involved in the fight against the powers of the Axis – Nazi Germany, Imperial Japan and Fascist Italy, and their socio-economic doctrines. As a result of the Bretton Woods Conference, a system of exchange rate among different currencies was set up anchored on the American Dollar, which was made convertible to gold – the common denominator and measure of wealth worldwide. Thus, the American Dollar became de facto the reserve currency of the world, accepted and traded everywhere. This system remained in place until the early 1970’s and it allowed countries to accumulate reserves in American Dollars, as opposed to gold.

When in 1970-1971 an economically resurgent Western Europe began demanding payment for their US Dollars, as it became clear that the American Government did not have enough gold reserves to buy back all those Dollars, the US Treasury under the Nixon Administration rather than defaulting on its payment ‘de-anchored’ the Greenback – that is it severed the link between the Dollar and gold. To avoid an international collapse of the American currency in world markets, however, the US treasury had to substitute gold with another valuable commodity so as to entice foreign countries to keep their foreign reserves in Dollars and to continue accepting the American currency.

Thus in 1972-73 an iron-clad arrangement was made with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. Dollars for its oil. The rest of OPEC was to follow suit and also accept only American Dollars. Because the world had to buy oil from the Arab oil-producing countries, it now had the reason to hold Dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world’s demand for Dollars could only increase. Even though Dollars could no longer be exchanged for gold, they were now exchangeable for oil. The Petrodollar was born.



In 2000, the first man who actually began demanding Euros for his oil was none other than Saddam Hussein of Iraq – and we all know what has happened to him. To be more specific, in fact, Saddam Hussein Abd al-Majid al-Tikriti (1937-2006), former President of Iraq, made two strategic mistakes, the second one of which would ultimately cost him his neck – literally. Firstly, on August 2, 1990 he invaded Kuwait, a country very friendly with both the United Kingdom and the United States, and holding approximately ten percent of the world’s oil reserves. Saddam, furthermore, became a real threat to Saudi Arabia as well. By invading Kuwait and threatening Saudi Arabia, Saddam breached the Carter Doctrine postulated by President Jimmy Carter in 1980, which states that “[…] an attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.” The Carter Doctrine was later on upheld by President George H.W. Bush in 1989 with National Security Directive 26, which declares that “Access to Persian Gulf oil and the security of key friendly states in the area are vital to U.S. national security […].” The Gulf War ensued in January 1991.



The second mistake of Saddam was to start demanding payment for his oil in Euros. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business the need arose to make an example of anyone who demanded payment in currencies other than U.S. Dollars. The punishment came with the worsening of the geo-political situation after the 9/11 attacks on the Twin Towers and an increased perception and worry about Saddam’s weapons of mass destruction – which he had used extensively against the Kurds and his own citizens. President Bush’s Shock-and-Awe intervention in Iraq followed, which ultimately brought about the demise of the Iraqi dictator.



Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade – the Iranian Oil Bourse (‘Bourse’ is the French word for Stock Exchange). The proposed Iranian Oil Bourse signifies that without some sort of US intervention, the Euro is going to establish a firm foothold in the international oil trade.

This is so, because the Europeans would no longer have to buy and hold Dollars in order to secure their payment for oil, but would instead pay with their own currency. The adoption of the Euro for oil transactions would provide the European currency with a reserve status that would benefit the European at the expenses of the Americans. Given U.S. foreign debt levels and trade deficit, Tehran’s objective constitutes an obvious encroachment on the Dollar supremacy in the crucial international oil markets, and America can hardly afford that to happen. It is really a case of lethal economic terrorism and financial warfare, a matter of life and death.

And speaking of economic terrorism and financial warfare, it is very interesting and worth mentioning the link between oil and Euros on one side and Iran’s nuclear programme on the other side that Gholam Hossein Elham has made during the foresaid announcement. He has stated: “They (the Westerners) should put an end to their hostilities towards our nation and should also be aware that we are capable of achieving nuclear technology through very transparent and legal methods – something that they must respect. They must not waste their time with venting hostility against this nation, otherwise they will be harmed, more so than us.”

If Iran follows up with the intention to charge Euros for its oil, the upcoming Iranian Bourse will introduce Petroeuros currency hedging in direct competition with traditional Petrodollars. More than that, in political terms, it will pit America, Israel and Sunni Islam against Iran, Syria and Shiite Islam and will fundamentally create new dynamics and competition into the biggest markets in the world – those of global oil and gas trade. One of the Federal Reserve’s nightmares may well begin to unfold if it appears that international buyers will have a choice of buying a barrel of oil for USD 60 on the NYMEX and IPE – or purchase a barrel of oil for €45 – €50 through the Iranian Bourse. In essence, America would no longer be able to expand effortlessly its debt-financing with the issuance of US Treasury bills, and the international demand and liquidity of the American Dollar would fall. This is a very good reason to go to war.

PREVIOUSLY on SPECTRE : CABLE CUT CONSPIRACIES
https://spectregroup.wordpress.com/2008/02/18/how-to-run-a-traceroute-cable-cut-conspiracies-cont/
http://www.ilovebonnie.net/2008/02/13/google-maps-version-of-the-2008-submarine-cable-cuts/
http://www.ilovebonnie.net/2008/02/06/submarine-cables-subsidiares-and-subversion/
Undersea Cable Cuts and the Iranian Oil Bourse

“Through the research that I have exhaustingly done over the past few days, this is the one that has struck me as the most likely reason for the damages that have occurred to submarine internet cables. The Iranian oil bourse is going to be a stock market for petroluem, petrochemicals and gas. What’s the big catch here? The exchange planned on being ran with currencies excluding the U.S. dollar. If you remember from earlier in the post, Iran stopped allowing purchases of their oil with the U.S. dollar in December of 2007. So, obviously, the U.S. is not going to be happy about this. The biggest piece of information linking this to the recent damages is the proposed location of the bourse: the island of Kish. This is the island that is right next to at least two of the cuts that have recently occurred…”

IRAN OIL BOURSE
http://www.iranbourse.com/Default.aspx?tabid=215
http://www.islamidavet.com/english/2010/09/12/kish-island-open-to-foreign-investment/
http://www.oil-price.net/en/articles/iranian-oil-bourse-opening.php
Iranian Oil Bourse Opens
by Steve Austin / 2008.02.06

The Iranian Oil Bourse establishing Euro-based pricing of oil is set to open on February 17th 2008 and could have devastating effects on the US dollar. Currently all three major oil markets (WTI, NYMEX, IPE) trade barrels of oil in US dollars. Consequently any country buying oil needs dollars to pay for it. This enables the US Federal Reserve to issue huge volumes of dollars to meet increasing demand for oil. In return oil producing nations invest dollar proceeds in US treasury bills, allowing for the current US budget deficit. But this balance may become unsettled after a fourth major oil market opens this month, trading in Euros: the Iranian Oil Bourse (IOB).

Unlike other bourses, the IOB relies on a peer-to-peer trading model, using the Internet. IOB has been in the works for several years and encountered many hurdles on the way, the last of which are severed underwater internet cables creating an Internet outage throughout the Middle East days before the IOB’s opening and prompting conspiracy theories. In recent years the US has outfitted some of its submarines with the capability to splice optical fiber underwater so these theories may not be far-fetched. Having the world’s second largest oil reserves of 136 gigabarrels, Iran will likely extend its influence on financial markets when the IOB opens. Although under-reported by the media, this historical shift and its consequences should be watched closely.

GOVERNMENT-MADE BUBBLE?
http://www.foxbusiness.com/markets/2010/09/29/feature-irans-bourse-booms-despite-sanctions/
Iran’s bourse booms despite sanctions
by Robin Pomeroy / Sep 30, 2010

In the busy foyer of the Tehran Stock Exchange an old woman in a black chador clutches her shopping bag and gazes up hopefully at the electronic display showing the latest share prices. Like the other Iranians bustling past her, she is betting on a market that has soared to record highs despite ever-tightening international sanctions, lackluster oil prices and political uncertainty after last year’s disputed presidential election. While U.S. diplomats were busy upping Iran’s economic punishment over nuclear activities Washington fears are aimed at making a bomb, Iranian shares, which might have been expected to fall, have, instead, gone through the roof. Tehran’s Tepix index has risen 65 percent to all-time highs this year. Its latest record was set on Sept. 18, when it hit 18,658, up from 11,295 at the start of the year. By comparison, New York’s S&P 500 Index has made no major gains this year as the U.S. economy struggles to recover from the financial crisis.

Officials say privatisation, cheap valuations and moves to cut red tape and encourage private investors have lured Iranians away from the once-booming property market, the traditional home of the Iranian nest egg, which stagnated in late 2008. The world’s fifth-largest oil exporter hopes to raise $12.5 billion by privatising over 500 state firms during the 2010-11 year, and plans to sell all of its refineries and petrochemicals units, promising potential investors a solid pipeline of IPOs. Iranians are also increasingly reluctant to park their spare cash in the bank, where interest on instant access savings has fallen from about 12.5 percent three years ago to 6 percent now. Those rates seem healthy compared to Western economies, where central bank rates are near zero, but are no match for the rewards promised by a bourse which already boasts more than 330 listed firms and a market capitalisation above $70 billion.

Speaking in his office on the upper floors of the stock exchange, bourse chief Hassan Ghalibaf Asl summed up the logic: “The opportunities and good factors affecting the growth of the capital market and attracting investors are more important, and the weight of them is more, than bad factors.” Few dispute however, that the bad factors are there. From a lack of transparency to tightening sanctions, myriad challenges belie the Tehran Stock Exchange’s stellar performance. Firms related to the elite Revolutionary Guards and other state bodies have bought large stakes in privatised companies, further muddying the waters between public and private in a country where powerful quasi-official foundations pervade.

Last year, a consortium linked to the Revolutionary Guards took a controlling stake in the Telecommunications Company of Iran for $7.8 billion, raising concern that some firms being put up for sale are just being transferred within the public sector. Investments by these vast semi-official or politically connected organisations have caused the surges in stock prices that small investors have been happy to ride, Meir Javedanfar, an Iran expert at Middle East analysis firm Meepas, said. “Very few stock exchanges have record gains in a country where sanctions, economic isolation, unemployment and inflation are increasing,” he said. “All indicators point to this boom being a government-made bubble. It’s difficult to predict when it will burst.” Even in parliament, questions are being asked about the disconnect between soaring share prices and an economy facing not just sanctions but looming cuts to multi-billion-dollar state subsidies that currently guarantee cheap fuel to domestic industries and reduce the cost of goods for Iranian consumers. Many small investors are ordinary Iranians, who could end up suffering the most if boom turns to bust.

Sheltering from the blazing sun under the porticos of the bourse building, a man sits on a fold-out stool and sells economics text books laid at his feet on sheets of newspaper. Traders, the majority apparently amateurs, pass him on their way inside to swap rumours as they crowd around touchscreens, looking up data provided by the bourse on their chosen stocks. Iranians can place orders with professional brokers, without having to go in person to the bourse, but the building, with its atmosphere of anticipation, attracts scores of people, placing their cash alongside institutions like Iran’s pension funds. Apart from one turbaned cleric and a handful of women, most are middle aged men, and the mood is optimistic though smaller trades are driven largely by rumour, since rules requiring listed firms to disclose their performance and plans are lax.

With his boy-band haircut, jeans and T-shirt, 26-year-old Navid Sadri is not the typical day-trader on Tehran’s bourse, but he has been making his living on the market for eight years, long enough to know that a boom usually ends in a bust. “Eight months ago there was a very small crowd,” he says, pointing to the amateur traders hovering in the corridors above the bourse’s modest trading floor. “If every day there’s a bigger crowd it’s a sign that there will be a drop.” While domestic investment in the bourse booms, international sanctions and political uncertainty are hampering the flow of foreign funds and expertise that Iran needs to modernize. Foreign investment on the Tehran bourse accounts for just 0.5 percent of the shares, according to the bourse chief. “We don’t even look at the Iranian market. There is just too much political risk involved,” Robert McKinnon of ASAS Capital, an asset management company in Dubai, said in June, when bourse officials travelled to the city to drum up foreign interest.

In an effort to attract cash from abroad, Iran revoked a rule this year that had forced foreign investors to hold their initial capital in the Islamic Republic for three years. While foreign investors can now repatriate their capital whenever they want, U.S. rules ban any bank that does business with the United States from making transactions with Iran. That rule is enough to keep most major international banks at bay. So far, Tehran’s bourse has lured only a handful of smaller institutions willing to gamble on the world’s riskier markets. Fund management company Castlestone calls Iran stocks “a jaw-dropping opportunity” and plans to include them in a new high-growth emerging markets fund. Turquoise Partners, an investment firm with offices in Tehran and London, manages a $100 million fund on behalf of foreign investors wanting a piece of the Iranian action. “We’ve had a flood of money coming into the market in the last one and a half years,” Ali Mashayekhi, head of investment research at Turquoise, said.

CURRENCY WARS
http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html#1999
http://www.feasta.org/documents/review2/nunan.htm
Petrodollar or Petroeuro? A new source of global conflict
by Cóilín Nunan

No observer of the lead-up to the war in Iraq and its aftermath could have failed to notice that the level of cooperation between Europe and America was extremely low. France and Germany were very strong opponents of the US/UK invasion and even after the war was declared over, disagreements persisted over the lifting of sanctions and how Iraq should be run. So was this just a one-off tiff or was it a symptom of deeper flaws in the relationship? I believe that the war on Iraq illustrated for the first time that continental Europe, led by France and Germany, no longer wishes to follow the Americans politically, although what has been termed a ‘clash of civilisations’ [1] is probably better viewed as a ‘clash of economies’.

While disagreements over the US trade barriers on steel imports or the European restrictions on imports of American genetically modified crops have attracted widespread comment, the most intense economic rivalry of all has received far less media attention than it perhaps should: this is the rivalry between the dollar and the euro for the position of world reserve currency, a privileged status that has been held by the dollar ever since the Bretton Woods agreement nearly 60 years ago.

At present, approximately two thirds of world trade is conducted in dollars and two thirds of central banks’ currency reserves are held in the American currency which remains the sole currency used by international institutions such as the IMF. This confers on the US a major economic advantage: the ability to run a trade deficit year after year. It can do this because foreign countries need dollars to repay their debts to the IMF, to conduct international trade and to build up their currency reserves. The US provides the world with these dollars by buying goods and services produced by foreign countries, but since it does not have a corresponding need for foreign currency, it sells far fewer goods and services in return, i.e. the US always spends more than it earns, whereas the rest of the world always earns more than it spends. This US trade deficit has now reached extraordinary levels, with the US importing 50% more goods and services than it exports. So long as the dollar remains the dominant international currency the US can continue consuming more than it produces and, for example, build up its military strength while simultaneously affording tax cuts.

Getting a share of this economic free lunch has been one of the motivations, and perhaps the main motivation, behind setting up the euro [2]. Were the euro to become a reserve currency equal to, or perhaps even instead of, the dollar, countries would reduce their dollar holdings while building up their euro savings. Another way of putting this would be to say that Eurozone countries would be able to reduce their subsidy to American consumption and would find that other countries were now subsidising Eurozone consumption instead.

A move away from the dollar towards the euro could, on the other hand, have a disastrous effect on the US economy as the US would no longer be able to spend beyond its means. Worse still, the US would have to become a net currency importer as foreigners would probably seek to spend back in the US a large proportion of the estimated three trillion dollars which they currently own. In other words, the US would have to run a trade surplus, providing the rest of the world with more goods and services than it was receiving in return. A rapid and wholesale move to the euro might even lead to a dollar crash as everyone sought to get rid of some, or all, of their dollars at the same time. But that is an outcome that no-one, not even France or Germany, is seeking because of the huge effect it would have on the world economy. Europe would much prefer to see a gradual move to a euro-dollar world, or even a euro-dominated one.

It turns out that there is a small group of countries which is playing the arbiter in this global contest. These are the world’s oil exporters, in particular OPEC and Russia. Ever since the days when the US dominated world oil production, sales of oil and natural gas on international markets have been exclusively denominated in dollars. This was partly a natural state of affairs since, up until the early 1950s, the US accounted for half or more of the world’s annual oil production. The tendency to price in dollars was additionally reinforced by the Bretton Woods agreement which established the IMF and World Bank and adopted the dollar as the currency for international loans.

The vast majority of the world’s countries are oil importers and, since oil is such a crucial commodity, the need to pay for it in dollars encourages these countries keep the majority of their foreign currency reserves in dollars not only to be able to buy oil directly but also to protect the value of their own currencies from falling against the dollar. Because a sudden devaluation of a country’s currency against the dollar would lead to a jump in oil prices and a possible economic crisis, every country’s central bank needs dollar reserves so as to be able to buy its own currency on the foreign exchange markets when its value needs to be supported.

The fact that oil sales and loans from the IMF are dollar-denominated also encourages poorer countries to denominate their exports in dollars as this minimises the risk of losses through any fluctuations in the value of the dollar. The knock-on effect of this is that, since many of these exports are essential raw materials which richer countries need to import, their denomination in dollars reinforces the need for rich countries to keep their own currency reserves in dollars.

While the denomination of oil sales is not a subject which is frequently discussed in the media, its importance is certainly well understood by governments. For example, when in 1971 President Nixon took the US off the gold standard, OPEC did consider moving away from dollar oil pricing, as dollars no longer had the guaranteed value they once did. The US response was to do various secret deals with Saudi Arabia in the 1970s to ensure that the world’s most important oil exporter stuck with the dollar [3]. What the Saudis did, OPEC followed. More recently, in June 2003, the Prime Minister of Malaysia publicly encouraged his country’s oil and gas exporters to move from the dollar to the euro. The European and American reactions were polar opposites: the EU’s Energy Commissioner, Loyola de Palacio, welcomed the suggestion, saying that ‘in the future the euro is [going to be] taking a place in the international markets in general as the money of exchange’ and that this was ‘a matter of realism’ [4]. Her counterpart in the US, the director of the Energy Information Administration, Guy Caruso, said that he couldn’t see ‘any particular merit’ in the move and that over the long run ‘the dollar’s always won out’ [5]. Either way, Malaysia is only a relatively minor oil exporter, so what it does can only have a very limited effect. A switch by a major oil exporter would be of far greater significance.

The first country to actually make the switch was a very important oil exporter indeed: Iraq, in November 2000 [6,7]. Before the war in Iraq began, some observers, myself included, argued that this might well be a major reason for the US desire to invade and the strong Franco-German opposition to the invasion [8,9]. Corroborating evidence included the apparent influence which loyalty (or lack thereof) to the dollar seemed to have on the US attitude towards other OPEC members. Iran had been talking of selling its own oil for euros [6,10] and was subsequently included in George Bush’s ‘axis of evil’. Venezuela, another important oil exporter, had started bartering some of its oil, thus avoiding the use of the dollar, and was encouraging OPEC to do likewise [11] – and the US was widely suspected in having played a part in the attempted coup against the Venezuelan president, Hugo Chavez.

Semi-official confirmation that petro-currency rivalry was at the heart of the split between France and Germany, on the one hand, and the US, on the other, was provided by Howard Fineman, the chief political correspondent for Newsweek, in an article he wrote in April 2003, in the aftermath of the war. The Europeans and Americans were then arguing over whether the UN’s oil-for-food programme in Iraq should remain in place or not. Using the term ‘clash of civilisations’ to describe the divide which was developing, Fineman explained that the disagreement had little to do with the French calls for the search for weapons of mass destruction to resume and for sanctions to remain in place until the search was complete. Instead, Fineman said, it was mainly about the dollar vs the euro. Citing White House officials and a presidential aide, he explained that the dispute between the two continents was really about ‘who gets to sell – and buy – Iraqi oil, and what form of currency will be used to denominate the value of the sales. That decision, in turn, will help decide who controls Iraq, which, in turn, will represent yet another skirmish in a growing global economic conflict. We want a secular, American-influenced pan-ethnic entity of some kind to control the massive oil fields (Iraq’s vast but only real source of wealth). We want that entity to be permitted to sell the oil to whomever it wants, denominated in dollars.’ Fineman concluded his article by confidently predicting that future Iraqi oil sales would be switched back to dollars [1].

Fineman’s White House sources would appear to have been reliable as that is precisely what has happened: when Iraqi oil exports resumed in June of last year, it was announced that payment would be in dollars only [12,13]. It was also decided that the billions of Iraqi euros which were being held in a euro account, controlled by the UN under the oil-for-food programme, were to be transferred into the Development Fund for Iraq, a dollar account controlled by the US [13,14,15].

Furthermore, Youssef Ibrahim, a former senior Middle East correspondent for the New York Times and energy editor on the Wall Street Journal, who is a member of the influential Council on Foreign Relations, has called Iraq’s switch to the euro ‘another reason’ for the war, saying that a general move by oil producers to the euro would be a ‘catastrophe’ for the US [16].

America’s willingness to use violence to defend its economic interests does not seem to have reduced the number of oil exporters considering switching to the euro as they recognise that their use of the dollar enables the US to build up its military strength. In addition to Malaysia, Indonesia has the switch under consideration [17] while Iran has been shifting its currency reserves into euros. Moreover, according to the Vice-President of the Iranian central bank, it has actually sold some of its oil to Europe for euros and is encouraging members of an Asian trade organisation, the Asian Clearing Union, to pay for Iranian oil in the European currency [18]. Along with Malaysia, it is also at the forefront of efforts to establish a new gold-backed currency, the Islamic Gold Dinar, to be used in international trade amongst Muslim countries instead of both the dollar and the euro [19]. In a further development, in June 2004, Iran announced that it had plans to establish an oil-trading market for Middle Eastern and OPEC producers which could threaten the dominance of London’s International Petroleum Exchange and New York’s Nymex [20]. Such a move could help remove some of the technical difficulties that exist with a switch away from dollar-denomination of oil sales.

It is therefore not surprising to find that, just as with Iraq, the European Union and the US are dealing with Iran in very different ways. While the EU has been holding trade negotiations with Iran [21] and involved in dialogue about its nuclear programme, the US has refused to get involved in direct talks with the Iranian government which it views as ‘evil’. The American Enterprise Institute, a highly influential American ‘think tank’, has in fact been actively calling for ‘regime change’ [22] and, although this policy has yet to be officially endorsed by the Bush administration, in July 2004 it was claimed in the British press that a senior official of the Bush administration had indicated that, if re-elected, Bush would intervene in the internal affairs of Iran in an attempt to overturn the Iranian government [23,24].

European enthusiasm for the ‘petroeuro’ also appears undampened by the US takeover of Iraq. Since the war, the European Union has been actively encouraging Russia, another opponent of the US invasion, to move to euro oil and gas sales. In October 2003, during a joint press conference with Germany’s Prime Minister Gerhard Schroeder, the Russian President Vladimir Putin declared that Russia was thinking about selling its oil for euros. A few days later, the European Commission President, Romano Prodi, said, after a summit between Russia and the European Union, that Russia was now drawn to having its imports and exports denominated in euros [25,26].

In December 2003, speculation about the future roles of the dollar and the euro increased when OPEC Secretary General Alvaro Silva, a former Venezuelan oil minister, said that the organisation was now considering trading in euros or in a basket of currencies other than the dollar, as the US currency was declining in value [27] . Although a few days later the Saudi oil minister Ali al-Naimi said that OPEC would not be discussing a switch to the euro at its next meeting (comments reinforced by the Qatari President of OPEC and the Algerian oil minister [28]), articles discussing a possible move continued to appear in the media [29,30] and the euro’s value against the dollar soared. Despite the speculation, no decision to move to the euro was taken at OPEC’s meeting in early February 2004 and thereafter the euro’s value fell back again.

In fact, close inspection of the dollar-euro exchange rate shows that since the euro’s introduction in January 1999, petro-currency rivalry appears to have played an important part in swinging the rate one way or the other. The markets, it seems, have noticed the importance of what is happening. On the other hand, the lack of an open discussion of the issues suggests that politicians and bankers are keen to move ahead with their plans with little or no explanation to the general public.

Should we not, however, be debating more openly what kind (or kinds) of international financial structure(s) we want to adopt, since the question has potentially huge implications for the stability of the world economy and for peace and stability in oil-exporting countries? A good starting point for such a debate would be the recognition that no country or countries should be allowed to dominate the system by controlling the issuance of the currency or currencies used. Similarly fundamental would be to prevent any country from running a persistent trade surplus or deficit so as to avoid the build up of unjust subsidies, unpayable debts and economic instability. At Bretton Woods, John Maynard Keynes, who understood how important these two conditions were, proposed a system which would have met them, but his proposal was rejected in favour of the dollar.[31] The dollar, though, is no longer a stable, reliable currency: the IMF has warned that the US trade deficit is so bad that its currency could collapse at any time.[32] Will we really have to wait for a full-blown dollar crisis before a public debate about creating a just and sustainable trading system can begin?

References
1. Howard Fineman, ‘In Round 2, it’s the dollar vs. euro’, April 23 2003, Newsweek, http://www.msnbc.com/news/904353.asp?0sl=22&newguid=FD367EA32A81424DB1136AF1FD3221F4&cp1=1
2. Anon., ‘Will the euro rule the roost?’, January 1 1999, BBC News, http://news.bbc.co.uk/1/hi/events/the_launch_of_emu/inside_em u/225434.stm
3. David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999
4. Anon., ‘EU says oil could one day be priced in euros’, 16 June 2003, Reuters
5. Irene Kwek, ‘EIA Says Oil Price Switch To Euro From Dollar Unlikely’, 16 June 2003, Dow Jones Newswires
6. Recknagel, Charles, ‘Iraq: Baghdad Moves to Euro’, November 1 2000,Radio Free Europe, http://www.rferl.org/nca/features/2000/11/01112000160846.asp
7. Faisal Islam, ‘When will we buy oil in euros?’, February 23 2003, The Observer, http://www.observer.co.uk/business/story/0,6903,900867,00.html
8. William Clark, ‘The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’, January 2003, http://www.ratical.org/ratville/CAH/RRiraqWar.html
9. Cóilín Nunan, ‘Oil, currency and the war on Iraq’, January 2003, http://www.feasta.org/documents/papers/oil1.htm
10. Anon., ‘Iran may switch to euro for crude sale payments’, Alexander Oil and Gas, September 5 2002, http://www.gasandoil.com/goc/news/ntm23638.htm
11. Hazel Henderson, ‘Globocop v. Venezuela’s Chavez: Oil, Globalization and Competing Visions of Development’, April 2002, InterPress Service, http://www.hazelhenderson.com/Globocop%20v.%20Chavez.htm
12. Carola Hoyos and Kevin Morrison, ‘Iraq returns to international oil market’, June 5 2003, Financial Times
13. Coalition Provisional Authority Regulation Number 2, http://www.cpa-iraq.org/regulations/index.html#Regulations
14. UN Security Council Resolution 1483, http://www.un.org/Docs/sc/unsc_resolutions03.html
15. Judy Aita, ‘U.N. Transfers Oil-for-Food Program to CPA, Iraqi Officials Nov 22’, November 2003, Washington File, http://www.cpa-iraq.org/audio/20031122_Nov-22UN_Transfers_Oil_for_Food_Program-post.htm
16. Catherine Belton, ‘Why not price oil in euros?’, October 10 2003, Moscow Times
17. Kazi Mahmood, ‘Economic Shift Could Hurt U.S.-British Interests In Asia’, March 30 2003, IslamOnline.net
18. C. Shivkumar, ‘Iran offers oil to Asian union on easier terms’, June 16 2003, http://www.blonnet.com/2003/06/17/stories/2003061702380500.htm
19. Anon, ‘Malaysia, Iran discuss the use of gold dinar’, July 3 2003, Asia Times, http://www.atimes.com/atimes/Southeast_Asia/EG03Ae01.html
20. Terry Macalister, ‘Iran takes on west’s control of oil trading’, June 16 2004, The Guardian, http://www.guardian.co.uk/business/story/0,3604,1239644,00.html
21. Hooman Peimani, ‘EU and Iran talk trade, not war’, June 7 2003, Asia Times, www.atimes.com/atimes/Middle_East/EF07AK02.html
22. Guy Dinmore, ‘US lobbyists tune in for regime change in Iran’, December 5 2003, Financial Times
23. Michael Binyon and Bronwen Maddox, ‘US sets sights on toppling Iran regime’, July 17 2004, The Times
24. Jennifer Johnston, ‘Regime change in Iran now in Bush’s sights’, July 18 2004, The Sunday Herald, www.sundayherald.com/43461
25. Lisa Jucca and Melissa Akin, ‘Europe Presses Russia on Euro’, October 20 2003, Moscow Times
26. Simon Nixon, ‘What’s that in euros?’, October 18 2003, The Spectator, www.spectator.co.uk/article.php3?table=old§ion=current&issue=2003-10-18&id=3619
27. Anon., ‘OPEC may trade oil in euros to compensate for dollar decline’, December 9 2003, Associated Press, http://www.hindustantimes.com/news/181_490084,00020008.htm
28. Anon., ‘Saudi Arabia: Dollars only please’, December 13 2003, Reuters, http://money.cnn.com/2003/12/13/news/international/bc.energy .saudi.reut/
29. Patrick Brethour, ‘OPEC mulls move to euro for pricing crude oil’, January 12 2004, Globe and Mail, http://www.globeandmail.com/servlet/story/RTGAM.20040112.wopec0112/BNStory/Business/
30. Anon., ‘To euro or not: should oil pricing ditch the dollar?’, February 9 2004, AFP
31. Michael Rowbottom, Goodbye America! Globalisation, Debt and the Dollar Empire, Jon Carpenter Publishing, 2000
32. Charlotte Denny and Larry Elliott, ‘IMF warns trade gap could bring down dollar’, September 19 2003, The Guardian, http://www.guardian.co.uk/business/story/0,3604,1045193,00.html

“It takes all the running you can do, to keep in the same place.” – Lewis Carroll in Through the Looking-Glass

http://astore.amazon.com/spectrevision-20/detail/0525951113
“Let me tell you the story of the most successful organism of all time: this is the story of the parasite. Early on, evolution branched into two distinct paths: independent organisms—those that exist on their own in the natural world—and parasites—organisms that live on other organisms. And it was, by far, the parasites that proved the more successful of the two branches. Today, for every independent organism in nature, there exist three parasites. These two strains of evolution have been locked in a primordial arms race, constantly evolving to best each other for supremacy of this planet. As parasites evolve to perfect their systems against a species of host, the host evolves to evade their attack. Scientists call this theory of an eternal genetic struggle the Red Queen Hypothesis—a name taken from Lewis Carroll’s Through the Looking Glass. Animal behavior has evolved to battle parasites. In fact, we have parasites to thank for the existence of sex. Sex is a costly and time-consuming method of reproduction. Experiments have shown that, in the absence of parasites, species evolve towards parthenogenesis – or cloning – as the reproductive method of choice. In parthenogenesis each individual is able to self-replicate. But this produces almost no genetic variation. In the presence of parasites, cloning, while more energy-efficient, is not a viable reproductive strategy. It presents a stationary target to parasites, who, once introduced into such a system, will quickly dominate it. … And parasitism evolves and moves through any system – not just living things. The less variation there is in a system, the more readily parasites will evolve to infest it…” — Daniel Suarez, Daemon (2006)

FINANCIAL PARASITE
http://www.businessinsider.com/andy-xie-the-world-doesnt-need-the-financial-industry-anymore-2010-9
Andy Xie: The Financial Industry Is A ‘Gigantic Parasite’ We Don’t Need Anymore
Vincent Fernando / Sep. 8, 2010

These are pretty strong words, given they are coming from ex-Morgan Stanley Andy Xie: “But institutional investors are intermediaries, too. Why should savers give them money to manage? Not for superior performance: More than 90 percent of institutional investors underperform market indexes. The main justification is that they bring down costs of information acquisition and processing, as well as transactions. This justification looks shakier by the day. Any individual can have access to as much information as a fund manager at virtually no cost. I’m afraid the financial services industry is likely to decline structurally. As financial services industry loses value-added to customers and the real economy, it is increasingly dependent on gaming the system and profiting from customer ignorance. This makes the industry and financial market more volatile and bubble-prone. In the last financial crisis, the financial sector survived by holding the real economy hostage. Unless policymakers understand that the financial industry isn’t necessary for the real economy anymore, and that it should scale down dramatically, the sector will remain a gigantic parasite on top of the real economy.”

KILLING the HOST
http://michael-hudson.com/
http://www.washingtonsblog.com/2009/08/hudson-financial-parasites-have-killed.html
Financial Parasites Have Killed the American Economy, and They Are Sucking as Much Money Out as They Can Before Jumping Ship

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Hudson has frequently described Wall Street as “parasitic”. For example, in a 2003 interview, Hudson said: “The problem with parasites is not merely that they siphon off the food and nourishment of their host, crippling its reproductive power, but that they take over the host’s brain as well. The parasite tricks the host into thinking that it is feeding itself. Something like this is happening today as the financial sector is devouring the industrial sector. Finance capital pretends that its growth is that of industrial capital formation. That is why the financial bubble is called “wealth creation,” as if it were what progressive economic reformers envisioned a century ago. They condemned rent and monopoly profit, but never dreamed that the financiers would end up devouring landlord and industrialist alike. Emperors of Finance have trumped Barons of Property and Captains of Industry.”

More recently, Hudson said: “You can think of the financial sector as being wrapped around the real economy, almost like a parasite, and that’s why it’s been called parasitic for so long. The financial sector extracts interest from the economy, the property sector extracts economic rent, as do monopolies. Now the key thing about parasites, is that it’s not simply that they extract nourishment from the host. The parasite takes over the host’s brain, to make it think it’s part of the economy, to make it think it’s part of the host’s own body, and, in fact, that’s it almost like a child of the host, to be protected. And that’s what the financial sector has done today. You have Obama coming out and saying, “We have to save the banks in order to save the real economy”. The fact is, you can’t serve both the parasite and the host.

And this: “A zombie bank is supposed to be a bank that has negative equity. And the word “zombie” comes basically from parasitology. Everybody—people often say the financial sector is a parasite extracting. But a parasite does more than that. It doesn’t just take nourishment from the host; it takes over the host’s brain, so the host thinks it’s actually part of the host’s body and, in fact, it’s its child, and it nurtures it. And the financial sector represents itself as being part of the economy. Mr. Geithner said that we can’t have a recovery of the economy without making the banks healthy and whole and profitable. And that’s just the wrong thing. We can’t have a recovery in the economy until we let the banks take the losses and we let the hedge funds essentially take their losses. There was no need to give $135 billion to AIG, which was raided by Britain’s office of serious crimes for financial fraud, when the US government refused to move against it for fraud. It’s paying the fraudsters instead of paying the victims, and then it’s blaming the victims as if somehow the bank’s a zombie instead of the bank turning the economy into a zombie economy run by insiders in Washington giving themselves what Bloomberg Financial said was $9 trillion two months ago and two days ago an added two-and-a-half trillion, which, to me, makes up $12 trillion, rounding off.”

On August 10th, Hudson went even further. Specifically, he said: “The giant financial institutions have already killed their host – the real American economy. … Since they realize that the American economy is dead, they are trying to suck as much blood out of America as possible while the corpse is still warm. … Because the American economy is dead, their plan is to soon jump to another host. They will ship all of their money overseas.”

GLOBALIZATION and the RED QUEEN
http://globalguerrillas.typepad.com/globalguerrillas/2009/08/the-us-globalization-and-the-red-queen.html
by John Robb / 25 August 2009

The Red Queen hypothesis (the name was taken from Carroll’s book) is a simple concept from evolutionary biology that describes the evolutionary arms race between competitive species — predator/prey and parasite/host. It was found by the evolutionary biologist Leigh Van Valen via extensive analysis of marine biological record. In short, it posits that the probability of extinction isn’t a function of how long the species exists. It doesn’t get easier or harder as time goes on. It’s random. Which implies: Constant evolution is necessary just to stay competitive. If your rate of evolution falls behind your competitors: You die (become extinct). Your evolution must be relative to the evolution of your competitor. If they zig, you must zag (if not, you die).

The US, Globalization and the Red Queen
Since the treaties of Westphalia nearly 400 years ago, competition between nation-states was the primary driver of social evolution. The method or model of competition was between predator and prey and between predators, made stable through creeping global expansion (new competition) and a wide diversity of competitive models. That competition narrowed during WW2 and again through the cold war down to two keystone competitors, each with a different model/ecosystem. The US and the USSR. With the elimination of USSR as a competitor, the US social and economic ecosystem became dominant and now blankets the world through globalization. However, as a result of this victory, the US lost it’s drive/imperative to evolve. It has became increasingly stagnant as a social and economic system, and it is now merely a participant in the much larger global capitalist system.

The flaw in this set-up is that evolutionary competition NEVER stops. It just changes its form. In this case, since the global social system is now a singular entity — capitalist — evolutionary competition changed into a model of parasite and host (conflicts, reflecting traditional state vs. state predator vs. prey competitions, like those with Iran and N. Korea are a sideshow joke). Worse, the global system is becoming increasingly homogenous — it expands via cloning itself and improves itself merely through incremental innovation and not evolution. In short, it has become a homogenous static target for parasites (the most vulnerable type of target).

So, what are the parasites to this homogenous global system? Networks. They range from financial/corporate networks (per the recent financial crash) to terrorist networks (al Qaeda, etc.) to criminal networks (narco-gangs, MEND, etc.). All of these parasites are post-modern in that they don’t adhere to any meaningful ideology that can replace the state (even al Qaeda envisions a decentralized feudal Caliphate as an end game). They all are in the process of co-opting global system functions (host functions) to achieve operational space for the advancing their evolutionary advantage. Unfortunately, per the Red Queen hypothesis, a rapidly evolving parasite’s competition against a static, non evolving, homogenous host likely results in extinction of the host.

Adaptation?
The only likely process of evolutionary competition against globally systemic parasites is to decentralize core functions of the global system (resilience through scale invariance). The process of decentralization, one model being resilient communities, manufactures geographic and social heterogeneity. Heterogeneity makes it possible for the host to develop solutions to parasitic predation (be it financial, criminal, biological, technological, or purely violent disruption). In this way, any potential extinction event visited on the global system would be met by solutions emerging out of systems hidden in a socially/economically heterogenous geography. It’s only in this way that a stable relationship between parasite and host can develop.

CHARTER CITIES
http://www.chartercities.org/concept
http://www.chartercities.org/resources
http://www.chartercities.org/blog
http://www.chartercities.org/faq

THIS FIRST:
CRUCIBLES for INNOVATION
http://www.uscharterschools.org/cs/r/query/q/1558?x-title=New+Non-Federal+Research+and+Reports
Top 10 Charter Communities by Market Share
http://www.publiccharters.org/files/publications/MarketShare_P4.pdf
Equity Overlooked: Charter Schools and Civil Rights Policy
http://www.civilrightsproject.ucla.edu/research/deseg/equity-overlooked-report-2009.pdf
Center for Education Reform’s 2009 Accountability Report
http://www.edreform.com/download/CER_2009_AR_Charter_Schools.pdf
Teacher Cooperatives
http://www.hoover.org/publications/ednext/Teacher_Cooperatives.html

EXPERIMENTAL CITY-STATE, AVAILABLE for LONG LEASE, WILL BUILD to SUIT

PREVIOUSLY on SPECTRE : WILL to POWER
http://news.bbc.co.uk/2/hi/africa/6990034.stm
https://spectregroup.wordpress.com/2007/07/21/if-only-he-would-apply-himself/
Kids in Guinea Study Under Airport Lamps / by Rukmini Callimachi

The sun has set in one of the world’s poorest nations and as the floodlights come on at G’bessi International Airport, the parking lot begins filling with children. The long stretch of pavement has the feel of a hushed library, each student sitting quietly, some moving their lips as their eyes traverse their French-language notes. It’s exam season in Guinea, ranked 160th out of 177 countries on the United Nations’ development index, and schoolchildren flock to the airport every night because it’s among the only places where they’ll always find the lights on. Groups of elementary and high school students begin heading to the airport at dusk, hoping to reserve a coveted spot under the oval light cast by one of a dozen lampposts in the parking lot. Some come from over an hour’s walk away. The lot is teeming with girls and boys by the time Air France Flight 767 rounds the Gulf of Guinea at an hour-and-a-half before midnight. They hardly look up from their notes as the Boeing jet begins its spiraling descent over the dark city, or as the newly arrived passengers come out, shoving luggage carts over the cracked pavement. “I used to study by candlelight at home but that hurt my eyes. So I prefer to come here. We’re used to it,” says 18-year-old Mohamed Sharif, who sat under the fluorescent beam memorizing notes on the terrain of Mongolia for the geography portion of his college entrance test.

Only about a fifth of Guinea’s 10 million people have access to electricity and even those that do experience frequent power cuts. With few families able to afford generators, students long ago discovered the airport. Parents require girls to be chaperoned to the airport by an older brother or a trusted male friend. Even young children are allowed to stay out late under the fluorescent bulbs, so long as they return in groups. “My parents don’t worry about me because they know I’m here to seek my future,” says 10-year-old Ali Mara, busy studying a diagram of the cephalothorax, the body of an insect. They sit by age group with 7-, 8- and 9-year-olds on a curb in a traffic island and teenagers on the concrete pilings flanking the national and international terminals. There are few cars to disturb their studies. Most are working on memorizing their notes, struggling to commit to memory entire paragraphs dictated by their teachers on the history of Marxism, or the unraveling of colonial Africa, or the geology of Siberia. Tests are largely feats of memorization, a relic from Guinea’s French colonial rulers. According to U.N. data, the average Guinean consumes 89 kilowatt-hours per year – the equivalent to keeping a 60-watt light bulb burning for two months – while the typical American burns up about 158 times that much. The students at the airport consider themselves lucky. Those living farther away study at gas stations and come home smelling of gasoline. Others sit on the curbs outside the homes of affluent families, picking up the crumbs of light falling out of their illuminated living rooms. “We have an edge because we live near the airport,” says 22-year-old Ismael Diallo, a university student.

It’s an edge in preparing for an exam in a country where unemployment is rampant, inflation has pushed the price of a large bag of rice to $30 and a typical government functionary earns around $60 a month. The lack of electricity is “a geological scandal,” says Michael McGovern, a political anthropologist at Yale University, quoting a phrase first used by a colonial administrator to describe Guinea’s untapped natural wealth. The Oregon-sized territory has rivers which if properly harnessed could electrify the region, McGovern says. It has gold, diamonds, iron and half the world’s reserves of bauxite, the raw material used to make aluminum. For 23 years, the former French colony has been under the grip of Lansana Conte, a reclusive and temperamental army general who grabbed the presidency in a 1984 coup. Suffering from a heart ailment, Conte has repeatedly traveled abroad for medical treatment. Mass demonstrations earlier this year called for his resignation because of his health and the deteriorating economy, but he instead declared martial law. Eighteen-year-old Ousman Conde admits that sitting on the concrete piling is not comfortable, but says passing his upcoming exam could open doors. “It hurts,” he says, looking up from his notes on Karl Marx for the politics portion of the test. “But we prefer this hurt to the hurt of not doing well in our exams.”


the HONG KONG MODEL
http://www.newsweek.com/blogs/wealth-of-nations/2009/08/12/the-best-development-plan-in-the-world-originated-with-the-british-empire.html
The Best Development Plan in the World Originated With…the British Empire?

The secret to turning a poor nation into a rich one can’t be found in a World Bank report. It wasn’t hatched in the corridors of the International Monetary Fund, either. It came from the British Empire. That is one way, at least, of interpreting Stanford economist Paul Romer’s new plan for turning economically backward countries like Cuba into engines of growth like China. Experts have long known that the traditional tools of development don’t work: free trade, foreign investment, and charity have failed as many countries as they’ve helped. The rot in a dysfunctional country is at its core—in the laws, institutions, and informal rules that govern daily life.

How to fix a problem so fundamental? Let a rich country take over part of a poor one. The hope, says Romer, is that the superior norms of the developed country will take root abroad. He calls his plan Charter Cities and illustrates it with a thought experiment. Imagine if the U.S. closes its prison at Guantánamo Bay and hands the land over to Canada, which agrees to develop it. “A new city blossoms,” writes Romer.

It does for Cuba what Hong Kong, administered by the British, did for China; it connects Cuba to the global economy. To help the city flourish, the Canadians encourage immigration. It is a place with Canadian judges and Mounties that happily accepts millions of immigrants. Some of the new residents could be Cuban émigrés who return from North America. Others might be Haitians who come work in garment factories that firms no longer feel safe bringing into Haiti. The new city gives the Haitians their only chance to choose to live under a system of law that offers safety and opportunity.

Private contractors rush in to build airports and infrastructure, lured by the prospect of rising property values. Multinational firms open factories, attracted by the proximity to low-cost labor and the certainty of the Canadian legal system. Eventually, Cuban authorities decide to replicate the experiment across the island, opening new, Guantánamo-like “special economic zones,” much as mainland China did starting in 1979, taking the Hong Kong model to Shenzhen and beyond. When played out on a global scale, “the gains from doing this are just enormous,” says Romer.

Such a fanciful idea might be easily dismissed if it weren’t coming from such an economic heavyweight. Romer transformed the field of growth theory in the 1980s, and his name is peppered throughout macroeconomic textbooks; he’s been mentioned as a potential Nobel Prize recipient. “There’s a thin line between revolutionary and crazy,” says NYU economist and development expert William Easterly. “Paul Romer has been adept at walking that line throughout his career, staying just out of the crazy part. He’s still tiptoeing along that line with this new idea.”

Still, there’s a pie-in-the-sky grandiosity to the scheme that elides some major stumbling blocks. One problem, admits Romer, is the parallel between charter cities and colonialism. Great Britain, for instance, would surely have qualms about taking over a few hundred acres of coastline in Ghana, where the legacy of slavery is still deeply felt. Romer says the similarities are surface level only—there’s no coercion involved in a charter city since it would be founded on empty or near-empty land, and anyone who lives there would do so by choice. Charter cities would only be considered in countries that welcome them. But the colonial parallel would certainly still rankle some. One way to mitigate the PR problem would be to let a group of rich countries administer the charter area; that way, no single nation could be accused of exploiting the host.

But the image problem hints at a more basic choke point: politics. “What’s clever about Paul’s idea is he’s saying, here’s a totally brand-new government we can invent from scratch and make it compete with existing governments,” says Easterly. “Anyone who doesn’t like their existing government can move. That’s an appealing notion. We’re so sick of governments that mistreat us that it’s kind of sticking them in the eye to say, here, we’re going to come up with a new one.” But though political competition is a seductive idea, it’s also a threat to existing powers, some of whom would surely try to block it. And globally orchestrated projects have a very low success rate—just look at the molasseslike progression toward a climate-change agreement. “International politics is a swamp,” says Easterly. “Things that involve international politics do not inspire a great deal of optimism in me.”

Nonetheless, Romer is attacking the idea with the zeal of a, er, missionary. He’s left his teaching position at Stanford and founded a nonprofit to pursue Charter Cities full time. He says he’s already in talks with potential host countries, although he won’t divulge which ones. Romer is confident that, despite the challenges, we’ll see the first charter cities within a few years. For the world’s poor and oppressed, that will be none too soon.

CONTACT
Paul Romer
http://www.stanford.edu/~promer/
http://www.ted.com/speakers/paul_romer.html
email : paul.romer [at] stanford [dot] edu


students do homework under the dim lights of a parking lot at G’bessi Airport in Conakry, Guinea

HOMEWORK by STREET LIGHT
http://www.prospectmagazine.co.uk/2010/01/for-richer-for-poorer/
For richer, for poorer
by Paul Romer / 27th January 2010

Forget aid—people in the poorest countries like Haiti need new cities with different rules. And developed countries should be the ones that build them

On the first day of TEDGlobal, a conference for technology enthusiasts in Oxford in July 2009, a surprise guest was unveiled: Gordon Brown. He began his presentation with a striking photograph of a vulture watching over a starving Sudanese girl. The internet, he said, meant such shocking images circulated quickly around the world, helping to mobilise a new global community of aid donors. Brown’s talk ended with a call to action: developed countries should give more aid to fight poverty.

When disaster strikes—as in the recent Haiti earthquake—the prime minister is right. Even small amounts of aid can save many lives. The moral case for aid is compelling. But we must also remember that aid is just palliative care. It doesn’t treat the underlying problems. As leaders like Rwandan president Paul Kagame have noted, it can even make these problems worse if it saps the innovation, ambition, confidence, and aspiration that ultimately helps poor countries grow.

So, two days later, I opened my own TED talk with a different photo, one of African students doing their homework at night under streetlights. I hoped the image would provoke astonishment rather than guilt or pity—for how could it be that the 100-year-old technology for lighting homes was still not available for the students? I argued that the failure could be traced to weak or wrong rules. The right rules can harness self-interest and use it to reduce poverty. The wrong rules stifle this force or channel it in ways that harm society.

The deeper problem, widely recognised but seldom addressed, is how to free people from bad rules. I floated a provocative idea. Instead of focusing on poor nations and how to change their rules, we should focus on poor people and how they can move somewhere with better rules. One way to do this is with dozens, perhaps hundreds, of new “charter cities,” where developed countries frame the rules and hundreds of millions of poor families could become residents.

How would such a city work? Imagine that a government in a poor country set aside a piece of uninhabited land. It invites a developed country to enter into a new type of partnership, in which the developed country sets up and enforces rules specified in a charter. Citizens from the poorer country, and the rest of the world, would be free to live and work in the city that emerges. It could create economic opportunities and encourage foreign investment, and by using uninhabited land it would ensure everyone living there would have chosen to do so with full knowledge of the rules. Roughly 3bn people, mostly the working poor, will move to cities over the next few decades. To my mind the choice is not whether the world will urbanise, but where and under which rules. Instead of expanding the slums in existing urban centres, new charter cities could provide safe, low-income housing and jobs that the world will need to accommodate this shift. Even more important, these cities could give poor people a chance to choose the rules they want to live and work under.

To understand why rules are the way to harness self-interest, and why such new cities could work where old cities have not, look again at the example of electricity. We know from the developed world that it costs very little to light a home—on average, less than one US penny an hour for a 100-watt bulb. We also know that most poor people in Africa are not starving. They could afford some light. Africans do not lack electricity because they are too poor. Indeed, reliable power is so important for education, productivity and job creation that it would be more accurate to say that many in Africa are poor because they don’t have electricity. So why don’t they?

Why the right rules matter
Consider development the other way round. US customers have cheap electricity mostly because rules channel self-interest in the right way. Some protect investments made by utilities, others stop these companies abusing their monopoly power. With such rules, companies win; efficient providers make a profit. But customers win too; they get access to a vital resource at low cost. It’s the absence of these rules that explains why many Africans don’t have electricity at home. It might seem a simple insight, but it took economists a long time to understand it.

In the 1950s and 1960s, economic models treated ideas as public goods, meaning that once one existed it was assumed to exist everywhere. Some ideas are like this—for example, the formula for oral rehydration therapy, the mixture of sugar, salt, and water, that stops children dying from diarrhoea. No one owns it and you can find it easily online. If all ideas were like this it would be easier for poor countries to grow. But they aren’t: patents and other legal rules stop some ideas spreading, while others are just easy to keep secret.

When I started graduate school in the late 1970s I was convinced economists underestimated the potential for new ideas to raise living standards. The body of work that grew out of my PhD thesis came to be called new growth theory, or post-neoclassical endogenous growth theory in Britain (when it was infamously taken up by new Labour in the mid-1990s). Initially I just wanted to understand how good ideas, like those which make cheap electric light possible, were discovered. But then another topic began to interest me: why didn’t ideas common in some parts of the world spread to others?

Put simply, some countries are better able to establish the type of rules that help good ideas spread, while others are trapped by bad rules that keep ideas out. The rules stopping cheap electricity, for instance, are not hard to identify. The threat of expropriation or political instability stops many western electricity companies moving into Africa. Those that do set up there can exploit their power as monopolists to charge excessive prices. Often they offer bribes to stop rules being enforced, or pay bribes themselves. Good rules would stop all this. So to unleash the potential of the marketplace, poor countries need to find a way to create good rules.

The challenge in setting up good rules lies in solving what economists call “commitment” problems. How can a developing country promise to keep the rules that govern investment fair? Nobel prize-winning economist Thomas Schelling illustrates this problem with the example of a kidnapper who decides he wants to free his victim. But the kidnapper worries that the victim, once released, will go to the authorities. The victim, eager to be free, promises not to—but there is no way for him to guarantee he will keep quiet. As a result, the kidnapper is compelled to kill the victim, even though both would be better off if a binding agreement could be made. Poor countries face similar problems: their leaders cannot make credible commitments to would-be investors.

Rich nations use well-functioning systems of courts, police and jails, developed over centuries, to solve such problems. Two people can make a commitment. If they don’t follow through, the courts will punish them. But many developing countries are still working their way down the same arduous path. Their leaders can fight corruption and establish independent courts and better rules over property rights, but such moves often require unpopular measures to coerce and cajole populations, making internal reforms excruciatingly slow. Subsequent leaders may undo any commitments they make. A faster route would seem to be for a developed country to impose new rules by force, as they did in the colonial period. There is evidence that some former colonies are more successful today because of rules established during their occupations. Yet any economic benefits usually took a long time to show up, and rarely compensated for years of condescension and the violent opposition it provoked. Today, violent civil conflicts have led some countries to again consider military humanitarian intervention, but this can only be justified in extreme circumstances. My point was that there is a middle ground between slow internal reforms and risky attempts at recolonialisation: the charter city.

There are large swathes of uninhabited land on the coast of sub-Saharan Africa that are too dry for agriculture. But a city can develop in even the driest locations, supported if necessary by desalinated and recycled water. And the new zone created need not be ruled directly from the developed partner country—residents of the charter city can administer the rules specified by their partner as long as the developed country retains the final say. This is what happens today in Mauritius, where the British Privy Council is still the court of final appeal in a judicial system staffed by Mauritians. Different cities could start with charters that differ in many ways. The common element would be that all residents would be there by choice—a Gallup survey found that 700m people around the world would be willing to move permanently to another country that offers safety and economic opportunity.

I started thinking about city-scale special zones after writing a paper about Mauritius. At the time of its independence in 1968, economists were pessimistic about this small island nation’s prospects. The population was growing rapidly, new jobs were scarce in its only real export industry (sugar), and high tariffs designed to protect small companies manufacturing for the domestic market meant no companies could profitably use their workers to manufacture goods for export. It was politically impossible to dismantle these barriers to trade, so policymakers did the next best thing: they created a special category of companies, ones said to be in a “special export zone.” The zone didn’t physically exist, in that these companies could locate anywhere on the island, but companies “inside” the zone operated under different rules. They faced no tariffs, or limits on imports or exports. Foreign companies in the zone could enter and exit freely, and keep profits they earned. Domestic companies could enter too. The only quid pro quo was that everyone in the zone had to produce only for export, so as not to compete with domestic firms. The zone was a dramatic success. Foreign businesses entered. Employment grew rapidly. The economy moved from agriculture to manufacturing. Once growth was underway, the government reduced trade barriers, freeing up the rest of the economy.

The history of development is littered with failed examples of similar zones. Mauritius was unusual because it had low levels of crime and the government already provided good utilities and infrastructure. The zone only had to remove one bad form of governance: trade restrictions. Yet many developing countries still can’t offer the basics, another reason why building new cities is an attractive option. Cities are just the right scale to offer basic conditions. So long as they can trade freely, even small cities are big enough to be self-sufficient. Yet because they are dense they require very little land.

To apply the lessons from Mauritius in countries with pervasive problems, the key is to create zones with new rules that are big enough to be self-contained. Big enough, that is, to hold a city. Then let people decide whether to enter.

When I returned to Mauritius in 2008, I outlined my ideas to Maurice Lam, head of the Mauritian Board of Investment. Maurice splits his time between Mauritius and Singapore. He and I knew that Lee Kuan Yew, former prime minister of Singapore, had experimented in the 1990s with a similar idea, establishing new cities that Singapore could help to run in China and Indonesia. These ran into difficulties because the local governments retained discretionary powers that they used to interfere after Singapore had made large investments in infrastructure. This convinced us that explicit treaties reassigning administrative control over land were needed. Maurice also said that countries in Africa would be open to this kind of arrangement. Some officials, eager to make a credible commitment to foreign investors, had already made informal inquiries about whether Mauritius would be willing to take administrative control over their special export zones.

What could go wrong?
Some economists have objected that a charter agreement between two countries will not necessarily solve the commitment problem that lies at the heart of development failures. The leaders of many countries enter into agreements, sometimes with the best intentions, that subsequent leaders or officials do not honour—as Lee Kuan Yew found to his cost. To guard against such an outcome, partners in a charter city must negotiate a formal treaty, like the one that gave the British rights in Hong Kong (see box, right). Under this arrangement the only way for the host country to renege on its commitment would be to invade. Even governments that resent having signed such agreements in the past almost always respect them. The Cubans hate the agreement that gave the US control of Guantánamo Bay, but learned to live with it.

Another objection comes from those who study urbanisation. They point out that the location of most existing cities is determined by accidents of history or geography, and suggest, correctly, that there are geographical requirements for a city to survive. But they are surely wrong to think that all the good sites for cities are taken. Here distance matters, but it is not an insurmountable obstacle: Mauritius continues to develop despite its remote location. Flat land is cheaper to build on, but many cities have developed on hilly terrain. A river can provide fresh water and access to the sea, but with desalination, so too can any coastal location where a port could be built. Access to the sea is the only real necessity—as long as a charter city can ship goods back and forth on container ships, it can thrive even if its neighbours turn hostile or unstable. And there are thousands of largely uninhabited coastal locations on several continents that could qualify.

Other urban economists fear new cities will repeat the unimpressive history of government-planned ones like Brasília, or Dubai’s recent bust. But these are both extreme examples. The state was too intrusive in Brasília and almost non-existent in Dubai. Hong Kong is the middle ground, a state ruled by laws not men, but one that leaves competition and individual initiative to decide the details.

The experience in Hong Kong offers two further lessons. The first is the importance of giving people a choice about the rules that govern them. Hong Kong was sparsely populated when the British took over. Unlike other colonial systems, almost everyone chose to come and live under the new system. This gave the rules proposed by the British a degree of legitimacy they never had in India, where the rules were imposed on often unwilling subjects. This is why building new cities, rather than taking over existing ones, is so powerful.

The second lesson is the importance of getting the scale right. Most nations are too large to update all their rules and laws at once. The coercion needed to impose a new system on an existing population generates friction, no matter who is in charge. Leaders on mainland China understood this when they attempted to copy the successes of Hong Kong by gradually opening a few places, such as the new city of Shenzhen, near Hong Kong. Yet while nations are too big, towns and villages are too small. A village cannot capture the benefits that arise when millions of people live and work together under good rules. Cities offer the right scale for dramatic change.

The demands of migration
As billions of people urbanise in the coming decades, they can move to hundreds of new cities. The gains new cities can unleash are clear. Picture again the students studying under the streetlights. By themselves, political leaders in poor countries won’t provide cheap, reliable electricity any time soon. They can’t eliminate the political risk that holds back investment or ensure adequate regulatory controls. But working with a partner nation, they can establish a new city where millions of young people could pay pennies to be able to study at home. And as these cities seek out residents, the leaders and citizens in existing countries will face the most effective pressure for good governance—competition.

We know from history that the competitive pressures created by migration can boost economic growth. But strong opposition to immigration in the world’s richest economies prevents many people from moving to better systems of rules. Charter cities bring the good systems of rules to places that would welcome migrants. Indeed, charter cities offer the only viable path for substantial increases in global migration, bringing good rules to places that the world’s poor can easily and legally access, while lessening the contentious political frictions that arise from traditional migration flows.

Intelligently designed new cities can offer environmental benefits too, a point increasingly made by environmentalists like Stewart Brand (see p39.) For example, Indonesia emits greenhouse gases at a rate exceeded only by China and the US. This rate is partly due to logging practices in its rainforest, and efforts to clear land for palm-oil plantations and pulp-producing acacia trees. Brand has cited the experience of Panama to demonstrate the green potential of urbanisation: as people there left slash-and-burn agriculture for work in cities, forest regenerated on the land they left behind. Similar migration to new cities in places like Indonesia could do much to reduce carbon emissions from the developing world.

Investment in charter cities could also make more effective the aid rich countries give. The British experience in Hong Kong shows that enforcing rules costs partners very little, but can have a huge effect. Because Hong Kong helped make reform in the rest of China possible, the British intervention there arguably did more to reduce world poverty than all the official aid programmes of the 20th century, and at a fraction of the cost. And, if many such cities are built, fewer people will be trapped in the failed states that are the root cause of most humanitarian crises and security concerns.

There are many questions to be resolved before the first city is chartered. Is it better to have a group of rich nations, or a multinational body like the EU, play the role the British played in Hong Kong? How would such a city be governed? And how and when might transfer of control back to the host country be arranged? But as we begin to explore these questions, we must not lose sight of the fundamental insights that advocates of the free market underestimate. The win-win agreements that we see in well-functioning markets are possible only when there is a strong, credible government that can establish the rules. In places where these rules are not present, it could take centuries for locals to bootstrap themselves from bad rules to good. By creating new zones through partnerships at the national level, good rules can spread more quickly, and when they do, the benefits can be huge.

The world’s fortunate citizens must be able to provide assistance when disasters like the earthquake in Haiti strike, but we must also be wary of the practical and moral limits of aid. When the roles of benefactor and supplicant are institutionalised, both parties are diminished. In the case of Haiti, if nations in the region created just two charter cities, they could house the entire population of that country. Senegal has offered Haitians the opportunity to return to the home “of their ancestors.” “If they come en masse we are ready to give them a region,” a Senegal government spokesman said. Outside of the extraordinary circumstances of a crisis, the role of partner is better for everyone. And there are millions of people seeking partnerships around the world. Helping people build them successfully is the opportunity of the century

Hong Kong: the first charter city?
Hong Kong was a successful example of a special zone that could serve as a model for charter cities. In the 1950s and 1960s, it was the only place in China where Chinese workers could enter partnerships with foreign workers and companies. Many of the Chinese who moved to Hong Kong started in low-skill jobs, making toys or sewing shirts. But over time their wages grew along with the skills that they gained working with educated managers, and using modern technologies and working practices.

Over time they acquired the values and norms that sustain modern cities. As a result, Hong Kong enjoyed rapid economic growth—in 1960, the average income was around £2,500; by 1997, it was around £20,000. Even if it had wanted to, the Chinese government acting alone could not have offered this opportunity. The credibility of rules developed over centuries by the British government was essential in attracting the foreign investment, companies and skilled workers that let these low-skill immigrants lift themselves out of poverty. As in Mauritius, authority rested ultimately with the British governor general, but most of the police and civil servants were Chinese. And the benefits demonstrated in Hong Kong became a model for reform-minded leaders in China itself.

ADOPT-a-CITY
http://video.forbes.com/fvn/21-century-cities-09/adopt-a-city
http://www.theatlantic.com/magazine/print/2010/07/the-politically-incorrect-guide-to-ending-poverty/8134/
The Politically Incorrect Guide to Ending Poverty
by Sebastian Mallaby / July/August 2010

Halfway through the 12th Century, and a long time before economists began pondering how to turn poor places into rich ones, the Germanic prince Henry the Lion set out to create a merchant’s mecca on the lawless Baltic coast. It was an ambitious project, a bit like trying to build a new Chicago in modern Congo or Iraq. Northern Germany was plagued by what today’s development gurus might delicately call a “bad-governance equilibrium,” its townships frequently sacked by Slavic marauders such as the formidable pirate Niclot the Obotrite. But Henry was not a mouse. He seized control of a fledgling town called Lübeck, had Niclot beheaded on the battlefield, and arranged for Lübeck to become the seat of a diocese. A grand rectangular market was laid out at the center of the town; all that was missing was the merchants.

To attract that missing ingredient to his city, Henry hit on an idea that has enjoyed a sort of comeback lately. He devised a charter for Lübeck, a set of “most honorable civic rights,” calculating that a city with light regulation and fair laws would attract investment easily. The stultifying feudal hierarchy was cast aside; an autonomous council of local burgesses would govern Lübeck. Onerous taxes and trade restrictions were ruled out; merchants who settled in Lübeck would be exempt from duties and customs throughout Henry the Lion’s lands, which stretched south as far as Bavaria. The residents of Lübeck were promised fair treatment before the law and an independent mint that would shelter them from confiscatory inflation. With this bill of rights in place, Henry dispatched messengers to Russia, Denmark, Norway, and Sweden. Merchants who liked the sound of his charter were invited to migrate to Lübeck.

The plan worked. Immigrants soon began arriving in force, and Lübeck became the leading entrepôt for the budding Baltic Sea trade route, which eventually extended as far west as London and Bruges and as far east as Novgorod, in Russia. Hundreds of oaken cogs—ships powered by a single square sail—entered Lübeck’s harbor every year, their hulls bursting with Flemish cloth, Russian fur, and German salt. In less than a century, Lübeck went from a backwater to the most populous and prosperous town in northern Europe. “In medieval urban history there is hardly another example of a success so sudden and so brilliant,” writes the historian Philippe Dollinger.

Perhaps the only thing more remarkable than Lübeck’s wealth was the influence of its charter. As trade routes lengthened, new cities mushroomed all along the Baltic shore, and rather than develop a legal code from scratch, the next wave of city fathers copied Lübeck’s charter, importing its political and economic liberties. The early imitators included the nearby cities of Rostock and Danzig, but the charter was eventually adopted as far afield as Riga and Tallinn, the capitals of modern Latvia and Estonia. The medieval world had stumbled upon a formula for creating order out of chaos and prosperity amid backwardness. Lübeck ultimately became the seat of the Hanseatic League, an economic alliance of 200 cities that lasted nearly half a millennium.

Fast-forward several centuries, and Henry the Lion’s would-be heir is Paul Romer, a gentle economist at Stanford University. Elegant, bespectacled, geekishly curious in a boyish way, Romer is not the kind of person you might picture armed with a two-handed flanged mace, cutting down Slavic marauders. But he is bent on cutting down an adversary almost as resistant: the conventional approach to development in poor countries. Rather than betting that aid dollars can beat poverty, Romer is peddling a radical vision: that dysfunctional nations can kick-start their own development by creating new cities with new rules—Lübeck-style centers of progress that Romer calls “charter cities.” By building urban oases of technocratic sanity, struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed. And since Henry the Lion is not on hand to establish these new cities, Romer looks to the chief source of legitimate coercion that exists today—the governments that preside over the world’s more successful countries. To launch new charter cities, he says, poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate. Romer’s prescription is not merely neo-medieval, in other words. It is also neo-colonial.

Inevitably, Romer’s big idea attracts some skeptical responses. “Paul is very creative,” says William Easterly, a development economist at New York University, “and sometimes creativity can cross the line into craziness.” The way Easterly sees it, charter cities (like charter schools in American cities) may provide an alternative to incumbent government systems, promising experimentation, competition, and perhaps a new way forward. But Easterly also worries that Romer has fallen prey to an old siren song—the idea that you can slough off debilitating customs and vested interests by constructing a technocratic petri dish uncontaminated by politics. Other critics are blunter. “Romer makes it sound as though setting up a charter city is like setting up a fairground,” Elliott Sclar, a professor of urban planning at Columbia University, told me. “We take a clear piece of land, we turn on the bright lights, and we create this separate environment that will stand apart from everything that’s around it. I wish it were that simple.”

However simple-seeming his ideas, Romer is no lightweight. Starting in the late 1980s, he produced a series of papers that changed the way his profession thinks about economic growth; his most celebrated contribution, published in 1990, “was one of the best papers in economics in 25 or 30 years,” in the estimation of Charles I. Jones, a colleague of Romer’s at Stanford. Before the Romer revolution, theorists had explained an economy’s growing output by looking at the obvious inputs—the number of hours worked, the skills of the workforce, the quantity of machinery and other physical capital.

But Romer stressed a fourth driver of growth, which he termed simply “ideas,” a category that encompassed everything from the formula for a new drug to the most efficient sequence for stitching 19 pieces of material into a sneaker. In statistical tests, the traditional inputs appeared to account for only half the differences in countries’ output per person, suggesting that ideas might account for the remaining half—and that leaving them out of a growth theory was like leaving the prince out of Hamlet. And whereas the old models had predicted that growth would slow as population expansion put stress on resources, and as new investment in skills and capital yielded diminishing returns, Romer’s New Growth Theory opened the window onto a sunnier worldview: a larger number of affluent people means more ideas, so prosperity and population expansion might cause growth to speed up.

Romer’s enthusiasm for technology made him a natural West Coaster, so it is not surprising that, after spells on the faculty at the University of Rochester and the University of Chicago, he fetched up at the University of California at Berkeley and then at Stanford’s Graduate School of Business. But the next turn in his thinking involved a rebellion against the libertarianism of his Silicon Valley home. “I was willing to be a bit confrontational,” Romer says, impishly. Starting with a paper he presented at a World Bank conference in 1992, Romer began to emphasize that “ideas” included more than just technologies and manufacturing processes. Ideas were also embodied in customs and institutions—or, as Romer later came to put it, “rules”—patent law, competition law, bankruptcy law, and so on, as well as the softer “norms” that govern people’s behavior. Indeed, these rules could be even more important than technologies, however much the digerati of Silicon Valley might wish to believe otherwise. Without new technologies, an economy might grow slowly. But without decent rules, an economy cannot even make use of the technologies that already exist.

To drive home the importance of good rules to economic growth, Romer sometimes shows a photograph of Guinean teenagers doing their homework under streetlights. The line of hunched, concentrating figures presents a mystery, Romer says; from the photo it is clear that the teens are not dirt poor, and youths like these generally own cell phones. Yet they evidently have no electric light at home, or they would not be studying by the curbside. “So here is the puzzle,” Romer declares: Why do these kids have access to a cutting-edge technology like the cell phone, but not to a 100-year-old technology for generating electric light in the home? The answer, in a word, is rules. Because of misguided price controls in the teenagers’ country, the local electricity utility has no incentive to connect their houses to the power grid. Their society lacks the rules that make technological advance meaningful.

For much of the 1990s, development economists built on Romer’s insights, so that laws and the institutions needed to enforce them became central to the mainstream view of what drives human progress. But then, having transformed academic economics, Romer shocked the profession once again—this time by abandoning it. Starting in 2001, he began to channel his energy into a start-up software company that he named Aplia. “I was extremely disappointed to lose Paul as an academic colleague,” Easterly told me. “By walking away from research, he no doubt ignored the advice of anyone he might have talked to.” But Romer shrugged off such complaints. “When I was young, there were too many old economists who were getting in the way,” he explained. “So after 10 years I wanted to get out of the way, and not stifle the next generation.” Besides, Romer’s father, Roy, a former governor of Colorado, had just begun running the Los Angeles school system. As a proponent of technology, the younger Romer was embarrassed that educators such as himself had barely used computers to boost their own productivity.

Like Romer’s research, his company was radical. It created teaching materials that could be accessed online by collegiate economics students, challenging the dead-tree model of the textbook-industrial complex. At first, Romer was told that his approach was crazy. Students were used to paying a fortune for textbooks and then getting the accompanying homework problems at a trivial cost; Romer’s little start-up presumed to invert custom. Sooner or later, Romer insisted, textbooks would be electronic, at which point they would be copied and shared. By contrast, access to online homework problems could be metered successfully on the Web, because the sale of the homework could be bundled with automatic, online grading. Professors would be drawn to the system, and to assigning Aplia’s online texts. And those who had stinted on handing out exercises because of the grading time required would now feel free to assign more, with the result that students would make faster progress. By the time Romer sold Aplia in 2007, students had submitted 200 million answers to its online problems, and the venture had made its founder independently wealthy—not rich enough to be invited to Silicon Valley’s fancy charity galas, but plenty rich enough to live without a salary. At 52 years old, he began to look for a new challenge.

Romer was not inclined to go back to academia. The World Bank sounded him out for the job of chief economist, a perch previously occupied by stars such as Stanley Fischer, Lawrence Summers, and Joseph Stiglitz, but Romer was not interested in that, either. What he wanted, he told me, was to draw on the intellectual creativity of his university days and the entrepreneurial initiative he had shown at Aplia—and above all, to be maximally ambitious. When he made his choice, in 2008, it was suitably bold. He gave up tenure at Stanford and set out to make his mark in his own way: with the help of three assistants, he launched his charter-cities campaign, operating partly out of the small office he retained at Stanford and partly out of a friend’s house or a local Peet’s Coffee. He also began to shuttle back and forth across the world, meeting with any developing-country leader who would grant him an audience. Especially in sub-Saharan Africa, a surprising number proved ready to do so.

When Romer explains charter cities, he likes to invoke Hong Kong. For much of the 20th century, Hong Kong’s economy left mainland China’s in the dust, proving that enlightened rules can make a world of difference. By an accident of history, Hong Kong essentially had its own charter—a set of laws and institutions imposed by its British colonial overseers—and the charter served as a magnet for go-getters. At a time when much of East Asia was ruled by nationalist or Communist strongmen, Hong Kong’s colonial authorities put in place low taxes, minimal regulation, and legal protections for property rights and contracts; between 1913 and 1980, the city’s inflation-adjusted output per person jumped more than eightfold, making the average Hong Kong resident 10 times as rich as the average mainland Chinese, and about four-fifths as rich as the average Briton. Then, beginning around 1980, Hong Kong’s example inspired the mainland’s rulers to create copycat enclaves. Starting in Shenzhen City, adjacent to Hong Kong, and then curling west and north around the Pacific shore, China created a series of special economic zones that followed Hong Kong’s model. Pretty soon, one of history’s greatest export booms was under way, and between 1987 and 1998, an estimated 100 million Chinese rose above the $1-a-day income that defines abject poverty. The success of the special economic zones eventually drove China’s rulers to embrace the export-driven, pro-business model for the whole country. “In a sense, Britain inadvertently, through its actions in Hong Kong, did more to reduce world poverty than all the aid programs that we’ve undertaken in the last century,” Romer observes drily.

Of course, versions of China’s special economic zones have existed elsewhere, especially in Asia. But Romer is not just arguing for enclaves; he is arguing for enclaves that are run by foreign governments. To Romer, the fact that Hong Kong was a colonial experiment, imposed upon a humiliated China by means of a treaty signed aboard a British warship, is not just an embarrassing detail. On the contrary, British rule was central to the city’s success in persuading capitalists of all stripes to flock to it. Romer sometimes illustrates this point by citing another Communist country: modern-day Cuba. Cuba’s rulers have tried to induce foreign corporations to set up shop in special export zones, and have been greeted with understandable caution. But if Raúl Castro convinced a foreign government—ideally a rich democracy such as Canada—to assume sovereignty over a start-up city in Cuba, the prospect of a mini Canada in the sun might attract a flood of investment.

It must have occurred to Castro, Romer says, that his island could do with its own version of Hong Kong; and perhaps that the Guantánamo Bay zone, over which Cuba has already ceded sovereignty to the United States, would be a good place to build one. “Castro goes to the prime minister of Canada and says, ‘Look, the Yankees have a terrible PR problem. They want to get out. Why don’t you, Canada, take over? Run a special administrative zone. Allow a new city to be built up there,’” Romer muses, channeling a statesmanlike version of Raúl Castro that Cuba-watchers might not recognize. “Some of my citizens will move into that city,” Romer-as-Castro continues. “Others will hold back. But this will be the gateway that will connect the modern economy and the modern world to my country.”

When I put this scenario to Julia Sweig, a Cuba expert at the Council on Foreign Relations, she described the whole notion as “wacky.” But not everyone has dismissed Romer’s vision so quickly. Romer maintains that when he started to discuss his thinking with governments in developing countries, he found many of them receptive. One nation in particular seemed eager to sign on: the island-state of Madagascar, off the southeastern coast of Africa, where 90 percent of the people subsist on less than $2 a day.

In July 2008, Romer made his first trip to Madagascar’s bustling capital, Antananarivo. Madagascar’s government was anxious to attract foreign investment, and it understood that a credibility deficit held it back. In an earlier bout of openness, the island had lured in foreign garment firms, but then the political climate turned hostile and the firms fled; now the government was having trouble enticing them to come back. Faced with this obstacle, the Malagasy authorities were open to unconventional arrangements. To boost investment in agriculture, they were ready to lease a Connecticut-size tract of land to Daewoo, a South Korean corporation, for 99 years. To boost investment in export industries, they were thinking about inviting a tiny Indian Ocean neighbor, Mauritius, to administer an export-processing zone on Malagasy territory. Romer’s proposal fit in with these adventurous ideas. He returned to Antananarivo in November 2008 and held another round of promising meetings with government officials. The final hurdle, he was told, would be to secure an audience with the president, a former businessman named Marc Ravalomanana. Nothing could happen without his say-so.

Romer returned to Stanford and waited to hear when the president might be available. Periodically, he would receive an e-mail: Ravalomanana’s schedulers were battling to fit him in, but dozens of competing issues demanded the boss’s attention, and they were reluctant to commit to a firm time for the meeting. As the end of the year approached, without any appointment, Romer decided it was time for a gamble: he made the 30-hour trip from San Francisco once again, arriving in Antananarivo on the Sunday before Christmas, figuring that the president’s schedule might open up over the holidays. He checked himself into the Hotel du Louvre, close to the presidential palace, and called his government contacts to announce his arrival; then he set about waiting. He found that a patisserie nearby served finer French pastries than he had tasted in any American city. Sitting in the café with an espresso and a mille-feuille, Romer could see young men, stunted from malnutrition, watching over the cars parked in front of the hotel, hoping for a few tips. A portly European of a certain age walked by with an attractive young Malagasy woman on his arm, and the men outside the hotel stared. The look on their faces expressed all that needed to be said about global inequality.

Two days after he arrived, Romer got the summons he was waiting for. Late in the evening, on the night before Christmas Eve, he was ushered into the president’s personal residence, a recently refurbished but relatively modest home high in the hills. Ravalomanana had a few guests over to celebrate the holidays, and the mood was relaxed. He invited Romer out onto his balcony to see the view of the city, and then the two men moved into a study. The only symbols of authority were a large desk and a flag. The president was in shirtsleeves.

In public, Ravalomanana cut quite a figure. Handsome, youthful in appearance, and wealthy, he had started out selling homemade yogurt off the back of a bicycle and ended up holding a national monopoly on all dairy and oil products. But in private, Romer found the president quite approachable. Romer made his pitch for a charter city, and Ravalomanana responded that he wasn’t sure one was enough; if Romer could identify two rich countries willing to play the role of government trustee, it might be better to launch two parallel experiments. The president and the professor agreed that the new hubs should be open to migrants from nearby countries as well as to locals. They rose to examine a map of Madagascar on the study wall. Ravalomanana suggested building the first city on the island’s southwestern coast, which was largely uninhabited because of its dry heat. To Romer, the site sounded very much like the coastal locations that appeal most to the world’s affluent as vacation spots.

Romer has a quick smile and a knack for saying big things with small words, but he is not much for emotion. Recalling his trips to Madagascar, he sounds typically cool about them. But a more excitable person would be whooping out the punch lines at this point in the story; the fact that the charter-cities movement had progressed so far so fast is little short of astonishing. Barely a year after launching his venture, Romer was on the brink of a rare coup: a nation of 20 million people was about to embrace a neo-medieval, neo-colonial scheme untested in the modern history of development. But then a different sort of coup occurred—the kind of coup, unfortunately, that underscores the obstacles to Romer’s project.

Even as Romer was meeting with Ravalomanana, the president’s main political opponent was sniping at the proposed lease of farmland to Daewoo, and the idea of giving up vast swaths of territory to foreigners was growing increasingly unpopular. The arrangement was denounced as treason, and public protests gathered momentum, eventually turning violent. In late January 2009, protesters tossed homemade grenades at radio and TV stations that Ravalomanana owned; looters ransacked his chain of supermarkets. In February, guards opened fire on marchers in front of the presidential palace, killing 28 civilians. At this, units of the army mutinied. Soon, Ravalomanana was forced out of office.

The first action of the new government was to cancel the Daewoo project, and Romer’s plans in Madagascar were put on hold indefinitely. But the larger question was what, if anything, this disappointment signified for Romer’s whole approach. The riots appeared to demonstrate the explosive sensitivities surrounding sovereignty and land—sensitivities that are not confined to Madagascar. Indeed, versions of the Daewoo story have played out elsewhere. In the late 1990s, for example, Fiji’s government decided to bring in a British nonprofit to manage its mahogany forests, and an indigenous leader launched a revolt under the slogan “Fiji for the Fijians.” The rebellion was hypocritical: as the Oxford economist Paul Collier recounts in his book The Bottom Billion, the indigenous leader had himself backed a rival foreign bid to manage the mahogany. But the venality of the rebels’ motivation didn’t change the fact that a demagogue could easily attract support by railing against territorial concessions to foreigners.

Ever since the setback in Madagascar, Romer has been coy, for obvious reasons, about which governments are interested in his plan. But he remains optimistic. “I revived growth theory. I made technology work in higher ed. I am two for two, and I think the impossible can be done,” he told me cheerfully. He added that the Daewoo deal might not have been the main impetus for the coup in Madagascar; the real reasons for Ravalomanana’s downfall lay in idiosyncratic local rivalries, even if the opposition exploited sensitivities over land to incite antigovernment protests. I suggested that the fact that land concessions could trigger such emotions was still not a good sign. Romer stopped, considered, and chose his words carefully.

“Anything that involves land can be manipulated by people who want to rise up against a leader,” he began. “You have to find a place where there’s a strong enough leader with enough legitimacy to do this knowing that he’s going to get attacked. It narrows the options quite a bit. But we shouldn’t give up without trying a few more places.” In short, a disappointment with one client is no excuse for failing to pitch other ones. Any entrepreneur knows that.

As politically freighted as Romer’s ideas are, they also carry a continuing attraction to the people in charge of many poor countries, particularly those with rapidly growing populations. By some estimates, 3 billion people will move to cities in the next few decades, abandoning miserable and environmentally destructive work as subsistence farmers in the hope of better lives in manufacturing and services. In the absence of a Romer-type solution, these migrants will move into urban slums with no running water, high crime rates, few steady jobs, and sewage in the streets; charter cities seem a better option. And Romer’s idea has the great merit of paying for itself. Land in successful cities appreciates in value, creating wealth that can be unlocked to finance new buildings, businesses, and infrastructure. And so African officials continue to meet with Romer, and Romer continues to jet off to wherever they are ready to see him.

When you listen carefully, you realize that much of what Romer is saying should not be controversial. A few development economists argue that geography is destiny, but most share Romer’s conviction that decent rules are paramount. After all, Asia accounted for fully 56 percent of world income in 1820, only 16 percent in 1950, and a substantial 39 percent in 2008; what changed over this period was rules, not geography. Equally, Romer’s contention that a developing country can achieve good government by importing the credibility of foreigners fits with mainstream thinking. When Panama or Ecuador decides to do business in dollars, or when Slovenia embraces the euro, each country is importing the credibility of a foreign central bank. Similarly, joining the World Trade Organization is a proven way to import the rich world’s tariff structure, intellectual-property rules, and domestic regulations—and, just as important, to persuade investors that the reform is permanent. Importing foreign election monitors or peacekeepers can compensate for weak political institutions or security forces. And so on.

But Romer is also urging us to reexamine assumptions about citizenship and democracy, and this is where he gets more radical. In the kind of charter city he imagines, the governor would be appointed by Canada or some other rich nation, but the people who work there would come from poor countries—the whole point, after all, is to bring the governance of the developed world to workers in undeveloped places. It follows that the workers in Romer’s charter city wouldn’t be citizens in the full sense. They would be offered whatever protections the founding charter might lay down, and they would have to take them or leave them. Rather than getting a vote at the ballot box, Romer is saying, the residents of a charter city would have to vote with their feet. Their leaders would be accountable—but only to the rich voters in the country that appointed them.

This viewpoint is, to say the least, not in keeping with the idealized vision of development, in which freedom and prosperity advance in lockstep, with democracy serving as the necessary companion to economic progress. In the 1980s Ronald Reagan declared confidently, “Freedom works”; and in the 1990s Bill Clinton lectured foreign counterparts on how democracy had become all the more indispensable to progress with the advent of the “knowledge economy.” But assertions like these have seemed more fragile recently, with authoritarian China breaking growth records and state capitalism apparently thriving; Romer is hardly the only person to doubt that democracy is a necessary condition for economic progress. And to the extent that opt-in charter cities offer a third way—something between pure democracy and pure authoritarianism—those who care for liberty might do well to embrace the experiment. Charter cities make it harder for authoritarians to claim that their system offers the only fast route out of poverty.

The real test for Romer’s attitude toward democracy is not whether it conforms to Western ideals, but whether it appeals to the poor people whom Western aid agencies claim to be serving. And on this score, the answer is clear. In fact, you could say Romer’s assertion—that voting with your feet can be a palatable alternative to casting a ballot—already has 214 million adherents, for that is the number of people who have chosen to leave their home countries and settle as migrants in places where they have no political vote. Real development, as distinct from the idealized vision of development, involves hard personal choices. If people are willing to live as legal or illegal immigrants, with rights that range from limited to none, then logically, they should be even more eager to move to a Romerplex, which would promise most of the economic gains of uprooting to another continent while allowing migrants to stay closer to their families and cultures.

If you have stuck with Romer thus far, you are ready for the last part of his argument. If good rules are the key to development, it follows that the big development challenge is to grasp how to reform bad rules—and to accept that conventional approaches are not terribly successful. Think back to the African teenagers reading under the streetlights. The bad rules they contend with are well understood: dozens of World Bank missions have doubtless pointed out that price controls on electricity destroy the electric company’s incentive to sign up new customers. But what is not understood is how to abolish those controls, since the country’s elite, which is already hooked up to the electric grid, will fight tooth and nail against higher prices.

The standard response to this obstacle is to advocate democracy and hope that voters will force change: the minority that has electric light will be outvoted by the much larger number of people who have been denied it. But Romer argues that this way forward is too slow. People don’t always vote their economic interests, and elites with tentacles all over the ministry of energy may keep price controls in place for decades. So rather than wait in vain for electricity rules to change, we are better off starting a new experiment with brand-new rules—a charter city that stands outside the ministry’s authority. Rather than going at an obstacle head-on, Romer is saying, sidestepping it is frequently a better option.

Romer likes to clinch this point with an analogy from industry. A firm like IBM may develop a culture—a set of corporate rules—that is brilliantly suited to handling the institutional customers that buy mainframe computers. But when the PC is invented, and individuals become customers, the IBM culture proves awkward and slow; and reforming its rules turns out to be difficult. So along come Dell and Apple, with business models better targeted at household consumers, and pretty soon computer-users start preferring their products. Change from without comes more easily than change from within. Industrial progress comes from new entrants and new experiments, not from the slow process of changing established corporate bureaucracies.

Sometimes, Romer continues, established businesses subject themselves to an internal version of this process. They spawn experimental subsidiaries, known as “skunkworks,” to try out new business models. For example, the discount retailer Target began as an experimental skunkworks spun off by the old-line retailer Dayton Company. Target was given its own charter and allowed to test out a new approach; it succeeded so resoundingly that Dayton eventually ditched the parts of its business that ran according to the old rules and embraced the Target formula. Again, generating change within an organization is often less effective than driving change from without. If companies can change themselves by setting up subsidiaries with new rules, countries could do the same with charter cities.

Throughout our conversation, Romer maintained a steady confidence that poor countries will eventually welcome charter cities. At the end of one of his overseas trips, he messaged me from his iPhone: “Sadly can’t say more yet other than that in two cases I’m waiting for next step meeting w the president. As before I remain optimistic about response from developing countries.” In one case, Romer and his government counterparts have progressed quite far: they have identified the site for the charter city, and agreed that its success will require the construction of a new port. Meanwhile, Romer is equally confident that elite opinion will come around to his idea—and my own recent straw poll of development economists suggests that at least some of them have already done so.

But the largest obstacle Romer faces, by his own admission, still remains: he has to find countries willing to play the role of Britain in Hong Kong. Despite the good arguments that Romer makes for his vision, the responsibilities entailed in Empire 2.0 are not popular. How would a rich government contend with the shantytowns that might spring up around the borders of a charter city? Would it deport the inhabitants, and be accused of human-rights abuses? Or tolerate them and allow its oasis to be overrun with people who don’t respect its city charter? And what would the foreign trustee do if its host tried to nullify the lease? Would it defend its development experiment with an expeditionary army, as Margaret Thatcher defended the Falklands? A top official at one of Europe’s aid agencies told me, “Since we are responsible for our remaining overseas territories, I can tell you there is much grief in running these things. I would be surprised if Romer gets any takers.”

Sensing the resistance among potential trustee nations, Romer has come up with new variants on his formula. A group of advanced countries could share the burden of trusteeship, rather than one nation shouldering the responsibility alone. To reduce the sensitivities over land and sovereignty, the territory for a charter city could be provided by one country while the migrant workers come from another. When I asked Romer about setting up a charter city in post-earthquake Haiti, he recoiled at the idea: the country has no functioning government, so there is no entity that could transfer sovereignty over a parcel of territory in a legitimate way. But Romer was happy to contemplate creative variations on this theme. What if Mexico ceded some land for a charter city for Haitians, with the charter being administered by a consortium of outside governments?

Whatever becomes of Romer’s movement, it is going to be interesting. His thinking taps into so many currents of our era—an era in which millions of migrants embrace his vote-with-your feet vision; in which the old faith in democratic development is questioned; and in which globalization scrambles settled notions of who rules what where. On one side, critics will be scathing: Elliott Sclar, the Columbia professor, warns, “Charter cities amount to a new form of colonialism, and that’s the last thing we need right now.” On the other side, adherents will cheer eagerly: charter cities are “one of the best ideas that anybody in development ever had,” according to Michael Clemens of the Center for Global Development, a think tank in Washington, D.C. And throughout these debates, it will be hard not to sympathize with Romer’s plea for fresh thinking. Charter cities face plenty of obstacles, and I could have written an article that dwelt exclusively on them. But when African teenagers do their homework under streetlights, isn’t Romer right to think the unthinkable?

HAVE GOOD RULES
http://freakonomics.blogs.nytimes.com/2009/09/29/can-charter-cities-change-the-world-a-qa-with-paul-romer/
Can “Charter Cities” Change the World? A Q&A With Paul Romer
by Dwyer Gunn / September 29, 2009

Weak institutions and bad rules are some of the most significant obstacles to economic growth in developing countries. Paul Romer, an economist known for his work on economic growth, has a plan to change that and recently resigned his tenured teaching position at Stanford to devote his full energies to the challenge. “Moving from bad rules to better ones may be much harder than most economists have allowed.” Romer’s plan calls for the establishment of Hong Kong-like “charter cities,” special zones within developing countries with better rules and institutions. Romer agreed to answer some of our questions about his crazy and/or revolutionary plan below:

Q. You recently gave up your tenured teaching position at Stanford to launch an ambitious development initiative. Can you tell us about your new charter cities project?
A. Yes, instead of being a professor, I’m now a senior fellow there, which means exactly what it says: I’m officially an old guy. The key to the project is a charter city, which starts out as a city-sized piece of uninhabited territory and a charter or constitution specifying the rules that will apply there. If the charter specifies good rules (or in our professional jargon, good institutions) millions of people will come together to build a new city.

Q. What makes you confident that land and a good charter are all it takes?
A. A well-run city lets millions of people come together and enjoy the benefit they can get from working together and trading with each other. The benefits per person increase with the total number of people; this is why big cities are more productive than small cities or villages. Of course, none of this is new. Adam Smith was referring to the power of exchange and the importance of increasing returns when he wrote that, “the division of labor is limited by the extent of the market.” There are many signs of the value created by all the exchange that takes place in a city. We see it in productivity and wage data. We also see it in the increase in the value of the land. Millions of people are willing to pay high rents just to live and work around millions of other people who are also paying high rents. Why? To get the benefits that come from exchange and interaction with so many others. In the developing world, most people don’t yet live in big well-run cities. Given the chance to move to one, hundreds of millions of people would go there to get a job, get an education for their children, and live in a place that is clean, safe, and healthy. Other people will make a profit by hiring them or supplying them with infrastructure and other services. If the rules let this happen, everyone can be better off. It doesn’t take any charity to build well-run cities.

Q. What kinds of rules would have to be specified in a charter for a new city?
A. Rules about public sanitation are a simple and familiar example. Without them, a city can’t be a healthy place to live; but these rules don’t just happen. The rules for a city are different from the ones for a village, but as a village slowly gets bigger, a city may be stuck with the rules of the village. In a village, it might be O.K. to rule that anyone can urinate anyplace they want. In a modern city, it is better to have a rule saying that people have to urinate into toilets connected to the sewer system. According to a recent news report, the city government in Paris is having trouble enforcing this rule. They have special police units that give tickets to men who urinate against walls. So when we speak of rules, we must understand both rules on paper and an effective system of enforcement. In many cities in poor countries, health is bad because governments don’t enforce basic rules about sanitation. The crime rate is appallingly high because the government doesn’t enforce rules that prohibit theft and violence. Traffic fatalities and congestion are both high because they don’t have good traffic rules or if they do, they don’t enforce them. The fact that people still flock to cities with such bad rules tells us something about how big the other benefits from living in a city must be. But given the choice, they would surely rather go to a city with good rules instead of one with bad rules.

Q. You have argued that new cities can speed up growth in the developing world. Aren’t the cities that the world needs springing up naturally? Why do we need the construct of a charter city to encourage faster or better urbanization?
A. Economists tend to assume that societies will naturally adopt good rules. If that were true, societies would put in place the rules needed to get the gains from a city and well-run cities would indeed spring up. The evidence suggests to the contrary that many societies are stuck with bad rules. Moving from bad rules to better ones may be much harder than most economists have allowed. The construct of a charter city is a suggestion about how we can change the dynamics of rules. It is a way to speed up the rate of improvement in the rules. There is an analogy that may be helpful here. Large corporations operate according to an internal set of rules that we sometimes call a corporate culture. A natural question to ask is what mechanisms lead to improvement in the rule-sets that prevail in all the corporations in an industry. If you think of an industry like computing, it is immediately evident that much of the change comes from the entry of new organizations. They have new rule-sets that attract resources away from the existing ones. IBM had good internal rules for working with big corporations and data centers, but they didn’t work as well for working with small businesses and individual consumers. If IBM had been the only company allowed to be in the computer business, it would have taken a very long time to get where we are now, with networked computers in our pockets. The entry of new organizations like Digital, Intel, and Apple that operated under very different internal sets of rules sped up change in the industry. Charter cities are a way to bring the power of entry and choice to the dynamics of the rules for cities.

Q. Let’s move on to logistics. Who might grant the charter for one of these cities and see that it will be enforced?
A. Different charters could specify different arrangements. This means that we could try many new types of innovative structures. If a national government has sufficient credibility, it could start a charter city within its own territory and administer it from the national capital. This is, in effect, what some countries have done when they have created special economic zones with rules that are different from the ones that prevail in the rest of the country. You could imagine that a country like India might try something like this to speed up urbanization by cutting through many local rules that get in the way of urban development. In poorer countries that don’t have the same kind of credibility with international investors, a more interesting but controversial possibility is that two or more countries might sign a treaty specifying the charter for a new city and allocate between them responsibilities for administering different parts of the treaty. Let me give you a specific example. Right now, the United States and Cuba have a treaty that gives the United States administrative control in perpetuity over a piece of sovereign Cuban territory, Guantanamo Bay. I’ve suggested that Canada and Cuba sign a new treaty in which Canada would take over administration of this area, bring Canadian rule of law there, and let a city grow up that could bring to Cuba some of the advantages that Hong Kong brought to China.

Q. Why will governments, particularly the entrenched, corrupt governments found in many countries, be willing to cede control of these zones?
A. First let me push back on an assumption that many people make and that seems to be implicit in your question. This assumption is that “bad guys” are why so many people are stuck living under bad rules. If you were a good guy and were the mayor of New York, would you be able to build enough consensus to implement congestion pricing for traffic, at least within our lifetimes? Or would you be strong enough to be able to coerce the people who don’t want it to go along? Narratives about good guys and bad guys are always entertaining, but there is a deeper reason why people get stuck under bad rules. For those of us who live in the United States, it is easier to understand in a context like New York that is more familiar. It is quite possible that its existing political system will never allow an improvement like congestion pricing, and yet many people would happily move to a new city that had sensible pricing and smoothly flowing traffic at all hours of the day. Systems of rules are “sticky”; they are difficult for any leader or group to change. With this in mind, suppose you were the president of Cuba. Suppose you wanted to do for Cuba what Deng Xiaoping did for China: engineer the transition from communism to rapid market-led growth. To do this, you might want to create a special zone where some of your citizens could opt-in to the market system without forcing others to make this change. You might be able to do this with a charter city that you control out of the president’s office. Now suppose you also want to make a binding commitment to rule-of-law protections for the foreign investors and potential residents from foreign countries you’d like to attract to this city. Investors from the rest of the world could finance the infrastructure for a new city in exchange for fee income from users. Entrepreneurs and managers from the rest of the world might come and run the businesses that would hire millions of people. Many of these highly educated and experienced people might be émigrés who left when the island turned to communism. These investors and these potential residents will come only if you can promise them the protections afforded by the rule of law. By yourself, with the Cuban institutions that you control, there is simply no way for you to make a credible binding commitment to the rule of law. You could simply change your mind later. More importantly, your successor, whomever that may be, might want to back out of any promises you make. The only way for you and your contemporaries to make a binding, long-term commitment is to sign a treaty with a country like Canada and to use it as a third-party guarantor. In effect, what a treaty lets you do is leverage the existing credibility of Canadian institutions and bring in the rule of law.

Q. But what if some future government in Cuba wants to violate the terms of the treaty and take the city over once it is built?
A. This is why the example of Guantanamo Bay is so revealing. In practice, countries around the world, even countries that can’t get along, still respect treaties. Cuba respects the treaty with the United States, even as they complain bitterly about it. Another good example is Hong Kong. The British clearly did not want to live up to the terms of the treaty they signed, which returned control of important parts of Hong Kong to China after 99 years. China didn’t want to wait that long to get Hong Kong back. But in the end, for 99 years, they stuck to the terms of the treaty they signed. Of course, in relations between countries there is always the possibility of an act of war that violates a treaty, but few nations are willing to cross such an explicit “bright red line.” Think back to how easy it was to mobilize a military reaction to Iraq’s invasion of Kuwait. The armed nations of the world don’t respond well to unilateral acts of war.

Q. It all sounds great as a theoretical exercise, but honestly, don’t your colleagues tell you that something like this will never happen?
A. They do say this, which is actually kind of ironic when you line it up with the other things they say. They recognize that the construct of a charter city is something that could make everyone better off. They admit that there is no technological or economic constraint that keeps us from building many of these. Then they say that for political reasons, it will never happen. They tell me that you can’t change politics; you can’t overcome nationalism; there is no way for countries to work together to extend the reach of good rules. Then these same economists suggest that we should just stick to business as usual. We should offer conventional economic advice and assume that political systems will naturally follow our advice when we point to something that could make everyone better off. But of course, they have already revealed that they don’t believe this. What’s going on here is a kind of self-censoring. Economists seem to think that we should propose things that are acceptable and that political systems will pursue, but that we should avoid proposing or even discussing things that are controversial or politically incorrect. I think we’d do our jobs better if we just said what’s true without trying to be amateur politicians. For example, back in the 1950’s and 1960’s, lots of development economists didn’t talk about the benefits of direct foreign investment and spoke instead of self-sufficiency because they thought that this was what the political actors in most poor countries wanted to hear. Now, of course, almost all developing nations are encouraging inward DFI. When we self-censored back then, we just slowed down movement toward global flows of technology via foreign investment. It happened despite what development economists said, not because of what they said. Think about the truly important changes in political systems. Back in the middle ages, suppose that someone described a legal system that enforced rules and contracts that everyone had to obey, even the country’s leaders. What would informed opinion of the day have been? “Great idea, but it will never happen.” No question it was hard to pull off, but it did happen. People always think that the unfamiliar is impossible. Many times, all that holds us back is a failure of imagination.

POST-SCARCITY
http://understandingsociety.blogspot.com/2010/06/social-progress.html
http://www.econlib.org/library/Enc/EconomicGrowth.html
http://reason.com/archives/2001/12/01/post-scarcity-prophet
Post-Scarcity Prophet
by Ronald Bailey / December 2001

reason: In terms of real per capita income, Americans today are seven times richer than they were in 1900. How did that happen?
Paul Romer: Many things contributed, but the essential one is technological change. What I mean by that is the discovery of better ways to do things. In most coffee shops these days, you’ll find that the small, medium, and large coffee cups all use the same size lid now, whereas even five years ago they used to have different size lids for the different cups. That small change in the geometry of the cups means that somebody can save a little time in setting up the coffee shop, preparing the cups, getting your coffee, and getting out. Millions of little discoveries like that, combined with some very big discoveries, like the electric motor and antibiotics, have made the quality of life for people today dramatically higher than it was 100 years ago. The estimate you cite of a seven-fold increase in income — that’s the kind of number you get from the official statistics, but the truth is that if you look at the actual change in the quality of life, it’s larger than the number suggests. People who had today’s average income in 1900 were not as well off as the average person today, because they didn’t have access to cheap lattés or antibiotics or penicillin.

reason: New Growth Theory divides the world into “ideas” and “things.” What do you mean by that?
Romer: The paper that makes up the cup in the coffee shop is a thing. The insight that you could design small, medium, and large cups so that they all use the same size lid — that’s an idea. The critical difference is that only one person can use a given amount of paper. Ideas can be used by many people at the same time.

reason: What about human capital, the acquired skills and learned abilities that can increase productivity?
Romer: Human capital is comparable to a thing. You have skills as a writer, for example, and somebody — reason — can use those skills. That’s not something that we can clone and replicate. The formula for an AIDS drug, that’s something you could send over the Internet or put on paper, and then everybody in the world could have access to it. This is a hard distinction for people to get used to, because there are so many tight interactions between human capital and ideas. For example, human capital is how we make ideas. It takes people, people’s brains, inquisitive people, to go out and find ideas like new drugs for AIDS. Similarly, when we make human capital with kids in school, we use ideas like the Pythagorean theorem or the quadratic formula. So human capital makes ideas, and ideas help make human capital. But still, they’re conceptually distinct.

reason: What do you see as the necessary preconditions for technological progress and economic growth?
Romer: One extremely important insight is that the process of technological discovery is supported by a unique set of institutions. Those are most productive when they’re tightly coupled with the institutions of the market. The Soviet Union had very strong science in some fields, but it wasn’t coupled with strong institutions in the market. The upshot was that the benefits of discovery were very limited for people living there. The wonder of the United States is that we’ve created institutions of science and institutions of the market. They’re very different, but together they’ve generated fantastic benefits. When we speak of institutions, economists mean more than just organizations. We mean conventions, even rules, about how things are done. The understanding which most sharply distinguishes science from the market has to do with property rights. In the market, the fundamental institution is the notion of private ownership, that an individual owns a piece of land or a body of water or a barrel of oil and that individual has almost unlimited scope to decide how that resource should be used. In science we have a very different ethic. When somebody discovers something like the quadratic formula or the Pythagorean theorem, the convention in science is that he can’t control that idea. He has to give it away. He publishes it. What’s rewarded in science is dissemination of ideas. And the way we reward it is we give the most prestige and respect to those people who first publish an idea.

reason: Yet there is a mechanism in the market called patents and copyright, for quasi-property rights in ideas.
Romer: That’s central to the theory. To the extent that you’re using the market system to refine and bring ideas into practical application, we have to create some kind of control over the idea. That could be through patents. It could be through copyright. It might even be through secrecy. A firm can keep secret a lot of what it knows how to do.

reason: A formula for Coca-Cola?
Romer: Yes. Or take a lot of the things that Wal-Mart understands about discount retailing. They have a lot of insight about logistics and marketing which they haven’t patented or copyrighted, yet they can still make more money on it than other people because they keep it closely held within the firm. So for relying on the market — and we do have to rely on the market to develop a lot of ideas — you have to have some mechanisms of control and some opportunities for people to make a profit developing those ideas. But there are other stages in the development of ideas. Think about the basic science that led to the discovery of the structure of DNA. There are some kinds of ideas where, once those ideas are uncovered, you’d like to make them as broadly available as possible, so everybody in the world can put them to good use. There we find it efficient to give those ideas away for free and encourage everybody to use them. If you’re going to be giving things away for free, you’re going to have to find some system to finance them, and that’s where government support typically comes in. In the next century we’re going to be moving back and forth, experimenting with where to draw the line between institutions of science and institutions of the market. People used to assign different types of problems to each institution. “Basic research” got government support; for “applied product development,” we’d rely on the market. Over time, people have recognized that that’s a pretty artificial distinction. What’s becoming more clear is that it’s actually the combined energies of those two sets of institutions, often working on the same problem, that lead to the best outcomes.

reason: We hear a lot of complaints from academicians about how business and corporations are taking over university research.
Romer: I think it’s important to have a distinct realm of science and a distinct realm of the market, but it’s also very good to have interaction between those two. One of the best forms of interaction is for people who work in one to move into the other. The people in university biology or biochemistry departments complain when they see somebody go on leave from the university and start a company that’s going to develop a new drug. That’s not the way it was done 30 years ago. But this is the best way to take those freely floating, contentiously discussed ideas from the realm of science and then get them out into the market process, because the reality is that there are virtually no ideas which generate benefits for consumers if there’s not an intervening for-profit firm which commercializes them, tailors them to the market, and then delivers them. You can point to examples where things jump right from science to benefits for the consumer, but that’s the exception, not the rule.

reason: Do we run the risk of ruining science by involving it too much in the market?
Romer: Well, some people would say that everything should be patented. The danger is that if you went that far, you could actually slow the discovery process down. There are very good theoretical reasons for thinking that market and property rights are the ideal solution for dealing with things, but there are also strong theoretical reasons for thinking that in the realm of ideas, intellectual property rights are a double-edged sword. You want to rely on them to some extent to get their benefits, but you want to have a parallel, independent system and then exploit the tension that’s created between the two.

reason: What are those theoretical reasons?
Romer: It traces back to this multiple use I was describing for ideas vs. single use for things. The miracle of the market system is that for objects, especially transformed objects, there’s a single price which does two different jobs. It creates an incentive for somebody to produce the right amount of a good, and it allocates who it should go to. A farmer looks at the price of a bushel of wheat and decides whether to plant wheat or plant corn. The price helps motivate the production of wheat. On the other side, when a consumer has to decide whether to buy bread or corn meal, the price allocates the wheat between the different possible users. One price does both jobs, so you can just let the market system create the price and everything works wonderfully. With ideas, you can’t get one price to do both things. Let me give an extreme example. Oral rehydration therapy is one of those few ideas which did actually jump immediately from science to consumer benefit. It’s a simple scientific insight about how you can save the life of a child who’s suffering from diarrhea. Literally millions of lives have been saved with it. So what price should you charge people for using it? Because everybody can use the idea at the same time, there’s no tragedy of the commons in the intellectual sphere. There’s no problem of overuse or overgrazing or overfishing an idea. If you give an idea away for free, you don’t get any of the problems when you try and give objects away for free. So the efficient thing for society is to offer really big rewards for some scientist who discovers an oral rehydration therapy. But then as soon as we discover it, we give the idea away for free to everybody throughout the world and explain “Just use this little mixture of basically sugar and salt, put it in water, and feed that to a kid who’s got diarrhea because if you give them pure water you’ll kill them.” So with ideas, you have this tension: You want high prices to motivate discovery, but you want low prices to achieve efficient widespread use. You can’t with a single price achieve both, so if you push things into the market, you try to compromise between those two, and it’s often an unhappy compromise. The government doesn’t pay drug companies prizes for coming up with AIDS drugs. It says they’ve got to incur these huge expenses, but then if they succeed, they can charge a high price for selling that drug. This has generated a lot of progress and we’re prolonging the life of people with AIDS, but the high price is also denying many people access to those drugs.

reason: Over the broad sweep of human history, technological progress and economic growth were painfully slow. Why has it sped up now?
Romer: It’s so striking. Evolution has not made us any smarter in the last 100,000 years. Why for almost all of that time is there nothing going on, and then in the last 200 years things suddenly just go nuts? One answer is that the more people you’re around, the better off you’re going to be. This again traces back to the fundamental difference I described before. If everything were just objects, like trees, then more people means there’s less wood per person. But if somebody discovers an idea, everybody gets to use it, so the more people you have who are potentially looking for ideas, the better off we’re all going to be. And each time we made a little improvement in technology, we could support a slightly larger population, and that led to more people who could go out and discover some new technology. Another answer is that we developed better institutions. Neither the institutions of the market nor the institutions of science existed even as late as the Middle Ages. Instead we had the feudal system, where peasants couldn’t decide where to work and the lord couldn’t sell his land. On the science side, we had alchemy. What did you do if you discovered anything? You kept it secret. The last thing you’d do was tell anybody.

reason: How did the better institutions come about?
Romer: That’s one of the deep questions. There’s some kind of political process, some group decision process, which leads to institutions. If you go back to what I said a minute ago about the advantages of having many people, you can see that there’s a tension here. There are huge benefits to having more people and having us all interact amongst ourselves to create goods and to share ideas. But you face a really big challenge in trying to coordinate all of those decisions, because if you have large numbers of independent decision makers who aren’t coordinating their actions appropriately, you could get chaos. Think about millions of drivers with no rules of the road, no agreement about whether you drive on the left or the right. So where do these institutions come from? It was a process of discovery, just as people discovered how to make bronze. They also discovered ways to organize political life. We can use democratic choice as an alternative to, say, a hereditary system of selecting who’s the king. What’s subtle here is, How do those discoveries get into action? It’s not like a profit motive in a firm that brings software to market. There was a process of persuasion when somebody discovered that, hey, this would be a better way for us to organize ourselves. So we had political and economic thinkers — Locke, Hobbes, Smith — who managed to persuade some of their peers to adopt those institutions. So institutions came from a combination of discovery, persuasion, adoption — and then copying. When good institutions work somewhere in the world, other places can copy them.

reason: Many economic historians are critical of New Growth Theory. Economic growth is a modern phenomenon, yet it appears that New Growth Theory should apply equally to the Roman Empire or Ming China as well as the modern world.
Romer: I think that’s a caricature of the theory. New Growth Theory describes what’s possible for us but says very explicitly that if you don’t have the right institutions in place, it won’t happen. If anything, it was the old style of theory which made it sound like technological change falls from the sky like manna from heaven, regardless of how we structure our institutions. This new theory says technological change comes about if you have the right institutions, which we have had.

reason: So what’s the crucial difference between Ming China and modern economies today?
Romer: Ming China was very advanced. It had steel. It had clocks. It had movable type. Yet it was far from generating either the modern institutions of science or the institutions of the market. The market and science differ in their treatment of property rights, but they’re similar in that they rely on individuals who are free to operate under essentially no constraints by authority or tradition. It took a special set of historical circumstances to persuade people that things could work if you freed people, within certain institutional constraints, to pursue their own interests. This is where Ming China was very far away from modern notions. Part of the answer to this big question about human history has been the acceptance of relatively unfettered freedom for large numbers of individuals. It’s something we just take for granted, but if you described it in the abstract to the people of 50,000 years ago, they would never believe it could possibly work. They were conditioned to systems where there was the head man or the chief, and as numbers got at all large, there was a sense that you had to have somebody with kind of dictatorial control. It was a deep philosophical insight and deep change in the whole way we viewed the world to tolerate and accept and then truly celebrate freedom. Freedom may be the fundamental hinge on which everything turns.

reason: You often cite the combinatorial explosion of ideas as the source of economic growth. What do you mean by that?
Romer: On any conceivable horizon — I’ll say until about 5 billion years from now, when the sun explodes — we’re not going to run out of discoveries. Just ask how many things we could make by taking the elements from the periodic table and mixing them together. There’s a simple mathematical calculation: It’s 10 followed by 30 zeros. In contrast, 10 followed by 19 zeros is about how much time has elapsed since the universe was created.

reason: Of all those billions of combinations, the vast majority are probably going to be useless. So how do you find the useful ones?
Romer: This is why science and the market are so important for this discovery process. It’s really important that we focus our energy on those paths that look promising, because there are many more dead ends out there than there are useful things to discover. You have to have systems which explore lots of different paths, but then those systems have to rigorously shut off the ones that aren’t paying off and shift resources into directions which look more promising. The market does this automatically. The institutions of science could tip either way. In American science, we have vigorous competition between lots of different universities, which leads to a kind of marketplace of ideas. You can think of other institutions of science that aren’t nearly as competitive. In the national laboratories, people are in the worst case civil servants: They’re there for life, and there’s always more funding for them.

reason: Does New Growth Theory give us some new insights on how to think about monopolies?
Romer: There was an old, simplistic notion that monopoly was always bad. It was based on the realm of objects — if you only have objects and you see somebody whose cost is significantly lower than their price, it would be a good idea to break up the monopoly and get competition to reign freely. So in the realm of things, of physical objects, there is a theoretical justification for why you should never tolerate monopoly. But in the realm of ideas, you have to have some degree of monopoly power. There are some very important benefits from monopoly, and there are some potential costs as well. What you have to do is weigh the costs against the benefits. Unfortunately, that kind of balancing test is sensitive to the specifics, so we don’t have general rules. Compare the costs and benefits of copyrighting books versus the costs and benefits of patenting the human genome. They’re just very different, so we have to create institutions that can respond differentially in those cases.

reason: You have written, “There is absolutely no reason why we cannot have persistent growth as far into the future as you can imagine.” Your Stanford colleague, the biologist Paul Ehrlich, disagrees. He believes that economic growth is an unsustainable cancer that is destroying the planet. How would you go about convincing people like Ehrlich that they are wrong?
Romer: Paul seems singularly immune to being convinced. He has been on the wrong side of these issues, so I wouldn’t set that as my standard of persuading anybody. However, if I took a neutral observer who might listen to me and Paul, there’s a pretty easy way to explain why I’m right and why Paul misunderstands. You have to define what you mean by growth. If by growth you mean population, more people, then Paul is actually right. There are physical limits on how many people you can have on Earth. If we took peak population growth rates from the ’70s at 2 percent per year, you can only sustain that for a couple of hundred years before you really run into true physical constraints.

reason: I would remind you that Ehrlich said that there would be billions of people dying of starvation in the 1980s.
Romer: He got the potentials wrong and the time frame wrong, but it’s absolutely true that population growth will have to come to zero at some point here on Earth. The only debate is about when. Now, what do I mean when I say growth can continue? I don’t mean growth in the number of people. I don’t even mean growth in the number of physical objects, because you clearly can’t get exponential growth in the amount of mass that each person controls. We’ve got the same mass here on Earth that we had 100,000 years ago and we’re never going to get any more of it. What I mean is growth in value, and the way you create value is by taking that fixed quantity of mass and rearranging it from a form that isn’t worth very much into a form that’s worth much more. A canonical example is turning sand on the beach into semiconductors.

reason: What do you make of the recent protests against globalization?
Romer: When we were describing the broad sweep of human history, we talked about how hard it was for people to get used to the idea of freedom. There was another kind of adjustment that we had to make as well: We had to get used to the idea of the market, and especially market exchange among anonymous strangers. People often contrast this with the institutions of the family, where you’ve got notions of sharing and mutual obligation. Many of us have a deep psychological intuition rooted in our evolutionary history that makes us feel warmly toward the family and suspicious of large, impersonal, anonymous market exchange. I think that emotional impulse is part of what some of the environmental ideologues draw on when they attack the whole market system and corporations and modern science and everything. This is a case where human psychology that was attuned to a hunter-gatherer environment is just a little bit out of touch with a new world that’s much more interconnected, much more interactive, and in many ways a much more satisfying and rich human experience. You can idealize life in a hunter-gatherer society, but nobody wants to go through the frequent death of a child — a very common experience for almost all of history that has been reduced a phenomenal degree within human memory.

reason: How would you convince protestors of the benefits of globalization?
Romer: First, just look at the facts. The protestors are amazingly ignorant about what has happened in terms of, say, life expectancy. Life expectancy for people in the poorest countries of the world is now better than life expectancy in England when Malthus was so worried about it. Then you look at the variation of experience between the poor countries that have done best and the ones that have done worst, and try to see what the correlations are. Which countries did best? Was it the countries that adopted the market most strongly, embraced foreign investment, and tried to adopt property rights? Or was it the other countries? The evidence again is clear. One of the untold stories about the ’80s and ’90s was the really dramatic turnaround in the developing world that took place on this issue. If you track the legislative history on foreign investment, you see a colonial legacy, even as late as the ’70s, where developing countries have laws designed to keep corporations out. Then there’s this dramatic turnaround as they saw the benefits that a few key economies received by inviting in foreign investment. It’s not the people from the developing world who are making the argument that Nike is a threat to their sovereignty or well-being. It’s people in the United States. The people in the developing world understand pretty clearly where their self-interest lies.

reason: What about boosting economic growth in developed countries?
Romer: For Europe and the United States, I think we need to be thinking very hard about how we can restructure our institutions of science. How can we restructure our system of higher education? How can we make sure that it has the benefits of vigorous competition and free entry, especially of those bright young people who might do really different kinds of things? We should not assume that we’ve already got the ideal institutions and the only thing we need to do is just throw more money at them. Unfortunately, I think a lot of countries have a long way to go to catch up to the state where we are in the United States — and I’m not that happy about where we are in the United States. Many European countries simply have not recognized the power of competition between institutions. So they have monolithic, state-run university systems. That stifles competition between individual researchers and slows down the whole innovative process. They also need to let people move more flexibly from the university into the private sector and back. This is something that many countries watching venture capital start-ups have become aware of, although they’ve been slower to get their institutions to adjust.

reason: In your recent paper on doing R&D, you said you think it would be possible to raise the growth rate from its average rate of 1.8 percent between 1870 and 1992 to 2.3 percent.
Romer: Well, I was trying to set a goal. When you’re thinking about the future, you never really know what we’re going to discover, but I think there’s a reason to set for ourselves an ambition of trying to raise the rate of growth by half a percent per year. The United States achieved about 0.5 percent a year faster growth than the U.K. did since 1870, so we’ve got a historical precedent for creating institutions which lead to better innovation of the market and strengthen science significantly. We should aim for that kind of improvement again.

reason: Why would that be important?
Romer: As you accumulate these growth rates over the decades, we get much higher levels of income. That lets us deal more effectively with all the problems we face, whether it’s making good on commitments to pay for people’s health care as they get older, preserving more of the environment, or providing resources so that people can have time to be out of the labor market for a certain period of time — when they’re raising kids, say, or when they want to take an extended sabbatical. Income per capita in 2000 was about $36,000 in year 2000 dollars. If real income per person grows at 1.8 percent per year, by 2050 it will increase to $88,000 in year 2000 purchasing power. Not bad. But if it grows at 2.3 percent per year, it will grow to about $113,000 in year 2000 purchasing power. In today’s purchasing power, that extra $25,000 per person is equal to income per capita in 1984. So if we can make the choices that increase the rate of growth or real income per person to 2.3 percent per year, in 50 years we can get extra income per person equal to what in 1984 it had taken us all of human history to achieve. One policy innovation, for example, that would boost the growth rate would be to subsidize universities to train more undergraduate and graduate students in science and engineering. Also, you could give graduate students portable fellowships that they could use to pay for training in any field of natural science and engineering at any institution the students choose. Graduate students would no longer be hostage to the sometimes parochial research interests of university professors. Portable fellowships would encourage lab directors and professors to develop programs that meet the research and career interests of the students.

reason: What’s next in New Growth Theory? Any conceptual breakthroughs on the horizon?
Romer: Because the economics of ideas are so different from the economics of markets, we’re going to have to develop a richer understanding of non-market institutions, science-like institutions. This is going to be a new endeavor for economics.

reason: Do you think that there is a big role for economic historians in helping uncover this richer theory?
Romer: History is an absolutely essential body of evidence, because you can’t make inferences about long-run trends using year-to-year or quarter-to-quarter data.

reason: There is a growing movement against technological progress around the world. Why is there this negative reaction to technological progress and what can we do about it?
Romer: You’re a big believer in turmoil and creative destruction when you’re early in life, because you can knock down the old and create your new thing. Once you achieve a certain level, you tend to get very conservative and try to slow the gales down, because they might blow you over. So I think we have to seriously commit ourselves to maintaining space for new entrants and for young people. That’s one way to keep the process going. Another is to do what scholars have always done: to proselytize, to dissect incoherent arguments. I think we’ll be able to maintain this dynamic of progress that was unleashed a couple centuries ago. There will be small setbacks and a lot of noise and complaining, but the opportunities and the benefits are just too great to pull back.

reason: Could anything stop economic growth and technological progress?
Romer: Even if one society loses its nerve, there’ll be new entrants who can take up the torch and push ahead. Mancur Olson talks about Caldwell’s Law, the idea that no nation has remained truly innovative for very long. Look at Italy, and then Holland, and then the U.K., and then the United States. The pessimistic interpretation is that nobody can keep the process going. The optimistic interpretation is, Yes, you can, but somebody else comes along and the progress moves from one place to the next. We’ve seen individual societies where conservative or reactionary elements suppress the changes. What has protected us in the past is that there were other nations that could try new paths. You didn’t have the same political dynamic everywhere at once. If in the far future we reach a situation where there really is truly global political control — if multinational institutions grow more powerful over economic affairs so that there is imposed uniformity across all nations — then there’d be a loss of diversity. And if the reactionary elements got in control of those institutions, there’d be no room for the new entrant, the upstart, to adopt new ideas. But that’s a pretty distant and unlikely prospect.

3rd PARTY OUTSIDE CONSULTANT
http://globalguerrillas.typepad.com/files/congressional-testimony1.pdf
http://globalguerrillas.typepad.com/globalguerrillas/2004/12/legitimacy_101.html
http://globalguerrillas.typepad.com/globalguerrillas/2005/08/neotribalism.html
http://globalguerrillas.typepad.com/globalguerrillas/2010/06/journal-resilient-detroit.html
http://www.boingboing.net/2010/06/15/john-robb-interview.html
John Robb interview: Open Source Warfare & Resilience
by Chris Arkenberg / Jun 15, 2010

John Robb is a globally-recognized author, technologist, and entrepreneur specializing in the complex systems of insurgency and asymmetrical warfare. His book, Brave New War, is an Amazon best-seller and established his expertise as a researcher & military consultant. He has been featured in the New York Times, The Economist, and the Wall Street Journal. His daily thoughts are collected on his blog, Global Guerrillas.

Q. In your book Brave New War you explore the changing nature of warfare. What are some recent examples of insurgency, resource conflicts, or terrorism that you feel best illustrate this new landscape?
A. Here’s an interesting story that may do the trick. Back in 2004, the US military was getting trounced in guerrillas in Iraq. Worse, the US military establishment didn’t know why. Didn’t have a clue. To correct this, I began to write about how 21st Century warfare actually worked on my blog, Global Guerrillas. Essentially, I concluded that guerrilla groups could use open source organizational models (drawn from the software industry), networked super-empowerment (freely available high tech tools, network information access, connections to a globalized economy), and systems disruption (the targeting of critical points on infrastructure networks that cause cascading failures) to defeat even the most powerful of opponents, even a global superpower.

The new theories of warfare I developed on the blog proved both predictive and very popular. As a result, I spent a lot of time on the speaking circuit in Washington DC (DoD, CIA, NSA, etc.). Of course, since my work was on a blog everyone could read it, even the guerrillas themselves.So, it was a little surprising although not unexpected when I got an e-mail in 2009 from Henry Okah, a leader of MEND (the Movement for the Emancipation of the Niger Delta). He invited me to Nigeria and stated that he was an avid reader of my blog.

It was a moment out of history, as if the UK’s General Liddell Hart (the originator of blitzkrieg armored warfare) got a note from Germany’s tank General Heinz Guderian in 1939, thanking him for his work. Here’s why: MEND’s campaign against Shell (the oil company) and the Nigerian government between 2006 and 2008 was a great example of how I thought 21st Century warfare would be fought. The organization structure was loose and organized along the lines of an open source movement. Lots of small autonomous groups joined together to take down the country’s oil infrastructure by targeting vulnerable points in the network (Nigeria is a major global oil exporter). During 2007, they were able to take out one million barrels a day of oil production. This shortfall was the reason oil prices rose to $147 a barrel. Those high prices had a negative global economic impact: the start of a global recession and a spike in default rates in US sub-prime mortgages (due to higher driving and food costs). That spike in sub-prime mortgage default rates radically accelerated the demise of our grossly over leveraged global financial sector, which in turn led to the financial panic of 2008.

In short, MEND’s disruption campaign, yielded tens of trillions of dollars in global economic damage for tens of thousands of dollars spent on making the attacks. That’s a return on investment (ROI) of 1,000,000,000%. How do nation-states survive when an unknown guerrilla group in a remote corner of the world can generate returns on that magnitude? They don’t.

Q. The United States is suffering both the economic decline of its industry and the ongoing dismantling of the social welfare apparatus supporting the citizenry. In your opinion, will this inevitably lead to some form of armed insurgency in America?
A. Yes. The establishment of a predatory and deeply unstable global economic system – beyond the control of any group of nations – is in the process of gutting developed democracies. Think in terms of the 2008 crisis, over and over again. Most of what we consider normal in the developed world, from the middle class lifestyle to government social safety nets, will be nearly gone in less than a decade. Most developed governments will be in and out of financial insolvency. Democracy, as we knew it, will wither and the nation-state bureaucracy will increasingly become an enforcer for the global bond market and kleptocratic transnational corporations. Think Argentina, Greece, Spain, Iceland, etc. As a result, the legitimacy of the developed democracies will fade and the sense of betrayal will be pervasive (think in terms of the collapse of the Soviet Union). People will begin to shift their loyalties to any local group that can provide for their daily needs. Many of these groups will be crime fueled local insurgencies and militias. In short, the developed democracies will hollow out.

Q. How big of a domestic threat is there from the narco-insurgency in Mexico and the growing power of Latin American gangs in America?
A. Very big. A threat that dwarfs anything we face in Afghanistan (a useless money pit of a war). It’s not a threat that can be solved by conventional military means, since the problem is that Mexico is a hollow state. Unlike a failed state like Somalia (utter chaos), a hollow state still retains the facade of a nation (borders, bureaucracy, etc.). However, a hollow state doesn’t exert any meaningful control over the countryside. It’s not only that the state can’t do it militarily, they don’t have anything they can offer people. So, instead, control is ceded to local groups that can provide basic levels of opt-in security, minimal services, and jobs via new connections to the global economy – think in terms of La Familia in Michoacana. The real danger to the US is that not only will these groups expand into the US (they already have), it is that these groups will accelerate the development of similar homegrown groups in the US as our middle class evaporates.

Q. Do you see a diminishing role for the state in large-scale governance? Does this compel communities to do it for themselves?
A. Yes, large scale governance is on the way out. Not only are nearly all governments financially insolvent, they can’t protect citizens from a global system that is running amok. As services and security begin to fade, local sources of order will emerge to fill the void. Hopefully, most people will opt to take control of this process by joining together with others to build resilient communities that can offer the independence, security, and prosperity that isn’t offered by the nation-state anymore. However, this is something you will have to build for yourself. Nobody is going to help you build it.

Q. In what ways are the new methods of insurgency & terror instructive towards building strategies for resiliency?
A. Here are a few of the parallels:
* Powerful technologies. Inexpensive tools that make it possible to produce locally what it used to take a global economy to produce.
* Networks. The ability to draw on the ideas of hundreds of thousands of people working on the same problems through open source tinkering networks. The ability to create new economic networks that accelerate prosperity.

Q. You’re currently writing a book about local resiliency. What are the primary global drivers behind your interest in resiliency?
A. Yes, I am. It’s about building resilient communities. Communities that offer energy independence, food security, economic prosperity, and protection. What are the global drivers that make resiliency important? Simply: stability, prosperity, and security is going away. You will soon find you are on your own, if you haven’t already. If you do nothing, you will suffer the predations of gangs, militias, and corrupt bureaucracies that will fill the void left by retreating nation-states. If you want to avoid this fate, you can build resilient communities that not only allow you and your family to survive intact, but to thrive. My goal with my new book, is to provide people with a road map on how to build resilient communities from scratch.

Q. What is the core messages you have to communities about preparing for the coming age?
A. Produce everything you can locally. Virtualize everything else. The value of your home will be based on the ability of your community to offer energy independence, food security, economic vitality, and protection. Survivalist stockpiles and zero footprint frugality are pathways to failure. Think in terms of vibrant local economic ecosystems that are exceedingly efficient, productive, and bountiful.

MEGA-CITY BEST PRACTICES
http://ngm.nationalgeographic.com/ngm/0211/feature3/
http://www.megacities.nl/archive.html
http://www.megacitiesproject.org/pdf/success_stories.pdf

http://www.megacitiesproject.org/trans_1.php

Curitiba’s “Surface Metro” to New York: The “Surface Metro” system uses dedicated bus lanes, and cylindrical loading tubes which allow passengers to pay in advance and board quickly. When the bus pulls alongside the tube, the bus driver opens the bus and tube doors, and the passengers walk directly onto the bus. The reduced dwell time required by the buses at the tube station results in less waiting time, increased speed and roadway capacity, and lessened air pollution. In 1992, the system was demonstrated in New York where four of the tubes and buses were installed in lower Manhattan, with buses operating for six weeks.

Sao Paulo’s Alert II to New York City: Alert II was an air pollution reduction program in Sao Paulo utilizing publicly-displayed air pollution monitors and a comprehensive public education campaign to voluntarily close down the streets of downtown Sao Paulo on dangerously smoggy days. The program was adapted in New York City by a task force including Commissioner of Environmental Protection Albert Appleton and Commissioner of Transportation Gerard Soffian. The New York version of Alert II, which was called “Green Alert/No-Drive Day” involved shutting down Park Avenue to traffic on World Environment Day, June 3, 1993.

Bangkok’s Magic Eyes Anti-littering program to Rio de Janeiro and Los Angeles: Magic Eyes is a unique anti-littering campaign targeted at children age 6-16. It utilizes green cartoon eyes (derived from traditional Thai mythology) which remind the children with songs and rhymes to pick up litter, and remind their parents to do the same. This program, which has reduced littering in Bangkok by an estimated 90% is now being replicated in Rio de Janeiro as part of the Clean Rio campaign through the Department of Sanitation and the School System. The enigmatic green eyes of the Thai version have been re-interpreted as a playful cartoon extraterrestrial more appropriate to the Brazilian culture. This innovation is also being adapted in Los Angeles, through the efforts of LA’s Best, an organization based in the Mayor’s office which designs and runs children’s educational programs.

Cairo’s Zabbaleen initiative to Manila and Bombay: In Cairo, the Zabbaleen people have eked out their existence for centuries by collecting trash and selling it to manufacturers capable of recycling it. Through the Zabbaleen initiative, the Zabbaleen have been given the training, equipment, and start-up funds necessary to organize small micro-enterprises where they convert the trash into marketable products, such as shoes, textiles, or pots and pans. In this way, the Zab baleen receives the benefits of adding value to the recyclable and can channel their profits into improving their community through the creation of better housing, schools, and health care centers. The Zabbaleen initiative is now being replicated in Bombay through the Bombay Municipal Corporation, which is incorporating the innovation into their “rag-pickers initiative”, in Manila through the Partnership of Philippine Support Service Agencies and it will also be replicated in Los Angeles by the Concerned Citizens of South Central (a community-based organization) as part of the W. K. Kellogg funded Urban Leadership for the 21st Centuty Project.

New York City’s “City Harvest” to Sao Paulo and Rio de Janeiro: City Harvest is a non-profit organization in New York City which collects unused, unserved food from restaurants and redistributes it to soup kitchens and homeless shelters. In 1992, the basic idea of this innovation was introduced to a number of key government leaders in Rio de Janeiro and Sao Paulo and was incorporated into the National Campaign Against Hunger and Misery, coordinated by IBASE.

Los Angeles’ Small Business Toxic Minimization Program to Rio de Janeiro and Buenos Aires: Through the Small Business Toxic Minimization Program, retired chemical and environmental engineers are enlisted to site visit small businesses and help them to find creative ways to reduce toxic waste, while maximizing their bottom line profit as well. In 1992, the project was transferred to Rio de Janeiro where it is now being tested on a small scale by the Guanabara Bay De-Pollution Group. This year, it is also being replicated by the Mayor’s office of Avelleneda, one of the municipalities comprising Greater Buenos Aires. Through the Small Business Toxic Minimization Program, retired chemical and environmental engineers are enlisted to site visit small businesses and help them to find creative ways to reduce toxic waste, while maximizing their bottom line profit as well. In 1992, the project was transferred to Rio de Janeiro where it is now being tested on a small scale by the Guanabara Bay De-Pollution Group. This year, it is also being replicated by the Mayor’s office of Avelleneda, one of the municipalities comprising Greater Buenos Aires.

Bombay’s “Child-to-Child” Community Health Care program to Rio de Janeiro: Through the Child-to Child Program, children in Bombay’s squatter settlements are trained as mini-doctors who teach their friends and family about basic approaches to curative and preventative health care. The program is being adapted for implementation in Rio de Janeiro, by a team led by Maria Teresa Ewbank, who represents the Escola Nacional de Daude, ENSP.

‘UNSTOPPABLE’, ‘ENDLESS CITIES’
http://www.guardian.co.uk/world/2010/mar/22/un-cities-mega-regions
UN report: World’s biggest cities merging into ‘mega-regions’
Trend towards ‘endless cities’ could significantly affect population and wealth in the next 50 years
by John Vidal / 22 March 2010

The world’s first mega-city, comprised of Hong Kong, Shenhzen and Guangzhou, home to about 120 million people. Photograph: Nasa
The world’s mega-cities are merging to form vast “mega-regions” which may stretch hundreds of kilometres across countries and be home to more than 100 million people, according to a major new UN report. The phenomenon of the so-called “endless city” could be one of the most significant developments – and problems – in the way people live and economies grow in the next 50 years, says UN-Habitat, the agency for human settlements, which identifies the trend of developing mega-regions in its biannual State of World Cities report.

The largest of these, says the report – launched today at the World Urban Forum in Rio de Janeiro – is the Hong Kong-Shenhzen-Guangzhou region in China, home to about 120 million people. Other mega-regions have formed in Japan and Brazil and are developing in India, west Africa and elsewhere. The trend helped the world pass a tipping point in the last year, with more than half the world’s people now living in cities. The UN said that urbanisation is now “unstoppable”. Anna Tibaijuka, outgoing director of UN-Habitat, said: “Just over half the world now lives in cities but by 2050, over 70% of the world will be urban dwellers. By then, only 14% of people in rich countries will live outside cities, and 33% in poor countries.”

The development of mega-regions is regarded as generally positive, said the report’s co-author Eduardo Lopez Moreno: “They [mega-regions], rather than countries, are now driving wealth. Research shows that the world’s largest 40 mega-regions cover only a tiny fraction of the habitable surface of our planet and are home to fewer than 18% of the world’s population [but] account for 66% of all economic activity and about 85% of technological and scientific innovation,” said Moreno. “The top 25 cities in the world account for more than half of the world’s wealth,” he added. “And the five largest cities in India and China now account for 50% of those countries’ wealth.” The migration to cities, while making economic sense, is affecting the rural economy too: “Most of the wealth in rural areas already comes from people in urban areas sending money back,” Moreno said.

The growth of mega-regions and cities is also leading to unprecedented urban sprawl, new slums, unbalanced development and income inequalities as more and more people move to satellite or dormitory cities. “Cities like Los Angeles grew 45% in numbers between 1975-1990, but tripled their surface area in the same time. This sprawl is now increasingly happening in developing countries as real estate developers promote the image of a ‘world-class lifestyle’ outside the traditional city,” say the authors.

Urban sprawl, they say, is the symptom of a divided, dysfunctional city. “It is not only wasteful, it adds to transport costs, increases energy consumption, requires more resources, and causes the loss of prime farmland.” “The more unequal that cities become, the higher the risk that economic disparities will result in social and political tension. The likelihood of urban unrest in unequal cities is high. The cities that are prospering the most are generally those that are reducing inequalities,” said Moreno.

In a sample survey of world cities, the UN found the most unequal were in South Africa. Johannesburg was the least equal in the world, only marginally ahead of East London, Bloemfontein, and Pretoria. Latin American, Asian and African cities were generally more equal, but mainly because they were uniformly poor, with a high level of slums and little sanitation. Some of the most the most egalitarian cities were found to be Dhaka and Chittagong in Bangladesh.

The US emerged as one of the most unequal societies with cities like New York, Chicago and Washington less equal than places like Brazzaville in Congo-Brazzaville, Managua in Nicaragua and Davao City in the Phillippines. “The marginalisation and segregation of specific groups [in the US] creates a city within a city. The richest 1% of households now earns more than 72 times the average income of the poorest 20% of the population. In the ‘other America’, poor black families are clustered in ghettoes lacking access to quality education, secure tenure, lucrative work and political power,” says the report.

The never-ending city
Cities are pushing beyond their limits and are merging into new massive conurbations known as mega-regions, which are linked both physically and economically. Their expansion drives economic growth but also leads to urban sprawl, rising inequalities and urban unrest. The biggest mega-regions, which are at the forefront of the rapid urbanisation sweeping the world, are:
• Hong Kong-Shenhzen-Guangzhou, China, home to about 120 million people;
• Nagoya-Osaka-Kyoto-Kobe, Japan, expected to grow to 60 million people by 2015;
• Rio de Janeiro-São Paulo region with 43 million people in Brazil.

The same trend on an even larger scale is seen in fast-growing “urban corridors”:
• West Africa: 600km of urbanisation linking Nigeria, Benin, Togo and Ghana, and driving the entire region’s economy;
• India: From Mumbai to Dehli;
• East Asia: Four connected megalopolises and 77 separate cities of over 200,000 people each occur from Beijing to Tokyo via Pyongyang and Seoul.

NO DEFENSES
http://findarticles.com/p/articles/mi_m0JIW/is_4_56/ai_110458726/
http://www.cca.qc.ca/en/study-centre/1007-what-is-the-city-as-bruce-lee-geoff-manaugh
The Future of War and the Indirect City

In 1564, the Tuscan urban planner, archaeologist, military theorist, mathematician and writer Girolamo Maggi published a work of military urbanism called Della fortificatione delle città, written by his colleague Giacomo Fusto Castriotto. That work, on the fortification of cities, devoted several passages to what might be called indirect or soft fortification: that is, protecting an urban population from attack not through the use of heavy walls, inner citadels, or armed bastions—although the book is, of course, filled with such things—but through a complex street plan.

Indirect streets and narrow walkways could be put to use, Castriotto and Maggi argued, as agents of spatial disorientation, leading an invader everywhere but where they actually wanted to go. It was a kind of urban judo, or the city as martial art. The city itself could be weaponized, in other words, its layout made militarily strategic: turning the speed at which your enemy arrives into exactly what would later entrap him, lost, unable to retrace his footsteps, fatally vulnerable and spatially exposed.

The CCA exhibited much of its collected manuscripts on urban fortification seventeen years ago, under the name The Geometry of Defence: Fortification Treatises and Manuals, 1500-1800. In the accompanying pamphlet, curator and former CCA historiographer Michael J. Lewis describes the geometric complexification that the fortified cities of the Renaissance underwent in the name of self-protection (Alberto Pérez-Gómez’s Architecture and the Crisis of Modern Science also contains a very lengthy history of this same material and is well worth consulting in full). A constantly shifting imbalance of power between the wall-builders and the invaders led to new spatializations of the metropolis. Whether due to the invention of gunpowder, massed assaults or simply new building techniques, the urban landscape was constantly reformatted according to the weapons that might be used against it.

Of course, this will be a very familiar story to most readers, so I don’t want to repeat it; I do, however, want to focus on the idea of forsaking mass—thick walls—for complexity in the name of strategic disorientation. There are well-known stories, for instance, of English coastal villages during World War II removing their road and street signs so as to prevent logical navigation by German aggressors, even erecting dummy signs to send confused Nazi paratroopers wandering off in the wrong direction.

But if the well-fortified Renaissance city could be seen, for the sake of argument, as something like the Hummer of military urbanism, what is the city-as-Bruce-Lee? A city that is lean, even physically underwhelming, but brilliantly fast and highly flexible? What is the city that needs no defensive walls at all?

There are a variety of possible answers here, all of which would be interesting to discuss; but I’m most struck by the possibility that the phenomenon recently dubbed the feral city is, in a sense, the anti-fortress in exactly this spatial sense. In a 2003 paper for the Naval War College Review, author Richard J. Norton describes the feral city as “a great metropolis covering hundreds of square miles. Once a vital component in a national economy, this sprawling urban environment is now a vast collection of blighted buildings, an immense petri dish of both ancient and new diseases, a territory where the rule of law has long been replaced by near anarchy in which the only security available is that which is attained through brute power.” From the perspective of a war planner or soldier, Norton explains, the feral city is spatially impenetrable; it is a maze resistant to aerial mapping and far too dangerous to explore on foot. Indeed, its “buildings, other structures, and subterranean spaces would offer nearly perfect protection from overhead sensors, whether satellites or unmanned aerial vehicles,” Norton writes, creating, in the process, an environment where soldiers are as likely to die from rabies, tetanus, and wild dog attacks as they are from armed combat.

I’m led to wonder here what a 21st-century defensive literature of the feral city might look like—from temporary barricades to cartographically incoherent slums experimenting with limited forms of micro-sovereignty. If the feral city is a city with no external walls but an infinite interior—endless spaces made of oblique architecture and indirect streets—then its ability to defend itself comes precisely through letting invaders in and disorienting them, not by keeping people out.

So if a city does away with defensive walls altogether, what specific spatial strategies are left for it to protect itself? For instance, can a city deliberately be made feral as an act of preemptive self-defense—and, if so, what architectural steps would be necessary to achieve such a thing? Channeling Archigram—or perhaps even Cisco—we might call this the insurgent instant city complete with its own infrastructural practices, its own rogue designers, and its own anti-architects.

How, then, could the spatial practice of urban feralization be codified, and what architectural lessons might be learned if this were to happen? Michael J. Lewis, describing the treatises on display at the CCA nearly two decades ago for The Geometry of Defence, refers to “fortification literature” or “the literature of the fortification,” including the publishing practices peculiar to this—for its time—top secret field of study. Privately circulated manuscripts, incomplete essayistic reflections, and even word of mouth only gradually solidified into full-length narratives; only at that point were they intended to communicate finely tuned, often firsthand, military knowledge of the city under siege to anyone who might want to discover it, whether that was a king, a layperson, or an enemy general (indeed, much of the literature of fortification went on to the form the core of an emergent field known as urban planning).

In another 50, 100, or even 500 years, then, will there be a defensive literature of the feral city, its systematic description, techniques for its defense (or obliteration), and its urban logic (or lack thereof)? Even if only on the level of urban form, this would be a fascinating journey, going from Castriotto’s and Maggi’s indirect streets to whole cities gone wild in the name of resisting outside intervention.

FERAL ZONES
http://www.nytimes.com/2004/12/12/magazine/12FERAL.html
http://www.usni.org/magazines/proceedings/archive/story.asp?STORY_ID=1695
http://www.worldpolicy.newschool.edu/journal/articles/wpj04-1/liotta.htm
Redrawing the Map of the Future
by P. H. Liotta and James F. Miskel / Spring 2004

When the Cold War ended, scholars, pundits, and policymakers turned to the task of defining the new world order and America’s place in it. Some warned of coming anarchy or of the clash of civilizations. After September 11, those warnings seemed prescient. Since 9/11, our sense of insecurity has only increased, as has our reliance on military solutions to the problems we see before us. Yet the more we rely on military force, the less secure we feel. Perhaps the difficulty is in how we see the world that confronts us. It is as if we are trying to find our way using an old map, only to discover that the roads marked no longer exist.

One new map that may be particularly useful in helping us to see the contours of the future is the “earthlights” image reproduced here and available on the National Aeronautics and Space Administration’s website. The image is a composite of satellite photographs taken over a period of months that recorded the illumination from city lights, producing, according to NASA, a unique measure of “the spatial extent of urbanization.” The earthlights map forces us to think about some disturbing trends and effects that, if left unchecked, will likely come to haunt us in the coming decades. These developments, broadly considered here, are: the changing demographics of cities, particularly in what we call the Lagos-Cairo-Karachi-Jakarta arc; the increased possibility of failing regions within functioning but troubled states; and the rise of the “feral city” in states and regions inextricably linked to the process of globalization.

As one looks at the earthlights image, patterns of world order and disorder begin to emerge, and it becomes clear that tectonic forces are at play in the globe’s physical, economic, cultural, and political geography. The patterns of light suggest the inevitability of Central and Eastern Europe drawing ever closer, like moths to a flame, toward an enlarging European Union. Likewise, North Africa is being pulled away from the rest of Africa—and from the Middle East, despite certain cultural ties—and drawn toward a larger Euro-Mediterranean community. The earthlights image is revealing in other ways as well. It is interesting to see that India and Pakistan, which began from relatively equal starting points at partition in 1947 have gone in radically different directions: all of India is lit, while Pakistan is dark. The same story is evident on the Korean peninsula, where the thirty-eighth parallel forms a dramatic dividing line between the lights of South Korea and the dark shadow that is North Korea. The lights in the People’s Republic of China are clustered in the east, along the country’s Pacific coast, not evenly distributed throughout the country as in Taiwan or Japan. This suggests the eventual formation of “two Chinas”—one consisting of ever more densely populated urban zones, the other of underdeveloped and undergoverned hinterlands.

It is our view that we must pay greater attention to the shadows on the earthlights map. Like the drunk who loses his keys in the dark and looks for them under the streetlight because that is the only place he can see, we tend to focus our gaze on places where the lights are shining, even though the keys to greater security lie elsewhere. The attacks of September 11 not only revealed that Americans were vulnerable on their home soil; there also came the disturbing awareness that the new threat we faced came not from an enemy whose identity and capabilities were “in the light,” but from one operating from the shadows.

There now seems to be an emerging understanding that certain nontraditional security issues that have long plagued the so-called developing world—and which traditionally minded, state-centric strategists were content to consign to often ineffective nonstate entities (the United Nations, nongovernmental organizations, corporations)— have circled back to haunt us. This is not to say that traditional state-centric security problems are things of the past, or that military force will have no role to play. They are not, and it will, as the war in Iraq demonstrates. But the “boomerang” effect of these nontraditional security issues could increasingly affect the policy decisions and options open to the developed states. Our concern is that while the military is wrestling with the challenge of developing ever more impressive means of deterring and defeating “in the light” threats, no agency of government at the state or multi-state level (including the U.S. military) is doing enough to understand and overcome the threats that are taking shape in the shadowy and dark areas on the earthlights map.

Anarchy, governmental collapse, ethnic rivalry, cultural grievances, religious-ideo-logical extremism, environmental degradation, natural resource depletion, competition for economic resources, drug trafficking, alliances between narco-traffickers and terrorists, the proliferation of “inhumane weapons,” cyberwar, and the spread of infectious disease threaten us all. We cannot isolate ourselves from their effects. The question is not whether we should concentrate on traditional “hard” security issues, which normally derive from the relationships between states, or on “soft” nontraditional security issues, which are not confined by national boundaries. The answer is that we must focus on both.

As our understanding of security concerns broadens and deepens, the traditional assumption that states and governments are the sole guarantors of security will be increasingly challenged. This is because our security may depend on how we cope with the broader human dilemma. Addressing this dilemma will require sustainable development strategies and must take into account population growth, particularly in the emerging world; the rapid spread of epidemic diseases such as HIV/AIDS; the impact of climate change, including shifts in precipitation patterns and rising sea levels; water scarcity; soil erosion and desertification; and increased urbanization and the growth of “mega-cities” around the globe. In the Lagos-Cairo-Karachi-Jakarta arc over the next two decades, more and more people will be compelled by economic or environmental pressures to migrate to cities that lack the infrastructure to support rapid, concentrated population growth.

To take just one of these problems, most of the states in the Middle East are already experiencing water scarcity (some have per capita water availability rates that are significantly lower than the minimums recommended by the World Health Organization) and water resources will obviously be stressed even further as the population surges by a third between 2000 and 2015. This population growth in the Middle East will likely have a deleterious effect on nearby regions and perhaps the developed world. The combination of indigenous population growth and water scarcity will undoubtedly lead to pressures on the Middle East’s large number of guest workers to return home, often to countries with struggling economies, where jobs are scarce. The return home of guest workers will eliminate remittances (for some countries the value of remittances from overseas workers is greater than the state’s foreign aid receipts) and increase the number of individuals who will draw upon the home government’s already limited resources. The differences between Israel’s low natural population growth rate and the high rates in the West Bank and Gaza Strip as well as in neighboring Arab states mean that Israel will be demographically swamped unless it aggressively promotes immigration—the very thing that water scarcity (and terrorism) seem likely to discourage. It also suggests that however the Israeli-Palestinian confrontation is resolved, the real power struggle in the region may soon revolve around natural resources.

The Mega-City
Truly cataclysmic demographic changes will occur in the Lagos-Cairo-Karachi-Jakarta arc, with momentous shifts in the global landscape resulting from the “flocking” of people to urban centers. According to the National Intelligence Council’s Global Trends 2015: A Dialogue About the Future With Nongovernment Experts, as well as data compiled by the National Geographic Society and the United Nations Population Division, world population will reach 7.2 billion in 2015, up from 6.1 billion in 2000. Ninety-five percent of the growth will take place in “emerging” countries, and nearly all projected population growth will occur in rapidly expanding urban areas.

The population of the greater New York metropolitan area, which stood at 12 million in 1950, is projected to grow to 17.6 million in 2015. In comparison, Nigeria’s capital city of Lagos, which had a population of 1 million in 1950, is projected to have 24.4 million inhabitants by 2015. While the population of Los Angeles is projected to increase over the same period from 4 million to 14.2 million, Karachi’s population will explode from 1.1 million to 20.6 million. Cairo in 1950 was a city of 2.1 million; in 2015 it will have 14.4 million inhabitants. Jakarta’s population will have grown from 2.8 million to 21.2 million. Thus, the real cause for concern lies not in the developed world but in the “population belt” from Lagos to Jakarta.

Urbanization in and of itself is neither a good nor a bad thing. Tokyo’s population is projected to reach 28.7 million in 2015, but Tokyo will likely be far better equipped to handle the infrastructure requirements of the mega-city than the cities of the emerging world. Seventy-two percent of Japanese already live in cities, and Japan has accommodated itself to an urbanized existence. It is unlikely, however, that Lagos or Dhaka or Tehran will be able to sustain growth rates such as those projected above. Indeed, it is doubtful that many cities in developed states could sustain such rates of growth as cities in the emerging world are experiencing. If, for example, New York’s rate of growth were the same as Dhaka’s (the capital of Bangladesh will have a population of 19 million by 2015, up from 10 million in 2000, and from 400,000 in 1950), the (Really) Big Apple would have a population just shy of 600 million people by 2015. As it seems unlikely that even a city in the world’s richest country could handle such rapid growth, how will impoverished Bangladesh accommodate such a dramatic surge in the population of its capital city?

Compounding the problem is the fact that in numerous regions where U.S. interests are involved we will see the continued reality of a (threat-based) security dilemma along with the rise of various (vulnerabilitybased) human dilemmas. By 2015, the number of cities with a population of over 5 million will skyrocket from 8 (in 1950) to 58, and we may see more than 600 cities worldwide with populations in excess of 1 million inhabitants by 2015; in 1950, by contrast, there were only 86 such cities. As our colleague Richard J. Norton notes in the August 2003 issue of the Naval War College Review, many of the burgeoning cities of the future may well become petri dishes of instability, disease, and terrorism. In other words, at least some of these cities will grow far beyond the “natural” carrying capacity of their respective national governments, with the result that governmental infrastructure and public services will be stretched past the breaking point. Cities in this condition will pose a particularly serious security threat because they will have both substantial pockets of darkness within their municipal boundaries and extensive commercial, communications, and transportation links to the rest of the world. In other words, it will be easy for groups in these urban pockets of darkness to export instability.

Pockets of Darkness
The issue of state failure began to be widely discussed in the 1990s. Instead of the peace dividend that was the promise of the end of the Cold War, instability and a collapse of governance appeared to be on the rise. The “failed state” was seen as a breeding ground for anarchy and violence, and the natural home of terrorists, warlords, ethnic militias, holy warriors, criminal gangs, arms dealers, and drug merchants. Policymakers hoped that research into state failure might provide early warning indicators that would trigger timely international interventions to prevent collapse, and to this end the Central Intelligence Agency established the State Failure Task Force to conduct a comprehensive examination of the issue. (The task force developed a “failure” model, with a claimed predictive accuracy of 67 percent.) Yet, as events of the past few years have illustrated, there are other bubbling petri dishes that deserve greater attention—pockets of darkness in undergoverned areas within functional but struggling states.

The para-states that take shape in these pockets of darkness (for example, the war-lord-dominated “tribal areas” of Afghanistan and the militia-run enclaves in Bosnia and Kosovo) develop Night of the Living Dead characteristics. Possessing some of the functional aspects of statehood, but lacking the civic equivalent of balanced, flexible limbs, these figurative zombies stagger into the future, unable to function independently without massive and continuous life support—in the form of U.N. aid, or bilateral assistance from other states, or “export earnings” from various criminal enterprises. These para-states and lawless zones inside “nonfailing” states often present greater threats to international stability than do failed states. Examples include eastern Colombia where narco-terrorists have operated for years inside remote valleys; the “lawless” triangle where Brazil, Paraguay, and Argentina meet and where Hezbollah, arms dealers, and smugglers of all stripes conduct business freely; the hinterlands of the Democratic Republic of Congo, where opposing ethnic groups, invading armies, and gangs pillage the countryside and terrorize the people (albeit at a temporarily lower level of intensity since the U.N. intervention in 2003); and Afghanistan beyond the outskirts of Kabul and Kandahar.

Focusing on failed states may have caused us to pay insufficient attention to the possibility that undergoverned zones in remote rural areas—or the mega-cities on the Lagos-Cairo-Karachi-Jakarta arc—may pose a greater threat to developed states than do failed states. It is inevitable that feral zones will emerge in both the ungoverned outback and inside cities along the arc.

Further compounding the problem posed by rapid urban population growth is the “youth bulge” phenomenon. In the near future, almost half of the adult populations of many African, Middle Eastern, and Southwest Asian countries will be between the ages of 15 and 29. Despite the recent spate of Chechen and Palestinian suicide bombings by women, young men are responsible for most acts of violence. As the overall population grows, so too will the population of young males looking for employment and educational services. If, as seems likely in the emerging megacities of the arc, there are too few jobs and educational opportunities to satisfy the demand, discontent, crime, and urban instability will result.

Other pockets of darkness are also likely to form around semi-urbanized collections of “displaced” populations. Tens of millions of refugees now live in semi-permanent camps in the West Bank and Gaza, Sudan, and the Great Lakes region of Aftica. These veritable slums, with their swollen populations—where life is lived without opportunity or hope—are themselves evolving into para-states, fertile ground for instability. The only saving grace from a security viewpoint is that the displaced are typically not well connected by road, rail, or air to the rest of the world and thus will be less efficient exporters of violence to distant locations.

Finding a Way Out
In a world that is becoming more interconnected economically and physically, it is impossible to separate zones of light from pockets of darkness. Many of the states that will be most adversely affected by demographic pressures and rapid urbanization are already entwined in the globalization process and are simply too important to be left to their own devices. Egypt, Pakistan, and Indonesia fall into this category. They are struggling—though not failed—states whose stability, or lack thereof, will influence security and economic trends all along the arc of emerging mega-cities.

We need to encourage internal public sector reform and public security improvements in states where governments are currently failing to keep the lights lit, where urban population growth is likely to lead to failure at the municipal level or force overstretched governments to withdraw from remote rural areas. If September 11 taught us anything, it is that our security is inextricably connected to domestic governance shortcomings elsewhere. Unfortunately, the United Nations, by virtue of its own inefficiency, the divergent agendas of its leading members, and its orientation toward state-level solutions, is not up to the task of promoting effective public sector reform. A more flexible approach is called for. We need to better organize the efforts of all of the actors in the international community: governments, international organizations, international nongovernmental organizations, national civil society organizations, and for-profit corporations. As Jonathan Lash, president of World Resources Institute, has aptly put it, what we need is a “shift from the stiff formal waltz of traditional diplomacy to the jazzier dance” of issue-based networks and creative partnerships.

Future strategies must move beyond policing actions and military interventions toward active prevention of resource scarcity and governance failures. Active prevention was the central premise of the strategy of cooperative security, developed by former secretary of defense William Perry and others at the Brookings Institution shortly after the end of the Cold War. The idea was to prevent discontent from leading to internal armed conflict by creating jobs, reducing poverty, and improving governance—especially in urban areas—before aggrieved groups resort to violence. Our current strategy of preemptive war, of using the military to force regime change and then for nation building in sustained “governance stability operations”—in essence for “kicking the door in” and then “putting the door back on”—is ill-suited to the challenges ahead.

A few heretics (most notably, Robert D. Kaplan, the author of The Coming Anarchy) claim that development—not poverty— leads to unrest by raising expectations. The destabilizing effects of rising expectations are undeniable, but in this wired and interconnected world, expectations are likely to continue to rise no matter what national governments do. The destabilizing effects will be most dramatic in struggling states with overpopulated cities.

Unfortunately, the typical response to situations of such complexity is to do nothing. Yet, that cannot be our response. Our first order of business must be to promote a sense of urgency. Then we must devise approaches for radical improvements in public infrastructure and governance—particularly in the states and municipalities along the Lagos-Cairo-Karachi-Jakarta arc. If we are to redraw the map of the future, there must be a new division of labor among governments, international agencies, nongovernmental organizations, and corporations. Perhaps what is needed is the equivalent of the 1972 Stockholm Conference, which launched the global environmental movement and established the United Nations Environment Program as the environmental conscience of the world. Another example of an attempt to build new approaches to global problems was the U.N. Habitat II Conference, held in Istanbul in 1996. Neither of these initiatives was completely successful in mobilizing international support, but they represent useful starting points.

This is not an argument for supremacy by stealth or to justify future intervention. But unless we act to contain, if not reverse, the worrisome trends outlined here, we are likely to be in for decades of military engagement and increased insecurity. Rather than justifying intervention, we ought to be thinking about investment. When we look at the map of the lit and unlit world, we can see where work needs to be done.

{P. H. Liotta holds the Jerome E. Levy Chair of Economic Geography and National Security and James F. Miskel is associate dean of academics and professor of national security affairs at the U.S. Naval War College. The views expressed here are the authors’ own and do not represent those of the Department of the Navy.}

MEANWHILE : CONTEST to PRODUCE LIGHT
http://www.lightingafrica.org
http://lightingafricaconference.org/index.php?id=108&tx_mininews_pi1[showUid]=11&cHash=f3709743abb32487cfe52cc8677d5248
http://www.worldchanging.com/archives/011269.html

The five winners of the World Bank Group’s Lighting Africa 2010 Outstanding Product Awardswere recently announced:

MORE LIGHT PLEASE
http://www.nextbillion.net/blog/2010/05/20/killer-apps-at-lighting-africa-2010
by Nathan Wyeth / May 20, 2010
Looking for Killer Apps at Lighting Africa 2010

At the World Bank/IFC Lighting Africa Conference in Nairobi, some numbers are looking good for a change. There are still 1.6 billion people without access to electricity, but decreasing costs of solar panels and LED lighting have put individual solar-powered lamps at a price that is affordable for much of the base of the pyramid. Solar lantern distribution is projected to grow at 25-40% rates over the next 5 years in Africa.

Does this mean the path to modern energy for rural Africa is in clear view? I’m not sure it is, which is why when I’m meeting people at this conference sponsored by the IFC’s Lighting Africa program, I’m saying that I’m still looking for killer apps. Engineering better, cheaper products is often a process of putting one foot in front of the other, but distributing them will require side-stepping the barriers that solar energy has continually run up against at every price point.

And even if the goal is defined as lighting for Africa, lighting products themselves may not be the best starting point or a standalone approach, as opposed to more comprehensive platforms for energy access – laying the groundwork to go from portable pico-power retail products to household and community scale energy distribution, in terms of both business infrastructure and customer readiness/ability.

Even at these huge projected growth rates that are probably as much as any single product distribution company can handle, Gaurav Gupta of Dalberg Development Advisors is quick to point out that over 5 years, that will take solar lighting market penetration in Africa from an estimated 1.3% to an estimated 2.3%. So I am on the lookout for approaches that will also open up whole new horizontal growth and distribution in this sector.

I’m not sure I’ve found the killer apps here just yet, but there are promising new ideas floating around, some embodied in new start-ups operating in Africa. Here are a few things that I’m looking for:

– Defining and increasing the value of solar by linking to income and tangible payback. There is generalized information available on what people currently pay for kerosene lighting, but very fuzzy understanding of actual willingness to pay for new energy products – and this may reflect unclear marketing and product positioning as much as lack of data collection.

Anecdote-based discussion is unfolding at this conference about whether end-user financing is necessary for solar lighting products that cost anywhere from $10-50, illuminating the fact that while product designers have been focused on a combination of lighting price and quality, there’s no clearly established understanding of what people will pay for modern lighting at what income levels.

What is clear is that payback and specific utility matters more than price. For example, Barefoot Power is having great success with its Firefly 12 product – not the least expensive in its line – because this can charge mobile phones. If solar is linked to specific utility, or payback for lighting is clearly defined, customers will be able to tell retailers what they will pay for it and the supply chain will be able to adjust accordingly.

– Building customer relationships. What makes solar attractive as an energy source makes it more difficult as a retail product – if you do a good job with your lamp product you won’t see your customers again for a few years and they won’t need to buy a single thing from you until they’re ready for a second lantern. But as a new technology, solar product companies need to develop intense technology loyalty and evangelism and probably need to be focused as much on reselling to existing customers and finding new ones. How to stay connected to customers who hopefully won’t have to talk to you more than once ever few years?

Companies that offer energy as a service might begin by suppling rechargeable battery stations that can power a home’s electricity need, but could then build on this by installing distributed power generation with the same customers at a much lower cost of acquisition and much greater readiness to install and value a household solar system.

– Building distribution and maintenance platforms. As alluded to above, electricity is a unique product. It’s only useful in tandem with other products, and some certainty of supply is needed before those products become worth it.

Distribution platforms offer the opportunity to meet energy needs beyond lighting – both in terms of energy supply and the appliances that can be linked specifically to distributed energy generation. For example, an energy efficient fan is valuable when it can be linked to a reliable energy supply, and solar panels gain in value when they can power an energy efficient fan. I would love to find an energy company that could sell both to a household in tandem.

In places with even more constrained ability to pay for energy services, a village energy vendor who recharges phones or LED lamps from a solar array can become a future distributor of products and the village expert in repairing solar panels.

These ideas are peeking through the cracks here at Lighting Africa, but perhaps by default, disruptive ideas are not an easy fit for this kind of forum, focused specifically on delivering lighting. Development banks operate on a programmatic basis, with certain starting points, end points, and program strategies in between. A focus on lighting markets – rather than energy markets – is one such construct that I’m not sure is helping here. Within this, the IFC is focusing on product quality. I can’t disagree with supporting high quality lighting products, but this presupposes that retail solar lantern distribution is actually the first step that you want for electrifying Africa. Disruptive approaches may pop up here but will go against the grain.

Battery re-charge subscription services, income-generating village energy vending opportunities, and technology-agnostic energy retail chains are among the disruptive and promising approaches that I’m seeing here. Mobile communications and payments can and will be wrapped into effective approaches – they may become killer apps in themselves. And as one persuasive participant said towards the end of the conference, when solar companies get as smart at marketing at Safaricom has in Kenya, these products will find their way into customers’ hands. This sector is moving fast but the clear winners have yet to emerge.

RESOURCE ECONOMY
http://www.thevenusproject.com/a-new-social-design/essay
http://www.thevenusproject.com/a-new-social-design/resource-based-economy

The term and meaning of a Resource-Based Economy was originated by Jacque Fresco. It is a system in which all goods and services are available without the use of money, credits, barter or any other system of debt or servitude. All resources become the common heritage of all of the inhabitants, not just a select few. The premise upon which this system is based is that the Earth is abundant with plentiful resource; our practice of rationing resources through monetary methods is irrelevant and counter productive to our survival.

Modern society has access to highly advanced technology and can make available food, clothing, housing and medical care; update our educational system; and develop a limitless supply of renewable, non-contaminating energy. By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.

A resource-based economy would utilize existing resources from the land and sea, physical equipment, industrial plants, etc. to enhance the lives of the total population. In an economy based on resources rather than money, we could easily produce all of the necessities of life and provide a high standard of living for all.

Consider the following examples: At the beginning of World War II the US had a mere 600 or so first-class fighting aircraft. We rapidly overcame this short supply by turning out more than 90,000 planes a year. The question at the start of World War II was: Do we have enough funds to produce the required implements of war? The answer was No, we did not have enough money, nor did we have enough gold; but we did have more than enough resources. It was the available resources that enabled the US to achieve the high production and efficiency required to win the war. Unfortunately this is only considered in times of war.

In a resource-based economy all of the world’s resources are held as the common heritage of all of Earth’s people, thus eventually outgrowing the need for the artificial boundaries that separate people. This is the unifying imperative.

We must emphasize that this approach to global governance has nothing whatever in common with the present aims of an elite to form a world government with themselves and large corporations at the helm, and the vast majority of the world’s population subservient to them. Our vision of globalization empowers each and every person on the planet to be the best they can be, not to live in abject subjugation to a corporate governing body.

Our proposals would not only add to the well being of people, but they would also provide the necessary information that would enable them to participate in any area of their competence. The measure of success would be based on the fulfilment of one’s individual pursuits rather than the acquisition of wealth, property and power.

At present, we have enough material resources to provide a very high standard of living for all of Earth’s inhabitants. Only when population exceeds the carrying capacity of the land do many problems such as greed, crime and violence emerge. By overcoming scarcity, most of the crimes and even the prisons of today’s society would no longer be necessary.

A resource-based economy would make it possible to use technology to overcome scarce resources by applying renewable sources of energy, computerizing and automating manufacturing and inventory, designing safe energy-efficient cities and advanced transportation systems, providing universal health care and more relevant education, and most of all by generating a new incentive system based on human and environmental concern.

Many people believe that there is too much technology in the world today, and that technology is the major cause of our environmental pollution. This is not the case. It is the abuse and misuse of technology that should be our major concern. In a more humane civilization, instead of machines displacing people they would shorten the workday, increase the availability of goods and services, and lengthen vacation time. If we utilize new technology to raise the standard of living for all people, then the infusion of machine technology would no longer be a threat.

A resource-based world economy would also involve all-out efforts to develop new, clean, and renewable sources of energy: geothermal; controlled fusion; solar; photovoltaic; wind, wave, and tidal power; and even fuel from the oceans. We would eventually be able to have energy in unlimited quantity that could propel civilization for thousands of years. A resource-based economy must also be committed to the redesign of our cities, transportation systems, and industrial plants, allowing them to be energy efficient, clean, and conveniently serve the needs of all people.

What else would a resource-based economy mean? Technology intelligently and efficiently applied, conserves energy, reduces waste, and provides more leisure time. With automated inventory on a global scale, we can maintain a balance between production and distribution. Only nutritious and healthy food would be available and planned obsolescence would be unnecessary and non-existent in a resource-based economy.

As we outgrow the need for professions based on the monetary system, for instance lawyers, bankers, insurance agents, marketing and advertising personnel, salespersons, and stockbrokers, a considerable amount of waste will be eliminated. Considerable amounts of energy would also be saved by eliminating the duplication of competitive products such as tools, eating utensils, pots, pans and vacuum cleaners. Choice is good. But instead of hundreds of different manufacturing plants and all the paperwork and personnel required to turn out similar products, only a few of the highest quality would be needed to serve the entire population. Our only shortage is the lack of creative thought and intelligence in ourselves and our elected leaders to solve these problems. The most valuable, untapped resource today is human ingenuity.

With the elimination of debt, the fear of losing one’s job will no longer be a threat This assurance, combined with education on how to relate to one another in a much more meaningful way, could considerably reduce both mental and physical stress and leave us free to explore and develop our abilities.

If the thought of eliminating money still troubles you, consider this: If a group of people with gold, diamonds and money were stranded on an island that had no resources such as food, clean air and water, their wealth would be irrelevant to their survival. It is only when resources are scarce that money can be used to control their distribution. One could not, for example, sell the air we breathe or water abundantly flowing down from a mountain stream. Although air and water are valuable, in abundance they cannot be sold.

Money is only important in a society when certain resources for survival must be rationed and the people accept money as an exchange medium for the scarce resources. Money is a social convention, an agreement if you will. It is neither a natural resource nor does it represent one. It is not necessary for survival unless we have been conditioned to accept it as such.

‘AGRICULTURAL URBANISM’
http://www.houstontomorrow.org/initiatives/story/agricultural-urbanism/
http://lawprofessors.typepad.com/land_use/2009/10/duany-on-agricultural-urbanism.html
http://www.cnu.org/search/projects
http://www.dpz.com/transect.aspx
http://smartcodecentral.com/smartfilesv9_2.html

LEISURE-BASED 1st WORLD LAND USE
http://vimeo.com/7240892

DOWNSIZING : CLEVELAND RAZED to GROW FORESTS
http://money.cnn.com/2010/06/25/news/companies/fannie_freddie_foreclosure_downsize.fortune/index.htmmega
Cleveland razed! Rust Belt remaking foreclosures into forests
by Nin-Hai Tseng / June 25, 2010

In a housing market still struggling to regain strength, Fannie Mae and Freddie Mac have quickly become two of the nation’s biggest landlords. By the end of March, the troubled mortgage finance companies had taken over 163,828 foreclosed houses. That’s more homes than there are in Seattle. In hopes of recouping some losses, Fannie and Freddie are working to sell the houses. In a healthy housing market, that makes sense. But they wouldn’t be in this predicament if that were the case. We’re still grappling with the same housing problems: too much supply, not enough demand.

How can the nation downsize with grace?
A growing chorus believes turning foreclosed homes into wide-open spaces — neighborhood parks, community gardens, or even urban forests — is the way to do it. It’s not exactly a far-fetched idea. Fortune has learned The Trust for Public Land, a national nonprofit land conservation organization, is examining Wells Fargo’s (WFC, Fortune 500) portfolio of foreclosed homes to buy tracts in order to return the land to a greener state. Record foreclosures and lower land prices has created some unlikely opportunities — what the organization is calling a “green lining” to the real-estate crash. “We’ve always worked with banks to acquire properties, but obviously there’s a lot more pieces and much more opportunities these days,” said Will Rogers, president of The Trust for Public Land, which help governments put together financing to acquire lands through grants, public dollars and private fundraising. For decades American cities such as Cleveland, Detroit, Youngstown, and St. Louis have responded to everything from white flight to population decline by converting abandoned lots or properties into plots for public uses. To be sure, not every structure has been demolished and turned into greener spaces. Some in good shape have been transformed into affordable housing, but creating open space has become a viable option for cities trying to shrink prosperously.

Conservation of land has its roots in the presidency of Theodore Roosevelt. In keeping with the spirit of our late President, known as the Father of Conservation and a crusader for saving wild places, the idea of turning unneeded homes into green space is worth exploring. Roosevelt helped create 150 national forests, five national parks, and 18 national monuments, among other conservation projects. Altogether, he was instrumental in the conservation of about 230 million acres. “Roosevelt is famous for being a conservationist — he was onto this idea that the great outdoors built strong Americans,” says Armando Carbonell of the Lincoln Institute of Land Policy, a Cambridge, Mass.-based policy research organization. “The amount of failure of real estate projects is so great that there are probably a lot of opportunities out there.”

In 2008 the federal government seized Fannie and Freddie because they were deeply troubled by bad loans. The companies hold titles to the foreclosed properties, and have hired real estate and marketing agencies to help sell their inventory. When a property is sold, the companies take payment and give the new homeowners title. As of the end of March, Freddie had taken over 53,831 homes, mostly concentrated in states with some of the nation’s highest foreclosure rates: California, Florida, Arizona, Michigan, Illinois, and Georgia. Listings for homes in California ranged from $19,000 to $59,000; those in Florida, $5,000 to $24,000; in Illinois, $2,000 to $36,000; in Arizona, $15,500 to $37,500; in Michigan, $100 to $19,900; and in Georgia, $4,000 to $31,000.

The weak housing market has kept Freddie from selling at prices that would help it recoup all its losses. On average, the recovery rate has been approximately 60%, said Brad German, a spokesman for Freddie. Clearly there are few winners in this nightmarish housing market. No doubt there’s a better way: Freddie and Fannie need to be part of the solution. The companies could sell their properties to governments or a land trust, which could then turn them into neighborhood parks or urban gardens or some form of open space. Not every piece will work.

Location, location, location
The Trust for Public Land prefers homes it is looking at to sit in a neighborhood that does not already have a park or green space. However, if the foreclosed parcel is located adjacent to an existing park, it could be added into it. Finding a willing government, church, school or organization to maintain the open space is also important. Efforts to turn foreclosures into green space could prove economically beneficial, helping reduce the nation’s oversupply of homes. In turn, this could support and possibly raise home prices.

In Ohio’s Cuyahoga County, home to the rust-belt city of Cleveland, momentum has increased to ease the area’s rampant foreclosures through a greener approach. In April the county of about 1.3 million launched a land bank, an independent government corporation with the power to acquire tax-foreclosed properties or buy up discounted structures from banks or loan services. The agency is a variation on a handful of land banks that have formed nationwide — the first of which emerged in the 1970s in St. Louis, where residents’ flocking to the suburbs left an inventory of empty homes and buildings.

Unlike land banks of the past, Cuyahoga’s agency appears to have teeth. Not only can the land bank pick up vacant property, but it can also acquire homes, buildings, and other structures. The county apparently has received an outpouring of requests from a public that envisions greenhouses, parks, trails, and community gardens, in hopes of redefining neighborhoods left hollow by subprime lending and mortgage foreclosures. But not every parcel or property should be demolished and turned into wide-open spaces. Affordable housing is still in demand, and many communities dealing with record foreclosures would probably benefit more from attracting new industries and more businesses. Local and state governments dealing with budget shortfalls would probably rather see new homes or a new office park on their tax rolls, leading to increased government revenues from property taxes. State governments face one of the worst budget seasons in years. Between now and 2012, states must still close budget gaps totaling about $127 billion, according to a survey by the National Association of State Budget Officers. If market demand for homes just isn’t there and the location is right, communities could find even more value in greener spaces. “It suddenly becomes an asset for the community rather than a liability,” says Frank Alexander, a professor at Emory University Law School who has helped form land banks in Atlanta and Michigan’s Genesee County.

The green space effect
In 2007, Philadelphia saw an $18.1 million windfall in property taxes because property values rose in certain residential areas near parks, according to a 2008 study by The Trust for Public Land. What’s more, parks attract tourists. Philadelphia collected $5.2 million worth of sales tax from tourism spending by out-of-towners who visited the city primarily for its parks, according to the report. If anything, open spaces might just add to life’s simple pleasures. A separate survey by The Trust for Public Land has found that the economic downturn has occasioned more visitors to free parks and playgrounds, while admissions to paid events, like professional sports, have gone down. In a 2009 poll, 38% of adults with children under 6 years old said they’ve made greater use of parks.

BACK to CITY-STATES
http://thehill.com/blogs/hillicon-valley/technology/101273-john-perry-barlow-internet-has-broken-political-system
John Perry Barlow: Internet has broken political system
by Gautham Nagesh / 06/03/10

“The political system is broken partly because of Internet,” Barlow said. “It’s made it impossible to govern anything the size of the nation-state. We’re going back to the city-state. The nation-state is ungovernably information-rich.” Speaking at Personal Democracy Forum in New York on Thursday, Barlow said there is too much going on at every level in Washington, D.C., for the government to effectively handle everything on its plate. Instead, he advocated citizens organizing around the issues most important to them.

Barlow also said that President Barack Obama’s election, driven largely by small donations, has fundamentally changed American politics. He said a similar bottom-up structure is needed for governing as well. “It’s not the second coming, everything won’t get better overnight, but that made it possible to see a future where it wasn’t simply a matter of money to define who won these things,” Barlow said. “The government could finally start belonging to people eventually.”

The former Grateful Dead songwriter said those disppointed in Obama are disregarding the extent to which the political system is broken. He blamed the Beltway establishment, which he said is loathe to give up any accumulated influence. “There is a circle of fat around the Beltway that is incredibly thick” Barlow said. “We can no longer try to run this country from the center. We’ve got to run it, just like the Internet, from the edges.”

A longtime advocate of individual’s rights online, Barlow also had some harsh words for the world’s leading search firm. “Google’s capacity to control human thought makes the Catholic church jealous, I bet,” Barlow said. “They wish they’d thought of it.” Despite his concerns, Barlow remains optimistic about the Internet’s ablitity as a force for good in politics, describing himself as a techno-utopian. “There are lots of battles to be fought, we can’t give them up,” Barlow said. “You folks in this room have the capacity to be some of the greatest ancestors anybody ever had.”

HOW TO CALCULATE YOUR RESOURCE WEALTH
http://www.europeanenergyreview.eu/index.php?id=1101
http://books.google.com/books?id=yk5NI69ZO9sC
http://www.usbig.net/links.html

‘CITIZEN’S DIVIDEND’
http://www.thomaspaine.org/Archives/agjst.html
http://en.wikipedia.org/wiki/Citizen’s_dividend

Citizen’s dividend or citizen’s income is a proposed state policy based upon the principle that the natural world is the common property of all persons (see Georgism). It is proposed that all citizens receive regular payments (dividends) from revenue raised by the state through leasing or selling natural resources for private use. In the United States, the idea can be traced back to Thomas Paine’s essay, Agrarian Justice[1], which is also considered one of the earliest proposals for a social security system in the United States. Thomas Paine best summarized his view by stating that “Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.”

This concept is a form of basic income, where the Citizen’s Dividend depends upon the value of natural resources or what could be titled as “common goods” like seignorage, the electro-magnetic spectrum, the industrial use of air (CO2 production), etc. The State of Alaska dispenses a form of citizen’s dividend in its Permanent Fund Dividend, which holds investments initially seeded by the state’s revenue from mineral resources, particularly petroleum. In 2005, every eligible Alaskan resident (including their children) received a check for $845.76. Over the 24-year history of the fund, it has paid out a total of $24,775.45 to every resident.

BASIC INCOME
http://en.wikipedia.org/wiki/Basic_Income
http://en.wikipedia.org/wiki/Georgism
http://www.basicincome.org/bien/aboutbasicincome.html
http://www.basicincome.org/bien/papers.html
http://www.multinationalmonitor.org/mm2009/052009/interview-widerquist.html

MM: What are the origins of the concept?
Widerquist: Some people trace the idea back as far as ancient Greece. The idea started appearing gradually in different times and places in the modern era. Thomas Paine mentioned something like it in his pamphlet “Agrarian Justice” in the 1790s. Bertrand Russell articulated the idea in 1915. Economists started talking about the idea in the 1940s. The idea gathered a great deal of attention in the United States in the 1960s and 1970s, when people began to think of it in very diverse ways: as the scientific solution to poverty, as a streamlined yet more effective alternative to the welfare state or as a way to empower the least advantaged people. At one point, it seemed like the inevitable next step in social policy. People as diverse as Martin Luther King and Richard Nixon endorsed it. Groups as diverse as chambers of commerce and grassroots welfare rights campaigners endorsed it. But the diversity of its appeal was matched by the diversity of its opposition. A watered-down version of it called “the Family Assistance Plan” passed narrowly in the House of Representatives in 1972, but was defeated in the Senate by a coalition of people who thought it went too far and people who didn’t think it went far enough. Interest in the idea dropped off in the United States in the late 1970s, but then interest began to grow in Europe. The academic debate has continued to grow ever since and it has translated into popular movements in places as diverse as Ireland, Namibia, Finland, Brazil, South Africa, Belgium, Germany and Italy.

MM: Are there examples of policies being enacted? How have they turned out?
Widerquist: Yes, there are a few small things around the world and one big example in Alaska. Brazil recently voted to combine several of its anti-poverty programs into a program called the Bolsa Familia, which is supposed to be the first step. A private NGO is currently conducting a pilot project in Namibia with great success. The Alaska Permanent Fund (APF) has been in place for 25 years. The “basic” in basic income guarantee is meant to indicate that it is enough to cover your basic needs. The APF isn’t that large, but it is one of the most popular government programs in the United States today. They had a referendum proposing to get rid of it a few years ago, and people voted something like 85 percent in favor of keeping it. Few government programs have that kind of support. The APF is another outgrowth of the NIT movement in the United States in the 1970s. Jay Hammond was governor when the Trans-Alaska Oil Pipeline was proposed. He had learned about BIG during the NIT debate, and he saw the opportunity to connect the two. Usually when businesses want to take publicly owned natural resources and make them into private property, they just pay off the right politicians and they get the resources free or at a nominal fee. But Hammond decided that this oil belonged to all the people of Alaska, and if the corporations wanted to buy it, they had to pay into a fund that would pay a yearly dividend to every citizen in Alaska. The APF dividend varies year-to-year depending on the fund’s returns. It’s usually somewhere between $1,000 and $2,000. Last year the dividend was a record high of $3,200. Of course, $3,200 isn’t enough to meet anybody’s basic needs, but it can make a huge difference for people at the margins. Suppose you’re a single parent with four children living on an Indian reservation somewhere in Alaska. Last year’s APF Dividend was worth $16,000 to you and your family. You can’t live on that all year, but imagine the difference it makes. You might worry that people who get a check from resource revenues might be more accepting of resource exploitation. But other factors, I believe, more than counteract any such effect. Remember that today companies are taking control of natural resources all over the planet and paying no compensation at all to the rest of humanity. If you want people to do less of something, taxation is a very good way to start. If you tax resource extraction, you not only discourage people from doing too much of it, you also establish the precedent that natural resources belong to everyone — not just to the first corporation to get permission from the government. That precedent would be enormously valuable to the environmental movement.

STEP ONE : LOCATE RESOURCES
http://www.npr.org/blogs/money/2010/06/14/127834173/will-afghanistan-fall-victim-to-the-resource-curse
http://www.npr.org/blogs/money/2010/06/17/127915306/one-way-to-break-the-natural-resource-curse-give-the-money-away

Afghanistan’s big deposits of lithium, copper and gold have some economists worried. As we noted earlier this week, the discovery of natural resources often leads to conflict and corruption, which in turn hurt economic growth. But a handful of economists are pushing an idea they say could break the natural resource curse. Take all money that comes in from foreign companies — for lithium in Afghanistan, oil in Nigeria, natural gas in Bolivia — and give it to the citizens. Literally have a government official sit down with piles of cash, maybe with some international oversight, and divvy it up. That system would create a strong incentive for the people to keep on eye on what the government’s doing, says Todd Moss of the Center for Global Development. “If you received $500 last year, and this year it’s only $400, you’re going to ask some pretty hard questions,” he says.

But there are a few key barriers to putting the plan into action. The first is logistics. Lots of resource-rich countries don’t have national databases, clear census records or strong banking systems. That makes it tough to hand out billions of dollars to millions of people, year after year. The second is the fact that money is power. A government that’s getting lots of money by selling natural resources may be reluctant to share the wealth. Arvind Subramanian, an economist with the Peterson Institute, recently traveled to Nigeria to pitch the idea of giving oil revenues directly to the people. The government wasn’t interested. “If the current guy in power does not want to give up power, my idea has no hope of succeeding,” Subramanian said.

‘SAUDI ARABIA of LITHIUM’
http://earth2tech.com/2010/06/14/who-wants-afghanistans-lithium-chinas-electric-vehicle-players/
http://afghanistan.cr.usgs.gov/flash_tile.php?cat=NRL%20Aerial%20Photography%20preliminary%20Data
http://afghanistan.cr.usgs.gov/airborne.php
http://www.usgs.gov/newsroom/article.asp?ID=1819
http://www.bgs.ac.uk/downloads/browse.cfm?sec=7&cat=83
http://www.bgs.ac.uk/afghanminerals/raremetal.htm
http://www.bgs.ac.uk/AfghanMinerals/links.htm
http://www.independent.co.uk/news/world/asia/afghanistans-resources-could-make-it-the-richest-mining-region-on-earth-2000507.html
Afghanistan’s resources could make it the richest mining region on earth
by Kim Sengupta / 15 June 2010

Afghanistan, often dismissed in the West as an impoverished and failed state, is sitting on $1 trillion of untapped minerals, according to new calculations from surveys conducted jointly by the Pentagon and the US Geological Survey. The sheer size of the deposits – including copper, gold, iron and cobalt as well as vast amounts of lithium, a key component in batteries of Western lifestyle staples such as laptops and BlackBerrys – holds out the possibility that Afghanistan, ravaged by decades of conflict, might become one of the most important and lucrative centres of mining in the world. President Hamid Karzai’s spokesman, Waheed Omar, said last night: “I think it’s very, very big news for the people of Afghanistan and we hope it will bring the Afghan people together for a cause that will benefit everyone.” In Washington, Pentagon spokesman Colonel David Lapan, told reporters that the economic value of the deposits may be even higher. “There’s … an indication that even the £1 trn figure underestimates what the true potential might be,” he said. According to a Pentagon memo, seen by The New York Times, Afghanistan could become the “Saudi Arabia of lithium”, with one location in Ghazni province showing the potential to compete with Bolivia, which, until now, held half the known world reserves.

Developing a mining industry would, of course, be a long-haul process. It would, though, be a massive boost to a country with a gross domestic product of only about $12bn and where the fledgling legitimate commercial sector has been fatally undermined by billions of dollars generated by the world’s biggest opium crop. “There is stunning potential here,” General David Petraeus, the US commander in overall charge of the Afghan war, told the US newspaper. “There are lots of ifs, of course, but I think potentially it is hugely significant.” Stan Coats, former Principal Geologist at the British Geographical Survey, who carried out exploration work in Afghanistan for four years, also injected a note of caution. “Considerably more work needs to be carried out before it can be properly called an economic deposit that can be extracted at a profit,” he told The Independent. “Much more ground exploration, including drilling, needs to be carried out to prove that these are viable deposits which can be worked.” But, he added, despite the worsening security situation, some regions were safe enough “so there is a lot of scope for further work”.

The discovery of the minerals is likely to trigger a commercial form of the “Great Game” for access to energy resources. The Chinese have already won the right to develop the Aynak copper mine in Logar province in the north, and American and European companies have complained about allegedly underhand methods used by Beijing to get contracts. The existence of the minerals will also raise questions about the real purpose of foreign involvement in the Afghan conflict. Just as many people in Iraq held that the US and British-led invasion of their country was in order to control the oil wealth, Afghans can often be heard griping that the West is after its “hidden” natural treasures. The fact US military officials were on the exploration teams, and the Pentagon was writing mineral memos might feed that cynicism and also motivate the Taliban into fighting more ferociously to keep control of potentially lucrative areas.

Western diplomats were also warning last night that the flow of money from the minerals is likely to fuel endemic corruption in a country where public figures, including Ahmed Wali Karzai, the President’s brother, have been accused of making fortunes from the narcotics trade. The Ministry of Mines and Industry, which will control the production of lithium and other natural resources, has been repeatedly associated with malpractice. Last year US officials accused the minister in charge at the time when the Aynak copper mine rights were given to the Chinese, Mohammed Ibrahim Adel, of taking a $30m bribe. He denied the charge but was sacked by President Karzai. But last night Jawad Omar, a senior official at the ministry, insisted: “The natural resources of Afghanistan will play a magnificent role in Afghanistan’s economic growth. The past five decades have shown that every time new research takes place, it shows our natural reserves are far more than what was previously found. This is a cause for rejoicing, nothing to worry about.”

According to The New York Times, the US Geological Survey flew sorties to map Afghanistan’s mineral resources in 2007, using an old British bomber equipped with instruments that offered a 3-D profile of deposits below the surface. It was when a Pentagon task force – charged with formulating business development programmes and helping the Afghan government develop relationships with international firms – came upon the geological data in 2009, that the process of calculating the economic values began. “This really is part and parcel of General [Stanley] McChrystal’s counter-insurgency strategy,” Colonel Lapan said yesterday. “This is that whole economic arm that we talk about but gets very little attention.”

‘DISCOVERY’
http://www.state.gov/secretary/rm/2010/05/141825.htm
http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4643
http://www.nytimes.com/2010/06/15/world/asia/15afghan.html?ref=global-home
http://blog.foreignpolicy.com/posts/2010/06/14/more_on_afghanistans_mineral_riches
http://ricks.foreignpolicy.com/posts/2010/06/14/minerals_in_afghanistan_mais_oui
by John Stuart Blackton

The ” discovery” of Afghanistan’s minerals will sound pretty silly to old timers. When I was living in Kabul in the early 1970’s the USG, the Russians, the World Bank, the UN and others were all highly focused on the wide range of Afghan mineral deposts. The Russian geological service was all over the North in the 60’s and 70’s. Cheap ways of moving the ore to ocean ports has always been the limiting factor. The Russians were looking at a northern rail corridor. Take a look at this little bibliography of Afghan mineral assessments. This one is mostly Russian, but pre-dates the DoD/USG “discovery” period by 30 years. In my day we did a joint USG/Iranian study of a potential rail line from Afghanistan to several of the Iranian rail hubs. This was predicated on mineral exploitation in a way that would thwart the Russian’s northern rail corridor plans. In the early 70’s the USG had an old FDR New-Deal planner/economist/brains-truster – Bob Nathan – working with the Afghan Ministry of Plan to work out a fifty year mineral exploitation program. When the Russians took over they picked up Bob’s plans and extended them. So this is anything but a “new discovery”. Low cost, long haul transport infrastructure remains the constraint.

{John Stuart Blackton, who has shaken more Helmand River sand out of his shorts than most Americans in Afghanistan have walked on, provides some background. By the way, before running USAID in Afghanistan, John attended Stephens College of Delhi-as did Pakistan’s Gen. Zia.}

STEP TWO : DETERMINE TRUE COSTS
http://reclaimdemocracy.org/corporate_welfare/
http://en.wikipedia.org/wiki/General_Mining_Act_of_1872
http://www.seattlepi.com/specials/mining/26875_mine11.shtml
The General Mining Act of 1872
by Robert McClure & Andrew Schneider / June 11, 2001

Gold, silver, platinum and other precious metals for free. Land for $5 an acre or less. That’s the deal mining companies get from the U.S. government when miners turn their explosives and earthmovers toward public land in the West. It’s pretty much the same deal miners have had for 129 years, ever since Congress approved the General Mining Law in 1872. Modern mining methods have left the West pockmarked by huge craters, some so large that they are visible from space. Whole mountainsides are ground to dust and doused with cyanide, teasing out enough gold for a single wedding ring from several tons of rock and soil. And tens of thousands of abandoned mines scar the landscape, many emitting an orange-red, acid-laced runoff called “yellow boy.” These mines have poisoned more than 16,000 miles of Western streams. When a mine goes bankrupt, taxpayers sometimes get stuck with the costs of cleaning up the mess — more than $275 million for three mines alone in Colorado, South Dakota and Montana that closed in the 1990s. Under terms of the antiquated law, miners cart away everything from gold to kitty litter from public lands — minerals worth about $11 billion in the last eight years alone. Not only does the U.S. Treasury get nothing, Congress has granted miners a tax break worth an estimated $823 million in the coming decade. Over the years, public lands the size of Connecticut have been made private under terms of the 1872 law, all for $2.50 to $5 an acre, though not all of it has been used for mining. Some claims became ski resorts, housing subdivisions, hotels and even a brothel, in Nye County, Nev.

Congress has acted over the years to rein in some abuses allowed under the act, but problems persist, and the debate over the future of Western lands continues. New mining regulations designed to protect taxpayers and the environment went into effect just hours before George W. Bush became president — and he soon moved to get rid of them. A watered-down version of the rules or a full suspension is expected next month. The controversy over the new regulations for administering the old law is just one more battle in a land-use war that has raged for generations. It’s a complex subject, rich in history. But the issues boil down to three broad areas of disagreement: To what degree mining harms the environment, whether the jobs it produces are worth the damage, and whether the public interest is being subverted by the miners and their friends in Washington, D.C.

Opening the West
Complaints about a taxpayer rip-off started just about as soon as miners arrived in the vast American West. Trying to establish order amid the chaos of the California gold rush in 1848, an Army colonel named Mason sent a dispatch to headquarters warning: “(T)he government is entitled to rents for this land, and immediate steps should be devised to collect them, for the longer it is delayed the more difficult it will become.” Nearly two decades later, Congress adopted the Lode Law of 1866 — a troubled bill that won passage because it was attached to unrelated legislation. The 1866 law, updated in 1870 and in 1872, probably wasn’t what Colonel Mason had in mind. It simply legitimized what miners were already doing: Find a bit of federal land that appears to contain gold, silver or other “hard-rock” minerals, pound stakes at its corners to warn off others, dig, and — if you guessed right — cash in.

Like the better-known Homestead Act, which offered free land to anyone willing to farm it, the mining law was intended as an incentive to those willing to push West and settle the frontier. That frontier was closed long ago, but the mining law remains on the books and very much in use — even where mining would harm an increasingly settled region. The new mining regulations targeted for repeal by the Bush administration give the government the right to reject a proposed mine if it would cause “substantial irreparable harm.” Currently, federal officials must administer a law they say promotes mining as the best use of millions of acres of federal land, even in sensitive places such as Top Of The World, Ariz., a wide spot in the road 70 miles from Phoenix. There, a Canadian company called Cambior wants to dig copper where wild boars roam and the hedgehog cactus blooms brilliant red in the spring. The sulfuric acid, trucks, noise and dust from a 24-hour-a-day mine would be plopped down just upstream from a lush, tree-shaded canyon — a rarity there.

Cambior, which also ran a mine in Guyana where 300 million gallons of a cyanide-bearing solution spilled, wants to dig three pits covering nearly a square mile, reaching a depth of 600 feet. The hundreds of millions of tons of earth removed would be piled into heaps covering an additional square mile-plus. The ore, the material that bears copper, would be doused with 400 tons of sulfuric acid per day. To do this, the company would reroute more than two miles of streams, some through channels constructed of a concretelike material. The Canadian firm and its subsidiary, Carlota Copper Co., will pay no more than $1,700 for the public portion of the land it would mine. The company expects to mine some 478,000 tons of copper worth about $728 million at current prices. Even a federal lawyer trying to defend the government’s approval of the mine had to admit, “The circumstances here include a proposed project that is so invasive to the forest that it would never be considered, much less approved, were it not for the mining law of 1872.” And a federal judge handling a suit by environmentalists who tried to stop the project ruled that the mining law trumps their concerns. “Because mining has been accorded a special place in the national laws related to public land, the development of mineral resources in the national forests may not be prohibited or unreasonably circumscribed,” U.S. District Judge Paul Rosenblatt wrote. “The Forest Service consequently has no authority to categorically reject an otherwise reasonable mining plan of operations.”

Bob Walish, manager of the Cambior project, said it is misleading to consider only the $5 per acre the company will pay the government. He said the company spent about $61 million prospecting, obtaining permits and fighting lawsuits. Echoing the industry’s supporters in Congress, Walish said the government should follow through with the intent of the mining law — to privatize land in the West. More than half of some states are still owned by the government, he noted. “The debate in our mind isn’t that we’re stealing this from the public,” he said. “It’s ‘Why is there (still) all this public land?'” Stephen D’Esposito, president of the Mineral Policy Center, an environmental group dedicated to mine-law reform, points to Top Of The World and places like it when asked what’s wrong with the 1872 law. “It’s time for a new deal that keeps our water clean, protects our public lands from destructive mineral development, eliminates corporate subsidies and gives the taxpayer a fair return,” D’Esposito said. “What’s needed are three common-sense reforms: the right of the public to say ‘no’ when mining isn’t the best use of our public lands; a requirement that mining companies pay to clean up their messes as a cost of doing business; and a provision that mining companies pay taxpayers a fair price for mining on public lands.”

An economic savior
Though less of an economic force than in the past, mining remains an economic savior of some rural areas in the West, where more than 100 hard-rock mines are operating. And those who run the international corporations that have replaced the pick-and-shovel prospectors of the 1800s say the public still benefits from their hard work and willingness to risk a fortune to develop mines that might not return one. They point out that mining still pays better than most jobs in the rural West, and they note that mining firms and their employees pay taxes, too. And society gets something it can’t live without, they argue: metals. U.S. manufacturers get about half their metals from right here at home. “Mining makes our civilization…. Everything you do today depends on mining,” Rep. Jim Gibbons, R-Nev., a former mining geologist, said at a recent congressional hearing. Before another hearing, Gibbons said that efforts to crack down on mining companies “may relegate us to a Third World status.”

The miners say they are regulated enough. The government already has put about 165 million acres off-limits, and on an additional 182 million acres, the U.S. Forest Service or the Bureau of Land Management can reject mining permits. That leaves about 350 million acres of the West open to mining. And miners note that the law doesn’t excuse companies from having to abide by more-recent federal laws such as the Clean Water Act and the National Environmental Policy Act. “We can’t mine in parks. We can’t mine in sensitive areas,” said Jack Gerard, president of the National Mining Association. “The government every day makes public lands/public policy decisions.”

Yet exercising this power can be expensive. In 1995, President Clinton proposed a ban on mining in an area near Yellowstone National Park. A Canadian firm, Crown Butte Mines Inc., already had applied to privatize some land in the area and planned to use land already patented — that is, converted to private property by others who paid a small fee. The government had to pay $65 million to stop the mine. The money went to Battle Mountain Gold, which had bought Crown Butte. Battle Mountain Gold wants to open Washington state’s first major open-pit gold mine, the Crown Jewel project in Okanogan County. The 1872 Mining Law has been under fire for decades, but the industry has been able to head off countless attempts at reform. One of its bedrock arguments is that overhauling the law would risk national security. “Destroying the mining law will risk the lives of our sons and daughters, for many will surely die in battle on some foreign shore because of it,” said Richard Lawson, a retired four-star Air Force general who until recently headed the National Mining Association. “Without the protection of the mining law, America cannot get the minerals it must have to remain free and secure, and we will go to war to get those precious metals.” But some Western communities pay a high price for this freedom.

Superfund sites abound
Signs near Spokane carry an ominous warning: “This health advisory is posted to alert you to the presence of elevated levels of lead and arsenic in soils along the shorelines and beaches of the upper Spokane River…. Swallowing or breathing loose shoreline soils may be an increased health risk to people, especially infants, small children and pregnant women.” The signs, posted by the Spokane Regional Health District, warn that children shouldn’t play in muddy soils along the river and should be closely supervised to ensure that they don’t put dirt in their mouths. Toxic goop is spilling into Washington fully 50 miles downstream from the Silver Valley, where North Idaho miners dug silver, lead and other metals from the earth for more than a century. The Spokane flows from Coeur d’Alene Lake, which the Environmental Protection Agency says holds some 70 million tons of mining waste — enough to cover a football field 4.7 miles high. And rivers all across the West are tainted by old mines, including the Columbia and the Okanogan in Washington.

The U.S. Environmental Protection Agency’s roster of the nation’s worst industrial contamination hot spots, the so-called Superfund list, includes more than 25 mines, a handful still active. Cleaning them up will cost billions of dollars. Whole towns in Montana and Idaho have been swallowed by Superfund sites, their stream banks and hillsides denuded of plants. In Idaho’s Silver Valley, the source of the mine waste in the Spokane River, tests show that one in six children under age 6 have enough lead in their bodies to affect learning and other functions. While much of the damage done by mining in the West happened decades ago, environmental problems continue: Near Deadwood, S.D., a small Canadian firm went bankrupt and left taxpayers a $40 million cleanup bill. At Montana’s Fort Belknap Indian Reservation, another bankrupt Canadian company stuck taxpayers with an estimated $33 million in cleanup costs. In southern Colorado, yet another bankrupt Canadian concern created a mess that will cost more than $200 million to clean up, while 17 miles of the Alamosa River were left devoid of fish and most other creatures for about eight years. In central Idaho, Hecla Mining Co.’s Grouse Creek mine, hailed as a marvel of modern mining when it opened in 1994, has slowly leaked cyanide into the ground and into a nearby creek. Near San Luis, Colo., Battle Mountain Gold’s self-proclaimed “environmentally friendly” mine experienced a large and unexpected buildup of cyanide within a year of opening. Near Whitehall, Mont., the Golden Sunlight mine, run by Placer Dome, a Canadian company, contaminated wells of two nearby ranchers. There’s a big difference between mines envisioned by Congress in 1872 and those operating today. Modern mines are far bigger, and many employ deadly cyanide to leach precious metals from rock. The leaching technique was used in small measure by miners in the early 1900s to draw gold and copper out of ore so low in mineral content that large-scale operators would have tossed it out as waste.

In the old days, leaching was done by misting cyanide over a barrel or large vat filled with crushed ore. The cyanide dissolved microscopic specks of gold from the rock, much as water dissolves sugar. As gold soared to $850 an ounce in the early 1980s, mining companies brought back the leaching technique in a big way, wringing more gold from long-closed mines and developing new ones where the ore had been considered too poor to bother. Miners still mix cyanide and water and slowly trickle it over piles of ore, but the piles are much bigger. Now they blast away entire mountains of rock, pile the ore in heaps the size of a football field and apply a river of cyanide, leaving behind hills of tailings and waste rock. Environmentalists cringe at the technique, not just because of the hazard of an accidental cyanide release, but also because of a long-term risk related to exposure of rock to the weather. The ore is often high in sulfides, and water passing through the rock and soil creates sulfuric acid, which in turn leaches poisonous heavy metals into runoff water, with iron in the rock turning streams an orange-red.

Forest Service, BLM decide
Environmental Protection Agency officials estimate that 40 percent of Western watersheds are affected by mining pollution. And sometimes EPA officials have advised against allowing a mine to open. But the EPA’s concerns are sometimes ignored since the ultimate go-ahead comes from the Forest Service or the BLM. The Grouse Creek mine in central Idaho, for example, won Forest Service approval even though the EPA warned that a strikingly beautiful high-elevation wetland valley would be destroyed. “Let the fun begin!!!!!” Forest Service mining engineer Pete Peters wrote in jest to a supervisor as he tried to figure out how to manage millions of gallons of muddy runoff water at the mine. Today, Peters acknowledges that he was unprepared for the enormity of his task of regulating the mine. “There’s no textbook. You have to hope you can stay ahead of it,” he said. “It was like nothing I’d ever dealt with.” The mine, leaking cyanide, closed after three years without making a profit. Signs posted by a nearby creek for a time warned, “Caution — do not drink this water.”

Mining industry officials acknowledge that there have been environmental problems, even with modern mines. But they say that the industry generally does a good job of policing itself, and that state regulators also keep an eye on miners. “The mining industry is not perfect, and mining has risks and it has impacts,” said Laura Skaer, director of the Northwest Mining Association. “Over the years, the industry has developed the practices and the techniques, coupled with regulations, to mitigate those impacts. It doesn’t mean there aren’t going to be accidents; that there isn’t going to be an occasional bad actor.” Accidents started to happen as soon as the Summitville mine opened in southwestern Colorado. Within six days, cyanide was leaking. The mine operator, Galactic Resources Ltd. of Canada, later went broke.

Galactic was one of a series of small mining companies, often financed through the loosely regulated Vancouver Stock Exchange, that rose to prominence during the mining boom before crashing in bankruptcy. Like other Canadian companies, it was allowed to mine on U.S. federal land even though Congress in 1872 specifically limited the privileges of the General Mining Law to “citizens of the United States and those who have declared their intention to become such.” The reason: In 1898, the U.S. Supreme Court ruled that corporations have the same legal rights as people. So today, a Toronto-headquartered firm such as Barrick Gold Corp. can set up a subsidiary in Nevada and privatize nearly 1,950 acres for less than $10,000. Last year, Barrick hauled away nearly 2.5 million ounces of gold worth more than $600 million on the open market. “We have concluded, and the U.S. has concluded and many countries around the world have concluded that it is in their interest to provide an incentive to cause people to search for a mineral that otherwise isn’t know to exist in that ground,” said Pat Garver, Barrick’s head lawyer. Yet another Canadian firm, with offices in Spokane, Pegasus Gold, left three failing mines in Montana, including one that will cost taxpayers $33 million to clean up. Most Pegasus staff members kept working for the company as it reorganized, continuing to operate more profitable mines. Some even got bonuses.

Nothing for U.S. taxpayers
Not all critics of the 1872 law call for reform because of environmental damage. Some are galled by the fact that the law, breaking with tradition, allows miners to dig a fortune from public land without giving a share to the American citizens who own it. Europe’s royal families demanded a portion of all minerals taken from their New World colonies. And in the 18th century, Congress passed a law requiring a third of the profits from mines on federal lands go to the Treasury. “Even the early miners in the West followed local mineral laws modified from German and British traditions which required a portion of the minerals to be returned to the community,” said Carol Russell, mining specialist in the EPA’s Denver office. “However, it appears that in the rush of the gold rush, royalties were forgotten, and haven’t surfaced yet.” In 1920, Congress removed oil, natural gas and other minerals that could be used for fuel from the 1872 Mining Law. Instead, the government would lease the rights. And in 1977, Congress decreed that miners of coal on federal land would have to pay a royalty of 8 to 12.5 percent, and clean up after themselves. The government in the past decade has collected $11.08 billion from companies taking coal, oil, and natural gas, plus $35.8 billion in rents, bonuses, royalties and escrow payments for offshore oil and gas reserves.

Still, hard-rock miners pay nothing for the gold, silver, platinum, copper and other minerals they get. Walish, the manager of Cambior’s Top of the World project, joins many in the mining industry in warning, “If massive royalties are put on federal land, you’re going to see a lot less mining.” Critics are even more agitated about the mining companies’ ability to transform public land into private land for no more than $5 an acre — close to the fair market value for ranch and farmland in the West in 1872. Since 1964, more than 289,000 acres have been privatized, or patented, for mines. Congress has temporarily prevented additional land from being privatized, but applications already in the pipeline are eligible to continue with the process. About 73,000 acres could eventually be privatized this way. In 1872, Congress sold the land cheap because it wanted the West to be settled. That’s why a typical claim of 20 acres cost $100 — about three months’ rent in a Seattle boardinghouse. Now, critics ask, why should the government continue to sell public land for a pittance when the frontier is closed, and the West largely settled?

‘Why are they tearing it up?’
Years ago, a young man growing up in northern Arizona was surprised to see a big hole being scooped from the flanks of the picturesque San Francisco Peaks near his home. The mountains are considered sacred by the Hopi, the Navajo and 11 other tribes. “They started ripping the side of this mountain open, and I remember asking early on: ‘Who owns this land? And why are they tearing it up and carting it away?'” he recalled. Decades later, “it’s expanded into a gigantic scar on these sacred mountains. … One of the most unspeakably beautiful places in the Southwest is being carted away, truckload by truckload.”

The man is Bruce Babbitt, former Arizona governor and Interior secretary in the Clinton administration. For eight years, Babbitt administered the 1872 Mining Law. Babbitt hates the 1872 Mining Law. What was being mined near Flagstaff was pumice, a light volcanic rock. Today most of it is used to give denim that soft, “stone-washed” look. “It’s not like it’s being mined for some metal that’s necessary,” Babbitt said in an interview before leaving office. “It’s being mined to make blue jeans look old. It’s just a scandalous commentary on the Mining Law of 1872.” (The Los Angeles Times reported last week that Babbitt is helping The Hearst Corp., owner of the Seattle Post-Intelligencer, broker a deal worth $200 million or more that will determine the fate of Hearst’s seaside ranch at San Simeon in central California.)

Babbitt never forgot the San Francisco Peaks, and last year the government agreed that federal taxpayers would give the mine’s operators $1 million to stop digging. He also worked hard to overhaul the law that allowed them to do it in the first place, calling it “a license to steal.” His case was bolstered by the General Accounting Office, the investigative arm of Congress, which issued numerous reports critical of the 1872 law, saying it “runs counter to other national resource policies” while allowing valuable land to be sold at nominal amounts. Facing stiff opposition from a Republican-controlled Congress, Democrat Babbitt switched gears in early 1997, pushing for more modest reforms through a rewrite of his agency’s own rules for administering the law.

Opponents in Congress moved to block even that reform. They ordered Babbitt to stall the rewrite of the rules until a panel appointed by the National Academy of Sciences could study the issue and report back. The NAS panel concluded that mine regulations “are generally well coordinated, although some changes are necessary.” It listed seven “regulatory gaps,” including “financial risks to the public and environmental risks to the land” because companies sometimes post inadequate bonds to pay for reclamation after mining ends. Likewise, the EPA’s inspector general concluded that “critical gaps” in bonding programs “could result in environmental problems and sizable cleanup costs for the federal taxpayers.”

These criticisms stemmed from a system that allowed local Forest Service and BLM officials to negotiate a financial guarantee with a mining company to cover cleanup costs. Those “guarantees” can prove uncollectible after a bankruptcy. Cleanup bonds posted by some miners were often inadequate to cover the true cost of fixing the environmental damage associated with huge modern mines. They also assumed the company would save money by doing much of the work itself, while bankrupt firms often simply abandon mines. Babbitt went further than the NAS panel suggested, though. The new regulations set minimum environmental standards for mines and, for the first time, gave federal land managers authority to deny a mining permit if it would cause “substantial irreparable harm … that cannot be effectively mitigated.”

As for reclamation bonds, the new rules assume a worst-case scenario: The company goes bankrupt, and the government has to take over. Some forms of bonds that have proven difficult to collect were forbidden. The rules were published in the Federal Register in November, and went into effect at 12:01 a.m. on Jan. 20 — just hours before George W. Bush was sworn in as president. The mining industry has characterized the rules as “burdensome, complex, counterproductive … onerous and misguided regulations rushed through during the waning days of the Clinton administration.” Jack Gerard of the National Mining Association said that “the Clinton administration took a sledgehammer to deal with a mosquito.”

Among those to challenge the rules in court were his association and the state of Nevada, home of most of America’s gold mines. Environmentalists, too, have been critical of the new regulations. Alan Septoff, legislative director of the Mineral Policy Center, said miners are still allowed to harm the environment, so long as they “effectively mitigate” the damage elsewhere. “Even though the stronger mining rule is monumentally better than the old rule, that’s a testament to the inadequacy of the old rule,” Septoff said. In March, Babbitt’s successor as U.S. Interior secretary, Gale Norton, ordered a reconsideration of the rules. Next month, the BLM is expected to issue a watered-down version of Babbitt’s rules or revert to old regulations adopted in the Carter administration. At the EPA, this prospect causes concern — particularly if rules on cleanup bonds are to be weakened. “The vast majority of these (mining Superfund) sites were historic sites, but in recent years we’re finding sites that are inadequately bonded, and the government is getting saddled with the cleanup costs,” said Nick Ceto, mining coordinator at the EPA’s Seattle office. “There are others that are coming up.”

STEP THREE : RATE FISCAL COMPETENCE
http://online.wsj.com/article/SB124580461065744913.html
http://reclaimdemocracy.org/corporate_welfare/
http://www.doingbusiness.org/economyrankings/
http://www.nytimes.com/2010/06/13/world/asia/13intel.html
http://online.wsj.com/article/SB10001424052748704905604575027673196231564.html
Afghanistan to Delay Awarding Concessions for Mineral Deposits
by Matthew Rosenberg / January 27, 2010

Afghanistan plans to delay awarding concessions for a major iron ore deposit and sizeable oil and gas reserves as part of a broader effort to stamp out corruption, the country’s finance minister said. The move by Afghanistan could upend the plans of Total SA, Swiss-based Addax Petroleum Corp. and Canada-based Nations Petroleum Co., all of which were among the seven finalists selected last year for oil and gas blocks in the country’s northwest. Of particular concern, said Finance Minister Omar Zakhilwal in an interview Tuesday, is a major iron ore deposit in central Afghanistan that last year attracted bids from smaller Chinese and Indian companies. “We’ve put a hold onto to the bidding process; it will have to be re-bid,” he said.

Mr. Zakhilwal would not directly say whether he believed bidding for any of the projects – the iron ore deposit, the oil and gas reserves and scores of other smaller mineral deposits — had been marred by bribery, kickbacks or other forms of corruption. He spoke in general terms about the need to root out corruption and ensure Afghanistan gets the best deals when bringing in foreign firms to exploit its natural wealth. Afghanistan is rich in minerals and gemstones, with huge copper and iron ore deposits and reserves of emerald and rubies. Exploiting those reserves could help provide the country with much of the money it needs to wean itself from the massive infusions of foreign aid on which it new depends.

Putting the Afghan economy in order is one of the major issues to be addressed at a conference Thursday in London on Afghanistan’s future. Foreign ministers from 56 countries along with representatives from the United Nations and other international organizations involved in stabilizing Afghanistan are to attend, and European diplomats have in recent days said they are keen to hear Mr. Zakhilwal’s economic plans for the coming years. Mining could be a major economic contributor. But the Mines Ministry has long been considered among Afghanistan’s most corrupt government departments, and Western officials have repeatedly expressed reservations about the Afghan government awarding concessions for the country’s major mineral deposits, fearful that corrupt officials would hand contracts to bidders who pay the biggest bribes — not who are best suited to actually do the work. Mr. Zakhilwal said those concerns are shared by many inside the Afghan government, too. “I was among those who have been opposed to opening up new bids,” he said. “It was not just the issue of corruption – but that is a real issue. We also need to do a review of how contracts are awarded, what lessons we’ve learned, what kind of transparency is needed to make the next best step.” Mr. Zakhiwal that process is now underway with the appointment of a new minister, Wahidullah Sharani.

Still, he said there was no evidence of corruption in the awarding of the one major concession given out in recent years, a copper mine being set up by two Chinese firms, China Metallurgical Group and Jiangxi Copper Group. That project attracted bids from all over the world, and there have been persistent reports of bribes being paid to secure it. Mr. Zakhilwal termed those reports “rumors” and held up the deal – under which the companies agreed to build schools, clinics, markets, mosques and a power plant — as a model for how Afghanistan could award future concessions.

STEP FOUR : DISTRIBUTE
http://globalpolicy.org/home/211-development/48036-a-basic-income-program-in-otjivero.html
http://www.bignam.org/page5.html
History and background of the pilot project

At the end of 2006, the understanding in the BIG Coalition grew that the BIG campaign needs to be taken a step further by starting a pilot project of the BIG in Namibia. The background is that a pilot project might be able to concretely show that a BIG can work and will indeed have the predicted positive effects on poverty alleviation and economic development. Spearheaded by Bishop Kameeta this idea has been inspired by the concrete (or from a theological perspective “prophetic”) examples, like e.g. English medium schools or township clinics during the apartheid era. In fact, also more recently, this has happened with a project run by the Treatment Action Campaign and ‘Doctors without borders’ and the provincial government in Cape Town. They started a treatment project in a township in Cape Town at a time when it was said that a rollout of Antiretroviral (ARV) therapy is good but certainly not practical in a developing country. The pilot project was successful and has subsequently changed the opinion on ARV rollouts in developing countries. The BIG Coalition argues that while it is the ultimate goal to lobby Government to take up its responsibility to implement such a grant, the Coalition should lead by example. The BIG Coalition fundraised in order to pay a Basic Income Grant in one community. Thereby it set an example of redistributive justice through concrete action to help the poor, and to document what income security means in terms of poverty reduction and economic development. The BIG Coalition hence at the end of 2006 to implement a BIG pilot project. The BIG pilot project started in January 2008 and was the first of its kind, to concretely pilot an unconditionally universal income security project in a developing country. The BIG Coalition implemented a BIG in one Namibian community, namely Otjivero – Omitara settlement (about 1,000 people, some 100 km to the east of Windhoek) for a limited period of time (2 years, from January 2008–to December 2009) to practically prove that income security indeed works and that it has the desired effects.

EQUALLY
http://www.citizenpolicies.org/articles/worldpeace.html
http://www.citizenpolicies.org/articles/iraq.html
http://www.nytimes.com/2003/09/10/world/struggle-for-iraq-iraq-s-wealth-popular-idea-give-oil-money-people-rather-than.html
A Popular Idea: Give Oil Money to the People Rather Than the Despots
by John Tierney / September 10, 2003

Few Iraqis have heard of the ”resource curse,” the scholarly term for the economic and political miseries of countries with abundant natural resources. But in Tayeran Square, where hundreds of unemployed men sit on the sidewalk each morning hoping for a day’s work, they know how the curse works. ”Our country’s oil should have made us rich, but Saddam spent it all on his wars and his palaces,” said Sattar Abdula, who has not had a steady job in years. He proposed a simple solution instantly endorsed by the other men on the sidewalk: ”Divide the money equally. Give each Iraqi his share on the first day of every month.”

That is essentially the same idea in vogue among liberal foreign aid experts, conservative economists and a diverse group of political leaders in America and Iraq. The notion of diverting oil wealth directly to citizens, perhaps through annual payments like Alaska’s, has become that political rarity: a wonky idea with mass appeal, from the laborers in Tayeran Square to Iraq’s leaders. American officials have projected that a properly functioning oil industry in Iraq will generate $15 billion to $20 billion a year, enough to give every Iraqi adult roughly $1,000, which is half the annual salary of a middle-class worker.

No one suggests dispensing all of the money — and some say the government cannot afford to give up any of it — but there have been proposals to dispense a quarter or more. Leaders of the American occupying force have endorsed the oil-to-the-people concept and said recently that they plan to discuss it soon with the Iraqi Governing Council. The concept is also popular with some Kurdish politicians in the north and Shiite Muslim politicians in the south, who have complained for decades of being shortchanged by politicians in Baghdad. ”Giving the money directly to the people is a splendid idea,” said one member of the Governing Council, Abdul Zahra Othman Muhammad, a Shiite from Basra who leads the Islamic Dawa party. ”In the past the oil revenue was used to promote dictatorship and discriminate against people outside the capital. We need to start being fair to people in the provinces.”

When oil wealth is controlled by politicians in the capital, one result tends to be the resource curse documented in the last decade in academic works with titles like ”The Paradox of Plenty,” ”Does Oil Hinder Democracy?” and ”Does Mother Nature Corrupt?” Among the many researchers have been Jeffrey Sachs of Columbia University and Paul Collier of Oxford University, both economists, and Michael L. Ross, a political scientist at the University of California at Los Angeles. The studies have shown that resource-rich countries in the Middle East, Africa and Latin America are exceptionally prone to authoritarian rule, slow economic growth and high rates of poverty, corruption and violent conflict.

Besides financing large armies to fight ruinous wars with neighbors, as in Iraq and Iran, oil wealth sometimes leads to civil wars over the sharing of the proceeds, as in Sudan and Congo. ”Governments tend to use mineral revenues differently from the revenues they get from taxpayers,” said Dr. Ross, who found an inverse relationship between natural resources and democracy. ”They spend more of it on corruption, the military and patronage, and less of it on basic public services. Oil-rich governments don’t need to tax their citizens, and taxation forces governments to become more representative and more effective.”

On April 9, the day Saddam Hussein’s statue was toppled in Firdos Square, a plan to end Iraq’s resource curse was published by Steven C. Clemons, executive vice president of the New America Foundation, a centrist research group. He proposed using 40 percent of Iraq’s oil revenue to create a permanent trust fund like the one in Alaska, which has been accumulating oil revenue for two decades. That capital is invested and each year a share of the income is distributed — more than $1,500 to each Alaskan in recent years. ”A fund like Alaska’s is the best way to prevent one kleptocracy from succeeding another in Iraq,” Mr. Clemons said. ”It would go a long way to curbing the cynical belief that Americans want Iraqi oil for themselves, and it would give more Iraqis a stake in the success of their new country. It would be the equivalent of redistributing land to Japanese farmers after World War II, which was the single most important democratizing reform during the American occupation.”

In America, Mr. Clemons’s idea was quickly embraced by many foreign aid experts, editorial writers, Bush administration officials and politicians of both parties. Some experts, though, have faulted the trust fund, saying it would be expensive to administer and would pay out small dividends at first, perhaps only $20 per Iraqi adult, until more capital was amassed. As an alternative, some have suggested skipping the individual payments in the early years and dedicating the money to economic development or social programs. Money could be invested in a long-term pension program, as Norway does with some of its oil revenue. Another alternative would be to make bigger payments up front by giving the money directly to citizens instead of putting it into a trust fund. Thomas I. Palley, an economist at the Open Society Institute, proposed dividing a quarter of the oil revenue each year among all adults in Iraq. That could amount to $250 per adult, assuming that the administration’s hopes for oil production prove accurate.

Oil companies would not be directly affected by an oil fund, since they would be paying the same taxes and fees no matter what the government did with the money. But they could benefit indirectly if citizens eager for higher payments pressed the government to increase production and open the books to outside auditors. ”The oil industry likes working in countries with dedicated oil funds and transparent accounting, because there’s less loose money to corrupt the government,” said Robin West, chairman of PFC Energy, an American consulting firm to the oil industry. ”Corruption is bad for business,” Mr. West said, ”because it creates instability. In places like Alaska and Norway, people support the oil industry because they see the benefits. In places like Nigeria, they see all this wealth that doesn’t benefit them, and they start seizing oil terminals.” Iraq’s civilian administrator, L. Paul Bremer III, has praised the idea of sharing ”Iraq’s blessings among its people,” and suggested that the Governing Council consider some kind of oil fund. Iraqi politicians, of course, have no trouble understanding the appeal of handing out checks to voters.

The chief argument against an oil fund is that Iraq’s government cannot afford to part with any oil revenue for the foreseeable future. It faces a large budget deficit this year, and sabotage to the oil industry has reduced oil production far below projections. ”There isn’t that much money now, and we need every penny for rebuilding the country,” said Adnan Pachachi, a member of the Governing Council and former foreign minister of Iraq. ”Giving away money would be politically popular,” he said, ”but we should not gain popularity at the expense of the long-range interests of the country. By giving away the money you may sacrifice building more schools and hospitals.”

Some have suggested letting the government keep all of the revenue until oil production increases well beyond current levels, then putting the extra money into a fund. But the oil-to-the-people advocates say that now is the time to at least establish the framework for the fund, before a permanent government gets addicted to the revenue. If experience is any guide, that government would probably not be devoting the money to schools and hospitals. ”There is a direct proportional relationship between bad government and oil revenue,” said Ahmad Chalabi, the current chairman of the Governing Council and the leader of the Iraqi National Congress. ”If the government performs well or badly it doesn’t matter, because the oil revenue continues to flow. The government will use the oil revenue to cover up mistakes.”

Mr. Chalabi pointed to a precedent: a trust fund that existed in Iraq during the 1950’s, when part of the oil revenue went not to the government’s budget but to a development fund whose disbursements were directed by Iraqi and foreign overseers. ”The fund worked very well,” he said. ”Iraq’s economy in the 1950’s and 1960’s was relatively good.” Back then, Mr. Chalabi said, oil revenue was a relative pittance, adding up to less than $10 billion in the four decades preceding the Baath Party’s rise to power in the late 1960’s. But then came the resource curse. During a single decade, the 1980’s, Iraq’s oil revenue amounted to more than $100 billion. ”What happened to it?” Mr. Chalabi asked. ”Iraq was a much better country in every aspect before it got that money.”

LIKE THEY DO IN ALASKA
http://www.apfc.org/home/Content/dividend/dividend.cfm
http://www.apfc.org/home/Content/aboutAPFC/lawIndex.cfm
http://www.pfd.alaska.gov/faqs/index.aspx
http://www.adn.com/2010/06/10/1317732/plan-puts-energy-future-in-alaskan.html
http://iraqdividend.com/alaska_dividend/
Hammond advocates dividend for Iraq
by Sam Bishop / February 22, 2004

Former Alaska Gov. Jay Hammond said Saturday that President George Bush should make an Alaska-like dividend for Iraqis a central element of his re-election campaign. Hammond made the remark after delivering a history and defense of the Alaska Permanent Fund dividend to the annual conference of the U.S. Basic Income Guarantee Network. The organization wants governments to offer all citizens, regardless of their own means, enough money to live. It says the Alaska dividend, which Hammond helped create while governor, is “the only example of an existing basic income guarantee in the world today.” Hammond, 81, warmed up the audience of about 100 at the Capitol Hyatt Hotel by reflecting on the U.S. BIG Network’s warm praise and on other accolades received in recent years. Honors have recently come from such diverse sources as sportsmen, environmentalists and developers, he marveled. After recently receiving an honor from his old nemesis, the Teamsters Union, he said he wondered “what can I expect next … an award for my contributions to public morality, co-sponsored by Jerry Falwell and Larry Flynt?” Hammond has been on a sort of moral crusade recently as he has perceived a growing threat to the dividend program. Earlier this month Hammond crashed the Conference of Alaskans, a 55-member group Gov. Frank Murkowski convened to talk about the permanent fund’s future, and diverted the participants into a discussion of income taxes as well. Saturday, Hammond recited a detailed history of his dividend advocacy, starting with his attempts in the 1960s as mayor of the Bristol Bay Borough to capture some of the salmon dollars that “hemorrhaged” out of that region. He reviewed his advocacy of a pre-permanent fund idea called “Alaska Inc.” in the mid-1970s as a Republican governor, then used the current Alaska dividend debate as a segue into the international arena.

“Without a permanent fund dividend program,” Hammond said. “Alaska will face the same fate as Nigeria.” There, the World Bank estimates that $296 billion flowed in and out of the government’s treasury during its oil boom, “leaving them worse off than they were before,” Hammond said. The Economist magazine appropriately called such mismanaged oil wealth, “the devil’s excrement,” Hammond said. The pattern has been repeated around the globe where countries have come into an oil windfall, he said. “Absent something like our dividend program and ensuing public interest, those windfalls simply inflated a grab bag for special interests. Once deflated, the average citizen was left holding that empty bag,” Hammond said. “Iraq is but the latest example.” He noted that Alaska Sen. Ted Stevens, at his request, proposed to President Bush that the U.S. push for an Alaska-style dividend program after the Iraq war. “Ted, incidentally, wrote me back after that and said ‘I talked to the president. He’s very much interested. Stay tuned,'” Hammond said.

He said he hasn’t heard much since, but intends to seek an audience with the president to push the idea. Hammond noted that he met the president’s father, former President George Bush, years ago in Alaska before the elder Bush was well known nationally. The elder Bush helped with his fund-raising and even wrote a blurb for his autobiography, Hammond noted. “I owe George Junior at least this–to convey to him how he could make this the centerpiece of his national campaign, thereby hopefully propelling the other candidates into the same arena to compete to see who can do more to propel or promote the concept in Third World countries, Iraq or wherever,” Hammond said. “If George Bush is out front, I think he’ll capture a lot of attention. I think his opposition certainly are not going to oppose it. “What better way to induce a capitalistic, democratic mindset among Iraqis? Far better than a few privileged kleptocrats living in opulent splendor while others grovel in squalor,” Hammond said.

To give some credentials to the idea, Hammond quoted 2002 Nobel-laureate in economics Vernon Smith, a professor from George Mason University in Arlington, Va., who spent much of 2003 at the University of Alaska Anchorage. “This is the time and Iraq is the place to create an economic system embodying the revolutionary principle that people’s assets belong directly to the people and can be managed to further individual benefits and free choice without intermediate government ownership,” Hammond quoted Smith as saying. Brazilian Sen. Eduardo Suplicy, who also spoke at the U.S. BIG Network conference, read a portion of a letter he wrote recently to the U.S. administrator in Iraq, Paul Bremer, also advocating an Alaska-style dividend plan. The idea has been endorsed by a variety of people, including a top United Nations official killed in a bombing last summer, Suplicy said.

In Iraq, the economist Smith recommended following Alaska’s precedent but avoiding Alaska’s mistakes, Hammond noted. Those mistakes were two-fold: Not putting all public resource wealth into the fund, and not reserving the income solely for dividends unless approved by a vote of the people. “Since this is precisely what I wanted but failed to do first with Bristol Bay Inc. with fish and later with oil and Alaska Inc., I find that comment vindicating,” Hammond said. “The following, however, I find truly rapturous. “Beware of giving governments drawing rights on the value of public assets,” Hammond quoted Smith as saying. “Public resources should belong directly to the public through mechanisms such as Alaska’s permanent fund … It is a model governments all over the world would be well-advised to copy.”

In questions after his speech, though, Hammond sensed that he and some of his association audience members may differ on a fundamental. Hammond’s pro-dividend philosophy rests upon the public ownership of the resources feeding the Alaska Permanent Fund. So when asked whether he thought an income tax should also be used to bolster the dividend, he balked. “People resent having their hard-earned income taken from them and redistributed,” he said. He said he sympathizes with that idea and on that score may differ from the ideas advocated by the U.S. BIG Network, he said. “Our program doesn’t contemplate taking income made by the public.” So what happens to those residents of places in the world unlucky enough to have neither “salmon nor oil,” another member of the audience asked. Hammond said he didn’t really know. He said he had recently been intrigued by proposals to auction rights to pollute the air, as a publicly owned resource, and distribute the proceeds as dividends.

ENDORSED by MARTIN LUTHER KING Jr, BERTRAND RUSSELL, MILTON FRIEDMAN…
http://www.progress.org/dividend/cdking.html
http://www.commercialappeal.com/news/2010/jan/18/king-focused-on-ending-poverty/
‘Guaranteed income’ plan finds support
by Bartholomew Sullivan / January 18, 2010

Dr. Martin Luther King Jr. wrote: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

Dr. Martin Luther King Jr. had another dream: the guaranteed income. Those careful about his legacy say the $120 million monument to him that’s finally nearing construction on the National Mall is all well and good. But as the nation commemorates King’s 81st birthday today, they say he should best be remembered for his career-long focus on the poor. A year before his 1968 death in Memphis, in his “Where Do We Go From Here: Chaos or Community,” King wrote: “I am now convinced that the simplest solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

The idea was to guarantee that no one lived in poverty by having the government provide a financial floor, pegged to median — not low — incomes, beneath which no one could fall. King talked about the psychological benefits of a widespread sense of “economic security.” Economists John Kenneth Galbraith, Paul Samuelson and Milton Friedman endorsed the idea of guaranteed incomes, as did Lyndon Johnson’s Labor Secretary and later New York Sen. Daniel P. Moynihan. Advocating the proposal was the official debate resolution for public high schools in 1973. It was a mainstream idea that has since faded from view.

But a movement to spur a guaranteed income plan is reawakening in academic and anti-poverty circles as the nation looks at 15.3 million people seeking work and the prospect of large-scale and long-term unemployment. The Basic Income Guarantee movement (USBIG.net) is based on the belief that increased mechanization and labor efficiencies, coupled with the export of industrial and manufacturing jobs to low-wage countries, means there just isn’t enough work available. Once robots can understand speech, even more jobs in the service industries will disappear, they say.

And yet people will still need to live even without work. Advocates say a redistribution of some anti-poverty program funding for direct subsidization of adequate incomes would solve the poverty problem while stimulating consumption. University of Tennessee-Knoxville sociology professor Harry F. Dahms, a member of the U.S. Basic Income Guarantee Network, said when he talks about the idea in the South “audiences seem rather baffled, first, that such an idea even exists.” Their second response is surprise “that some people would entertain it seriously.”

In a class on social justice and public policy, Dahms, originally from Germany, discusses guaranteed incomes as a way for the work force to take advantage of growing efficiencies by having more people work fewer hours. In Memphis, efforts to enact a living wage for Shelby County and city employees and contractors were a step in the direction of raising the income bar. But Rebekah Jordan Gienapp, director of the Workers Interfaith Network, said King called for raising the minimum wage to a level that could raise working people out of poverty. She noted that, adjusted for inflation, it’s lower now than in 1968.

Tennessee and Mississippi don’t have state minimum wage laws and the minimum in Arkansas is lower than the current federal minimum wage of $7.25 per hour. “What does that tell us about how we’ve really, in a lot of ways, moved backwards since the civil rights movement in some of these economic ways?” she asks. “Particularly on Dr. King’s birthday, he tends to be held up as just someone who advocated diversity or integration, but his message was much broader and more radical than that …”

Supporters of a guaranteed income acknowledge the solution sounds radical but point to the subsidy every citizen of Alaska receives each year from the state’s oil revenue. The share-the-wealth program in one of the most Republican-leaning states is so popular that efforts to repeal it have failed. Congress actually considered a slimmed-down variant of a guaranteed income plan when U.S. Rep. Bob Filner, D-Calif., proposed the Tax Cuts for the Rest of Us Act in 2006 in response to Bush tax cuts for upper-income taxpayers. It would have made the standard income tax deduction into a refundable tax credit.

BASICS
http://www.bepress.com/bis/
http://www.statemaster.com/encyclopedia/Guaranteed-minimum-income
Basic income
Main article: Basic income
A basic income is granted independent of other income (including salaries) and wealth, with no other requirement than citizenship. This is a special case of GMI, based on additional ideologies and/or goals. While most modern countries have some form of guaranteed minimum income, a basic income is rare.

Examples of implementation
Portugal is by far the closest a country has come to actually having fully implemented such a system. This is because the Portuguese government made a guaranteed minimum income a legally enshrined right for the entire population in 1997. The policy remains at present. However, the country’s income security policy is rather residualist, with an amount guaranteed well below the poverty line, and other income security policies such as the minimum wage are thus still in place as a consequence. The system also forces participants to attend social integration sessions.

The U.S. State of Alaska has a system which guarantees each citizen a share of the state’s oil revenues (see Alaska Permanent Fund Dividend). The city of Dauphin, Manitoba, Canada had an experimental guaranteed annual income program (“Mincome”) in the 1970s.[1] Many other countries have political parties that advocate such a system, such as the Green Party of Canada, Green Party of England and Wales, the Canadian Action Party, the Anarchist Pogo Party of Germany, the Danish Minority Party, Vivant (Belgium), both the Scottish Green Party and recently the Scottish National Party, and the New Zealand Democratic Party.

In 1972, members of the American Democratic Party wrote a proposal for a GMI into their official platform. However, that particular plank, along with numerous others, was removed following the landslide defeat of Senator George McGovern, the party’s candidate in that year’s presidential election. One proposed method of offsetting the cost to the Treasury of this tax expenditure lies in its coupling with a flat tax, a type of federal income tax in which all taxpayers are subject to a single tax rate. The current model of progressive income taxes used throughout the western world could be eliminated, but the system would still be progressive, since those at the lower end of the wage scale would pay less in taxes than they would receive in guaranteed income. For the most wealthy members of society the few thousand dollars of the guaranteed income would only make a small dent in the taxes they have to pay. Also, the USA has the Earned income tax credit for low-income taxpayers. The citizen’s dividend is a similar concept, but the payment made to individuals is based upon the revenues that the government can collect from leasing and selling natural resources (such a dividend in fact exists in the state of Alaska).

Advocates
Modern advocates include Hans-Werner Sinn (Germany) and Ayşe Buğra (Turkey). Other advocates are winners of the Nobel Prize in Economics, including Paul Samuelson, James Tobin, Herbert Simon, Friedrich Hayek, James Meade, Robert Solow, and, depending on how one regards his negative income tax proposal, Milton Friedman. In his final book Where Do We Go From Here: Chaos or Community? (1967) Martin Luther King Jr. wrote[2] “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” – from the chapter entitled “Where We Are Going”

Funding
Many different sources of funding have been suggested for a guaranteed minimum income:
Income taxes
Sales taxes
Capital gains taxes
Inheritance taxes
Wealth taxes, e.g. property tax
Luxury taxes
Elimination of current income support programs and tax deductions
Repayment of the grant at death or retirement
Land and natural resource taxes
Pollution taxes
Fees from government created monopolies (such as the broadcast spectrum and utilities)
Collective resource ownership
Universal stock ownership
A National Mutual Fund
Money creation or seignorage
Tariffs, the lottery, or sin taxes
Technology Taxes
Tobin Tax

UNIVERSAL BASIC INCOME (UBI)
http://www.globalincome.org/English/Earth-Dividend.html
http://www.cceia.org/resources/ethics_online/0019.html
http://ipsnews.net/news.asp?idnews=46179
http://www.basicincome.qut.edu.au/aboutbi/history.jsp
http://ubi.wairaka.net/
http://plato.stanford.edu/entries/social-minimum/
http://dieoff.org/page152.htm
http://www.bostonreview.net/BR25.5/vanparijs.html
by Philippe Van Parijs

Entering the new millennium, I submit for discussion a proposal for the improvement of the human condition: namely, that everyone should be paid a universal basic income (UBI), at a level sufficient for subsistence. In a world in which a child under five dies of malnutrition every two seconds, and close to a third of the planet’s population lives in a state of “extreme poverty” that often proves fatal, the global enactment of such a basic income proposal may seem wildly utopian. Readers may suspect it to be impossible even in the wealthiest of OECD nations.

Yet, in those nations, productivity, wealth, and national incomes have advanced sufficiently far to support an adequate UBI. And if enacted, a basic income would serve as a powerful instrument of social justice: it would promote real freedom for all by providing the material resources that people need to pursue their aims. At the same time, it would help to solve the policy dilemmas of poverty and unemployment, and serve ideals associated with both the feminist and green movements. So I will argue.

I am convinced, along with many others in Europe, that–far from being utopian–a UBI makes common sense in the current context of the European Union.1 As Brazilian senator Eduardo Suplicy has argued, it is also relevant to less-developed countries–not only because it helps keep alive the remote promise of a high level of social solidarity without the perversity of high unemployment, but also because it can inspire and guide more modest immediate reforms.2 And if a UBI makes sense in Europe and in less developed countries, why should it not make equally good (or perhaps better) sense in North America?3 After all, the United States is the only country in the world in which a UBI is already in place: in 1999, the Alaska Permanent Fund paid each person of whatever age who had been living in Alaska for at least one year an annual UBI of $1,680. This payment admittedly falls far short of subsistence, but it has nonetheless become far from negligible two decades after its inception. Moreover, there was a public debate about UBI in the United States long before it started in Europe. In 1967, Nobel economist James Tobin published the first technical article on the subject, and a few years later, he convinced George McGovern to promote a UBI, then called “demogrant,” in his 1972 presidential campaign.4

To be sure, after this short public life the UBI has sunk into near-oblivion in North America. For good reasons? I believe not. There are many relevant differences between the United States and the European Union in terms of labor markets, educational systems, and ethnic make-up. But none of them makes the UBI intrinsically less appropriate for the United States than for the European Union. More important are the significant differences in the balance of political forces. In the United States, far more than in Europe, the political viability of a proposal is deeply affected by how much it caters to the tastes of wealthy campaign donors. This is bound to be a serious additional handicap for any proposal that aims to expand options for, and empower, the least wealthy. But let’s not turn necessity into virtue, and sacrifice justice in the name of increased political feasibility. When fighting to reduce the impact of economic inequalities on the political agenda, it is essential, in the United States as elsewhere, to propose, explore, and advocate ideas that are ethically compelling and make economic sense, even when their political feasibility remains uncertain. Sobered, cautioned, and strengthened by Europe’s debate of the last two decades, here is my modest contribution to this task.

UBI Defined
By universal basic income I mean an income paid by a government, at a uniform level and at regular intervals, to each adult member of society. The grant is paid, and its level is fixed, irrespective of whether the person is rich or poor, lives alone or with others, is willing to work or not. In most versions–certainly in mine–it is granted not only to citizens, but to all permanent residents. The UBI is called “basic” because it is something on which a person can safely count, a material foundation on which a life can firmly rest. Any other income–whether in cash or in kind, from work or savings, from the market or the state–can lawfully be added to it. On the other hand, nothing in the definition of UBI, as it is here understood, connects it to some notion of “basic needs.” A UBI, as defined, can fall short of or exceed what is regarded as necessary to a decent existence.

I favor the highest sustainable such income, and believe that all the richer countries can now afford to pay a basic income above subsistence. But advocates of a UBI do not need to press for a basic income at this level right away. In fact, the easiest and safest way forward, though details may differ considerably from one country to another, is likely to consist of enacting a UBI first at a level below subsistence, and then increasing it over time.

The idea of the UBI is at least 150 years old. Its two earliest known formulations were inspired by Charles Fourier, the prolific French utopian socialist. In 1848, while Karl Marx was finishing off the Communist Manifesto around the corner, the Brussels-based Fourierist author Joseph Charlier published Solution of the Social Problem, in which he argued for a “territorial dividend” owed to each citizen by virtue of our equal ownership of the nation’s territory. The following year, John Stuart Mill published a new edition of his Principles of Political Economy, which contains a sympathetic presentation of Fourierism (“the most skillfully combined, and with the greatest foresight of objections, of all the forms of Socialism”) rephrased so as to yield an unambiguous UBI proposal: “In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour. The remainder of the produce is shared in certain proportions, to be determined beforehand, among the three elements, Labour, Capital, and Talent.”5

Under various labels–”state bonus,” “national dividend,” “social dividend,” “citizen’s wage,” “citizen’s income,” “universal grant,” “basic income,” etc.–the idea of a UBI was repeatedly taken up in intellectual circles throughout the twentieth century. It was seriously discussed by left-wing academics such as G. D. H. Cole and James Meade in England between the World Wars and, via Abba Lerner, it seems to have inspired Milton Friedman’s proposal for a “negative income tax.”6 But only since the late-1970s has the idea gained real political currency in a number of European countries, starting with the Netherlands and Denmark. A number of political parties, usually green or “left-liberal” (in the European sense), have now made it part of their official party program.

UBI and Existing Programs
To appreciate the significance of this interest and support, it is important to understand how a UBI differs from existing benefit schemes. It obviously differs from traditional social-insurance based income-maintenance institutions (such as Social Security), whose benefits are restricted to wage workers who have contributed enough out of their past earnings to become eligible. But it also differs from Western European or North American conditional minimum-income schemes (such as welfare).

Many, indeed most West European countries introduced some form of guaranteed minimum-income scheme at some point after World War II.7 But these schemes remain conditional: to receive an income grant a beneficiary must meet more or less stringent variants of the following three requirements: if she is able to work, she must be willing to accept a suitable job, or to undergo suitable training, if offered; she must pass a means test, in the sense that she is only entitled to the benefit if there are grounds to believe that she has no access to a sufficient income from other sources; and her household situation must meet certain criteria–it matters, for example, whether she lives on her own, with a person who has a job, with a jobless person, etc. By contrast, a UBI does not require satisfaction of any of these conditions.

Advocates of a UBI may, but generally do not, propose it as a full substitute for existing conditional transfers. Most supporters want to keep–possibly in simplified forms and necessarily at reduced levels–publicly organized social insurance and disability compensation schemes that would supplement the unconditional income while remaining subjected to the usual conditions. Indeed, if a government implemented an unconditional income that was too small to cover basic needs–which, as I previously noted, would almost certainly be the case at first–UBI advocates would not want to eliminate the existing conditional minimum-income schemes, but only to readjust their levels.

In the context of Europe’s most developed welfare states, for example, one might imagine the immediate introduction of universal child benefits and a strictly individual, noncontributory basic pension as full substitutes for existing means-tested benefit schemes for the young and the elderly. Indeed, some of these countries already have such age- restricted UBIs for the young and the elderly. Contributory retirement insurance schemes, whether obligatory or optional, would top up the basic pension.

As for the working-age population, advocates of a universal minimum income could, in the short term, settle for a “partial” (less-than-subsistence) but strictly individual UBI, initially pitched at, say, half the current guaranteed minimum income for a single person. In US terms, that would be about $250 per month, or $3,000 a year. For households whose net earnings are insufficient to reach the socially defined subsistence level, this unconditional and individual floor would be supplemented by means-tested benefits, differentiated according to household size and subjected, as they are now, to some work requirements.

UBI and Some Alternatives
While the UBI is different from traditional income maintenance schemes, it also differs from a number of other innovative proposals that have attracted recent attention. Perhaps closest to a UBI are various negative income tax (NIT) proposals.8

NIT
Though the details vary, the basic idea of a negative income tax is to grant each citizen a basic income, but in the form of a refundable tax credit. From the personal tax liability of each household, one subtracts the sum of the basic incomes of its members. If the difference is positive, a tax needs to be paid. If it is negative, a benefit (or negative tax) is paid by the government to the household. In principle, one can achieve exactly the same distribution of post-tax-and-transfer income among households with a UBI or with an NIT. Indeed, the NIT might be cheaper to run, since it avoids the to-and-fro that results from paying a basic income to those with a substantial income and then taxing it back.

Still, a UBI has three major advantages over an NIT. First, any NIT scheme would have the desired effects on poverty only if it was supplemented by a system of advance payments sufficient to keep people from starving before their tax forms are examined at the end of the fiscal year. But from what we know of social welfare programs, ignorance or confusion is bound to prevent some people from getting access to such advance payments. The higher rate of take-up that is bound to be associated with a UBI scheme matters greatly to anyone who wants to fight poverty.

Second, although an NIT could in principle be individualized, it operates most naturally and is usually proposed at the household level. As a result, even if the inter-household distribution of income were exactly the same under an NIT and the corresponding UBI, the intra-household distribution will be far less unequal under the UBI. In particular, under current circumstances, the income that directly accrues to women will be considerably higher under the UBI than the NIT, since the latter tends to ascribe to the household’s higher earner at least part of the tax credit of the low- or non-earning partner.

Third, a UBI can be expected to deal far better than an NIT with an important aspect of the “unemployment trap” that is stressed by social workers but generally overlooked by economists. Whether it makes any sense for an unemployed person to look for or accept a job does not only depend on the difference between income at work and out of work. What deters people from getting out to work is often the reasonable fear of uncertainty. While they try a new job, or just after they lose one, the regular flow of benefits is often interrupted. The risk of administrative time lags– especially among people who may have a limited knowledge of their entitlements and the fear of going into debt, or for people who are likely to have no savings to fall back on–may make sticking to benefits the wisest option. Unlike an NIT, a UBI provides a firm basis of income that keeps flowing whether one is in or out of work. And it is therefore far better suited to handle this aspect of the poverty trap.

The Stakeholder Society
UBI also differs from the lump-sum grant, or “stake,” that Thomas Paine and Orestes Brownson–and, more recently, Bruce Ackerman and Anne Alstott–have suggested be universally awarded to citizens at their maturity in a refashioned “stakeholder society.”9 Ackerman and Alstott propose that, upon reaching age 21, every citizen, rich or poor, should be awarded a lump-sum stake of $80,000. This money can be used in any way its recipient wishes–from investing in the stock market or paying for college fees to blowing it all in a wild night of gambling. The stake is not conditioned on recipients being “deserving,” or having shown any interest in contributing to society. Funding would be provided by a 2 percent wealth tax, which could be gradually replaced over time (assuming a fair proportion of recipients ended their lives with enough assets) by a lump-sum estate tax of $80,000 (in effect requiring the recipient to pay back the stake).

I am not opposed to a wealth or estate tax, nor do I think it is a bad idea to give everyone a little stake to get going with their adult life. Moreover, giving a large stake at the beginning of adult life might be regarded as formally equivalent–with some freedom added–to giving an equivalent amount as a life-long unconditional income. After all, if the stake is assumed to be paid back at the end of a person’s life, as it is in the Ackerman/Alstott proposal, the equivalent annual amount is simply the stake multiplied by the real rate of interest, say an amount in the (very modest) order of $2,000 annually, or hardly more than Alaska’s dividend. If instead people are entitled to consume their stake through life–and who would stop them?–the equivalent annual income would be significantly higher.

Whatever the level, given the choice between an initial endowment and an equivalent life-long UBI, we should go for the latter. Endowments are rife with opportunities for waste, especially among those less well equipped by birth and background to make use of the opportunity the stake supplies. To achieve, on an ongoing basis, the goal of some baseline income maintenance, it would therefore be necessary to keep a means-tested welfare system, and we would be essentially back to our starting point–the need and desirability of a UBI as an alternative to current provisions.

Justice
The main argument for UBI is founded on a view of justice. Social justice, I believe, requires that our institutions be designed to best secure real freedom to all.10 Such a real-libertarian conception of justice combines two ideas. First, the members of society should be formally free, with a well-enforced structure of property rights that includes the ownership of each by herself. What matters to a real libertarian, however, is not only the protection of individual rights, but assurances of the real value of those rights: we need to be concerned not only with liberty, but, in John Rawls’s phrase, with the “worth of liberty.” At first approximation, the worth or real value of a person’s liberty depends on the resources the person has at her command to make use of her liberty. So it is therefore necessary that the distribution of opportunity–understood as access to the means that people need for doing what they might want to do–be designed to offer the greatest possible real opportunity to those with least opportunities, subject to everyone’s formal freedom being respected.

This notion of a just, free society needs to be specified and clarified in many respects.11 But in the eyes of anyone who finds it attractive, there cannot but be a strong presumption in favor of UBI. A cash grant to all, no questions asked, no strings attached, at the highest sustainable level, can hardly fail to advance that ideal. Or if it does not, the burden of argument lies squarely on the side of the challengers.

Jobs and Growth
A second way to make the case for UBI is more policy-oriented. A UBI might be seen as a way to solve the apparent dilemma between a European-style combination of limited poverty and high unemployment and an American-style combination of low unemployment and widespread poverty. The argument can be spelled out, very schematically, as follows.

For over two decades, most West European countries have been experiencing massive unemployment. Even at the peak of the jobs cycle, millions of Europeans are vainly seeking work. How can this problem be tackled? For a while, the received wisdom was to deal with massive unemployment by speeding up the rate of growth. But considering the speed with which technological progress was eliminating jobs, it became apparent that a fantastic rate of growth would be necessary even to keep employment stable, let alone to reduce the number of unemployed. For environmental and other reasons, such a rate of growth would not be desirable. An alternative strategy was to consider a substantial reduction in workers’ earnings. By reducing the relative cost of labor, technology could be redirected in such a way that fewer jobs were sacrificed. A more modest and therefore sustainable growth rate might then be able to stabilize and gradually reduce present levels of unemployment. But this could only be achieved at the cost of imposing an unacceptable standard of living on a large part of the population, all the more so because a reduction in wages would require a parallel reduction in unemployment benefits and other replacement incomes, so as to preserve work incentives.

If we reject both accelerated growth and reduced earnings, must we also give up on full employment? Yes, if by full employment we mean a situation in which virtually everyone who wants a full-time job can obtain one that is both affordable for the employer without any subsidy and affordable for the worker without any additional benefit. But perhaps not, if we are willing to redefine full employment by either shortening the working week, paying subsidies to employers, or paying subsidies to employees.

A first option, particularly fashionable in France at the moment, consists in a social redefinition of “full time”–that is, a reduction in maximum working time, typically in the form of a reduction in the standard length of the working week. The underlying idea is to ration jobs: because there are not enough jobs for everyone who would like one, let us not allow a subset to appropriate them all.

On closer scrutiny, however, this strategy is less helpful than it might seem. If the aim is to reduce unemployment, the reduction in the work week must be dramatic enough to more than offset the rate of productivity growth. If this dramatic reduction is matched by a proportional fall in earnings, the lowest wages will then fall–unacceptably–below the social minimum. If, instead, total earnings are maintained at the same level, if only for the less well paid, labor costs will rise. The effect on unemployment will then be reduced, if not reversed, as the pressure to eliminate the less skilled jobs through mechanization is stepped up. In other words, a dramatic reduction in working time looks bound to be detrimental to the least qualified jobs–either because it kills the supply (they pay less than replacement incomes) or because it kills the demand (they cost firms a lot more per hour than they used to).

It does not follow that the reduction of the standard working week can play no role in a strategy for reducing unemployment without increasing poverty. But to avoid the dilemma thus sketched, it needs to be coupled with explicit or implicit subsidies to low-paid jobs. For example, a reduction of the standard working week did play a role in the so-called “Dutch miracle”–the fact that, in the last decade or so, jobs expanded much faster in the Netherlands than elsewhere in Europe. But this was mainly as a result of the standard working week falling below firms’ usual operating time and thereby triggering a restructuring of work organization that involved far more part-time jobs. But these jobs could not have developed without the large implicit subsidies they enjoy, in the Netherlands, by virtue of a universal basic pension, universal child benefits, and a universal health care system.

Any strategy for reducing unemployment without increasing poverty depends, then, on some variety of the active welfare state–that is, a welfare state that does not subsidize passivity (the unemployed, the retired, the disabled, etc.) but systematically and permanently (if modestly) subsidizes productive activities. Such subsidies can take many different forms. At one extreme, they can take the form of general subsidies to employers at a level that is gradually reduced as the hourly wage rate increases. Edmund Phelps has advocated a scheme of this sort, restricted to full-time workers, for the United States.12 In Europe, this approach usually takes the form of proposals to abolish employers’ social security contributions on the lower earnings while maintaining the workers’ entitlements to the same level of benefits.

At the other extreme we find the UBI, which can also be understood as a subsidy, but one paid to the employee (or potential employee), thereby giving her the option of accepting a job with a lower hourly wage or with shorter hours than she otherwise could. In between, there are a large number of other schemes, such as the US Earned Income Tax Credit and various benefit programs restricted to people actually working or actively looking for full-time work.

A general employment subsidy and a UBI are very similar in terms of the underlying economic analysis and, in part, in what they aim to achieve. For example, both address head-on the dilemma mentioned in connection with reductions in work time: they make it possible for the least skilled to be employed at a lower cost to their employer, without thereby impoverishing workers.

The two approaches are, however, fundamentally different in one respect. With employer subsidies, the pressure to take up employment is kept intact, possibly even increased; with a UBI, that pressure is reduced. This is not because permanent idleness becomes an attractive option: even a large UBI cannot be expected to secure a comfortable standard of living on its own. Instead, a UBI makes it easier to take a break between two jobs, reduce working time, make room for more training, take up self-employment, or to join a cooperative. And with a UBI, workers will only take a job if they find it suitably attractive, while employer subsidies make unattractive, low-productivity jobs more economically viable. If the motive in combating unemployment is not some sort of work fetishism–an obsession with keeping everyone busy–but rather a concern to give every person the possibility of taking up gainful employment in which she can find recognition and accomplishment, then the UBI is to be preferred.

Feminist and Green Concerns
A third piece of the argument for a UBI takes particular note of its contribution to realizing the promise of the feminist and green movements. The contribution to the first should be obvious. Given the sexist division of labor in the household and the special “caring” functions that women disproportionately bear, their labor market participation, and range of choice in jobs, is far more constrained than those of men. Both in terms of direct impact on the inter-individual distribution of income and the longer-term impact on job options, a UBI is therefore bound to benefit women far more than men. Some of them, no doubt, will use the greater material freedom UBI provides to reduce their paid working time and thereby lighten the “double shift” at certain periods of their lives. But who can sincerely believe that working subject to the dictates of a boss for forty hours a week is a path to liberation? Moreover, it is not only against the tyranny of bosses that a UBI supplies some protection, but also against the tyranny of husbands and bureaucrats. It provides a modest but secure basis on which the more vulnerable can stand, as marriages collapse or administrative discretion is misused.

To discuss the connection between UBI and the green movement, it is useful to view the latter as an alliance of two components. Very schematically, the environmental component’s central concern is with the pollution generated by industrial society. Its central objective is the establishment of a society that can be sustained by its physical environment. The green-alternative component’s central concern, on the other hand, is with the alienation generated by industrial society. Its central objective is to establish a society in which people spend a great deal of their time on “autonomous” activities, ruled by neither the market nor the state. For both components, there is something very attractive in the idea of a UBI.

The environmentalists’ chief foe is productivism, the obsessive pursuit of economic growth. And one of the most powerful justifications for fast growth, in particular among the working class and its organizations, is the fight against unemployment. The UBI, as argued above, is a coherent strategy for tackling unemployment without relying on faster growth. The availability of such a strategy undermines the broad productivist coalition and thereby improves the prospects for realizing environmentalist objectives in a world in which pollution (even in the widest sense) is not the only thing most people care about.

Green-alternatives should also be attracted to basic income proposals, for a UBI can be viewed as a general subsidy financed by the market and state spheres to the benefit of the autonomous sphere. This is in part because the UBI gives everyone some real freedom–as opposed to a sheer right–to withdraw from paid employment in order to perform autonomous activities, such as grass-roots militancy or unpaid care work. But part of the impact also consists in giving the least well endowed greater power to turn down jobs that they do not find sufficiently fulfilling, and in thereby creating incentives to design and offer less alienated employment.

Some Objections
Suppose everything I have said thus far is persuasive: that the UBI, if it could be instituted, would be a natural and attractive way of ensuring a fair distribution of real freedom, fighting unemployment without increasing poverty, and promoting the central goals of both the feminist and the green movements. What are the objections?

Perhaps the most common is that a UBI would cost too much. Such a statement is of course meaningless if the amount and the scale is left unspecified. At a level of $150 per month and per person, a UBI is obviously affordable in some places, since this is the monthly equivalent of what every Alaskan receives as an annual dividend. Could one afford a UBI closer to the poverty line? By simply multiplying the poverty threshold for a one-person household by the population of a country, one soon reaches scary amounts–often well in excess of the current level of total government expenditure.

But these calculations are misleading. A wide range of existing benefits can be abolished or reduced once a UBI is in place. And for most people of working age, the basic income and the increased taxes (most likely in the form of an abolition of exemptions and of low tax rates for the lowest income brackets) required to pay for it will largely offset each other. In a country such as the United States, which has developed a reasonably effective revenue collection system, what matters is not the gross cost but its distributive impact–which could easily work out the same for a UBI or an NIT.

Estimates of the net budgetary cost of various UBI and NIT schemes have been made both in Europe and the United States.13 Obviously, the more comprehensive and generous existing means-tested minimum-income schemes are, the more limited the net cost of a UBI scheme at a given level. But the net cost is also heavily affected by two other factors. Does the scheme aim to achieve an effective rate of taxation (and hence of disincentive to work) at the lower end of the distribution of earnings no higher than the tax rates higher up? And does it give the same amount to each member of a couple as to a single person? If the answer is positive on both counts, a scheme that purports to lift every household out of poverty has a very high net cost, and would therefore generate major shifts in the income distribution, not only from richer to poorer households, but also from single people to couples.14 This does not mean that it is “unaffordable,” but that a gradual approach is required if sudden sharp falls in the disposable incomes of some households are to be avoided. A basic income or negative income tax at the household level is one possible option. A strictly individual, but “partial” basic income, with means-tested income supplements for single adult households, is another.

A second frequent objection is that a UBI would have perverse labor supply effects. (In fact, some American income maintenance experiments in the 1970s showed such effects.) The first response should be: “So what?” Boosting the labor supply is no aim in itself. No one can reasonably want an overworked, hyperactive society. Give people of all classes the opportunity to reduce their working time or even take a complete break from work in order to look after their children or elderly relatives. You will not only save on prisons and hospitals. You will also improve the human capital of the next generation. A modest UBI is a simple and effective instrument in the service of keeping a socially and economically sound balance between the supply of paid labor and the rest of our lives.

It is of the greatest importance that our tax-and-transfer systems not trap the least skilled, or those whose options are limited for some other reason, in a situation of idleness and dependency. But it is precisely awareness of this risk that has been the most powerful factor in arousing public interest for a UBI in those European countries in which a substantial means-tested guaranteed minimum income had been operating for some time. It would be absurd to deny that such schemes depress in undesirable ways workers’ willingness to accept low-paid jobs and stick with them, and therefore also employers’ interest in designing and offering such jobs. But reducing the level or security of income support, on the pattern of the United States 1996 welfare reform, is not the only possible response. Reducing the various dimensions of the unemployment trap by turning means-tested schemes into universal ones is another. Between these two routes, there cannot be much doubt about what is to be preferred by people committed to combining a sound economy and a fair society–as opposed to boosting labor supply to the maximum.

A third objection is moral rather than simply pragmatic. A UBI, it is often said, gives the undeserving poor something for nothing. According to one version of this objection, a UBI conflicts with the fundamental principle of reciprocity: the idea that people who receive benefits should respond in kind by making contributions. Precisely because it is unconditional, it assigns benefits even to those who make no social contribution–who spend their mornings bickering with their partner, surf off Malibu in the afternoon, and smoke pot all night.

One might respond by simply asking: How many would actually choose this life? How many, compared to the countless people who spend most of their days doing socially useful but unpaid work? Everything we know suggests that nearly all people seek to make some contribution. And many of us believe that it would be positively awful to try to turn all socially useful contributions into waged employment. On this background, even the principle “To each according to her contribution” justifies a modest UBI as part of its best feasible institutional implementation.

But a more fundamental reply is available. True, a UBI is undeserved good news for the idle surfer. But this good news is ethically indistinguishable from the undeserved luck that massively affects the present distribution of wealth, income, and leisure. Our race, gender, and citizenship, how educated and wealthy we are, how gifted in math and how fluent in English, how handsome and even how ambitious, are overwhelmingly a function of who our parents happened to be and of other equally arbitrary contingencies. Not even the most narcissistic self-made man could think that he fixed the parental dice in advance of entering this world. Such gifts of luck are unavoidable and, if they are fairly distributed, unobjectionable. A minimum condition for a fair distribution is that everyone should be guaranteed a modest share of these undeserved gifts.15 Nothing could achieve this more securely than a UBI.

Such a moral argument will not be sufficient in reshaping the politically possible. But it may well prove crucial. Without needing to deny the importance of work and the role of personal responsibility, it will save us from being over-impressed by a fashionable political rhetoric that justifies bending the least advantaged more firmly under the yoke. It will make us even more confident about the rightness of a universal basic income than about the rightness of universal suffrage. It will make us even more comfortable about everyone being entitled to an income, even the lazy, than about everyone being entitled to a vote, even the incompetent.

{Philippe Van Parijs directs the Hoover Chair of Economic and Social Ethics at the Catholic University of Louvain.}

1. Many academics and activists who share this view have joined the Basic Income European Network (BIEN). Founded in 1986, BIEN holds its eighth congress in Berlin in October 2000. It publishes an electronic newsletter (bien@etes.ucl.ac.be), and maintains a Web site that carries a comprehensive annotated bibliography in all EU languages (http://www.etes.ucl.ac. be/BIEN/bien.html). For a recent set of relevant European essays, see Loek Groot and Robert Jan van der Veen, eds., Basic Income on the Agenda: Policy Objectives and Political Chances (Amsterdam: Amsterdam University Press, 2000).
2. Federal senator for the huge state of Sao Paulo and member of the opposition Workers Party (PT), Suplicy has advocated an ambitious guaranteed minimum income scheme, a version of which was approved by Brazil’s Senate in 1991.
3. Two North American UBI networks were set up earlier this year: the United States Basic Income Guarantee Network, c/o Dr Karl Widerquist, The Jerome Levy Economics Institute of Bard College, Annandale-on-Hudson, NY 12504-5000, USA (http://www.usbig.net); and Basic Income/Canada, c/o Prof. Sally Lerner, Department of Environment and Resource Studies, University of Waterloo, Waterloo, Ontario, Canada N2L 3G1 (http://www. fes.uwaterloo.ca/Research/FW).
4. See James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, “Is a Negative Income Tax Practical?” Yale Law Journal 77 (1967): 1-27. See also a recent conversation with Tobin in BIEN’s newsletter (“James Tobin, the Demogrant and the Future of U.S. Social Policy,” in Basic Income 29 (Spring 1998), available on BIEN’s web site).
5. See Joseph Charlier, Solution du problème social ou constitution humanitaire (Bruxelles: Chez tous les libraires du Royaume, 1848); John Stuart Mill, Principles of Political Economy, 2nd ed. [1849] (New York: Augustus Kelley, 1987).
6. See the exchange between Eduardo Suplicy and Milton Friedman in Basic Income 34 (June 2000).
7. The latest countries to introduce a guaranteed minimum income at national level were France (in 1988) and Portugal (in 1997). Out of the European Union’s fifteen member states, only Italy and Greece have no such scheme.
8. In the United States, one recent proposal of this type has been made in Fred Block and Jeff Manza, “Could We End Poverty in a Postindustrial Society? The Case for a Progressive Negative Income Tax,” Politics and Society 25 (December 1997): 473-511.
9. Bruce Ackerman and Anne Alstott, The Stakeholder Society (New Haven: Yale University Press, 1999). Their proposal is a sophisticated and updated version of a proposal made by Thomas Paine to the French Directoire. See “Agrarian Justice” [1796], in The Life and Major Writings of Thomas Paine, P. F. Foner, ed., (Secaucus, N.J.: Citadel Press, 1974), pp. 605-623. A similar program was proposed, independently, by the New England liberal, and later arch-conservative, Orestes Brownson in the Boston Quarterly Review of October 1840. If the American people are committed to the principle of “equal chances,” he argued, then they should make sure that each person receives, on maturity, an equal share of the “general inheritance.”
10. For a more detailed discussion, see Philippe Van Parijs, Real Freedom for All (New York: Oxford University Press, 1995).
11. One can think of alternative normative foundations. For example, under some empirical assumptions a UBI is also arguably part of the package that Rawls’s difference principle would justify. See, for example, Walter Schaller, “Rawls, the Difference Principle, and Economic Inequality,” in Pacific Philosophical Quarterly 79 (1998) 368-91; Philippe Van Parijs, “Difference Principles,” in The Cambridge Companion to John Rawls, Samuel Freeman ed., (Cambridge: Cambridge University Press, forthcoming). Alternatively, one might view a UBI as a partial embodiment of the Marxian principle of distribution according to needs. See Robert J. van der Veen and Philippe Van Parijs, “A Capitalist Road to Communism,” Theory and Society 15 (1986) 635-55.
12. See Edmund S. Phelps, Rewarding Work (Cambridge, Mass.: Harvard University Press, 1997).
13. In the US case, for example, the fiscally equivalent negative-income-tax scheme proposed by Block and Manza, which would raise all base incomes to at least 90 percent of the poverty line (and those of poor families well above that), would, in mid-1990s dollars, cost about $60 billion annually.
14. To fund this net cost, the personal income tax is obviously not the only possible source. In some European proposals, at least part of the funding comes from ecological, energy, or land taxes; from a tax on value; from non-inflationary money creation; or possibly even from Tobin taxes on international financial transactions (although it is generally recognized that the funding of a basic income in rich countries would not exactly be a priority in the allocation of whatever revenues may be collected from this source). But none of these sources could realistically enable us to dispense with personal income taxation as the basic source of funding. Nor do they avoid generating a net cost in terms of real disposable income for some households, and thereby raising an issue of “affordability.”
15. Along the same lines, Herbert A. Simon observes “that any causal analysis explaining why American GDP is about $25,000 per capita would show that at least 2/3 is due to the happy accident that the income recipient was born in the U.S.” He adds, “I am not so naive as to believe that my 70% tax [required to fund a UBI of $8,000 p.a. with a flat tax] is politically viable in the United States at present, but looking toward the future, it is none too soon to find answers to the arguments of those who think they have a solid moral right to retain all the wealth they earn.’” See Simon’s letter to the organizers of BIEN’s seventh congress in Basic Income 28 (Spring 1998).

MANITOBA
http://www.cbc.ca/canada/manitoba/story/2010/03/25/mb-poverty-experiment.html
1970s’ Manitoba poverty experiment called a success / March 25, 2010

A controversial government experiment in the 1970s in which some households in a Manitoba town were given a minimum level of income improved the community’s overall health, a professor at the University of Manitoba says. A controversial government experiment in the 1970s in which some households in a Manitoba town were given a minimum level of income improved the community’s overall health, a professor at the University of Manitoba says. From 1974 through 1978, about 30 per cent of the population of Dauphin was provided with a “mincome,” as the guaranteed level of income came to be called. “We found that, overall, hospitalizations in Dauphin declined relative to the control group,” said Evelyn Forget, professor of community health science at the University of Manitoba. “We also looked at accidents and injuries, and they also declined. You can argue that accident and injury hospitalizations are strongly related to poverty.”

The goal of the program, which cost $17 million, was to find out whether a guaranteed income would improve health and community life. If a household’s income dropped below a certain amount, the program would top it up to an income equivalent to the welfare rates at the time. The participants who worked had their supplement reduced 50 cents for every dollar they earned in an attempt to encourage people in the program to look for work. Forget has spent three years comparing the administrative health care records of Dauphin’s citizens between 1974 and 1978 with those of a control group of people living in similar Manitoba communities at that time. She said her research suggests that people appear to live healthier lives when they don’t have to worry about poverty. “Hospitalizations for mental health issues were down significantly,” she said, adding that teenagers stayed in school longer as a result of the initiative.

The initiative, which started in 1974, was terminated in 1978 as political support for the experiment faded. “Politically, there was a concern that if you began a guaranteed annual income, people would stop working and start having large families,” Forget said. Ron Hikel, the executive director of the Mincome project, is delighted Forget is taking a fresh look at the project’s impact. “As somebody who devoted three or four years of his life to making this happen, I was disappointed that the data were warehoused,” Hikel said. Forget has not yet been given access to the 2,000 boxes of data collected by the original Mincome researchers, which contain copies of questionnaires participants filled out and, she believes, transcripts of interviews with the families who took part. Hikel, who is now legislative director for U.S. Rep. Eric Massa, said Forget’s research is immensely relevant in Canada and the United States. He said he intends to use her analysis as part of the current health-care debate. “It has to do with the impact that larger social conditions have on one’s health condition and the need for health care,” Hikel said.

MONGOLIA
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWm8u8kb0R5E
Mongolia Fund to Manage $30 Billion Mining Jackpot
by Bloomberg News / September 11, 2009

The Mongolian government will set up a sovereign wealth fund using mining royalties and tax revenue, and distribute part of the income to citizens to alleviate poverty, said Finance Minister Sangajav Bayartsogt. The fund, to be run by professional managers from 2013, will disburse part of its annual income to every Mongolian in cash or non-cash securities to let them own stakes in the country’s mining wealth, Bayartsogt said. Initial capital will be drawn from Ivanhoe Mines Ltd.’s $4 billion Oyu Tolgoi copper- gold mine project, estimated to generate $30 billion in tax revenue over 50 years, he said. “We’re drafting the idea to implement the proposal, and we’re studying examples like the Alaskan Permanent Fund,” Bayartsogt said in a Sept. 9 interview in the capital Ulaanbaatar, declining to specify the size of the proposed fund. Mongolia, whose 2.7 million citizens depend on mining and agriculture for half the nation’s 2008 economic output, is banking on Oyu Tolgoi and about 6,000 other mineral deposit sites to lift average annual income, which at $1,680 per person last year was ranked 151st in the world by the World Bank. “If the government can pull this off, we can expect lasting stability and growth in Mongolia, because this fund can help stabilize the economy and help fend off the boom and burst of the commodity-price cycles,” said Erdenedalai Choinkhor, an economist at Frontier Securities Co. in Ulaanbaatar.

Oil, Gas Money
The $40 billion Alaska Permanent Fund, created in 1976 with state revenue from oil production, has constitutionally protected capital that can’t be spent. Most of its earnings are reinvested, and a dividend is returned each year to eligible Alaskans. The fund reported a $6.3 million loss in 2001 after buying 685,600 shares in Enron Corp. Norway’s sovereign wealth fund, the 2.47 trillion-krone ($410 billion) Government Pension Fund – Global, derives money from taxes on oil and gas and ownership of petroleum fields. The oil and gas money is invested abroad to avoid stoking domestic inflation. Mongolia also wants to diversify the economy’s reliance on animal husbandry and mining to avoid the so-called Dutch Disease, where a commodity boom sucks in foreign exchange, raises the currency’s value and makes manufacturing less competitive. “If mining is booming, the rest of the sectors will slow down because people are expecting to receive work and revenue from mining,” Bayartsogt said. “We will use revenue from mining to develop the processing industry, invest in outsourcing, education, science and technology to move up the value chain and transform the economy.”

Transforming Mongolia
Bayartsogt’s Democratic Party and the opposition Mongolian People’s Revolutionary Party pledged during May general elections to distribute as much as $6 billion, or up to 1.5 million tugriks ($1,060) for every citizen, from the country’s mining wealth. To fulfill the election pledge, the government may use a $250 million pre-payment from Oyu Tolgoi to seed its distribution program, Bayartsogt said. The final accord to develop the Oyu Tolgoi deposits may be signed this month, Minister of Minerals and Energy Dashdorj Zorigt said this week. “The transformational power of the Oyu Tolgoi mine cannot be understated,” said Peter Morrow, chief executive officer of the Khan Bank in Ulaanbaatar. Investments in Oyu Tolgoi are projected at almost 80 percent of Mongolia’s $5 billion economy, he said.

Oyu Tolgoi Deposits
Oyu Tolgoi may hold as much as 32 million tons of copper and 1,200 tons of gold, according to government estimates. Annual output when the mines are excavated may top 450,000 tons of copper with 330,000 ounces of gold, Zorigt said. “The ordinary people are expecting something” to be distributed to them as soon as Oyu Tolgoi is signed, Bayartsogt said. “The expectation is too high. Economics is always connected to politics.” The Oyu Tolgoi deposits, discovered by Ivanhoe in 2003, have gone through a sometimes tumultuous development process. Mongolia’s government on Aug. 25 passed laws allowing companies to carry forward their losses for eight years, build private roads and let Oyu Tolgoi developers use water they find on their land. The parliament will also repeal from Jan. 1, 2011, a 68 percent windfall profit tax on copper and gold. The nation’s 6,000 known mineral deposit sites include reserves of coal, uranium, silver, zinc and molybdenum. “It’s the beginning, an experiment in how to structure a large mining-exploration agreement with the world,” said Terence Ortslan, managing director of TSO & Associates, a Montreal, Canada-based research firm focusing on mining. “Five years from now, Oyu Tolgoi will be in operation, and other projects will be under way.”

BRAZIL
http://www.cpj.ca/en/blog/chandra/basic-income-brazil
Basic income in Brazil
By Chandra Pasma / July 14th, 2009

While Alaska is the only place in the world with an ongoing basic income program, they are not the only jurisdiction to have shown interest. Brazil actually has a law mandating the progressive institution of a basic income program. The law was introduced by Senator Eduardo Suplicy of the Brazilian Workers’ Party in 2001. He had previously introduced a bill to create a Negative Income Tax model of a guaranteed livable income, but that bill failed to pass. This second bill called for a universal basic income program to be progressively instituted, beginning with those most in need. The bill was approved by the Senate in 2002 and by the Chamber of Deputies in 2003. It was signed into law by President Lula da Silva in 2004. The bill leaves implementation in the hands of the President. No progress has been made toward implementing a basic income since then.

However, Brazil does have an interesting, albeit conditional, income security program for the poorest Brazilians. The Bolsa Familia, or Family Grant, was created in 2003 by merging 4 existing cash transfer programs. It could be used as a stepping stone to a basic income program, even though it was not created with that intention. The Bolsa Familia is paid to 11 million of Brazil’s poorest families, which means that the money reaches 46 million people. It has contributed to a reduction in inequality, although it is not the only factor. Brazil, one of the most unequal countries in the world, has made astonishing progress in reducing inequality since 2001. In the last five years, the incomes of the poorest Brazilians have risen 22%, compared to only 4.9% for the richest Brazilians. The program has also had a significant positive effect on the number of children in school, while decreasing the number of children in child labour.

The program has two aspects. Extremely poor families, those with a monthly per capita income of 60 reais or less (R$2 is equal to approximately US$1), receive a basic benefit of R$62 per month. They also receive variable benefits for their children, R$20 per month per child for their first three children, plus R$30 per month per 16 or 17 year old, to a maximum of two. Meanwhile, poor families – those with a monthly per capita income of R$120 or less, receive only the variable benefits for their children. The grants are based on a number of conditions. Children must be in school, attending at least 85% of school days, and they must receive all of their immunizations. Pregnant women must receive pre-natal care. The program currently includes 85% of Brazil’s poorest families. Some are excluded because they repeatedly failed to meet the conditions, while other poor families struggle with the issue of identification. This is one of the reasons why Senator Suplicy is still campaigning tirelessly to see the Bolsa Familia turned into a true basic income program.

Earlier this year, President Lula announced that an additional 1.3 million families will be added to the program in response to the recession. Senator Suplicy is also hoping to start a basic income pilot project, similar to Namibia’s, in Brazil. The project would begin next July, when the Basic Income Earth Network’s biannual conference takes place in Brazil. President Lula has already accepted an invitation to speak on the opening day of the conference.

INTEVIEW with BRAZILIAN SENATOR EDUARDO SUPLICY
http://www.widerquist.com/karl/Suplicy-Interview.htm

Senator Suplicy may be the highest-ranking political figure in the world to dedicate himself to promote the basic income guarantee. A U.S.-trained economist, he was elected to the Brazilian Senate in 1990, and he has been promoting the basic income guarantee at the national level ever since. He will be the keynote speaker at the First Congress of the U.S. Basic Income Guarantee Network. Last month, I asked him a few questions about his quest to introduce BIG in Brazil. –Karl Widerquist

1. YOU DID YOUR TRAINING AS AN ECONOMIST AT A TIME WHEN THE NEGATIVE INCOME TAX WAS EXPERIENCING A VOGUE WITHIN OUR PROFESSION. WERE ECONOMISTS SUCH AS JAMES TOBIN, JOHN KENNETH GALBRAITH, MILTON FREEDMAN, AND HERBERT SIMON INFLUENTIAL IN THE DEVELOPMENT OF YOUR IDEAS ON THE BASIC INCOME GUARANTEE? WERE YOU INFLUENCED BY THE EARLIER WRITERS SUCH BERTRAND RUSSELL, THOMAS PAINE, COURNOT, AND OTHERS?

After completing my bachelor’s degree (1964) in Business Administration, at the Fundação Getúlio Vargas, in São Paulo, Brazil, and after working with my father for a year or more, I decided to become a Professor of Economics at that same institution were I had studied, and so I decided to work on my Master’s (1966-68) and on my Ph.D in Economics (1970-73) at Michigan State University, with a period of 15 months (1971-1972) of graduate studies at Stanford University. It was my main purpose to understand the mechanisms of the economic system and why were we having so much inequalities and poverty in Brazil. Since I lived in a family with deep sense of fraternity and Christian values, I wanted to know why were there so many conflicts and injustices beyond the walls of my house. I wanted to know the characteristics of the socialism and the capitalism system, and if it would be possible to build a system were we could at the same time eradicate poverty, promote more equality, efficiency and freedom. I had learn from the history of the main scientists such as Galileo Galilei, Nicolau Copernico and Albert Einstein that one should always search for the truth, because willing to know the truth is part of the human nature. The first time I remember to be presented to the negative income tax concept was in my Economic Theory course about the Price System, with Doctor John Moroney, using as a reference the text Microeconomics by Charles Fergunson. I also became acquainted with Capitalism and Freedom (1962) by Milton Friedman and the articles by James Tobin on the topic. Abba Lerner was also teaching at Michigan State University, and I remember José David Langier, a Brazilian Ph.D. student at MSU during the late sixties that was very found of him. After all, Lerner was one of the first to propose a negative income tax in a lump some tax form, that is, a fixed sum to all, in The Economics of Control (1944). I also started to read the books and conferences of John Kenneth Galbraith that once gave a lecture at MSU. During the late sixties and early seventies I also followed with much interest the Civil Rights movement, the speeches of Martin Luther King Jr., the Black Panthers, Angela Davis, the presidential candidates such as Eugene J. McCarty, Robert F. Kennedy, George Mc Govern, Richard Nixon, and others. I remember that in my preliminary exam in Economic Theory I developed a model were we would have all the conditions of efficiency in the economy but that at the same time people would be persuaded to offer conditions of survival with dignity to everyone in the society. At that time I was not acquainted with the writings of Thomas Paine, Bertrand Russell, August Cournot and so many others about whom I refer in my book Renda de Cidadania. A Saída é pela Porta. Cortez Editora e Editora Fundação Perseu Abramo, 2002, São Paulo, or Citizen’s Income. The Exit is Through the Door. During the seventies I interacted with some Brazilian economists that had an interest on the negative income tax concept such as Antonio Maria da Silveira, Edmar Lisboa Bacha and Roberto Mangabeira Unger. When I was elected a Federal Representative of the Worker’s Party, during the eighties, with Paul Singer and others economists, we started to say that it would be important that we defend the concept of a guaranteed income to all Brazilians. It was only when I was elected a Senator in 1990, that I decided to present a legislative proposal to institute a Guaranteed Minimum Income Program through a Negative Income Tax to all adults with 25 years or more with monthly income below US$ 150. They would have the right to receive a complement of income that would be 30% or up to 50% of the difference between that some and his or her level of income. On December 16, 1991, after a long debate, all parties decided to approve that proposal, including the PSDB lead by the present President of Brazil, Fernando Henrique Cardoso. During that day, Senator Cardoso said that the proposal was a realistic utopia. The initiative went to the Chamber of Deputies, where it received a favorable report in the Finance Committee. It is waiting for its approval until today. Some important developments occurred since there were economists such as José Márcio Camargo and Cristovam Buarque, Governor of the Federal District, as well as Mayor José Roberto Magalhães of Campinas, that started to defend the idea of a guaranteed income to poor families as long as they have children in school age that are really going to school. Programs along these lines developed all over the country and are now object of the efforts of the Federal, State and Municipal governments. By the end of 2002, almost all municipalities of Brazil, with the support of the Federal Government will have implemented a guaranteed minimum income program related to educational opportunities, named also as Bolsa-Escola program. The monetary values for families with monthly income below R$90 (US$37.2) or half the minimum wage per capita, however, R$15 (US$6.2), R$30 (US$12.4) or R$45 (US$18.6) if the family has one, two, three or more children up to 14 years of age going to school, are very modest.

2. THE NAME OF THE BIG NETWORK IN BRAZIL, THE BASIC INCOME EARTH NETWORK-BRAZIL (BIEN-BRAZIL), IS CLEARLY BASED ON THE BASIC INCOME EUROPEAN NETWORK (BIEN). WHAT IS YOUR RELATIONSHIP WITH BIEN AND HOW HAS YOUR THINKING BEEN INFLUENCED BY CONTEMPORARY EUROPEAN BIG SUPPORTERS SUCH AS CLAUS OFFE, PHILIPPE VAN PARIJS, GUY STANDING, TONY ATKINSON, SEAN HEALY, AND OTHERS?

It was in 1992 that I became acquainted with the concept of an unconditional basic income, talking with some economists that recommended Arguing for a Basic Income: Ethical Foundations for a Radical Reform (London, Verso, 1992), edited by Philippe Van Parijs. My first reaction was that we should first be guaranteeing a minimum income to those who have little or nothing. More and more, since then, I started to interact with the members of BIEN, the Basic Income European Network. I decided to participate in theirs International Congress in London (1994), Vien (1996) and Berlin (2000). Although I had planned to be there, I was not able to go to the Amsterdam Congress (1998) because I had to be campaigning for my reelection to the Senate. I was reelected Senator for the 1999-2006 term. It is true that I was much influenced by Philippe Van Parijs, Claus Offe, Guy Standing, Tony Atkinson, Sean Healy, Walter Van Trier and so many others that have participated in those congresses and seminars over the subject. Today I am also convinced that the basic income is a common sense solution. Accordingly I presented a new legislative initiative in the Brazilian Senate, on December 4, 2001, saying that from 2005 on, a citizen’s income will be instituted to all Brazilians that live in Brazil as well to all foreigners who are living for at least five years in this country, no matter his or her socioeconomic condition. The citizen’s income will be equal to all, paid in monetary terms. Its value will be determined by the Federal Government taking into account the vital needs of each one, the level of economic development and the budget capacity of the nation. If the initiative is approved by the National Congress, in the October elections of 2004 a popular referendum will be called to confirm the approval of the proposal.

3. WHEN YOU ASKED MILTON FREEDMAN TO EVALUATE BASIC INCOME (BI) AS AN ALTERNATIVE TO THE NEGATIVE INCOME TAX (NIT), HE REPLIED IT “IS NOT AN ALTERNATIVE TO A NEGATIVE INCOME TAX. IT IS SIMPLY ANOTHER WAY TO INTRODUCE A NEGATIVE INCOME TAX.” WITHIN THOSE WHO FAVOR SOME KIND OF BASIC INCOME GUARANTEE, NIT SUPPORTERS TEND TO BELIEVE BI AND NIT HAVE THE SAME EFFECTS AND THAT NIT SHOULD BE FAVORED BECAUSE OF ITS SIMPLICITY, BUT BASIC INCOME SUPPORTERS TEND TO BELIEVE THE TWO HAVE DIFFERENT EFFECTS, AND THAT BI SHOULD BE FAVORED BECAUSE IT CAN DELIVER MORE SECURITY. WHICH OF THE TWO DO YOU BELIEVE IS BETTER AND WHY?

I can understand that the basic income is another way to introduce a negative income tax, as Milton Friedman has replied. But I believe that we would have some advantages if we may have the determination and courage to cut some steps and move forward as soon as possible to the basic income. I can visualize that more and more people will know about their right that will be really universal without a complex bureaucracy that would otherwise be asking all the details about how much each person has gained in the formal as well in the informal market. To have a basic income will be regarded as a right similar to the one that any Brazilian has to walk, play and swim in any of the beaches of our country. Of course the Internal Revenue Service would still have to collect taxes from those with reasonably high incomes to help finance the citizen’s income. Its existence and its fairness, in my view, will help the creation of an attitude of good will from the contributors in favor of a more just and civilized society.

4. YOU HAVE MADE EFFORTS TO MAKE THE BASIC INCOME GUARANTEE AN ISSUE IN THIS YEAR’S PRESIDENTIAL ELECTION IN BRAZIL. WHAT STRATEGIES HAVE YOU TRIED AND HOW HAS BIG AFFECTED THE POLITICAL DIALOGUE?

On the 17 of March, 2002, for the first time in the Brazilian History, a political party, the Worker’s Party, will provide the opportunity to all its affiliates, more than 800 thousand in our case, to choose among two different alternatives, Luiz Inácio Lula da Silva, our Honour President and myself, who is going to be the presidential candidate. It is already defined in our Outlines for a Government Plan, approved by the National Encounter of the Partido dos Trabalhadores, PT, held in Recife last December 2002, and that is common for both candidates, the following text:
“It is relevant, in this picture, the institution of a minimum income, related to education, such as in the Bolsa Escola programs, all over the national territory, as an ingredient of complementing the family income. The Bolsa Escola national program of Fernando Henrique Cardoso Government – in spite of the increase of the resources that previously were allocated, in which the PT had important role – is still too timid with respect to the size of the benefits and is based on a limited, incomplete and stagnated vision of the social exclusion problem. The minimum income that we propose, articulated with the social inclusion program, should be viewed as a step towards the implementation – when the social conditions are existent – of a citizen’s basic income as a right of all the Brazilian population.”
It was in the meetings of the economists of the PT along 2001 that I have made efforts for them to include the vision that we should be in favor of a basic citizen’s income as soon as possible. As you may see, the idea was accepted. During the Recife Encounter before 560 delegates I have used the word for 20 minutes to explain this evolution. Right now, with the publication of my book, I am traveling to many cities in several regions of Brazil saying that if I am the chosen candidate I will give high priority to this point.
Let me explain that Lula is a very strong candidate who has been our presidential candidate in 1989, 1994 and 1998, when he got very good results as the second most elected. For more than a year he is leading the polls with 26 to 34% of the national preference. It won’t be easy for me to win, although I do not discard the possibility of a surprise. But I have been telling my friend Lula, for whom I have much respect, and the party, that more important than I becoming the president is that the one who does will really put in practice the ideas that I have been defending.

5. WHAT ARE THE PROSPECTS FOR A NATIONAL REFERENDUM ON BIG IN BRAZIL?

The Brazilian Constitution says in its Article 14, that the popular sovereignty will be exercised by universal election as well by plebiscite, referendum and popular initiative. Article 49 says that the National Congress may authorize the referendum. That is why the legislative initiative that I presented last December proposes a referendum to be held in October 2004. I believe that the citizen’s basic income will be much more accepted if discussed in depth by the whole population.

6. WILL BRAZIL BE THE FIRST COUNTRY TO INTRODUCE A FULL-SIZED BIG?

Brazil was one of the last nations to abolish slavery in 1888. It will be proper if Brazil becomes one of the first nations to introduce a basic income.

7. ONE COULD ARGUE THAT IT IS EASIER TO INTRODUCE BIG IN DEVELOPING NATIONS, LIKE BRAZIL, BECAUSE THE STANDARD OF LIVING IS LOW, AND ONLY A SMALL AMOUNT OF REDISTRIBUTION WOULD GREATLY INCREASE ECONOMIC SECURITY. ON THE OTHER HAND, ONE COULD ARGUE THAT IT IS MORE DIFFICULT TO ADOPT BIG IN DEVELOPING NATIONS BECAUSE THEY HAVE GREATER NEED FOR INFRASTRUCTURE IMPROVEMENTS AND OTHER PROJECTS THAT COMPETE FOR EXTREMELY SCARCE GOVERNMENT REVENUES. WHAT DO YOU BELIEVE ARE THE RELATIVE PROSPECTS FOR THE TECHNICAL FEASIBILITY OF BIG IN DEVELOPED AND DEVELOPING NATIONS?

It will be a very difficult task to persuade people both in developed as well in developing nations to introduce a basic income. Every time that I have had the opportunity to explain the concept and its fundamentals in my lectures all over Brazil, in general the proposal is accepted by most people as a good solution. It is important to have the support of institutions such as the labor unions, religious associations, entrepreneurial entities, civil organizations and so on. It is very encouraging the movement in favor of a basic income that has been developing in South Africa with the support of the Alliance for Children’s Entitlement to Social Security, Black Sasc, Child Health Policy Institute, Congress of South African Trade Unions, Development Resources Centre, ESST, Gender Advocacy Programme, Community Law Centre (UWC), Southern African Catholic Bishop’s Conference, South African Council of Churches, South African NGO Coalition and Treatment Action Campaign. South Africa and Brazil are both developing industrialized nations that with respect to income distribution are among the most unequal in the World. Therefore, it is important that the theme is being debated with much interest in both nations.

8. BY SOME ACCOUNTS, BRAZIL HAS THE HIGHEST ECONOMIC INEQUALITY IN THE WORLD. CLEARLY, THIS POINTS TO THE NEED FOR A BASIC INCOME GUARANTEE; HOW DOES IT AFFECT THE POLITICAL FEASIBILITY OF BIG?

According to the 2001 Report about the Human Development Index of the United Nations only Swaziland (60.9 in 1994), Nicarágua and South Africa present Inequality Gini Coefficients higher than those of Brazil (59.1 in 1997). According to the 2000/2001 World Bank Development Report, Brazil is third among the nations with most unequal distribution of income, with a Gini Coefficient of 60.0, in 1996, coming after Sierra Lioa (62.9 in 1989) and Central African Republic (61.3 in 1993). In 1999, the one percent richest got 13.9% of the National Income, a higher proportion than the 13.5% obtained by the 50% poorest of the Brazilian population. Under these circumstances, to guarantee a basic income to the whole population becomes most relevant.

9. WHAT POLITICAL AND ECONOMIC STRENGTHS AND WEAKNESSES TOWARD THE IMPLEMENTATION OF BIG DOES BRAZIL HAVE RELATIVE TO OTHER SOUTH AMERICAN COUNTRIES?

The integration of the South American countries must be seen mainly from the point of view of the human being, that differs from the point of view of the owners of capital. The more the social and economic rights of people in countries of the same region are similar the better are the chances of a healthy integration. It was very difficult for Argentina to maintain a fixed parity exchange rate system for a long time whereas Brazil, since 1999, had started a more flexible exchange system. Since February 2002 a more homogeneous form of dealing with the exchange system will help the integration of the economies. If Brazil implements a basic income as a citizen’s right it is most likely that Argentina and other South American countries will start studying how to apply it in their nations. It is interesting to know that a growing number of economists, social scientists and members of the parliaments in several Latin American countries are debating the issue, mainly in Argentina, Colombia and Brazil. See, for example Vuolo, Rubén Lo (org.) (1995). Contra la exclusión. La propuesta del ingresso ciudadano. Buenos Aires, CIEPPP/Mino y Dávila. It will be important to study the effects in the labor market of each nation of the introduction of the basic income. It is my view that it will make the economies consistently more efficiently and competitive, at the same time that will be presenting a higher degree of equity. In Latin America, we should be aware that when in the United States the government introduced in 1975 the EITC, that was significantly expanded in 1993, the Earned Income Tax Credit, a partial negative income tax, has made the American economy relatively more competitive than without that instrument. The American Society had decided to pay an additional amount to all workers receiving less than certain level, making their firms more competitive than in the absence of that instrument of economic policy.

10. FROM THE U.S. PERSPECTIVE, SOUTH AMERICAN COUNTRIES SEEM TO EXPERIENCE REGULAR CURRENCY CRISES, SUCH AS THE CURRENT ONE IN ARGENTINA. IS THERE A CONTINUING FEAR OF A SIMILAR CRISIS IN BRAZIL, AND HOW DOES THIS AFFECT THE FEASIBILITY OF BIG IN BRAZIL? MORE GENERALLY, DO YOU BELIEVE THAT DEVELOPING NATIONS CAN IMPLEMENT BIG GIVEN THE CURRENT INTERNATIONAL FINANCIAL SYSTEM OR WILL THEY REQUIRE SOME CHANGE IN POLICY FROM DEVELOPED NATIONS SUCH AS DEBT FORGIVENESS OR CURRENCY SUPPORT IN THE EVENT OF CRISIS?

It is true that the South American economies are having to dedicate a large portion of their resources to pay for the services of their debt. The Brazilian public sector, for example, including the municipalities, the states and the Union, paid respectively, in 1999 and 2000, R$86billions (US$35.5 billion) and R$70 billions (US$ 28.9 billion) of interest on internal and external debt. Suppose we were to pay a quite modest basic income to start with of R$40 (US$16.5) per month or R$480 (US$198.3) per year to all 170 million Brazilians. This would sum up to R$80.6 billions (US$33 billions). Since our 2002 Gross Domestic Product will be around R$1.3 trillion (US$537.1 billions) and our Federal Annual Revenue around R$350 billions (US$144.6 billions), to use R$80.6 billions (US$33 billions) to pay a modest citizen’s income to all Brazilians is a huge sum considering that there are so many other urgent needs. When we compare, however, that the Brazilians are also paying an equivalent amount of interest to the owners of titles of the public internal and external debt, it is reasonable to think that a dialogue with them should take into account the principles of justice and equity. When priorities are defined in very clear and transparent terms, greater respect among all parts, including creditors, tend to prevail.

11. BRAZIL RECENTLY INTRODUCED A SMALL CONDITIONAL INCOME GUARANTEE FOR FAMILIES WITH SCHOOL-AGE CHILDREN WHO REMAIN IN SCHOOL. HOW SUCCESSFUL HAS THIS EFFORT BEEN (COMBINED WITH PREEXISTING POLICIES) IN RELIEVING POVERTY IN BRAZIL? …IS IT A MAJOR STEP TOWARD AN UNCONDITIONAL BASIC INCOME GUARANTEE?

The small conditional guarantee for families with school-age children who remain in school has been spreading to reach around 6 million families or 11 million children in this first semester of 2002. In some municipalities such as São Paulo, the benefit is more substantial, due to a more generous municipal law: the families with monthly income below R$90 (US$37.2) or half the minimum wage per capita with children up to 14 years of age going to school have the right to receive a complement of income that is a proportion (2/3) of the difference between R$90 (US$37.2) x number of members of the family and the family income. There are also other designs. In general the results have been considered positive, although there are strong recommendations to improve the value of that modest benefit. I believe that those programs are an important step towards the implementation of a basic income.

12 BRAZIL IS ONE OF THE FEW NATIONS IN THE WORLD THAT STILL HAS HUNTER-GATHERER COMMUNITIES. WOULD A BIG DISRUPT THE TRADITIONAL WAY OF LIFE IN THESE COMMUNITIES? AND IF SO, SHOULD THEY BE EXCLUDED—PERHAPS IN EXCHANGE FOR LAND RIGHTS?

The idea of a citizen’s basic income has much to do with the values of solidarity that have characterized the Indian communities since their origin. It also has to do with the values of the black communities in their struggle against slavery. All communities in Brazil, no matter how far from the cities, need some money for their defense, health assistance, education, housing improvement and so many things. Their members will have the same citizen right as any other Brazilian. They will be able to choose whether to use their respective basic income in a more individual or in a more communal way.

13. POLITICALLY, DO YOU BELIEVE IT IS BETTER TO START WITH A PARTIAL INCOME GUARANTEE, SUCH AS THE ALASKA DIVIDEND, WHICH GUARANTEES A LEVEL OF INCOME BUT NOT ENOUGH TO COVER AN INDIVIDUAL’S BASIC NEEDS, OR IS IT BETTER TO PROMOTE A FULL BIG WHICH COULD IN ONE STROKE REPLACE ALMOST EVERY PROGRAM IN THE WELFARE STATE?

I spent seven days in Alaska in 1995 asking the people all over the places about the Alaska Permanent Fund dividend system. I was quite impressed that although in 1976 the result of the referendum was 76.000 yes to 38.000 no, or almost 2 to 1, nowadays almost everyone is quite enthusiastic about the system. A few with very high income told me that the dividend did not make great difference to them. But they did not oppose the idea. I believe that the Alaska example is nice because it has permitted that people is accompanying the pros and cons of the system, allowing the annual dividend to gradually reach the point of being equal to the survival needs of a person in Alaska. It would be very difficult to start in Brazil with a full BIG.
I believe that we may start with a modest amount such as R$40 (US$16.5) per month per capita, on R$480 (US$198.3) per year. In a family of six, this would mean R$240 (US$99.2) per month. If the husband and wife knows that for the next 12 months they will be able to count for sure with that amount, that in the following years this amount will increase with the nation’s economic growth, this will make a tremendous difference for their condition of life, freedom and dignity. In a few years the monthly amount per capita will more than double as it happen in Alaska.

14. BRAZIL, LIKE ALASKA, IS HAS RELATIVELY ABUNDANT NATURAL RESOURCES. DO YOU BELIEVE A BIG FINANCED BY NATURAL RESOURCE TAXES WOULD BE SUCCESSFUL IN BRAZIL? I MUST CONFESS THAT WHEN I HEARD OF PRESIDENT BUSH’S PLAN TO EXPAND OIL DRILLING ON ALASKA’S NORTH COST, MY SECOND THOUGHT WAS THAT IT WOULD AT LEAST BE GOOD FOR THE ALASKA DIVIDEND. DOES AN ECO-TAX-FINANCED BIG RISK CREATING GREATER POPULAR SUPPORT FURTHER DESTRUCTION OF NATURAL RESOURCES?

A basic income in Brazil may be financed by a combination of both national resource taxes as well as taxes on all kinds of wealth that are created in society, taking also into account a principle of progressivity, that is, that those that have greater wealth and income should contribute relativity more.

15. MORE GENERALLY, WHAT METHOD OF FINANCING BIG WOULD BE MOST DESIRABLE FOR BRAZIL, AND HOW WOULD THAT DIFFER FROM FINANCING ONE IN THE UNITED STATES?

In 1999 I presented in the Senate a legislative initiative proposing the creation of Citizen’s Brazilian Fund that would have the purpose of financing a citizen’s guaranteed minimum income. The main sources of this fund would be:
I. Resources consigned in the General Budget of the Country.
II. 50% of the resources received in cash, bonds and credits including the ones, which are originated from specific agreements in the scope of the National Program of Privatization.
III. 50% of the resources originated from the concession of public services and public works, as well as from permit or authorization of public services.
IV. 50% of the resources originated from activities foreseen by the 1st paragraph of art. 176 of the federal constitution *
V. 50% of the resources originated from the contracts states or private enterprises, the development of the activities foreseen by the items I to VI of the art. 177 of the federal constitution**
VI. 50% of the resources originated from real estate that belongs to the country assets.
VII. Other properties, rights and assets of the country as well as credits and transferring operations, which are awarded to them.
VIII, Income of any nature issued as payment resulted from application of assets that belong to the citizenship program.
IX. Donations in cash, values, real state and other properties received by them.
Sole paragraph: The balances checked at the end of each fiscal year will be obligatorily transferred to citizenship program of the following year.
* These resources are originated from the exploitation of mines and the potential of hydraulic energy.
** These resources are originated from the research, exploitation, importation, and transportation of the petroleum and natural gas
This legislative initiative has been approved in February 2000 by the Justice Commission of the Senate.
I believe that we should always take into account that the nation’s natural resources should not be used only for the maximum benefit of the present generation, but with a balanced view of befitting future generations and always taking care for not allowing the predatory depletion of the nation’s natural resources.

16. IN THE UNITED STATES, THE BASIC INCOME GUARANTEE MOST COMMONLY RUNS INTO OPPOSITION FROM THOSE WHO BELIEVE THAT EVERY INDIVIDUAL HAS THE RESPONSIBILITY TO WORK—MEANING IN THE PAID LABOR MARKET. IS THIS A STRONG FEELING IN BRAZIL AND HOW DO YOU BELIEVE THE MOVEMENT FOR BIG CAN OVERCOME THIS KIND OF OPPOSITION?

This is a question that is always present in the discussions about the basic income. It’s important to distinguish the basic income guaranteed form the income that someone gets from his on her work effort. The basic income, as so well explained by Thomas Paine in Agrarian Justice (1795) must be seen as a right, that every individual has to participate in the wealth of a nation.

The Brazilian Constitution, as well as that of other nations, recognizes the right of private property. It recognizes that the proprietors of farms, factories, banks, real state, bonds and stocks may receive their income in the form of profits, rents or interest. Without the obligation of doing any work. If we guarantee the right of capital owner’s to receive their income without any labor effort, why should we not extend the same right to receive a modest income sufficient for his or her basic needs to everyone, rich and poor? When I explain this argument, that we may find in Bertrand Russell’s Proposed Roads to Freedom: (1918) normally all audiences agree that the citizen’s on basic income makes much sense.

IRAQ
http://www.adn.com/2008/08/09/488420/pfd-rebate-pack-a-punch.html
A Basic Income to Democratize and Pacify Iraq
by Eduardo Matarazzo Suplicy

Last March, 2007, when Ibrahim al-Jaafari, the ex-Prime Minister of Iraq (02/23/05-05/20/2006) visited Brazil, I had the opportunity to have a conversation with him in Brasília as well as in São Paulo. I told him that in April 2003, shortly before the Brazilian Sergio Vieira de Mello was nominated as the United Nations representative in Iraq, I had written to Mr. de Mello suggesting that the Iraqis could consider following the example of the Alaska Permanent Fund Dividend system, a pioneer and successful example of a Citizen’s Basic Income. Because of the country’s huge oil reserves, Iraq could follow this path. I explained him how Sergio Vieira de Mello wrote back to me on April 30, 2003, saying that he considered the proposition a very positive one and that he would take it to the administrative authorities of Iraq. On June 23 of that year, in the Reconciliation Summit of A’mman, Ambassador J. Paul Bremer III who was responsible for administering Iraq after the fall of Saddam Hussein, said that Iraqis could follow the Alaskan example so that all of them could feel as having a stake in the wealth of the nation. On August 1st, Vieira de Mello called me from Baghdad saying that the proposal was being positively considered and that the World Bank mission had deemed it to be viable. Unfortunately he was a victim together with 21 more persons in the attack of the UN Office in Baghdad on August 19 of that year. Ibrahim al-Jaafari today is a member of the National Assembly of Iraq and leader of Islamic Dawa Party, the main political party of the United Iraqi Alliance coalition that supports the government. He is a Shiite and was previously one of the two vice-presidents of Iraq under the Iraqi Interim Government in 2004. I also told him that the Brazilian National Congress had approved the Law 10.835 that institutes an unconditional Citizen’s Basic Income, sanctioned by President Luiz Inácio Lula da Silva in January 8, 2004. The law says that it will be established step-by-step, under the Executive Power’s criteria, starting with those most in need, as the present Bolsa Família Program does, until the day when everyone in Brazil will have that right. As the proponent of the bill, and Co-Chair of the Basic Income Earth Network, BIEN, since 2004, I had been ready to go to Iraq to explain to their government and parliament how this instrument could contribute to the democratization and pacification of the Nation. Other economists and political thinkers such as Steve Clemons, Guy Standing, Steven Schafarmam and the ex-Governor of Alaska, Jay Hammond, had also made the same proposal.

As a result, last April I received an official invitation from the President of the Iraqi National Assembly to visit Baghdad. I considered going in April and later in July. But the Brazilian Foreign Minister Celso Amorim and his Executive Secretary, Ambassador Samuel Pinheiro Guimarães made an appeal to me to postpone my trip because it would be too risky. If something happened to me it would cause a serious problem for the Brazilian government. Even in the so-called “Green Area” of Baghdad, under control of state-of-the-art security forces, the situation was not considered to be safe. In fact, on the same day of their recommendation, the United Nations Secretary-General, Ban Ki-moon, was forcefully shaken by an explosion that took place 50 meters away from him, which killed several people in that building, also inside the Green Area. I agreed that I should go when conditions of security would be improved.

Last October, the Brazilian Ambassador to Iraq, Bernardo de Azevedo Brito, -who, for security concerns, works out of A’mman, Jordan- told me that he just returned from a three-day trip to Baghdad, and that the overall situation had improved significantly. Therefore he was ready to accompany me for an official visit to Iraq for three days in January 2008. I would have the support of the Brazilian government who would secure the services of a private British security firm from our arrival to Baghdad International Airport and throughout our whole stay, up to our departure back to A’mman.

I was convinced that this would be one of my most significant trips of my 66 year’s life. Of course my family, my colleagues at work, and friends were worried.  Yet I explained them that I was so convinced that Iraq could effectively implement a Citizen’s Basic Income unconditionally to all 30 million inhabitants in order to pacify this nation after so many years of wars, violence and deaths, that it would be worthwhile embracing the challenge and being there. I felt honored by the invitation made by the Speaker of the Iraqi Council of Representatives, Mahmoud Dawud al-Mashhadani, – elected on April 22, 2006 to the speakership, receiving 159 votes against 97 spoilt and 10 abstentions as part of the Sunni Arab-led Iraqi Accord Front list-, to enlighten to them how they have all the conditions to introduce this instrument of economic policy.

Two of my countrymen were on the same trip since Brazil: Nawfal Assa Mossa Alssabak, vice-president of the Brazil-Iraq Chamber of Commerce and Industry, born in Iraq but since the early eighties living in Brazil, where he got married and has 3 sons and one daughter, who served as an interpreter in several occasions, and Sergio Kalili, an independent journalist who filmed 7 hours worth of all the important events of the trip. From A’mman to Baghdad, the Brazilian Ambassador was also accompanied by two members of the Brazilian Embassy’s staff, Safana Sallooum and Valdir Guimarães. As soon as we arrived in the airport of Baghdad at around 10 am of January 16, we were surrounded by six security people with semi-automatic machine guns who were to guide us, attentively screening throughout all taking place in the big airport hall. We were instructed to wear a 15-kg flak jacket and a helmet, to yield us on the way from the airport until Baghdad’s green zone. I had earlier granted the Brazilian Ministry of Foreign Affairs that I would not venture outside the agreed-on Green Area. Once there, we were all accommodated at the security company’s compound. Each very basic dormitory was protected from potential mortar fire by piled-up sandbags sitting by the windows as well as above the roof. After leaving our reduced luggage there, we embarked straight into a very efficient and productive agenda of meetings.

One thing impressed very much during this visit.  Mr. Alssabak, member of the Brazil-Iraq Chamber of Commerce and Industry, had been born in Baghdad, was raised and came of age in the city, and was returning for the first time to his hometown after so many years living abroad.  Despite well-traveled and versed in so many cities in Europe, the US, and Latin America, he earlier had confessed to me that he still considered Baghdad the most beautiful capital in the world.  Now, his disappointment was blatant in his face.  He could no longer recognize his surroundings: in every avenue and street (especially in the Green Area which I saw, but from what I heard a scene that repeats itself in many parts of Baghdad) there are concrete walls of about 3-5 meters height, sometimes crowned with barbwire, shouldering both sides of many avenues. It is impossible from the road to actually see the buildings behind the walls, and upon arrival to a building, there is always a large steel door, which opens regrettably to the presence of security guards, especially when those buildings pertain to official activities.  I understood that as a sign of how divided Iraq is today.  What came to my mind is that in a such separated society, the Iraqis are having to spend so much money to build walls and security instruments that for sure won’t be of any need when the principle of justice and solidarity would become a reality in this nation.

The first meeting was with the Special Representative of the Secretary-General of the United Nations to Iraq, Staffan de Mistura, a Swedish-Italian who is the successor of Sergio Vieira de Mello. I told him that just before I left São Paulo, Carolina Larriera, Sergio’s widow who was in the Canal Hotel working at the UN headquarters a few meters from him on August 19, 2003 when a truck exploded with a bomb that killed him, told me that she was very moved in knowing that someone was continuing to defend the proposal that he had embraced. She had asked me to take a small bag of Brazilian soil to sprinkle in the Canal Hotel were he died. Regrettably, this was outside the Green Area. De Mistura told us about how much all the UN staff admired so much Sergio’s efforts for peace. He took us to the tribute plaque set-up in his memory. There I left a copy of my book: The Citizen’s Basic Income. The Answer is Blowin’ the Wind (L&PM 2006). To all Irakian authorities that I met in this travel I gave a copy of the Woodrow Wilson International Center for Scholars English publication (March 2007) of this book, as well as its translation into Arab made by Mr. Walthik Hindo, of the Brazil-Iraq Chamber of Commerce and Industry, to whom I am grateful.

The second meeting was with the President of the Consulting Commission to the Prime Minister, Thamir A. Ghadhban, who was also ex-Minister of Oil. I explained to him how Iraq could follow Alaska’s example in conditions even better than Brazil’s who had recently approved a Law to implement an incremental Citizen’s Basic Income. He gave me even more reasons. He stated that Iraq had surpassed Saudi Arabia and is now the first country in the world in terms of known oil reserves. From the top 12 places in the world where higher quantities of oil are found, 9 are in Iraq, he emphasized.

The third meeting was with the Minister of Planning, Ali Ghalib Baban, a key man in elaborating policies for the future, according to Ambassador Brito. In our one-hour conversation, I explained about the rationality of an unconditional basic income, its fundamentals and how economists, philosophers and social scientists in a very wide spectrum today are in favor of it, as well about how Alaska had decided to separate 50% of the royalties coming out of the exploitation of natural resources to build a fund that pertain to all inhabitants. Since the early eighties those resources have been applied in US bonds, stocks of Alaskan, other American, and international companies, and real state investments. The Alaska Permanent Fund has evolved in value since then from US$ 1 billion to around US$ 40 billion today. Each resident in Alaska, as long as he or she is living there for a year or more – today they are around 700 thousand – has the right to receive an equal dividend, which has evolved from around US$ 300, in the early eighties, to US$ 1,654 per year per capita in 2007. This system has made Alaska the most equal of all 50 American States. In 1976, when Alaska had 300 thousand inhabitants, 76,000 voted “yes” and 38 thousand voted “no”, in a referendum about the idea. Today, as I could personally observe in 1995- when I visited Alaska for 7 days – and from what Professor Scott Goldsmith, from the University of Alaska, observed in his speech to the BIEN Conference in 2002, it would be considered political suicide for any leader in that US state to propose the end of the Alaska Permanent Dividend System.

Minister Baban mentioned that they are now examining the several experiences in all major oil producing countries. They are looking at how they use the proceeds of oil and discussing the matter within the government and the parliament. Due to the serious destruction of the infrastructure, including extracting oil, they decided first to use much of the resources on the rebuilding of what was destroyed by the war. I emphasized in all of the meetings that we Brazilians, Iraqis and people from the developing world must be aware of the effects of the several kinds of income transfers – such as the Earned Income Tax Credit in the US or the Family Tax Credit in the UK – that exist in the developed world that make their economies more competitive than ours if we don’t do the same or even better. I tried to show that an even better tool for this purpose is the unconditional basic income.

The Minister of Planning also mentioned that he was very fond of the micro credit experience of Professor Muhammad Yunus and the Grameen Bank in Bangladesh and that the Iraqi government was expanding the micro credit operations. I told him of my interaction with Professor Yunus during 2007. First, in Germany, last June, when we both were invited by Professor Gotz W. Werner for a Conference at the University of Karlsruhe on “Micro Credit and Basic Income as instruments to eradicate absolute poverty and to promote entrepreneurship”; second in my visit to Dacca, last July; and third, in November, in Yunus’ visit to Florianópolis, Brazil. On those occasions, I have explained him my strong belief on how both instruments, Micro Credit and Basic Income, can be well harmonized to attain the objectives of promoting development together with the practice of justice.

From the information that we gathered, Ambassador Bernardo de Azevedo Brito told me that I was visiting Iraq at the appropriate time for the purpose of presenting the proposal of what to do with the proceeds of the oil and natural resources, since they were exactly in the process of examining different alternatives in order to decide which will be the best one. We have learned that in the past twenty years Iraq has developed a Public Distribution System that has a universal character. Several kinds of basic items, including food and domestic needs, are distributed “in-kind” by the State through a net of hundreds of trucks and stores all over Iraq. After 2003, they have considered the distribution in monetary terms, but until now the banking system is still not sufficiently mature or developed to allow for this alternative.

Our next appointment was one of the most meaningful and very special. The ex-Prime Minister and leader of the main coalition in the Iraq Council of Representatives, Ibrahim al-Jaafari, received us for a conference and a dinner at his residence in the Green Area. I was quite surprised because I had no idea of what would happen. He came to the main door exactly at 19:30 pm to receive us and conducted us to the main hall where more than 40 authorities were already waiting for the conference. He introduced me to each one of five ministers of the present government, the President of the High Court of Justice, several ministers of the previous government of which he was the Prime Minister, including the Minister of Justice, his own previous Deputy in Chief, and about 30 members of the Council of Representatives, both men and women. Then he spoke for about 25 minutes in Arab translated into Portuguese by Mr. Alssabak about the importance to Iraq of my visit and the proposal that I was going to present. Then I had the word for about 50 minutes, which were sufficient to explain the fundamentals of the basic income idea, its evolution along the history of mankind and the advantages that the proposal could have for promoting a sense of solidarity among all Shiites, Sunnis, Kurds, Christians, Jews and other society groups.

I emphasized that the basic income was consistent with the Qur’an and the writings of its followers, and that the teachings of the principles of justice and equality in Islam are similar to those of Christianity. In the Book of Hadith, Omar, the second of the four caliphs that followed Muhammad, recommended to the citizens with large properties or gains that they should reserve a portion to those with less or nothing. The roots of the idea can be found in ancient history. Writing in the six century before Christ, Confucius observed that “uncertainty is even worse than poverty”. And “can anyone go out from his home except through the door?”. In fact, when we study the rationality of the Citizen’s Basic Income we conclude that it is such a common sense solution as going out from one’s home through the door.

I also reminded of Aristotle’s definition of Politics as the science of to attain the common good. In order to establish a fair life to all the people we need political justice, which must be preceded by distributive justice, making more equal those that are so unequal. Karl Marx presented similar ideas when he wrote of man’s mature form of behavior in society: “from each according to his ability, to each according to his need”, in his 1875 Critique of the Gotha Program. The same principle can be found in the most frequently quoted word in the Old Testament of the Bible, “Tzedakah” in Hebrew, that means social justice, or justice in society. A clear defense of the basic income project was made by Saint Paul in the Second Epistle to the Corinthians, in the New Testament: he recommended that the Macedonians follow the example of Jesus, who had decided to join the poor and live among them. As it is written, in order to have justice and equality: “He that gathered much had nothing over; and he that gathered little had no lack”. The defense of a minimum income is also clearly defended by Buddhism, as we can see in the assertions of the Dalai Lama in Ethics for the New Millennium: “If one accepts the luxurious consumption of the very rich, it is first necessary to ensure the survival of all humanity.”

I spoke about the main thinkers in History that developed the proposal of a guaranteed minimum income such as Thomas More, Juan Louis Vives, Thomas Paine, Bertrand Russell and the most wide spectrum of economists like Joseph Charlier, Dennis and Mabel Milner, Joan Robinson, John Maynard Keynes, Friedrich Von Hayek, James Edward Meade, George Stigler, Milton Friedman, James Tobin, Robert Theobald, John Kenneth, until the founders of BIEN such as Philippe Van Parijs, Guy Standing and Claus Offe that could be invited to speak to the Iraqis about how the Basic Income would help a society to provide dignity and freedom for all.

I explained how in Brazil a Guaranteed Minimum Income Program related to educational and health opportunities, the Bolsa-Família Program and other government initiatives, such as the Bolsa Escola, which preceded it were developed since the mid-nineties. Today around 45 million Brazilians, or one fourth of the 189 million inhabitants, are beneficiaries of the Bolsa Família Program that has been recognized as quite efficient in the fight against poverty and promoting equity. Then I announced the good news that the Brazilian National Congress became the first in the world to approve a law that, although gradually, will introduce an unconditional basic income.

I underlined that the Iraqis love soccer and that they have great admiration for the Brazilian players. I told that I had recently read in the Brazilian Press the interview of the Brazilian soccer coach, Jorvan Vieira, of the National soccer team of Iraq that was responsible for the Championship of the Asian Games. He said that in the beginning it was difficult for the Shiites to pass the ball to the Sunnis, then to the Kurds and so on. But once he managed to harmonize the team they were able to become the champions. When I was leaving Brazil for Iraq I asked Pelé whether he would sign two T-shirts: one of Santos Football Club and the other of the Brazilian National Team, respectively with the messages: To Iraq, all the best, Pelé; and I wish peace to Iraq, Pelé. So I gave the first one to al-Jaafari together with the DVD Eternal Pelé about his history and his best games.

They were all very enthusiastic both about the proposal and the idea that soccer can bring people together. The women who are members of the Council of Representatives asked me to present in a more complete form the Citizen’s Basic Income to the Commission of Human Rights on Friday, January 18. They would especially like to discuss the proposal from the point of view of women. I immediately accepted to do it in the first available hour, 9 am of our third programmed day. After my presentation, partly in Portuguese, translated into Arab, partly in English, (since many of them understood English, we moved to the large table with available seats for more than 40 people to have an Arab dinner. During the informal conversation I had the opportunity to learn more about Iraq and to answer questions about the viability of the basic income.

After the dinner, around midnight, we had the news that due to the religious festivities of the next two days, the Ashura, -when more than 10 million Iraqis all over the country go out to the streets- there would be a curfew. During the 18th and 19th of January it would be impossible for us to move from the compound and nobody would be able to go from their residence to meet us. We would only be able to fly again out of Baghdad on Sunday, January 20. I wanted very much to stay until Sunday, but Ambassador Bernardo de Azevedo Brito explained to me that it would cost a lot more and it wouldn’t be productive. Therefore we wouldn’t be able to do some of the already set meetings as the conversation with the Catholic Cardinal Emmanuel Delly III, nominated by Pope Bento XVI in 2007; with the President of the Economic, Investment and Reconstruction Commission of the Council of Representatives, Yonadam Kanna and his colleagues; with the Commission of Human Rights and with the Dean of the University of Baghdad, Mousa al-Musawi and his colleagues. Since we were reducing by one day the previously planned three-day-visit, the security company reduced part of what would be the cost of the third day. The costs of my trip were paid by the Council of Representatives of Iraq, although advanced by the Brazil-Chamber of Commerce and Industry. There were no expenses paid by the Brazilian Senate.

On January 17 we were received at the residence of the Speaker of the Council of Representatives, Mahmoud al-Mashhadani. Unlike the custom of receiving in formal attire authorities in the Council of Representatives, at home he was dressed with the Arabic traditional attire. He said that normally during the past two years he received authorities in his office in the Parliament. At home he receives only his family and close friends. In my case, however, he was receiving me at home because I came from a very friendly country, Brazil, that is an example for Iraq of how people from so many different origins were able to live in harmony and because we were able to have a peaceful democratization of the political system. Also, he added, because I had come to Baghdad to explain a relevant proposal to the benefit of Iraq knowing that there were some risks involved in that trip. Therefore he was receiving me as a true friend of Iraq.

I gave to him the Brazilian National soccer team shirt with Pelé’s message, I wish peace to Iraq, as well as the Pelé Eterno DVD, produced by Anibal Massaini, for the Iraqis to learn how to play even better. Again I made the parallel between how important for the players of the team to harmonize their behavior with how a basic income could help all the people to have a sense of living with solidarity based on the applications of the principles of justice with the existence of an unconditional basic income.

But would the Basic Income be paid to all citizens? Including President al-Mashhadani in Iraq, Pelé, Senator Suplicy and the most successful entrepreneurs both in Iraq as well in Brazil? Yes, I explained. But why, he continued, if we don’t need it for our survival? Because we will contribute relatively more for ourselves and for everybody else in society to receive the Citizen’s Basic Income.

Which are the advantages? We will eliminate all the bureaucracy involved in having to know how much is earning in the formal, as well in the informal market; we will eliminate the stigma or feeling of shame of anyone having to say: I receive only that, so I need a complement of income; we will also eliminate the dependency phenomena that results from a system that says that one will receive a complement of income if his or her income doesn’t attain a certain level. Then the person evaluates that if he or she starts some work and looses what the government was giving in that program, then the person might decide not to work anymore, and you produce the unemployment or poverty traps. Mainly, from the point of view of dignity and freedom of anyone it will much better to know beforehand that in the next period and more and more, with the progress of the nation, you and all members of your family will have the right to receive a Basic Income as a citizen’s right to participate in the wealth of the nation. Once more, I tried to explain how Iraq was in an excellent position to follow the example of Alaska of using the proceeds of oil exploitation to build a fund that would pertain to all 30 million Iraqis and more in the future.

In the final part of our friendly conversation, I told President al-Mashhadani about my speech from the Brazilian Senate tribune on September 2002, when the US Government was considering to attack Iraq to put an end to Saddam Hussein’s regime. Taking into account the popular movements for peaceful actions all over the world I started my speech quoting The Bomb, a beautiful poem by our great poet Carlos Drummond de Andrade in which after speaking about the horrors of the war he concludes saying of his hope that finally man will destroy the bomb. Then, I asked President George W. Bush to pay attention to the recommendations of Martin Luther King Jr. in his I Have a Dream speech of 1963, where he recommended his people not to accept to drink the tea of gradualism of those who say that things will become better with time, because if we don’t do the necessary changes, as soon as possible, America would live another sweltering Summer. But he also said that we should never drink from the cup of violence, hate, vengeance and war; that we should always confront physical force with the force of the soul.

President Bush didn’t listen to my appeal, although I had argued that we Brazilians had shown that we were able to finish a dictatorship through peaceful demonstrations. I could feel that he was really moved. He told me that the Iraqis want very much the American and foreign occupation to finish very soon. He said very assertively that the Council of Representatives, where there are many young people, will approve a proposal of a Basic Income, and that he wanted me to return again to Iraq to help in this process. He asked me to tell the family of Sergio Vieira de Mello that the Iraqi people feel that they are in debt with this Brazilian that lost his life when helping to pacify Iraq. That they have great respect and admiration for him and that soon there will be a special homage by Iraq for Sergio.

Our last meeting was with the Minister of Foreign Affairs, Hoshyar Zebari, as well with the Vice-Chancellor Labeed M. Abbawi. They mentioned how happy they were to receive a Brazilian Senator and that they want very much to increase Iraqi-Brazilian relations in all fields. In fact, the Minister of Commerce of Iraq is expected to visit Brazil soon.

Ambassador Bernardo de Azevedo Brito told me the he considered our journey very productive, in spite of becoming shorter than initially planned. He is continuing to work on the matter of our conversations with the Iraqi authorities. The President of the Economic, Investment and Reconstruction Commission, Yonadam Kannan visited him in A’mman in the following week.. The President and the Vice President of the Iraq-Brazil Chamber of Commerce and Industry, Jalal Jamel Dawood Chaya and Nawfal Assa Mossa Alssabak considered the trip “a great success, with an excellent repercussion all over in Iraq with the real interest of the several parts in approximating both countries”, as expressed in the attached letter of January 30, 2008.

Near us we did not see any menace or sign of violence during the time we were in Bagdad. Anyway it is relevant to mention that the Iraqian press registered on the 18th of January that one day before the reception at Mr. Al-Jaafari’s residence two mortars fell at a 1km distance from the place. Also, in the following week, unfortunately, due to suicide women, two bombs exploded at one popular market in Bagdah killing 73 persons and injuring more than 100 people. I have heard from the Irakians that in general those that are responsible for these violent attacks know exactly who they are trying to hurt and that they are very precise. I might have been somehow optimistic, but I was sure of not being the target of any kind of violence since the motive of this trip was exactly to propose an instrument that may contribute to more justice in that nation.

An Invitation to Present the Basic Income to East Timor
A few days after my return to Brazil, Carolina Larriera invited me for a reception in Rio de Janeiro for the 1966 Nobel Peace Prize, President of East Timor. On the occasion he gave his testimony about Sérgio Vieira de Mello contribution for peace during the transition period between Independence, the election of the Constitutional Assembly and the elections in this new Nation born in 2002 and about his own efforts to normalize de political situation in East Timor after the turmoil period of 2006 when episodes of violence occurred. I explained to him about my trip to Irak. He invited me for breakfast on the next morning.

For almost one hour I explained to him what the Citizen’s Basic Income was. That a new nation like East Timor with 1.1 million inhabitants that is now having a monthly revenue of around US$ 100 million from oil and gas exploitation may also build a fund that, with time, starting modestly, will be able to pay a basic income to all the people. He classified the idea as fascinating and said that he would like me to be in East Timor to explain it to the Prime Minister Cabinet as well as to the Parliament. On the next day, January 30, just before leaving Brazil back to East Timor, he called me confirming the invitation saying that the best hour would be at the end of March during a meeting in Dili with representatives of all donor countries. I said that I was honored by the invitation and would be happy to accept it.

Unfortunately, on February 10, President José Ramos Horta was victim of a violent attempt. As I write this article he is recovering from a very serious surgery that extracted from his stomach and lung two bullets. Here I express my deep solidarity for his family and the people of East Timor, wishing and praying for his prompt recovery. For example: please note how long it takes for me to explain the Bolsa Familia Program that exists in Brazil since October 2003, considering the values in effect since September 2009. Every family in Brazil with a monthly income per capita below R$ 140 has the right to receive a benefit that starts with the monthly amount of R$ 68, if this family has a monthly family income per capita below R$ 70. (In April, 24, 2010, US$ 1.00 was equal to R$ 1.76). This family also has the right to receive R$ 22, R$ 44 or R$ 66, if the family has, respectively, one, two, three or more children up to 16 years of age, more R$ 33 for each adolescent, from16 to 18 years of age, up to a maximum of two. So, the Bolsa Familia Program pays a minimum of R$ 22 and a maximum of R$ 200 per month. The average amount of the benefit is R$ 95 per family. The expenditure with the Bolsa Familia Program for 2009 was R$ 12.1 billion. The budget estimated for 2010 is of R$ 13.6 billion.

The average size of the Brazilian family is 3,5 persons. It is a little higher, around 4, for the families that are beneficiaries of the program. There are obligations to be fulfilled. If the mother is pregnant, she should go to the public health network – a health post or the municipality hospital – for exams and health conditions follow-up. Parents should take their children up to six years of age to be vaccinated according to the calendar of the Ministry of Health. The children from 7 to 16 years of age should go to school, with at least 85% attendance. The adolescents from 16 to 18 years of age should attend school, with at least 75% attendance.

Now let me explain the Basic Income. Let us suppose that, starting from next January the government announces that the Citizen´s Basic Income will be launched, even with a modest amount, higher than what is paid to the people granted with the Bolsa Familia Program. So the government would declare: Starting from next January, everyone in Brazil, including the foreigners living here for more than five years, regardless his/her social or economic condition, will receive R$ 40 per month. In a family with six members, the total will be R$ 240. With the progress of the country, this amount will be raised, we shall say to R$ 100, someday to R$ 500, R$ 1,000 and so on. It will not be denied to anybody. It will be unconditional. Isn’t it much easier to understand?

And which are the other advantages in paying the same amount to everyone? First, the elimination of all bureaucracy involved in knowing each person’s income in formal or informal market. That is, in the working card of the worker, public servant or in the payment made to anyone in any activity. Or in not registered payment, as those paid to people who take care of cars in the streets, to a neighbor who does your laundry or takes care of your children, while you go to work, or to the market or to street vendors. Elimination of any stigma or shame for a person to reveal: I earn only this much, so I need a complement of income for my survival. Elimination of the dependency phenomenon that occurs when there are programs that say: if a person does not receive up to that amount, he or she has the right to receive a complement of income. But if the person receives such a sum for the job and then the government cancels that much from him from that program then the person might decide not to do that job. And so he or she gets into the unemployment or the poverty trap. If all of us, meanwhile, know that from now on, everyone and all the members of our families have the right to a Citizen’s Basic Income, any work that we do will mean an addition to our income. Thus, there will be always an incentive for progress.

The most important advantage of the Citizen’s Basic Income is that it raises everyone’s level of dignity and freedom. In the sense that the Nobel Prize Winner Amartya Sen says, in “Development as Freedom”, that development, to be worthwhile, should mean higher degree of freedom for everyone in the society. It is the case, for example, of a girl who does not have another alternative for her survival than selling her body. Or a young man who, to support himself and his family is forced to work for the drug traffic gangs. Or even a rural worker who can only get jobs in slavery conditions. If there is a Citizen’s Basic Income in effect for these people and for everybody in their families, they can certainly refuse those alternatives, and wait a little while until an opportunity comes more in accordance with their propensity or vocation. They might even attend a professional course and get better chances to find an opportunity.

Some of you could think: would the Basic Income stimulate idleness? What should we do with those who have a strong tendency to vagrancy? Are there really a lot of them? Let us think a little bit. We, human beings, love to do a lot of things. And we feel responsible for doing different activities, even without being paid by the market. For example, mothers who breastfeed their children with lots of love; us, parents, when we take care of our children, to be well nourished, not to be hurt, and to grow up well; when our parents or grandparents need our support; in the local organizations, churches, academic associations where many of us have done voluntary works, because we feel helpful to the community. When the great painters, Vincent Van Gogh and Amedeo Modigliani painted their works, they went to the streets, trying to sell them for their survival, without any success. Both of them became ill and died early. Today their works are worth millions of dollars.

Furthermore, our Constitution assures the right to private property. That means that the owners of factories, farms, hotels, restaurants, banks, real estate and financial bonds have the right to receive the capital revenues, that is, the profits, rentals and interests. Do the Brazilian laws or of most other countries mention that to receive those revenues, the capital owners must demonstrate that they are working? No, and they usually work, and many of them also dedicate a good part of their time in voluntary works. Do they need to demonstrate that their children are going to school? No. Nevertheless, their children usually attend the best schools.

So, if we assure to those who have more resources the right to receive their revenues without conditions, why not extending to everyone, rich and poor, the right to participate in the nation’s wealth as our right for being Brazilians? Let’s consider certain aspects of our history. For more than three centuries, people were pulled away from Africa to come and work as slaves in Brazil, helping to accumulate capital of many families. Or, as President Lula has said, it seems that God is Brazilian, helping Petrobras to find oil reserves at the pre-salt layer in the depth of the Atlantic Ocean. Do you consider a good idea that all the Brazilians should participate in this wealth through a modest income that allows their survival, the same amount for everyone, as a citizen’s right?

It is a good sense proposal. Its bases were elaborated along the history of the human being and they are present in all the religions and in the thinking of a large spectrum of great philosophers, economists and thinkers. When you left your home today, did you pass through the window or any other way? Through the door? Well, as Confucius Said, 520 years before Christ that “uncertainty is even worse than poverty” and that “can anyone leave his home except through the door?” We want to demonstrate that, if we want to eliminate absolute poverty, becoming a more equal and fair society and assuring dignity and real freedom to everyone in the society, instituting the Citizen’s Basic Income is a solution as simple as leaving home through the door.

300 years before Christ, in the book “Politics” philosopher Aristotle taught that politics is the science that shows how to reach a fair life for everyone – the common good. For this, it is necessary political justice, which must be preceded by distributive justice that makes more equal those who are so unequal.

Which is the most cited Hebraic word in the Holy Bible, 513 times in the Old Testament? It is Tzedaka, which means social justice, justice in the society, which was the great longing of the Jewish people, as well as the Palestine people. In the New Testament, in the Acts of Apostles, we observe that they decided to join all their possessions, to live in solidarity, so as to provide to each one according to his/her needs. In Jesus’ parables, like in the Vineyard Landlord, we find similar principles. He hired several workers along the day. With each one he agreed what both considered fair. At the end of the journey he began to pay, starting with the last ones that had arrived, giving to everyone the same amount. When he reached the first peasant this one complained; you are paying the same to me as the last one that arrived here and I worked much more than he did. And the vineyard landlord answered; so, didn’t you realize that I’m paying exactly what we both considered fair, and that the last one that arrived here also has the right to receive enough for the needs of his family? In the Second Epistle of Saint Paul to the Corinthians, he recommends everybody to follow Jesus’ example. Despite being very mighty he had decided to join the poor people and to live among them. As it is written, in order to have justice and equality: “He that had gathered much had nothing over; and he that gathered little had no lack”.

Also the followers of Muhammad, the Qurán and the Islamism, in this aspect, adopt the similar principles. In the Hadith Book, the second of the four caliphs, Omar, said: Everyone that had big properties should separate a part for the ones who had little or nothing. In Buddhism, the Dalai Lama, in “Ethics for the New Millennium”, affirms that if we accept the luxurious consumption of the very rich we should ensure before the survival of all humanity.

If we advance in the History, in the beginning of the XVI Century, we will find the teachings of a great humanist, Thomas More. In 1516, he wrote a very nice book, “Utopia”, a place where everything works well. The story contains a dialog about capital punishment that, after being introduced in England, did not contribute to the reduction of violent crimes. So, the character commented that much better than inflicting these horrible punishments to whom does not have another alternative of becoming first a thief and then a corpse, is to assure everyone’s survival. Based on this reflection, a friend of Thomas More, Juan Luis Vives, wrote to the mayor of the Flemish city Bruges, a subvention treaty for the poor in which, for the first time, he proposed the guarantee of a minimum income.

Two centuries later, Thomas Paine, considered one of the greatest ideologues of the French and American revolutions, explained to the National Assembly of France, in 1795, in “Agrarian Justice”, that poverty is originated by civilization and private property. In America, where he had been before the independence, he didn’t see such deprivation and poverty as in the European villages and cities. But he considered a good sense that the person who cultivates the land and makes some improvement should have the right to receive the outcome of that cultivation. However, he should separate a part of this revenue to a fund that belongs to all. This fund, once accumulated should pay a basic capital and income to each resident in this country, not as a charity, but as a right of everyone to participate in the wealth of the nation that was taken away when private property was instituted. This was a proposal for all countries.

Another Englishman, an elementary school teacher, Thomas Spence, in a pamphlet published in London under the title “The Rights of Infants“(1797), proposed that each city should have auctions to cover all public expenditures including the building and the maintenance of real estate, as well as taxes paid to the government, that will distribute quarterly equal parts of the surplus among all residents ensuring their subsistence.

In 1848, Joseph Charlier, in “Solution du problème social”, stated that everybody has the right to enjoy the usufruct of natural resources created by the Providence to meet all their needs. In “Principles of Political Economy” (1848), the English economist and philosopher John Stuart Mill defended that a minimum for survival should be assured to everyone with or without capacity to work.

In the XX century, philosophers and economists of several tendencies, after examining several ideologies and proposals, reached for a common conclusion, as expressed by Bertrand Russel, in 1918, in “Roads to Freedom: socialism, anarchism and syndicalism”:

The plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income, as much larger as might be warranted by the total amount of commodities produced, should be given to those who are willing to engage in some work which the community recognizes as useful.

In 1920, in “Scheme for a State Bonus”, the couple Dennis e Mabel Milner proposed that: All individuals, all the time, should receive a small sum of money from a central fund that would be sufficient to maintain their life and freedom, should all else fail; that all people should receive a part of a central fund, in a way that all would have some sort of income to contribute proportionality to their capacity.

In 1937, the great economist Joan Robinson in “Introduction to the Theory of Full Employment”, suggested distributing to everybody on Saturdays, one pound sterling. Her fellow at the University of Cambridge, in England, who also had acquaintanceship with John Maynard Keynes and that, in 1977, was honored with the Nobel Prize in Economics, James Edward Meade, was one of the defenders of Citizen´s Income. Since when he elaborated the “A Guide of Economic Policy for a Labor Government”, in 1935, until the works in more matured way in his trilogy about Agathotopia, in 1989, 1992 e 1995, he developed a beautiful argumentation.

Meade related his long journey in search of Utopia. No matter how much he sailed, he did not succeed in finding it. On the way back, however, he came across Agathotopia. An economist, who became his friend told him the Agathopians knew where Utopia was, but they would not tell him because they were different from the Utopians, perfect human beings who lived in a perfect place. The Agathopians were imperfect human beings that committed foolishness and perfidies, but that after all, had succeeded in building a good place to live.

Meade observed that in Agathotopia they had built institutions and social arrangements that were the best to attain simultaneously the objectives of freedom, in the sense that each one is able to work in his/her vocation and is able to spend what he/she receives on the goods that he/she wants; equality, in the sense that there are no great differences between income and wealth; and efficiency, in the sense to reach the highest possible life pattern with the resources and the technology in effect.

And what were the arrangements? Flexibility in prices and wages to reach the efficiency in resource allocation: forms of association between the entrepreneurs and the workers so that the workers were hired not only for wages, but also for output participation; and finally, a social dividend that provides a guaranteed income for everyone. Meade proposed the achievement of these objectives by stages, but with firm steps.

The greatest economist of the 20th century, John Maynard Keynes, in 1939, in “How to Pay for the War?”, published in “The Times”, tried to convince his compatriots, before entering into the war, that they should get ready for the defense, and also, to separate around 2% of the Gross National Product, thus 100 million sterling pounds from a total of 5 billion to ensure everyone a basic income.

Abba Lerner, who worked with Oskar Lange in “On the Economic Theory of Market Socialism”, in 1944, published “The Economics of Control: Principles of Welfare Economics”, containing the proposition of institution of a fixed sum as a negative income tax for everybody.

Other economists honored with the Nobel Prize in Economics, defenders of the market system, argued in favor of the guaranteed minimum income for those who do not have the necessary for survival. So did Friedrick Hayek, in “The Road to Serfdom”, in 1944. George Stigler, in “The Economics of Minimum Wage Legislation”, in American Economic Review, 36, of 1946, observed that if we want to eradicate absolute poverty and promote employment, better than a minimum wage, should be the institution of a negative income tax, which should provide a minimum income to those who do not reach the necessary with his/her income. The same subject, was popularized in a very didactic way by Milton Friedman, in “Capitalism and Freedom”, in 1992. Also the Nobel Prize James Tobin made a great effort in the elaboration and defense of a guaranteed minimum income through a negative income tax during the sixties and seventies. James Tobin in many aspects was different than Friedman, because he was a defender of the Keynes propositions. In 1972, James Tobin helped the democrat candidate George Mc Govern in the elaboration of the proposition of one “Demogrant” of US$ 1.000 per year for all Americans, exactly the concept of a basic income.

James Tobin, Paul Samuelson, John Kenneth Galbraith, Robert Lampman, Harold Watts and 1200 economists, in 1968, sent a manifest to the U.S. Congress in favor of the adoption of a complement and guaranteed income. In 1969, President Richard Nixon invited Daniel Patrick Moynihan, an architect of social programs of the governments of John Kennedy and Lyndon Johnson, to design the Family Assistance Plan, which institutes the guaranteed minimum income through a negative income tax. It was approved by the House of Representatives, but obstructed by the Senate. On that time, one who made a great effort in the defense of a guaranteed income was Martin Luther King Jr, as we can observe in his several essays in “Where Do We Go From Here: Caos or Community?”, of 1997, where he affirms, “I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income”.

In 2005, while I was in USA, I called on ex-Senator Mc Govern, who had lost the presidential elections for Richard Nixon, in 1972, to tell him that Brazil had approved the institution of the Citizen’s Basic Income, a similar concept to what he defended in 1972. He was very happy and told me, “People say that I was a man with ideas before my time”.

In 1974, the US Congress approved a proposal of a partial negative income tax, only for those who work and do not reach a certain level of income, under the name of Earned Income Tax Credit, which had an important development. Today more than 23 million families receive this income complement that amount more than two thousand dollars per year in average. This scheme is added to the Aid for Families with Dependent Children, replaced in 1996, by Temporary Assistance for Needy Families, to Unemployment Security, to Food Coupons, and to Social Security. In the last decades, almost all European countries created income guarantee and transference schemes, like the Minimum Income of Insertion, in France, Minimum Familiar Income, in Portugal, and child benefits in a very general way. In the Latin-American countries, conditional income transference schemes spread out, like Oportunidades in México, Chile Solidario, in Chile, Jefes and Jefas del Hogar, and more recently,Asignación Familiar, in Argentina, Avancemos in Costa Rica and Ingreso Ciudadano in Uruguai.

In 1986, in Louvain, Belgium, a group of social scientists, economists and philosophers, among them Philippe Van Parijs, Guy Standing, Claus Offe, Robert van der Veen, created BIEN, Basic Income European Network, to constitute a debate forum of forms of income transference in several countries, and to propose that in every country an Unconditional Basic Income should be instituted. Since then, every two years BIEN has held international congresses. In 2004, during the congress held in Barcelona, as there were researchers from the five continents, they decided to change BIEN into Basic Income Earth Network. During the 12th BIEN International Congress, in Dublin, in June 2008, a question was asked to us, Brazilians, whether we could host the next 13th BIEN International Congress. So it was defined that the 13th Congress will be held at the Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo, FEA-USP, in June 30th, July 1st and 2nd, 2010. President Luiz Inácio Lula da Silva accepted to deliver the inaugural speech of the event.

In the early sixties, in a fishermen’s village, the mayor observed that a huge amount of wealth under the form of fishing was produced, but many of its inhabitants were still poor. So he told its inhabitants about creating a tax of 3% on the value of fishing for the institution of a fund which belongs to everybody. He faced a great resistance: “Another tax? I´m against it”.

It took five years to persuade the community. Once instituted, it was so well succeeded, that ten years later he became the governor of the State of Alaska, where they discovered a large oil reserve in the late sixties. In 1976, Governor Jay Hammond told his 300 thousand co-citizens: “We should think not only about this current generation, but about the forthcoming one. Oil, like other natural resources is not renewable. So let us separate a part of the royalties originated from the natural resources for the constitution of a fund that shall belong to all residents in the state of Alaska. By 76 thousand votes for and 38 thousand opposed, 2X1, the proposal was approved. The law separates 25% of the revenue coming from the natural resources exploitation and invested in US bonds, Alaska´s companies stocks, contributing to diversify its economy, USA and international companies stocks, including some of the 30 most profitable companies from Brazil, like Petrobrás, Vale do Rio Doce, Itaú and Bradesco, which means we Brazilians are contributing to the success of this system, and real estate. The equity of the Alaska Permanent Fund increased from US$ 1 billion, in early eighties to US$ 40 billion recently. In 2009 it decreased because of the economic crisis, but is already in recovery.

Each person living for one year or more in Alaska could filled a one-page form, between January 1st to March 31th, that included his/her business and home address, if he/she lived there for one year or more, even if he/she had travelled, the number of people in the family up to 18 years of age, not being necessary to inform his/her income or possessions, a few more data and the witness of two persons about the veracity of the information. Who did that, since the early eighties, every year until the beginning of October, received in his bank account, by electronic transfer, or by a check sent to his house, first around US$ 300 and gradually more, up to US$ 2.069 per person in 2008. In 2009, the sum decreased to US$ 1305, because of the economic crisis that affected the economy and reduced the oil and stock prices in the New York Stock Exchange.

As shown by Professor Scott Goldsmith’s, of the University of Alaska, in Anchorage, in his paper presented in the IX BIEN International Congress, in 2002, in Geneve, the FPA has distributed around 6% of the Gross Domestic Product during the last 27 years to all its inhabitants – presently, there are about 700 thousand, among which 611 thousand complied with the requirements in 2008 – and has made Alaska the most equalitarian of the 50 American states. If in 1976 a referendum approved the proposal in the ratio of two to one, Goldsmith observes that, presently, proposing the end of the dividend system of the Permanent Fund of Alaska is political suicide for any leadership.

During the period 1989-99, while the per capita family income of the 20% richest families in USA increased 26%, the per capita income of the 20% poorest families increased 12%. In Alaska, due to the dividends paid equally to all its inhabitants, the increase of the per capita family income of the 20% richest families was 7%. The increase of the per capita family income of the 20% poorest families was 28%, thus 4 times more. This means that for the objective to reach a more fair society, the experience has been very successful. These results were shown by Scott Goldsmith in his lecture to the XI International Congress of BIEN, in Geneva, 2002. He mentioned that today it is political suicide for a political leader to propose the end of the Alaska Permanent Fund Dividend system.

In 1999, professors Bruce Ackerman and Ann Alstott, from the University of Yale, published the book “The Stakeholder Society”. Based on the proposal of Thomas Paine, they proposed that everyone in USA when turning 21 should have the right to receive a sum of US$ 80 thousand to start his/her adult life with the possibility to spend in anything that he/she wants, to conclude his/her studies, to start an enterprise or any other thing. One of his post-graduate students, member of the Fabian Society presented the idea to his personal friend, the former First Minister Tony Blair. When Blair announced that his wife Cherie was pregnant of their fourth son, Alexander, he said that from that time on every child born in England would receive a bank deposit when the child is born and completes 6, 11 and 16 years of age, respectively the amounts of 250, 50, 50 and 50 sterling pounds. If the child’s family had an annual familiar income below a certain level, near to 17 thousand sterling pounds, those amounts should be 500, 100, 100 and 100 pounds sterling respectively. As these deposits earn interests, when the person turns 18, he/she would have an amount near to 4 thousand or 5 thousand pounds sterling, as a right to participate in the wealth of the nation. Under the name of “Child Fund Trust”, this law was approved by the United Kingdom Parliament on May 13th, 2003. Finally, in his birthplace, the proposition of Thomas Paine, formulated in 1795, was applied, even modestly.

In Brazil, we could consider the institution of the Citizen’s Basic Income as consistent with the values defended by the indigenous living in community, by the fighting “quilombolas” and abolitionists for the slavery abolition and by all those researchers and scientists who fight for the creation of a fair nation in Brazil. Among those we can cite Caio Prado Junior, Milton Santos, Josué de Castro and Celso Furtado. In 1956, as the federal deputy of PTB, in a speech in the Chamber of Deputies about the income unevenness, the author of “Geografia da Fome” and “Geopolítica da Fome”(Hunger Geography and Hunger Geopolitics), Josué de Castro, affirmed:

I defend the need of giving the minimum to each one, according to the right that all Brazilians should have the minimum for their survival.

It was during the years of 1966-68, when I studied for my Master´s Degree in Economics at the Michigan State University, USA, that I came across with the concept of the income guarantee through the negative income tax. When I did my Doctorate in Economics at the MSU, with 15 months of studies at the University of Stanford, USA, I became more acquainted with the concept. When I went back to Brazil, I interacted with professor Antonio Maria da Silveira, who, in 1975, in Revista Brasileira de Economia, proposed the institution of negative income tax in Brazil in the article “Moeda e redistribuição de renda” (Currency and Income Redistribution).. When I was elected Senator by PT-SP, for the first time in 1990, I called Professor Antonio Maria to collaborate in the proposition of the Guaranteed Minimum Income Scheme, PGRM. Every adult person, of 25 years or more, who does not earn at least 45 thousand cruzeiros per month, should have the right to a complement of 30% to 50%, under the criterion of the Executive Power, of the difference between that level (in that time, about US$ 150 per month) and the income level of the person. The project was approved by the Federal Senate, by consensus of all parties, on December 16th, 1991. It went to the Chamber of Deputies, where, at the Committee of Finance and Taxation, received an enthusiastic written opinion from Deputy Germano Rigotto (PMDB-RS).

Then, the debate on the subject flourished in Brazil. In 1991, during a debate among approximately 50 economists with affinity to PT, held in Belo Horizonte, where, invited by Walter Barelli, Antonio Maria da Silveira and I presented the proposal of the PGRM. Professor José Márcio Camargo, from PUC-Rio de Janeiro, observed that the guarantee of a minimum income is a good step, but should be granted to needy families, with children in school age attending school regularly. So, they would not be forced to work early to help their family maintenance. He wrote two articles about the subject in the newspaper “Folha”, in December 3rd, 1991, and in March 10th, 1993. In 1986, Professor Cristóvam Buarque, from Universidade de Brasília, developed a similar proposal.

So in 1995, taking into consideration these thoughts, Mayor José Roberto Magalhães Teixeira (PSDB), in Campinas, and Governor Cristóvam Buarque (PT), in Distrito Federal, started their minimum income schemes associated to education opportunities, the Bolsa-Escola. Every family that, at that time did not receive up to half minimum wage monthly per capita, that is 70 reais, would have the right to receive the difference to complete the 70 reais per capita, in Campinas, or one minimum wage, in Distrito Federal. Those experiences spread out by several municipalities, such as Ribeirão Preto, Piracicaba, Jundiaí, São José dos Campos, Belo Horizonte, Belém, Mundo Novo etc.. In the National Congress, several bills of law were presented, requiring the support of the Federal Government for the municipalities that were going towards this direction.

In 1996, I took Professor Philippe Van Parijs, philosopher and economist who has defended very well the Citizen´s Basic Income, for an audience with President Fernando Henrique Cardoso and the Minister of Education, Paulo Renato Souza, attended also by Representative Nelson Marchezan, one of those proponents. Van Parijs expressed that unconditional basic income should be a better objective, but starting a minimum income guarantee associated with education opportunities was a good step, because it was related to human capital investment. It was then when President Fernando Henrique Cardoso gave the positive sign for the National Congress to approve the Law 9.533, of 1997. The law authorized the federal government to grant a financial support of 50% on the amount spent by the municipalities with minimum income associated to social and education actions schemes.

In March 2001, the National Congress approved and President Fernando Henrique Cardoso sanctioned a new law, of his initiative, Nr. 10219/2001, authorizing the federal government to celebrate agreements with the government of all Brazilian municipalities to adopt the minimum income associated to education al opportunities, or Bolsa Escola. The President gave the name José Roberto Magalhães Teixeira to the law, in homage to the Mayor of Campinas who had passed away. Later on, the government instituted the Bolsa-Alimentação and the Auxílio-Gás programs. In 2003, the government of Luiz Inácio Lula da Silva instituted the Vale – Alimentação program.

In October 2003, the government of President Lula decided to unify and rationalize the several programs such as Bolsa Escola, Bolsa Alimentação, Cartão Alimentação and Auxílio Gás in the Bolsa Família Program, which had 3.5 million families registered in December 2003. The number increased to 6.5 million families in December 2004, 8.5 million families in December 2005 and 11 million families in December 2006, and 12.5 million families in December 2009.

The Bolsa Família Program, among other economic policy instruments, contributed for the reduction of absolute poverty and inequality degree in Brazil. According to the studies of IPEA, Instituto de Pesquisa Econômica Aplicada number 30, PNAD 2008, First Analysis, of September 24th, 2009, the Gini coefficient of inequality of domestic income per capita, which reached 0.599; in 1995, 0.581, in 2003; decreased gradually every year, reaching 0.544 in 2008. The proportion of families under extremely poor line, with income per capita below R$ 93.75 which was 17.5% in 2003, decreased to 8.8% in 2008. The proportion of poor families, with income per capita below R$ 187.50, decreased from 39.4% in 2003, to 25.3%, in 2008.

This favorable result can also be shown by the following way. The 20% poorest families had an income per capita increase 47% faster than the income of the richest 20%. While in 2001, the average income of the 20% richest families was 27 times in relation to the 20% poorest families, in 2008 it was 19 times, a reduction of 30% in inequality in 7 years.

Brazil, despite the achieved progress, is still one of the countries more unequal in the world. While the poorest 40% live with 10% of the national income, the richest 10% live with more than 40%. The income appropriated by the 1% richest is the same as of the 45% poorest. The creation and expansion of the Bolsa Família Program, preceded by Bolsa Escola, Bolsa Alimentação and others, had positive effects. To advance towards a more efficient and direct eradication of the absolute poverty and greater equality and the guarantee of greater real freedom for all is the reason for the application of the Citizen´s Basic Income.

During the nineties, more and more I interacted with the researchers who founded BIEN, participating in the bi-annual congresses. I was convinced that better that an income guarantee through a negative income tax, or conditioned forms, should be an unconditional Basic Income for all the population. For this reason, in December 2001, I presented a new bill of law to the Senate for the institution of the Citizen´s Basic Income, CBI. The designed committee reporter, Senator Francelino Pereira (PFL-MG), after having studied the proposition, told me: Eduardo, it is a good Idea. But you have to make it compatible with the Fiscal Responsibility Law, where for each expenditure, it is necessary to have the correspondent revenue. Would you accept a paragraph saying that it will be instituted step by step, under the criterion of the Executive Power, starting with the most in need, as it is done by the Bolsa-Escola, and then the Bolsa Família Programs, until it is extended to everyone someday? I thought that it was a good sense, I remembered the recommendation of James Meade, and I accepted. Due to this aspect the bill of law was approved by consensus by all parties in the Senate, in December 2002, and in December 2003, by the Chamber of Deputies. In January 2004, the Minister of Finance, Antônio Palocci when consulted by President Luiz Inácio Lula da Silva, said that since it is to be instituted gradually, it was feasible, so he may sanction it. Therefore, on January 8th, 2004, the President sanctioned the Law 10.835/2004, creating CBI. On this day, he received the following message from economist Celso Furtado:

At this moment when Your Excellency sanctioned the Citizen’s Basic Income Law I want to express my conviction that, with this measure, our country puts itself in the vanguard of those that fight for the building of a more harmonious society. Brazil was frequently referred as one of the last countries to abolish slave labor. Now with this act which is a result of the principles of good citizenship and the wide social vision of Senator Eduardo Matarazzo Suplicy, Brazil will be referred as the first that institutes an extensive system of solidarity and furthermore, it was approved by the representatives of its people

In the same way as the first minimum income associated to education programs started locally, in Campinas and in the Federal District, it is possible to start the Citizen’s Basic Income in communities or municipalities.

Among the developing countries, a significant experience started in Namíbia, in the village Otjivero/Omitara, 100 km from the capital Windhoek, in January 2008. All its 1000 inhabitants of this rural village, since then, started to receive 100 Namibia dollars, or about US$ 12, per month for each citizen. The initiative was taken by the Coalition in Favor of Basic Income of Namibia, which has one of its enthusiasts, Bishop Zephaniah Kameeta, from the Lutheran Church, and who collected voluntary contributions from several sources, including from the Workers Union in the Federal Republic of German, to get the necessary fund. The magazine Der Spiegel of August 2009, published an extensive report about “How A Basic Income Scheme Saved a Namibian Village”, where it stressed lots of positive effects of the experience. The economic activity improved, lots of micro entrepreneurial initiatives started, absolute poverty diminished, the frequency of children in schools increased, the nutrition degree improved, the self esteem of the people increased, and there was a great interest of the society in the pioneer experience.

In Brasil, Recivitas – Instituto pela Revitalização da Cidadania, after having created in Vila de Paranapiacaba, on Serra de Mar, with 1.200 inhabitants, a Free Library and a Free Toy Center, so that people could have access to books and toys for their usufruct, decided to propose to its inhabitants the creation of the Citizen’s Basic Income. The President, Bruna Augusto Pereira and the coordinator Marcus Brancaglione dos Santos are waiting for the steps of the Mayor of Santo André, where the village is located, to carry on the project. While waiting, they started a pioneer experience in the village Quatinga Velha, in Mogi das Cruzes, where, since the beginning of 2009, they have paid R$ 30 per month to 61 persons.

Another propitious experience is taking place in Santo Antonio do Pinhal, in Serra da Mantiqueira, 177 km from São Paulo, on the way to Campos de Jordão. There, on October 29th, 2009, the Municipal Chamber, by consensus of its nine councilmen, approved the Municipal Bill of Law for a Basic Income, proposed by Mayor José Augusto Guarnieri Pereira, from PT, elected in 2004 by 55% of the votes and reelected in 2008, by 79.06% of the votes. The law was sanctioned by the Mayor on November 12th, 2009. It is the first, among the 5.564 Brazilian municipalities which approved a law instituting the CBI. Its first article declares:

With the purpose to turn Santo Antonio do Pinhal into a Municipality that harmonizes sustainable social and economic development with the application of justice principles, meaning the solidarity practice among all its inhabitants, and, above all, to grant a higher level of dignity to all its inhabitants, the Citizen´s Basic Income of Santo Antonio do Pinhal – CBI is instituted, consisting in the rights of all registered residents or residents in the Municipality for at least 05 (five) years, regardless of their social and economic status, to receive a monetary benefit.

Exactly as the federal law, it will be the same amount for everyone and sufficient to meet the minimum vital needs of each person, taking into account the development level of the municipality and its budgets possibilities. It will be attained by stages, upon the criterion of the Conselho Municipal de RBC, giving priority to the most needed segments of the population.

To finance the payment of the CBI, a Municipal Fund will be created with the following sources: 6% of the tax revenues of the municipality; donations from individuals or corporations, public or private, national or international; money transfers from the State of Federal Government; yields generated by the investment of the available funds and other resources. Santo Antonio do Pinhal, with 7.036 inhabitants (in 2008, according to IBGE), a half in the rural area and another half in the urban area, has 60 lodging houses, corresponding to 1,300 beds, 32 restaurants, small and medium farmers, artisans and several activities in the commerce and industry. There are good schools and low criminality index, zero homicides.

It is perfectly possible that the visitors, who on season holidays fill up the lodging houses and restaurants, feel enthusiastic to contribute for the pioneer achievement of the CBI and the principles of justice elaborated by philosopher John Rawls in “A Theory of Justice” (1971). According to Professor Philippe Van Parijs, in “Real Freedom for All” What (if anything) may justify capitalism?” (1995) Oxford, the CBI is one of the instruments that contribute for the realization of these three principles:

1. Each person is to have an equal right to the most extensive system of equal basic liberties compatible with a similar system of liberty for all (the principle equal liberty);

2. The inequalities of social and economic advantages are justified only if (a) they contribute to the improvement of the less advantaged of the society (the principle of difference), and if (b) they are linked to positions that everybody has equal opportunities to occupy (the principle of equal opportunities).

To turn the CBI feasible, it would be necessary to obtain a great amount of resources. If we want to give a farther better than the Bolsa Família, even modest, we should begin with at least an amount higher than the average paid by this scheme, R$ 95 per family, what means something like R$ 31.66 per person in a family of three members. So, if we think about a CBI of R$ 40, it would be R$ 240 per month in a family of 6 members. In 12 months, the yearly amount would be R$ 480 per person. If we multiply to consider 192 million of Brazilians in the beginning of 2010, we would need R$ 92.160 billion, something around 3.5% of the Gross National Product of R$ 2.6 trillion in 2009, about 6.7 times the Bolsa Familia budget of R$ 13.6 billion for 2010, a considerable leap.

R$ 40 per month is a modest amount, but along the time, with the progress of the country and the growing approval from the population, the CBI could turn into somewhat as 100, someday R$ 1.000 and so on. A way to make it feasible is the creation of the Citizen’s Brazil Fund, according to the Bill of Law nr. 82/1999, which I presented to the Senate. It was already approved by consensus by the Senate, and is in legal procedures in the Chamber of Deputies, where it was already approved by the Committee of Family and Social Security and is waiting for the written opinion of Deputy Ciro Gomes (PSB-CE), at the Committee of Finance and Taxation. This Fund is constituted by 50% of the resources generated by authorization or concession of the natural resources exploitation; 50% of the revenues from rentals of the Government real estate, which belong to all the population; 50% of the revenues generated by the concession and services and public works and other resources. The output generated by the investments of the Fund resources, like the Alaska Permanent Fund, will be used to pay CBI to all the Brazilian residents

Especially when more people understand how CBI could contribute for the construction of a fair and more civilized Brazil, more voices will be saying to the President of the Republic, to the Governors and Mayors: It is a good proposal. Let’s put it into practice right away. How are the 2010 election presidential candidates and their parties viewing the perspective of the CBI?

During the IV National Congress of the PT in Brasilia, February 19-21 of this year, by the unanimous vote of the 1.350 delegates, the following point was added to the National Program of Dilma Rousseff who was acclaimed Presidential candidate by consensus:

“The Great Transformation

The accelerated growth and the fight against racial, social, regional inequalities and the promotion of sustainable development will be the axis of the economic development structure.

19) The expansion and the strengthening of the popular consumption goods, that produces strong positive impact over the productive sector system, will be attained by:

a)…

f) permanent improvement of the income transfer programs such as the Bolsa Família, to eradicate hunger and poverty, to facilitate access of the population to employment, education, health and higher income;

g) transition from the Bolsa Família Program towards the Citizen´s Basic Income, CBI, unconditional, as a right of every person to participate in the wealth of the nation, such as set by the Law 10.853/2004, a PT initiative, approved by all parties in the National Congress and sanctioned by President Luiz Inácio Lula da Silva in January 8, 2004.”

In July 2008, after visiting Iraq, under the invitation of the President of the National Assembly, and before attending the invitation of President José Ramos Horta from East Timor, to propose the CBI for them, I asked for an audience to Minister of the Civil House, Dilma Rousseff. For one hour and 45 minutes I had the opportunity to explain to her all the development and the advantages of the CBI, In conclusion, she said that it was very interesting. In December of that year, I told her that I understood well her personnal merits that had made President Lula to choose her as his candidate for succeeding him. And since she had shown herself in favor of the CBI, I would support her mainly to help her in implementing it.

Senator Marina Silva, the PV candidate, informed me that she is also in favour of the CBI and that she told of the main formulators of her program to consider it among the socio environmental policies. Therefore, Professor José Eli da Veiga, from the University of São Paulo, wrote in the Marina Silva´s presidential program:

Both the uses of natural resources as well as the negative impacts over the ecosystems – in its various forms – may generate contributions to a Fund that allows the distribution of an annual dividend to all Brazilians and foreign residents for an year or more. It is a form of effective participation in the wealth generated by the nation as a citizen’s right.

[1]Work for the XIII International Congress of BIEN at FEA/USP, June 30, July 1st and 2nd, 2010. This is a relatively simple text, summarizing what I explained in deeper detail in my books “Renda de Cidadania. A Saída é pela Porta” (Cortez Editora e Ed. Fundação Perseu Abramo, 6th. ed. 2010) and “Renda Básica de Cidadania. A Resposta dada pelo Vento” (L&PM, 3rd. ed. 2008). You may find a more complete bibliography in both books.

[2]Eduardo Matarazzo Suplicy is Senator from PT-SP, Professor in Economics at the Escola de Administração de Empresas e de Economia de São Paulo, from Fundação Getúlio Vargas, Ph.D. in Economics by Michigan State University, USA, author of the Bill of Law that originated Law 10.835/2004 which institutes the Citizen´s Basic Income in Brazil and Honorary Co-President of BIEN, Basic Income Earth Network.

CONTACT
Eduardo Suplicy
http://www.senado.gov.br/eduardosuplicy/
email : eduardo.suplicy [at] senador.gov [dot] br

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http://www.worldwatch.org/node/543
The Hidden Shame in the Global Industrial Economy
by Ed Ayres / December 15, 2003

Conquistadors
Where do the raw materials to build our paneled offices, airplanes, and cell phones come from? Maybe you really don’t want to know. A lot of them come from plunder, of a kind we’d like to think came to an end long ago. In the 16th century, Hernando Cortez sailed to Mexico seeking gold for the Spanish empire. He found a lot of it, and seized it without compunction, killing any Aztecs who stood in his way. Today, that kind of plunder may seem antiquated-abhorred by the community of nations. Of course, we still suffer the depredations of various transnational criminal cartels and mafias. But those are the exceptions, the outlaws. Today, no self-respecting nation or corporation would engage in the kind of brutal decimation of a whole culture, simply to seize its treasure, that Cortez did. Or would it?

In fact, the plundering of precious metals and other assets is far more prevalent today than in centuries past, and on a larger scale. Now it’s not just Spain and a few other military powers seeking global dominance, but scores of nations seeking cell phones and teak furniture, that are seizing materials from native cultures-some of these materials in quantities that the conquistadors could never have imagined. Now it’s not just silver and gold, but coltan (for those cell phones), copper, titanium, bauxite, uranium, cobalt, oil, mahogany, and teak. And now, in place of the extinguished Aztecs and other now decimated cultures, it’s hundreds of still surviving cultures that are being overrun, in perhaps a hundred countries. And most significantly, while the looting is still done by invaders from across the oceans, it is often sanctioned and facilitated by the victimized peoples’ own national governments.

But while the plunder is greater now, it is in some respects less openly pursued and less visible than it would have been for Cortez, had the technology to observe it been available in his day. The conquistadors would likely have reveled in seeing their exploits shown on TV. Today such publicity is avoided, for compelling reasons: First, plunder usually entails invasion, and in the centuries since Cortez the world’s nations have moved toward nearly unanimous condemnation of unprovoked invasion-as reflected in their widely shared shock at the U.S. invasion of Iraq. There has been parallel progress in recognizing the wrongness of enslaving other people or simply killing them for their property. There’s an evolving appreciation of human diversity, and of the idea of a global (as opposed to European, or nationalist) community. Yet the incentives for seizing the wealth of others are as economically irresistible today as they ever have been, and the means of doing so are now far more widely available. So the seizing continues, but not necessarily by military assault. That’s not to say there aren’t still places where the job is done with outright killing, as the following pages will detail. In Indonesia, Sierra Leone, and Nigeria, there have been cases in which people who opposed extractive operations on their land were given Cortez-style removals from the discussion. But where the scrutiny of the global media is present, the means are more indirect, and appear to be accidental. People living near uranium mines that have left piles of radioactive waste on their land die of cancer in unusual numbers, and their children have unusual numbers of birth defects. Indians whose land has been taken over by oil-drilling operations are slowly poisoned by petrochemical contamination of their water and soil. Those living downstream from large gold mines find their drinking water laced with cyanide. Food sources are destroyed, as are sacred places-and people die of spiritual, as well as physical, deprivation. Those kinds of dying don’t make the evening news.

Second, the plunder is less visible now because it rarely need be witnessed by the people who end up with the wealth-the major purchasers of gasoline or gold chains or tickets to fly on aluminum-bodied planes. In gold rush days, the lucky miner who found a nice nugget could buy a fancy watch. In the modern economy, the man with the Rolex has likely never been anywhere near a gold mine. The big extractive industries are far from the urban centers where most of the affluent live. In poorer countries from which much of the world’s mineral and forest wealth is taken, the extractive operations are often in remote jungles or subsistence farming regions-homelands to people who are largely left out of the global dialogue and trade.

Finally, there is the unspoken disincentive of the world’s media giants to expose the exploitative nature of the industries that provide the raw materials of the economy that pays their way. Nearly all media, whether print or electronic, are funded by advertising for consumer goods that too often originate with raw materials largely taken from indigenous land or from ostensibly protected parkland. It would perhaps be unfair to say the media are part of a conspiracy of silence, because in all likelihood most media executives rarely stop to think about what fuels the economy that allows them to profit. But it’s fair to suggest that there’s a reluctance to undermine the foundations of the economy on which their whole business rests.

Not all extractive industries operate in the shadows. Many are honest businesses, run by people who are attentive to the human and environmental impacts of their operations. But those businesses are far too few. By some estimates, for example, some 80 percent of the logging done in Indonesia-one of the largest producers of wood in the world-is illegal. Some of the largest mines in the world, dumping thousands of tons of deadly poisons into their surroundings each day, are operating without the consent of the people whose land they have taken over.

Big Footprints
Mining and logging operations-the “extractive industries”-aren’t just small pin-pricks in the Earth’s skin, though they may appear that way on maps. Apologists may think of them as small holes discreetly drilled in large territories, for which small compensations to the impoverished inhabitants of those territories may be sufficient. But in fact, extraction has far-reaching impacts and costs. Because nature is not static but involves continuous movement of wind, water, and wildlife, contaminants released by mines can cause Pandora-like destruction. One of the most alarming forms of contamination is that of heap-leach gold mining, a modern technique that involves pouring rivers of cyanide on huge piles of low-grade ore to extract the gold. Cyanide is extremely poisonous: a teaspoonful containing a 2-percent cyanide solution can kill an adult. In February 2000, a dam holding heap-leach waste at a gold mine in Romania-the Baia Mare gold mine owned by an Australian company, Esmeralda Exploration-broke and dumped 22 million gallons of cyanide into the Tisza River. The poison flowed more than 500 kilometers downstream into Hungary and Serbia, wreaking what some called the worst environmental disaster since the Chornobyl nuclear explosion in 1986. Unfortunately, this event could not be written off as the last gasp of an outmoded technology. Heap-leach gold mining is on the increase. In Peru, the Yanacocha gold mine-second largest in the world-sits atop the South American continental divide, from which any similar breech would run all the way to both the Atlantic and Pacific Oceans. And in Tanzania, the Geita mine has just been sited on the Nyamelembo River, which drains into Lake Victoria. One of the largest and most valuable fresh-water lakes on the planet, Victoria is essential to the economies of Kenya and Uganda as well as Tanzania. A Kenyan environmental professor, Wangari Maathai (now the country’s environment minister), described the Geita mine as “the most insensitive economic undertaking I have ever come across,” explaining that “it is not just a matter of poisoning people. Very soon, the European Union will ban all fish exports from East Africa just because some toxic elements have found their way into the fish, and it will be a great economic loss to the local people whose life depends entirely on fishing.”

The kinds of spills produced by modern mines shouldn’t be compared to the relatively petty crime that occurs when someone dumps dry cleaning fluid into the sewer drain, or drops his old batteries into the garbage. Mine waste sends huge plumes of poison into the world’s rainforests, groundwater, and food. In Zortman, Montana, in 1982, the Zortman-Landusky gold mine spilled 52,000 gallons of cyanide into the local groundwater, and it was discovered only when a local mine worker smelled cyanide in his faucet at home. Cyanide was the agent used to kill Jews in Hitler’s gas chambers. Today, in West Papua, Indonesia, a gold mine owned by the U.S. company Freeport McMoRan dumps 120,000 tons of cyanide-laced waste into local rivers every day. In Papua New Guinea, the Ok Tedi copper mine, which was built on the local people’s land without their consent, dumps 200,000 tons of waste per day into the Fly River and has brought the once biologically rich region to ruin.

There are other means, besides rivers, by which damage from extraction can be spread. Wind, in particular, can be as dangerous a factor with big mines as with broken nuclear plants. Uranium mines produce huge piles of crushed ore waste, or tailings. According to the Center for World Indigenous Studies, the most common health risk associated with uranium mining is breathing radon-222 gas, which will continue to seep from the tailings for thousands of years to come. In Australia, the tailings dam of an abandoned uranium mine was burst by monsoon rains, and subsequent dispersal of the waste by river and wind has polluted an area of 100 square kilometers of land-driving out the Aboriginal people who lived there. In the U.S. Southwest, radioactive waste from an abandoned uranium mine owned by El Paso Natural Gas Company has blown toward an area used by Navajo Indians for shepherding.

In some cases, the extraction is not at a single point at all, but takes place over a wide area. Logging operations have decimated some of the world’s most biologically valuable forests. Many of these operations are either illegal or are sanctioned by corrupt national governments over the desperate objections of indigenous inhabitants. In Bolivia, in the late 1990s, the government granted logging concessions covering 500,000 hectares of Guarayo Territory and 140,000 hectares of Chiquitano de Monte Verde Territory. In Cambodia, illegal logging has led to severe deforestation, flooding, and destruction of rice crops-and to the displacement of people who depended on those forests for subsistence. In Liberia, in the year 2000, some $100 million worth of timber was cut down and sold, mainly to European consumers, to enrich the dictator Charles Taylor and to buy arms for his henchmen. In Indonesia, the looting of forests has reached new levels, with about 2 million hectares disappearing every year.

Buying Silence
Cortez did not have to worry about bad PR. Companies like Shell Oil or Freeport McMoRan may do their extraction in remote places, and with the tacit acceptance of the global media, but they can no longer escape the attention of activists and groups like Amazon Watch, Rainforest Action Network, and the Mineral Policy Center. Shell was burned badly when it was accused of collusion with the Nigerian government in the murder of the Ogoni activist Ken Saro-Wiwa, who had dared to protest Shell’s ruination of his people’s homeland. So, the major extractive industries have learned to become more discreet about how they take what they want. One of the most common strategies is to offer employment in the mines to indigenous people who are not well informed about the hazards, and to develop a dependency that the workers and their families are unable to break even when their health begins to break-a contemporary form of indentured servitude. An Aborigine writer, Vincent Forrester, describes how this dependency was established at the Ranger uranium mine in his people’s region of Australia. Mining royalties are paid to the government, not to the local people. (Most mining companies don’t pay royalties to anyone at all.) The government then supplies the community with essential services, but does not inform the people about the effects of the mining on their land and health. “This dependency, I believe, is a form of ransom,” writes Forrester. “White Australia says to the under-serviced, fledgling outstation movement, ‘You can have money for Toyotas, for bores, to help you set up, but if mining stops the money stops too.'”

A more hardball way of buying acquiescence is simply to find individual members of the local community who are willing to publicly support a proposed mining project in exchange for a small payment, which in an impoverished area can be a large inducement. The offers open rifts in the local community, causing enough disarray to allow the project to gain a foothold. In the late 1990s, for example, the Navajo Times reported that the HRI corporation, which wanted to open a uranium mine near the Navajo community of Crownpoint, New Mexico, had arranged to give lease payments to some of the Indian landowners living in the community. According to a report by Chris Shuey of the Southwest Research and Information Center in Albuquerque, the total amount of the payoff came to $367,000. The population of Crownpoint at that time was 2,700, which meant HRI was paying $136 per citizen to begin a process that would use the community’s underground water-bearing strata as a medium for “in situ leach” processing of uranium-turning the water into a “pregnant solution” from which the uranium would be extracted within one-half mile of several churches, schools, businesses, and most of the homes in the community.

In Madagascar, the Anglo-Austrialian mining giant Rio Tinto has tried to buy off the natives for even less. Rio Tinto wants to mine 40 kilometers of coastal dunes, bulldozing an indigenous homeland that is also a habitat for numerous rare and endangered plant species. The company’s strategy has been to invite the villagers to dinners at which they can eat and drink while watching PR films that extol the proposed operation but make no mention of likely damage. In hundreds of mining or logging operations around the planet, the main economic incentive for capitulation is the lure of jobs. Where people are poor, that lure of short-term cash can easily blind young workers to the long-term impacts of the project on their culture and health-and on the long-term sustainability of their local economy. In the Arctic, Inuit communities are now divided about whether to welcome more intensive oil drilling. Those who see a threat to their traditional way of life have put up strong resistance, but it’s rarely enough to fend off the incursions, especially when their own national governments have been bought off. In a globalized economy, the buying-off of governments has become widespread. A few years ago in India, for example, the indigenous Bhagata, Khond, Konda Reddi, and Samantha communities found themselves targeted by foreign companies interested in the bauxite (aluminum ore) deposits on their lands. Indian constitutional law protects indigenous peoples from unwanted exploitation of this kind, but that did not stop the state of Andhra Pradesh from secretly inviting the companies-and giving them leases-to begin mining. The opposing parties have been litigating ever since.

Is There Really No Alternative?
When economists talk about “extractive industries” they’re usually referring to mining, oil or gas drilling, or logging-essentially, the use of heavy machinery to cut raw materials from the planet. The concept could easily be broadened to include pumping water from aquifers, hauling fish from the oceans, shooting monkeys for bushmeat, or collecting honey from wild bees. We focus here on mining, oil drilling, and logging because they have been so heavily concentrated in places that are both the homelands of the world’s marginalized peoples and the habitats of the most threatened ecosystems. These industries are therefore the most direct-and least regulated-assaults of industrial society on the Earth’s cultural and biological stability.

To some extent, the lack of restraint in these industries may reflect an implicit belief, in the governments of industrial nations, that the genie long ago exited the bottle, and that trying to undo any damage it has done now is as unrealistic as trying to undo the damage done by the seizing of Indian territories by Europeans two or three centuries ago. But the idea that redressing past injustices is now “unrealistic,” too, makes a questionable assumption-that the descendants of the conquered Indians have long since been assimilated into the modern industrial economy and share the same benefits as the descendants of their conquerors. Yet, the reality of places like the Navajo reservations in the U.S. Southwest belies that assumption. Native American communities are far more impoverished, with far higher rates of disease, unemployment, and suicide, than the rest of the country. And it’s on Native American lands that the most blatantly exploitative extractive operations are concentrated. A similar observation can be made of the oil-rich Ogoni lands of Nigeria, or the Guarayo territory of Bolivia, among scores of others.

The political inertia that has allowed colonial-era racial distinctions to be perpetuated in the twenty-first century economy has also allowed outmoded assumptions about industrial productivity to be perpetuated. The prevailing belief is that if we want to continue having the rich lifestyle to which we are now accustomed, we have no choice but to keep on drilling and digging in the places where we already are-and, indeed, to commence new drilling in any place where more resources can be found. If the Inuit are hunting caribou in the Alaska National Wildlife Refuge (ANWR), but the war on terror and the fueling of American Hummers and Expeditions demands oil and there’s oil under ANWR, sooner or later the Inuit will have to step aside-will have to forget their antiquated ways, learn to speak English, head south, and find jobs at Exxon gas stations or Wal-Mart.

Such assumptions have been amply discredited, though you might never know it from following the mainstream news media and its conservative-dominated commentary. The discrediting takes several forms, each of which involves the exploding of a persistent myth about the materials economy: “Economic growth requires increasing materials and energy consumption.” In other words, population momentum (the unavoidable population growth of the coming years even with maximum stabilization policies), plus rising standards of living across the planet, will necessarily drive up demand for raw materials. Historically, economic growth has meant soaring material consumption. But the idea that this link must continue assumes that the efficiency of materials use must remain constant, which it need not. If cities were redesigned to be more compact, for example, the quantities of materials required to provide housing and transport per capita could be greatly reduced while actually improving the quality of urban life. As asphalt and gasoline use declined, so would the psychic and physical ravages of traffic congestion, auto accidents, air pollution, and suburban isolation. At the same time, growing efficiency in energy use, both from technological advances and from changes in consumer behavior (how about trading in your Expedition for a Prius, or your leaf blower for a rake?) could vastly reduce the per capita demand for oil or aluminum without compromising the pursuit of happiness. For the 2 billion people who are poorest, hopes for a better life do not have to require further impoverishment for those of their indigenous counterparts whose land is being mined or deforested.

“Meeting the need for increased supply of materials requires taking more out of the ground.” When the benefits of more efficient design and use have been exhausted, we may indeed need to increase the supply, at least until population has stabilized. But to assume that the increase must come from the ground falsely assumes that the new materials must be virgin. In the long-term ecology of the planet, nearly all materials are eventually recycled, and now we need to do that in the short term as well. The mines of the future will be, increasingly, the cities rather than the rainforests. Already, in some areas, aluminum recycling has reduced the need for bauxite mining by half.

“Mining or timbering in indigenous areas is cheap.” This argument is similar to the one employed by Wal-Mart, which says it’s economical to get poor people, who have few alternatives, to clean toilets and wash floors for cheap wages. That thinking is just one expression of the more general myth that industry can profit by not paying the externalities, or social and environmental costs, of production. But while economic practice remains entrenched in reactionary doctrine, moral consciousness has come a long way since the days when few people had any qualms about slavery. Exploiting cheap labor is a form of quasi-slavery, and the hundreds of organizations dedicated to raising public sensitivity to that have long since brought us past the point where social costs can be ignored. The true costs of extractive industries will inexorably become more internalized-for example, in requiring oil companies to bear the medical costs of diseases brought by their polluting of indigenous water supplies. As that happens, the prices of oil and other raw materials will rise, and there will be more incentives to develop sustainable substitutions-of renewable energy for oil, of recycled metals and wood for virgin, and of more efficient use for more supply.

AND WHILE WE’RE AT IT
HUMAN RIGHTS INSURANCE

HISTORY
http://www.basicincome.org/bien/aboutbasicincome.html#history

History of Basic Income, Part One
The idea of an unconditional basic income has three historical roots. The idea of a minimum income first appeared at the beginning of the 16th century. The idea of an unconditional one-off grant first appeared at the end of the 18th century. And the two were combined for the first time to form the idea of an unconditional basic income near the middle of the 19th century.

1. Minimum income: the humanists More (1516) and Vives (1526)
Raphael’s cure for theft – The idea of a minimum income guaranteed by the government to all the members of a particular community is far older than the more specific and radical idea of an unconditional basic income. With the advent of the Renaissance, the task of looking after the welfare of poor people ceased to be regarded as the exclusive preserve of the Church and of charitable individuals. Some of the so-called humanists started playing with the idea of a minimum income in the form of public assistance. In Thomas More’s (1478-1535) Utopia, published in Louvain in 1516, the Portuguese traveller Raphael Nonsenso, walking on the central square of the City of Antwerp, narrates a conversation he says he had with John Morton, the Archbishop of Canterbury. Such a scheme, he argued, would be a more astute way of fighting theft than sentencing thieves to death, which had the unpleasant side effect of increasing the murder rate.

“I once happened to be dining with the Cardinal when a certain English lawyer was there. I forgot how the subject came up, but he was speaking with great enthusiasm about the stern measures that were then being taken against thieves. ‘We’re hanging them all over the place’, he said. ‘I’ve seen as many as twenty on a single gallows. And that’s what I find so odd. Considering how few of them get away with it, how come we are still plagued with so many robbers?’ ‘What’s odd about it?’, I asked – for I never hesitated to speak freely in front of the Cardinal. ‘This method of dealing with thieves is both unjust and undesirable. As a punishment, it’s too severe, and as a deterrent, it’s quite ineffective. Petty larceny isn’t bad enough to deserve the death penalty. And no penalty on earth will stop people from stealing, if it’s their only way of getting food. In this respect, you English, like most other nations, remind me of these incompetent schoolmasters, who prefer caning their pupils to teaching them. Instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse.” [1]

A pragmatic theological plea for public assistance – It is, however, Thomas More’s close friend and fellow humanist, Johannes Ludovicus Vives (1492-1540), who should be regarded as the true father of the idea of a guaranteed minimum income, as he was the first to work out a detailed scheme and develop a comprehensive argument for it, based both on theological and pragmatic considerations. Juan Luis Vives was born in Valencia in a family of converted Jews. He left Spain in 1509 to escape the Inquisition, studied at the Sorbonne but soon got fed up by the conservative scholastic philosophy that was prevailing in Paris at the time and moved on to Bruges in 1512, and in 1517 to Louvain, one of the main centres of the humanist movement, where he was appointed professor in 1520. He taught more briefly at Corpus Christi College, Oxford, but spent most of his adult life in the city of Bruges, where his statue can still be seen on the bank of one of the main canals. In a memoir addressed to the Mayor of Bruges in 1526 under the title De Subventione Pauperum (On the Assistance to the Poor), he proposed that the municipal government should be given the responsibility of securing a subsistence minimum to all its residents, not on grounds of justice but for the sake of a more effective exercise of morally required charity. The assistance scheme would be closely targeted to the poor. Indeed it is because of their ability to target them more efficiently that public officials should be put in charge of poor relief. To be entitled to the latter, a poor person’s poverty must not be undeserved, but he must deserve the help he gets by proving his willingness to work.

“Even those who have dissipated their fortunes in dissolute living – through gaming, harlots, excessive luxury, gluttony and gambling – should be given food, for no one should die of hunger. However, smaller rations and more irksome tasks should be assigned to them so that they may be an example to others. […] They must not die of hunger, but they must feel itspangs.” Whatever the source of poverty, the poor are expected to work. “Even to the old and the stupid, it should be possible to give a job they can learn in a few days, such as digging holes, getting water or carrying something on their shoulders.” The point of requiring such toil from the beneficiaries of the scheme is in part to make them contribute to the funding of the latter. But it is also to make sure that “being busy and engrossed in their work, they will abstain from those wicked thoughts and actions in which they would engage if they were idle”. Indeed, this concern should consistently extend to those born rich: Emperor Justinian was right, according to Vives, “in imposing a law that forbade everyone to spend his life in idleness”. If the poor cannot be parasites, why could the rich? [2]

At two junctures, Vives anticipates some insights that will drive later thinkers in the direction of a basic income. “All these things God created, He put them in our large home, the world, without surrounding them with walls and gates, so that they would be common to all His children.” Hence, unless he helps those in need, whoever has appropriated some of the gifts of nature” is only a thief condemned by natural law, because he occupies and keeps what nature has not created exclusively for himself”. Further, Vives insists that relief should come “before need induces some mad or wicked action, before the face of the needy blushes from shame… The benefaction that precedes the hard and thankless necessity of asking is more pleasant and more worthy of thanks”. But he explicitly discards the more radical conclusion that it would be even better if “the gift were made before the need arose”, which is exactly what an adequate basic income would achieve.

From Vives to the Poor Laws – Vives’s plea explicitly inspired a scheme put into place a few years later by the Flemish municipality of Ypres. It also contributed to inspiring incipient thinking and action about forms of poor relief, from the School of Salamanca of Francisco de Vitoria and Domingo de Soto (from 1536 onwards) to England’s Poor Laws (from 1576 onwards). Less well remembered than his friends and protectors Erasmus and More, Vives’s pioneering thinking on the welfare state has been recently rediscovered. [3]

He is also still remembered in his Alma Mater, the University of Louvain: A stone from his house has been incorporated in the wall of the “Universitaire Halle”, which houses the rectorate in the old town of Leuven. And the meeting room of the Chaire Hoover in the new town of Louvain-la-Neuve, where the Collectif Charles Fourier met in 1984-86 to discuss basic income and organise the founding meeting of the Basic Income European Network, has been named “Salle Vives”.

Vives’ s tract is the first systematic expression of a long tradition of social thinking and institutional reform focused on the public exercise of compassion through government-organised means-tested schemes directed at the poor. Despite the difficulties and doubts aroused by the operation of the poor laws, the thinkers of the nouveau régime made public assistance an essential function of the government. Thus, Montesquieu (L’Esprit des Lois (1748), section XXIII/29, Paris: Flammarion, Vol.2, p. 134): “The State owes all its citizens a secure subsistence, food, suitable clothes and a way of life that does not damage their health”. This line of thought eventually led to the setting up of comprehensive, nationally-funded guaranteed minimum income schemes in a growing number of countries, most recently, France’s RMI (1988) and Portugal’s RMG (1997).

2. Basic endowment: the republicans Condorcet (1594) and Paine (1596)
Condorcet on social insurance – However, towards the end of the 18th century, a different idea emerged that was to play an even greater role in the alleviation of poverty throughout Europe. The first known person to have sketched the idea is the first-rate mathematician and political activist, Antoine Caritat, Marquis de Condorcet (1743-1794). After having played a prominent role in the French revolution, both as a journalist and as a member of the Convention, Condorcet was imprisoned and sentenced to death. While in prison, he wrote his most systematic work, the Esquisse d’un tableau historique des progrès de l’esprit humain (published posthumously by his widow in 1795), whose last chapter contains a brief sketch of what a social insurance might look like and how it could reduce inequality, insecurity and poverty.

“There is therefore a necessary cause of inequality, of dependency and even of misery, which constantly threatens the most numerous and most active class of our societies. We shall show that we can to a large extent removing it, by opposing luck to itself, by securing to those who reach old age a relief that is the product of what he saved, but increased by the savings of those individuals who made the same sacrifice but died before the time came for them to need to collect its fruit; by using a similar compensation to provide women and children, at the moment they lose their husbands or fathers, with resources at the same level and acquired at the same price, whether the family concerned was afflicted by a premature death or could keep its head for longer; and finally by giving to those children who become old enough to work by themselves and found a new family the advantage of a capital required by the development of their activity and increased as the result of some dying too early to be able to enjoy it. It is to the application of calculus to the probabilities of life and to the investment of money that one owes the idea of this method. The latter has already been successfully used, but never on the scale and with the variety of forms that would make it really useful, not merely to a handful of individuals, but to the entire mass of society. It would free the latter from the periodic bankruptcy of a large number of families, that inexhaustible source of corruption and misery.” [4]

This distinct idea, which will end up inspiring, one century later, the birth and development of Europe’s massive social insurance systems, starting with Otto von Bismarck’s old age pension and health insurance schemes for the labour force of unified Germany (from 1883 onwards). Though not targeted to the poor and involving massive transfers to the non-poor, these systems soon started having a huge impact on poverty as their development quickly dwarfed public assistance schemes and relegated them to a subsidiary role. In one way, social insurance brought us closer to basic income than public assistance, as the social benefits it distributed were not prompted by compassion, but by an entitlement, based in this case on the premiums paid into the insurance system. But in another way, it took us away from basic income, precisely because entitlement to the benefits is now based on having paid (or having had one’s employer paying) enough contributions in the past, typically in the form of some percentage of one’s wage. For this reason, unlike the most comprehensive versions of public assistance, even the most comprehensive forms of social insurance cannot provide a guaranteed minimum income.

Condorcet and Paine on basic endowment – However, it is the very same Marquis de Condorcet who was the first to briefly mention, in the context of his discussion of social insurance, the idea of a benefit restricted neither to the poor (deserving of our compassion) nor to the insured (entitled to compensation if the risk materialises), namely the idea of “giving to those children who become old enough to work by themselves and found a new family the advantage of a capital required by the development of their activity.” Condorcet himself is not known to have said or written anything else on the subject, but his close friend and fellow member of the Convention Thomas Paine (1737-1809) developed the idea in far greater detail, two years after Condorcet’s death, in a memoir addressed to the Directoire, the five-member executive that ruled France during most of the period separating the beheading of Robespierre and the rise of Napoleon.

“It is a position not to be controverted, he writes, that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race.” As the land gets cultivated, “it is the value of the improvement, only, and not the earth itself, that is in individual property. Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue.” Out of this fund, “there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property. And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age”. Payments, Paine insists, should be made “to every person, rich or poor”, “because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did.” [5]

From Paine to the Stakeholder Society – This idea of an equal basic endowment given to all as they reach adulthood, has reappeared now and then, for example in the writings of the French political philosopher François Huet. In his attempt to combine liberalism and socialism, he proposed that young people should all be given an endowment financed out of the taxation of the whole of that part of land and other property which the bequeather has himself received (see esp. Le Règne social du christianisme, Paris: Firmin Didot & Bruxelles: Decq,1853, pp. 262, 271-3).
The same endowment idea, combined as it was by Paine with a basic pension, has been more recently revived and developed in great detail by two Yale Law School Professors, Bruce Ackerman and Anne Alstott (The Stakeholder Society, New Haven: Yale University Press, 1999). The justification for this $80.000 unconditional grant, however, is no longer common ownership of the earth, but more comprehensive conception of justice as equality of opportunities. [6]

3. Basic income: the utopian socialists Charlier (1848) and Mill (1849)
Charles Fourier’s right to subsistence – What equal ownership of the earth justifies, in Paine’s view, is an unconditional endowment for all, not a guaranteed income. A number of 19th century reformers, such as William Cobbett (1827), Samuel Read (1829) and Poulet Scrope (1833) in England (see Horne, Thomas A. “Welfare rights as property rights”, in Responsibility, Rights and Welfare. The theory of the welfare state, Boulder & London: Westview Press, 1988, 107-132, for a useful survey), have rather interpreted it so as to give guaranteed income schemes a firmer basis than public charity. Most famous among them is the eccentric and prolific French writer Charles Fourier (1836: 490-2), one of the radical visionaries Marx contemptuously labelled “utopian socialists”. In La Fausse Industrie (1836), Fourier argues that the violation of each person’s fundamental natural right to hunt, fish, pick fruit and let her/his cattle graze on the commons implies that “civilization” owes subsistence to everyone unable to meet her/his needs, in the form of a sixth class hotel room and three modest meals a day.

“Le premier droit, celui de récolte naturelle, usage des dons de la nature, liberté de chasse, cueillette, pâture, constitue le droit de se nourrir, de manger quand on a faim. Ce droit est dénéié en civilisation par les philosophes et concédé par Jésus-Christ en ces mots: (…). Jésus, par ces paroles, consacre le droit de prendre quand on a faim, son nécessaire où on le trouve, et ce droit impose au corps social le devoir d’assurer au peuple un minimum d’entretien: puisque la civilisation le dépouille du premier droit naturel, celui de chasse, pêche, cueillette, pâture, elle lui doit une indemnité. (…) Si l’ordre civilisé enlève à l’homme les quatre branches de subsistance naturelle, chasse, pêche, cueillette, pâture, composant le premier droit, la classe qui a enlevé les terres doit à la classe frustrée un minimum de subsistance abondante, en vertu du neuvième droit (subsistance abondante). Mais voici de nombreux obstacles à la concession de ce droit: D’abord, il faudrait chercher et découvrir le mécanisme sociétaire d’industrie combinée qui, donnant quadruple produit, fournirait de quoi satisfaire en minimum. D’autre part, comme la multitude assurée d’un minimum abondant ne voudrait que peu ou point travailler, il faudrait découvrir et organiser un régime d’industrie attrayante qui garantirait la persistance du peuple au travail, malgré son bien-être.” [7]

Fourier, however, is as clear about the non-universality of the delivery of this income in kind (only a minority would be accommodated in those sixth class hotels) as he is about the absence of a work test: it is an unconditional entitlement for the poor by way of compensation for the loss of direct access to natural resources. His disciple and leader of the Fourierist school, Victor Considérant (Exposition abrégée du système Phalanstérien de Fourier, Paris, 1845) makes a step in the direction of a genuine basic income when emphasizing that, when work will have been made attractive thanks to the Phalansterian system, “one will be able to forward a minimum income to the poor members of the community with the certainty that they will have earned more than the expenditure by the end of the year”. But despite the nature of the underlying justification, poor relief is still not being turned into a universal income.

“La distribution des travaux par groupes et séries ayant la propriete de les rendre attrayants, toutes les classes de la société recherchent avec ardeur des places dans toutes les branches infiniment variées de fonctions sociales. Il n’y a donc plus de paresseux: on pourra faire aux sociétaires pauvres l’avance d’un minimum, avec la certitude qu’ils auront gagné plus que leur dépense à la fin de l’année. Ainsi, l’établissement du régime sociétaire extirpera la misère et la mendicité, fléaux des sociétés basees sur la concurrence anarchique et le morcellement. Il serait impossible aujourd’hui de faire au peuple l’avance du minimum: il tomberait aussitôt dans la fainéantise, attendu que le travail est répugnant. Voilà pourquoi la Taxe des pauvres, en Angleterre, n’a fait qu’élargir la plaie hideuse du paupérisme. – L’avance du minimum, c’est la base de la liberté et la garantie de l’émancipation du prolétaire. Pas de liberté sans minimum; pas de minimum sans attraction industrielle. Toute la politique d’émancipation des masses est là.” [8]

Joseph Charlier’s territorial dividend – In 1848, however, while Karl Marx was finishing off the Communist Manifesto in another neighbourhood of Brussels, the Fourierist author Joseph Charlier (1816-1896) published in Brussels his Solution du problème social ou constitution humanitaire (Bruxelles, “Chez tous les libraires du Royaume”, 1848, 106p.), which can be regarded as containing the first formulation of a genuine basic income. Undoubtedly inspired by the Fourierist tradition, he saw the equal right to the ownership of land as the foundation of an unconditional right to some income. But he rejected both the right to means-tested assistance advocated by Charles Fourier himself and the right to paid work advocated by his most prominent disciple Victor Considerant. The former, he reckoned, only dealt with the effects, and the latter involved too much mingling by the state. Under the labels “minimum” or “revenu garanti” (and later “dividende territorial”), he proposed giving every citizen with an unconditional right to a quarterly (later, monthly) payment of an amount fixed annually by a representative national council, on the basis of the rental value of all real estate. In a later book, in which he further develops his proposal, he relabels it “dividende teritorial” (La Question sociale résolue, précédée du testament philosophique d’un penseur, Bruxelles, Weissenbruch, 1894, 252p.). Such a scheme, he argues, would end “the domination of capital over labour”. Would it not encourage idleness? “Hard luck for the lazy: they will be put on short allowance. Society’s duty does not reach beyond securing each a fair share of the enjoyment of what nature puts at his disposal, without usurping anyone’s rights.” Anything above the minimum will have to be earned. [9]

Mill’s most skillfully combined form of socialism – Charlier’s obstinate plea was hardly heard, and he was himself quickly forgotten. This is not quite what happened to another admirer of Fourierism: John Stuart Mill. The relevant passage is the sympathetic discussion of Fourierism which he added to the second edition of his Principles of Political Economy, published the year after Charlier’s first book. This discussion unambiguously ascribes to the Fourierists the proposal of a non-means-tested basic income:

“The most skilfully combined, and with the greatest foresight of objections, of all the forms of Socialism, is that commonly known as Fourierism. This System does not contemplate the abolition of private property, nor even of inheritance; on the contrary, it avowedly takes into consideration, as elements in the distribution of the produce, capital as well as labour. […] In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour. The remainder of the produce is shared in certain proportions, to be determined beforehand, among the three elements, Labour, Capital, and Talent.”

The idea is clearly there, and under the pen of one of the most influential political thinkers of the century. But it will take another six decades before something like a real discussion arose for the first time. [10]

1. Thomas More, Utopia (1st Latin edition, Louvain, 1516), English translation by Paul Turner, Harmondsworth: Penguin Classics, 1963, p. 43-44.
2. Juan Luis Vives, De Subventione Pauperum, Sive de humanis necessitatibus, 1526; Dutch translation on behalf of the Magistrates of Ypres: Secours van den Aermen, Antwerp, 1533, reprinted by Valero & Fils, Brussels, 1943, 114p.; French translation by Ricardo Aznar Casanova: De l’Assistance aux pauvres, Brussels: Valero et Fils, 1943, 290p; English translation of part II only by Alice Tobriner: On the Assistance to the Poor. Toronto & London: University of Toronto Press (“Renaissance Society of America Reprints”), 1998, 62p.
3. Vives’s impact on social policy thinking has been emphatically recognised in Spain, for example, through the creation (in 1987) of the Fundacion Luis Vives, a foundation supporting Spanish NGO’s in the area of social policy with seats in Madrid and Brussels (http://fundacionluisvives.recol.es/quienes.asp), or through the creation (in 1998) of the Instituto de Seguridad Social Juan Luis Vives, a research institute on the welfare state at Madrid’s Universidad Carlos III (http://www.uc3m.es/uc3m/inst/IUSS/dpiuss.html).
4. Condorcet, Esquisse d\’un tableau historique des progres de l’esprit humain (1st edition, 1795), Paris: GF-Flammarion, 1988, p. 273-274.
5. Thomas Paine 1796, p. 611; 612-613.
6. For discussions of basic endowment proposals in connection with basic income, see The Ethics of Stakeholding, Keith Dowding, Jurgen De Wispelaere, and Stuart White eds., Basingstoke: Palgrave/Macmillan, 2003; and “Rethinking Distribution”, Erik O. Wright ed., special issue of Politics and Society, 2003.
7. Charles Fourier, La Fausse industrie (1836), Paris: Anthropos, 1967, p. 491-492.
8. Victor Considrant, Exposition abrege du systeme Phalansterien de Fourier, Paris, 1845, section “Plus de paresse – extinction de la misere et de la mendicite – armees industrielles”, p. 49.
9. For more details, see Cunliffe, John & Erreygers, Guido, “The Enigmatic Legacy of Charles Fourier: Joseph Charlier and Basic Income”, History of Political Economy 33(3), Fall 2001, 459-484. Note that this idea of equal ownership of the value of natural resources justifying a universal basic income is not restricted to the Fourierist tradition. It later appears, for example, in the early Herbert Spencer’s (Social Statics, London: J. Chapman, 1851) writings on land reform, in Henry George’s (Progress and Poverty (1879) London: The Hogarth Press, 1953) advocacy of a “single tax”, in the normative writings of Leon Walras (Etudes d’economie Sociale (1896), Lausanne: Rouge; Paris: Pichon & Durand-Auzias, 1936.), one of the founding fathers of mathematical economics, and, most rigorously, in the writings of the Canadian left-libertarian political philosopher Hillel Steiner (An Essay on Rights, Oxford: Blackwell, 1994).
10. J.S. Mill, Principles of Political Economy, 2nd ed. 1849, New York: Augustus Kelley, 1987, pp. 212-214, Book II, chapter 1.

History of Basic Income, Part Two.
The 20th century saw three periods when discussion about basic income was particularly intense. Firstly, under names like “social dividend”, “state bonus” and “national dividend” proposals for a genuinely unconditional and universal basic income were developed in inter-war debates in England. Secondly, after some years of silence this type of ideas was rediscovered and gained considerable popularity in debates about “demogrants” and “negative income tax” schemes during the 1960s and 70s in the United States. Thirdly, a new period of debate and exploration emerged as basic income proposals were actively discussed in several countries in North-Western Europe from the late 70s and early 80s. Quite independently, this century also saw the introduction of the world’s first, full-blown basic income scheme through the birth of the Alaska Permanent Fund, providing annual dividends to all the inhabitants of Alaska.

1. From militancy to respectability: England between the wars
Russell’s combination of anarchism and socialism – Things start waking up in Britain in 1918, towards the end of the First World War. In Roads to Freedom, a short and incisive book first published in 1918, the mathematician, philosopher, non-conformist political thinker, militant pacifist and Nobel laureate in literature Bertrand Russell (1872-1970) argues for a social model that combines the advantages of socialism and anarchism. One central component of it is a UBI “sufficient for necessaries”.

“Anarchism has the advantage as regards liberty, Socialism as regards the inducement to work. Can we not find a method of combining these two advantages? It seems to me that we can. […]

Stated in more familiar terms, the plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income – as much larger as might be warranted by the total amount of commodities produced – should be given to those who are willing to engage in some work which the community recognizes as useful…When education is finished, no one should be compelled to work, and those who choose not to work should receive a bare livelihood and be left completely free.” [1]

Milner’s State Bonus – In the same year, the young engineer, Quaker and Labour Party member, Dennis Milner (1892-1956), published jointly with his wife Mabel a short pamphlet entitled “Scheme for a State Bonus” (1918). What they argued for, using an eclectic series of arguments, was the introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom. Pitched at 20% of GDP per capita, the “State bonus” should make it possible to solve the problem of poverty, particularly acute in the aftermath of the war. As everyone has a moral right to means of subsistence, any obligation to work enforced through the threat of a withdrawal of these means is ruled out. Milner subsequently elaborated the proposal in a book published by a respectable publisher under the title Higher Production by a Bonus on National Output. Many of the arguments that played a central role in later discussions can be found in this book — from the unemployment trap to labour market flexibility, from low rates of take up to the ideal complement of profit sharing, but the emphasis is on the “productivist” case: the state bonus can even be vindicated on grounds of efficiency alone. Milner’s proposal was enthusiastically backed by fellow Quaker Bertram Pickard, supported by the short-lived State Bonus League — under whose banner Milner took part in a national election —, discussed at the 1920 British Labour Party conference and definitively rejected the following year [2].

Major Douglas and the Social Credit movement – It did not take long, however, for another English engineer, Clifford H (“Major”) Douglas (1879-1952), to take up the idea again with significantly greater impact. Douglas was struck by how productive British industry had become after World War I and began to wonder about the risks of overproduction. How could a population impoverished by four years of war consume the goods available in abundance, when banks were reticent to give them credit and their purchasing power was rising only very slowly? To solve this problem, Douglas (1924) proposed in a series of lectures and writings, often quite confused, the introduction of “social credit” mechanisms, one of which consisted in paying all households a monthly “national dividend”. The social credit movement enjoyed varying fortunes. It failed to establish itself in the United Kingdom but attracted many supporters in Canada, where a Social Credit Party governed the province of Alberta from 1935 to 1971, although it rapidly dropped the idea of introducing a national dividend.

Cole and Meade on social dividend – While the popularity of the Social Credit movement was first swelling and next shrinking in broad layers of the British population, the idea of the UBI was gaining ground in a small circle of intellectuals close to the British Labour Party. Prominent among them was the economist George D.H. Cole (1889-1959), the first holder of Oxford’s Chichele Chair of Social and Political Theory (later held by Isaiah Berlin, Charles Taylor and G.A. Cohen). In several books, he resolutely defended what he was the first to call a “social dividend” (Cole, 1935). “Current productive power is, in effect, a joint result of current effort and of the social heritage of inventiveness and skill incorporated in the stage of advancement and education reached in the arts of production; and it has always appeared to me only right that all the citizens should share in the yield of this common heritage, and that only the balance of the product after this allocation should be distributed in the form of rewards for, and incentives to, current service in production.” (Cole 1944: 144) In his presentation of J.S. Mill in History of Socialist Thought (1953), Cole also seems to have been the first to refer to the idea of a UBI by using the English expression “basic income”, which quickly spread as the discussion became international in the 1980s [3].

Politically less active, but with a far wider international reputation than Cole, another Oxford economist, the Nobel Laureate James Meade (1907-1995), defended the “social dividend” with even greater tenacity. The idea of a social dividend is present in his Outline of an Economic Policy for a Labor Government (1935) and in several other early writings (Meade 1937, 1938) as a central ingredient of a just and efficient economy. And it was to become a crucial component of the Agathatopia project, to which he devoted his last writings (1989, 1993, 1995): partnerships between capital and labor and a social dividend funded by public assets are there offered together as a solution to the problems of unemployment and poverty. Around the same time and place as the notion of “social dividend” appeared in the writings of James Meade, it also surfaced in a famous discussion on market socialism by two professors at the London School of Economics Oskar Lange (1904-1965) and Abba Lerner (1903-1982): in reply to a remark by Lerner (1936), Lange (1937) made clear the expression “social dividend”, which he used to refer to the return on collectively owned capital, had to be understood as contribution-independent.

It is on the background of this inter-war discussion that the liberal peer Juliet Rhys-Williams (1943) proposed a “new social contract”, whose central element consisted in a basic income. Universal, but not quite unconditional, as it made availability for work a necessary counterpart for the uniform grant. Payment of the grant is suspended during strikes, for example. However, it was the alternative proposal for a national minimum income (tied to a broader program of unified national child benefit and social insurance) made in 1942 by another liberal peer, William Beveridge, director of the London School of Economics, that prevailed in Britain — and soon started spreading elsewhere in Europe —, thus relegating UBI-type proposals to the fringe of the UK’s policy-relevant debate.

2. Short-lived effervescence: the United States in the 1960s
Three American approaches to the guaranteed minimum – It is in the turbulent America of the 1960s, at the peak of the civic rights movement, that a real debate on universal basic income resurfaced, with three main sources of inspiration. Firstly, Robert Theobald (1929-1999) and his Ad Hoc Committee on the Triple Revolution (1964) defended in various publications a vaguely specified guaranteed minimum income on grounds reminiscent of Douglas, such as the belief that “automation is rendering work for pay obsolete, and that government handouts are the only way to give the public the means to buy the immense bounty produced by automatons”. Secondly, in his popular Capitalism and Freedom (1962), the American economist and Nobel Laureate Milton Friedman (1912-2006) proposed a radical simplification of the American Welfare State through the introduction of what he there called a “negative income tax”. Friedman’s proposal of a linear negative income tax would fully integrate the income tax and transfer systems. It was offered as a simple and radical alternative to the patchwork of existing social welfare schemes. And it was itself meant as a transitional stage on the way to an ideal, transfer-free capitalist society (For Friedman’s own account of where he got the idea from and relevant references, see the Suplicy-Friedman exchange in BIEN NewsFlash 3, May 2000). Finally, and most importantly, James Tobin (1918-2002), John Kenneth Galbraith (1908-2006) and other liberal economists started defending in a series of articles the idea of a guaranteed minimum income more general, more generous and less dependency-creating than the existing assistance programs.

Tobin’s demogrant – Tobin, Pechman and Miezkowski published the first technical analysis of negative income tax schemes in 1967, where they came out in favor of a variant involving an automatic payment to all citizens – a genuine UBI which Joseph Pechman proposed calling a demogrant. In contrast with Friedman’s proposal, Tobin’s demogrant scheme was not meant to replace the whole system of social assistance and insurance schemes — let alone to help extinguish the welfare state altogether —, but only to reconfigure its lower component so as to make it a more efficient and work-friendlier instrument for raising the incomes of the poor.

Under Tobin’s proposal, more generous than Friedman’s and more precise than Theobald’s, each household was to be granted a basic credit at a level varying with family composition, which each family could supplement with earnings and other income taxed at a uniform rate. (For relevant references and Tobin’s own account of how his demogrant proposal evolved, see the Suplicy-Tobin exchange in BIEN NewsFlash 11, September 2001)

Nixon’s Family Assistance Plan and McGovern’s support for the demogrant – In this lively and promising context, a petition was organized in the Spring of 1968 calling for the US Congress “to adopt this year a system of income guarantees and supplements”. It was supported by James Tobin, Paul Samuelson, John Kenneth Galbraith, Robert Lampman, Harold Watts and over one thousand more economists, though not by Milton Friedman. In a context in which dependence on the existing means-tested welfare system was increasing dramatically, this petition contributed to creating a climate in which the administration felt it had to move ahead. This led to the Family Assistance Plan (FAP), an ambitious social welfare program prepared by the democrat senator Daniel Patrick Moynihan (1927-2003) on behalf of Republican President Richard Nixon’s administration. The FAP provided for the abolition of the aid program targeting poor families (AFDC) and incorporated a guaranteed income with financial supplements for workers which came close to a negative income tax scheme. It was publicly presented by President Nixon in August 1969, adopted in April 1970 by a large majority in the US House of Representatives, rejected by the relevant Commission of the US Senate in November 1970, and definitively rejected in 1972, despite several amendments meant to assuage the opposition, owing to a coalition between those who found it too timid and those who found it too bold. A more ambitious “demogrant” plan was included on James Tobin’s advice in democrat George McGovern’s platform for the 1972 presidential election, but dropped in August 1972. Combined with McGovern’s defeat by Nixon in November 1972, the beginning of the Watergate affair in March 1973 and Nixon’s resignation in November 1974, the defeat of the FAP in the Senate marked the end of the short but strong appearance of UBI-type ideas in the US debate. The discussion continued however in a more academic vein, on the basis of five large-scale experiments with negative income tax schemes (four in the USA and one in Canada) and controversies over the results.

3. New departure: North-Western Europe in the 1980s
The first initiatives: Debates in Denmark and the Netherlands – Towards the end of the 1970s, while the demogrant debate was virtually forgotten in the United States, a debate on a UBI started up from scratch in a number of European countries, in near total ignorance of previous discussions, whether in Europe or in America. Thus, in Denmark, three academics defended a UBI proposal by the name of “citizen’s wage” in a national best-seller later translated into English under the title Revolt from the Center (Meyer et al, 1978). But it is above all in the Netherlands that the new European discussion on UBI took off. The first voice to be heard in this discussion was that of J.P. Kuiper, a professor of social medicine at the Free University of Amsterdam. Struck by how sick some people were able to make themselves by working too much while others were making themselves sick because they could not find work, he recommended uncoupling employment and income as a way of countering the de-humanizing nature of paid employment: only a decent “guaranteed income”, as a called it, would enable people to develop independently and autonomously (Kuiper, 1976). In 1977, the small radical party (Politieke Partij Radicalen), grown out of the left of the Dutch Christian-democratic party, became the first European political party with parliamentary representation to officially include a UBI (basisinkomen) in its electoral program. The movement grew quite rapidly, thanks to the involvement of the food sector trade union Voedingsbond, a component of the main Trade Union Confederation FNV. With its exceptionally high proportion of women and part-time workers among its members, the Voedingsbond played a major role in the Dutch debate throughout the 1980s. It initiated a series of publications and actions defending a UBI combined with a drastic reduction in working time and hosted the Dutch UBI association on its premises. In 1985, the Dutch discussion reached a first climax when the prestigious Scientific Council for Government Policy created a sensation by publishing a report in which it recommended unambiguously the introduction of a so-called “partial basic income”. Such a partial basic income is a genuine UBI, but at a level insufficient to cover the needs of a single person and hence not meant to replace the existing conditional minimum income system.

Developments in Britain and Germany – Around the same time, the debate began to take shape in other countries too, albeit more discretely. In 1984, a group of academics and activists gathered around Bill Jordan and Hermione Parker under the auspices of the National Council for Voluntary Organizations formed the Basic Income Research Group (BIRG) – which was to become in 1998 the Citizen’s Income Trust. Despite the consistent support of independent minds such as the assistant editor of the Financial Times Samuel Brittan and the sympathy shown for the idea by liberal-democrat party, the UBI did not manage to reach mainstream politics — except in the very attenuated form of a baby bond — in Blair’s New Labour era any more than under Thatcher’s neo-liberalism. In Germany, Thomas Schmid, an eco-libertarian from Berlin, got the discussion going with his Liberation from False Labor (Schmid ed. 1984). Several collective volumes emanating from the green movement pursued and developed this first initiative (Opielka & Vobruba 1986; Opielka & Ostner 1987). At the same time, Joachim Mitschke (1985), professor of public finance at the University of Frankfurt, began a long campaign in favor of a citizen’s income (Bürgergeld) administered in the form of a negative income tax. However, the fall of the Berlin wall (1989) and the consequent reunification of Germany (October 1990) stopped this incipient public discussion for many years, despite the support it enjoyed from reputed academics like Claus Offe (1992, 1996), close to the greens, and to a lesser extent Fritz Scharpf (1993), close to the social democrats. It is only around 2005, after reunification was more or less digested, that a surprising convergence generated a rich national debate.

The basic income debate in France – In France, the debate got off the ground more slowly. The influential left-wing sociologist and philosopher André Gorz (1923-2007) initially defended a life-long basic income coupled to a universal social service of 20,000 hours (Gorz 1985). However, his fear of social life getting entirely colonized by paid employment drove him towards the defence of an unconditional income (Gorz 1997). In a very different vein, Yoland Bresson (1984, 1994, 2000), self-described as a “left Gaullist” economist, offered a convoluted argument for a universal ”existence income” supposed to be pitched at a level objectively determined by the “value of time”. Alain Caillé (1987, 1994, 1996), leader of the “Movement against Utilitarianism in the Social Sciences” (or MAUSS) advocated an unconditional income as the expression of society’s fundamental trust in those excluded from the labor market and in their ability and willingness to invest in activities of collective interest. And Jean-Marc Ferry (1995, 2000), a political philosopher in the Habermas tradition, developed a plea for a UBI as a right of citizenship at the level of the European Union, in a context in which he reckons full employment, conventionally understood, is forever out of reach and in which a “quaternary” sector of socially useful activities needs to be developed.

The birth and expansion of BIEN – These modest national debates emerged independently from one another and the intellectual contributions that fed them were unaware of most of the history of the idea, if not the whole of it. However, they gradually came into contact with one another thanks to the creation of BIEN. In March 1984, a group of researchers and trade unionists close to the University of Louvain (Belgium) published a provocative UBI scenario under the collective pseudonym “Collectif Charles Fourier”. The scenario was entered in a competition on the future of work earning the Collectif a prize with which it organized in Louvain-la-Neuve (Belgium) in September 1986 the very first meeting gathering UBI supporters from several countries. Pleasantly surprised to discover how many people were interested in an idea they thought they were almost alone in defending, the participants decided to set up the Basic Income European Network (BIEN), which published a regular newsletter and organized conferences every two years. The birth of similar networks in the United States, South America and South Africa, the intensification of contacts with pre-existing networks in Australia and New Zealand, and the presence of an increasing number of non-Europeans at the BIEN conferences, led BIEN to re-interpret its acronym as the Basic Income Earth Network at its 10th congress, held in Barcelona in September 2004. The first congress outside Europe of the newly created worldwide network was held at the University of Cape Town (South Africa) in October 2006.

4. Modest but real: Alaska’s dividends
The introduction and development of the only genuine universal basic income system in existence to this day took place many leagues from these debates. In the mid 1970s, Jay Hammond, the Republican governor of the state of Alaska (United States) was concerned that the huge wealth generated by oil mining in Prudhoe Bay, the largest oilfield in North America, would only benefit the current population of the state. He suggested setting up a fund to ensure that this wealth would be preserved, through investment of part of the revenue from oil. In 1976, the Alaska Permanent Fund was created by an amendment to the State Constitution. In order to get the Alaskan population interested in its growth and continuity, Governor Hammond conceived of the annual payment of a dividend to all residents, in proportion to their number of years of residence. Brought before the United States Supreme Court on grounds of discrimination against immigrants from other states, the proposal was declared in contradiction with the “equal protection clause”, the fourteenth amendment of the Federal Constitution. The proposal was modified in order to overcome this objection, and transformed into a genuine universal basic income. Since implementation of the program in 1982, everyone who has been officially resident in Alaska for at least six months – currently around 650,000 people – has received a uniform dividend every year, whatever their age and number of years of residence in the State. This dividend corresponds to part of the average interest earned, over the previous five years, on the permanent fund set up using the revenue from oil mining. The fund was initially invested exclusively in the State economy, but later became an international portfolio, thus enabling the distribution of the dividend to cushion fluctuations in the local economic situation instead of amplifying them (Goldsmith, 2004). The dividend stood at around $300 per person per annum in the early years but was close to reaching $2000 in 2000, when the stock market plummeted and cut the dividend in half in the course of a few years. In 2008, however, the size of the annual dividends reached a new all-time high with payments of $2069 per person. Alaska’s oil dividend scheme has repeatedly been proposed for other parts of the world, but still remains unique — and helps make Alaska the most egalitarian among US states.

“The history of basic income” is based on chapter 1 of L’allocation universelle by Yannick Vanderborght and Philippe Van Parijs (expanded English version in progress, to be published by Harvard University Press). The web version has been edited and abridged by Simon Birnbaum and Karl Widerquist. For the full list of references, see Vanderborght, Yannick & Van Parijs Philippe (2005), L’allocation universelle, Paris: La Découverte.

1. Bertrand Russell, Roads to Freedom. Socialism, Anarchism and Syndicalism, London: Unwin Books (1918), pp. 80-81 and 127.
2. On the Milners, Bertram Pickard, Major Douglas, James Meade, G.D.H. Cole and other aspects of this first public emergence of the UBI proposal, see Van Trier (1995).
3. The term basic income appears in the following context:”Mill did, however, regard as much nearer practicability those forms of socialism which, at a sacrifice of idealism, accepted a moderate degree of economic inequality. On this score he praised the Fourieristes, or rather that form of Fourierism which assigned in the first place a basic income to all and then distributed the balance of the product in shares to capital, talent or responsibility, and work actually done.” (p. 310). The Dutch equivalent (basisinkomen) had already been used in 1934 by Nobel laureate Jan Tinbergen, in the context of discussions about the program of the Labour Party (PvdA) in his own country, the Netherlands.

PRE-INDUSTRIAL LAND-USE
http://www.detroitagriculture.org/GRP_Website/Grown_In_Detroit.html
http://www.greeningofdetroit.com/3_0_cool_projects.php
http://detroitblackfoodsecurity.org/policy.html
http://urbanfarming.org/homefarming.html

DOWNSIZING
http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab080216.pdf
http://www.washingtontimes.com/news/2010/mar/09/detroit-looks-at-downsizing-to-save-city/
Detroit wants to save itself by shrinking
BY David Runk / Mar 8, 2010

Detroit, the very symbol of American industrial might for most of the 20th century, is drawing up a radical renewal plan that calls for turning large swaths of this now-blighted, rusted-out city back into the fields and farmland that existed before the automobile. Operating on a scale never before attempted in this country, the city would demolish houses in some of the most desolate sections of Detroit and move residents into stronger neighborhoods. Roughly a quarter of the 139-square-mile city could go from urban to semi-rural.

Near downtown, fruit trees and vegetable farms would replace neighborhoods that are an eerie landscape of empty buildings and vacant lots. Suburban commuters heading into the city center might pass through what looks like the countryside to get there. Surviving neighborhoods in the birthplace of the auto industry would become pockets in expanses of green. Detroit officials first raised the idea in the 1990s, when blight was spreading. Now, with the recession plunging the city deeper into ruin, a decision on how to move forward is approaching. Mayor Dave Bing, who took office last year, is expected to unveil some details in his state-of-the-city address this month. “Things that were unthinkable are now becoming thinkable,” said James W. Hughes, dean of the School of Planning and Public Policy at Rutgers University, who is among the urban experts watching the experiment with interest. “There is now a realization that past glories are never going to be recaptured. Some people probably don’t accept that, but that is the reality.”

The meaning of what is afoot is now settling in across the city. “People are afraid,” said Deborah L. Younger, past executive director of a group called Detroit Local Initiatives Support Corporation that is working to revitalize five areas of the city. “When you read that neighborhoods may no longer exist, that sends fear.” Though the will to downsize has arrived, the way to do it is unclear and fraught with problems. Politically explosive decisions must be made about which neighborhoods should be bulldozed and which improved. Hundreds of millions of federal dollars will be needed to buy land, raze buildings and relocate residents, since this financially desperate city does not have the means to do it on its own. It isn’t known how many people in the mostly black, blue-collar city might be uprooted, but it could be thousands. Some won’t go willingly. “I like the way things are right here,” said David Hardin, 60, whose bungalow is one of three occupied homes on a block with dozens of empty lots near what is commonly known as City Airport. He has lived there since 1976, when every home on the street was occupied, and said he enjoys the peace and quiet.

For much of the 20th century, Detroit was an industrial powerhouse – the city that put the nation on wheels. Factory workers lived in neighborhoods of simple single- and two-story homes and walked to work. But then the plants began to close one by one. The riots of 1967 accelerated an exodus of whites to the suburbs, and many middle-class blacks followed. Now, a city of nearly 2 million in the 1950s has declined to less than half that number. On some blocks, only one or two occupied houses remain, surrounded by trash-strewn lots and vacant, burned-out homes. Scavengers have stripped anything of value from empty buildings. According to one recent estimate, Detroit has 33,500 empty houses and 91,000 vacant residential lots.

Several other declining industrial cities, such as Youngstown, Ohio, have also accepted downsizing. Since 2005, Youngstown has been tearing down a few hundred houses a year. But Detroit’s plans dwarf that effort. The approximately 40 square miles of vacant property in Detroit is larger than the entire city of Youngstown. Faced with a $300 million budget deficit and a dwindling tax base, Bing argues that the city can’t continue to pay for police patrols, fire protection and other services for all areas. The current plan would demolish about 10,000 houses and empty buildings in three years and pump new investment into stronger neighborhoods. In the neighborhoods that would be cleared, the city would offer to relocate residents or buy them out. The city could use tax foreclosure to claim abandoned property and invoke eminent domain for those who refuse to leave, much as cities now do for freeway projects.

The mayor has begun lobbying Washington for support, and in January Detroit was awarded $40.8 million for renewal work. The federally funded Detroit Housing Commission supports Bing’s plan. “It takes a true partnership, because we don’t want to invest in a neighborhood that the city is not going to invest in,” said Eugene E. Jones, executive director of the commission. It is not known who might get the cleared land, but with prospects for recruiting industry slim, planners are considering agricultural uses. The city might offer larger tracts for sale or lease, or turn over smaller pieces to community organizations to use.

Maggie DeSantis, a board member of Community Development Advocates of Detroit, said she worries that shutting down neighborhoods without having new uses ready is a “recipe for disaster” that will invite crime and illegal dumping. The group recently proposed such things as the creation of suburban-style neighborhoods and nature parks. Residents like Hardin want to keep their neighborhoods and eliminate the blight. “We just try to keep it up,” he said. “I’ve been doing it since I got it, so I don’t look at nobody trying to help me do anything.” For others, Bing’s plans could represent a way out. Willie Mae Pickens has lived in her near east-side home since the 1960s and has watched as friends and neighbors left. Her house is the only one standing on her side of the street. “They can buy it today. Any day,” said Pickens, 87, referring to city officials. “I’ll get whatever they’ll give me for it, because I want to leave.”

MORE MODEST VIEW
http://www.detroitmi.gov/DepartmentsandAgencies/MayorsOffice/ContacttheMayor/tabid/1238/Default.aspx
http://online.wsj.com/article/SB10001424052748703503804575083781073108438.html
Mayor Uses Census Tally Showing Decline as Benchmark in Overhaul
BY Alex P. Kellogg / February 27, 2010

This city is shrinking, and Mayor Dave Bing can live with that. The nation’s once-a-decade census, which gets under way next month, usually prompts expensive tally-building efforts by cities eager to maximize federal funding tied to the count. Detroit, which faces a population decline of as much as 150,000, has used that tactic in the past and once fought a successful court challenge to boost its count. But this time, Mr. Bing is pushing the city to embrace the bad news. The mayor is looking to the diminished tally, down from 951,270 in 2000, as a benchmark in his bid to reshape Detroit’s government, finances and perhaps even its geography to reflect its smaller population and tax base. That means, in part, cutting city services and laying off workers.

His approach to the census is a product of not only budget constraints but also a new, more modest view of the city’s prospects. “We’ve got to pick those core communities, those core neighborhoods” to sustain and preserve, he said at a recent public appearance, adding: “That’s something that’s possible here in Detroit.” Unlike his predecessors, Mr. Bing, a Democrat first elected last year to finish the term of disgraced former Mayor Kwame Kilpatrick, hasn’t touted big development plans or talked of a “renaissance.” Instead, he is trying to prepare residents for a new reality: that Detroit—like the auto industry that propelled it for a century—will have to get smaller before it gets bigger again.

With no high-profile census push, the city risks an undercount that would mean forgoing millions of dollars in federal funding. Nationwide, each person counted translates into about $1,000 to $1,200 in federal funding to municipal governments. But some community leaders see the hands-off approach as a sign the city’s leadership under Mr. Bing, a 66-year-old businessman and former basketball star, is prepared to face up to the depopulation problem and rethink Detroit’s future. “This is going to be hard to wrestle to the ground,” said Rip Rapson, president of the Kresge Foundation of Troy, Mich., a national philanthropy that has invested heavily in development projects aimed at salvaging the nicest remnants of the city. “He deserves enormous credit for leading the community into this.”

Soon after being elected to a full term in November, Mr. Bing began cutting back on city services such as buses and laying off hundreds of municipal workers. The mayor is now making plans to shutter or consolidate city departments and tear down 10,000 vacant buildings. And Mr. Bing is supporting efforts to shrink the capacity of the city’s school system by half. Along with the mayor, a number of academics and philanthropic groups are sketching visions of a different Detroit. One such vision has urban farms and park spaces filling the acres of barren patches where people once lived and worked. In a city of roughly 140 square miles, vacant residential and commercial property accounts for an estimated 40 square miles, an area larger than the city of Miami. “The potential of this open space is enormous,” said Dan Pitera, an architect at the University of Detroit Mercy who has done land-use studies on the city.

Thirty years ago, Mayor Coleman Young fought the census count in federal court, setting a precedent by arguing successfully that it missed tens of thousands of residents and cost Detroit millions in federal dollars. In 2000, Mayor Dennis Archer worked with schools, health clinics, neighborhood associations, charities and the like to pump up the numbers. The city even paid for census registration to be done at special block parties it helped throw. But that last count was ultimately a blow to Detroit’s pride, pinning its population below one million for the first time since the 1920s. At its peak in the 1950s, the city had been home to nearly two million people. Some experts believe the population will eventually settle just below 700,000, about the current size of Charlotte, N.C.

Long-term declines triggered by suburban sprawl, home-loan bias and racial strife have accelerated in recent years as home foreclosures and auto-industry cutbacks tear through even more stable, wealthy neighborhoods. Meanwhile, declining home values in Detroit’s better-off suburbs have made them more accessible to the city’s poorer residents, fueling the flight. The city is counting on nonprofit partners to take the lead on the census this year, rather than funding efforts itself. But with a population that is widely dispersed and largely poor and minority—two segments traditionally disinclined to fill out government paperwork—Detroit is already difficult to count. In the last census, just 62% of Detroiters responded, compared with an average of 71% statewide. “That’s why I keep telling the city, ‘you are in trouble,’ ” said Kurt Metzger, director of Data Driven Detroit, an organization founded by large local philanthropies that want to help the city collect accurate demographic, housing, economic and other information. “Unfortunately, they don’t have the resources.” Erica Hill, the mayor’s census coordinator, says Detroit is in a bind. It knows an undercount would be costly, but it is too broke to promote the census the way it used to. “We need to make sure the city gets its due,” she said. But “we have to be creative and build a lot of partnerships to make this happen.”

ECONOMIES OF SCALE
http://www.hantzgroup.com/
http://www.hantzfarmsdetroit.com/press.html
http://money.cnn.com/2009/12/29/news/economy/farming_detroit.fortune/index.htm
Can farming save Detroit?
BY David Whitford / December 29, 2009

John Hantz is a wealthy money manager who lives in an older enclave of Detroit where all the houses are grand and not all of them are falling apart. Once a star stockbroker at American Express, he left 13 years ago to found his own firm. Today Hantz Financial Services has 20 offices in Michigan, Ohio, and Georgia, more than 500 employees, and $1.3 billion in assets under management. Twice divorced, Hantz, 48, lives alone in clubby, paneled splendor, surrounded by early-American landscapes on the walls, an autograph collection that veers from Detroit icons such as Ty Cobb and Henry Ford to Baron von Richthofen and Mussolini, and a set of Ayn Rand first editions. With a net worth of more than $100 million, he’s one of the richest men left in Detroit — one of the very few in his demographic who stayed put when others were fleeing to Grosse Pointe and Bloomfield Hills. Not long ago, while commuting, he stumbled on a big idea that might help save his dying city.

Every weekday Hantz pulls his Volvo SUV out of the gated driveway of his compound and drives half an hour to his office in Southfield, a northern suburb on the far side of Eight Mile Road. His route takes him through a desolate, postindustrial cityscape — the kind of scene that is shockingly common in Detroit. Along the way he passes vacant buildings, abandoned homes, and a whole lot of empty land. In some stretches he sees more pheasants than people. “Every year I tell myself it’s going to get better,” says Hantz, bright-eyed, with smooth cheeks and a little boy’s carefully combed haircut, “and every year it doesn’t.” Then one day about a year and a half ago, Hantz had a revelation. “We need scarcity,” he thought to himself as he drove past block after unoccupied block. “We can’t create opportunities, but we can create scarcity.” And that, he says one afternoon in his living room between puffs on an expensive cigar, “is how I got onto this idea of the farm.”

Yes, a farm. A large-scale, for-profit agricultural enterprise, wholly contained within the city limits of Detroit. Hantz thinks farming could do his city a lot of good: restore big chunks of tax-delinquent, resource-draining urban blight to pastoral productivity; provide decent jobs with benefits; supply local markets and restaurants with fresh produce; attract tourists from all over the world; and — most important of all — stimulate development around the edges as the local land market tilts from stultifying abundance to something more like scarcity and investors move in. Hantz is willing to commit $30 million to the project. He’ll start with a pilot program this spring involving up to 50 acres on Detroit’s east side. “Out of the gates,” he says, “it’ll be the largest urban farm in the world.”

This is possibly not as crazy as it sounds. Granted, the notion of devoting valuable city land to agriculture would be unfathomable in New York, London, or Tokyo. But Detroit is a special case. The city that was once the fourth largest in the country and served as a symbol of America’s industrial might has lately assumed a new role: North American poster child for the global phenomenon of shrinking postindustrial cities. Nearly 2 million people used to live in Detroit. Fewer than 900,000 remain. Even if, unlikely as it seems, the auto industry were to rebound dramatically and the U.S. economy were to come roaring back tomorrow, no one — not even the proudest civic boosters — imagines that the worst is over. “Detroit will probably be a city of 700,000 people when it’s all said and done,” says Doug Rothwell, CEO of Business Leaders for Michigan. “The big challenge is, What do you do with a population of 700,000 in a geography that can accommodate three times that much?”

Whatever the answer is, whenever it comes, it won’t be predicated on a return to past glory. “We have to be realistic,” says George Jackson, CEO of the Detroit Economic Growth Corp. (DEGC). “This is not about trying to re-create something. We’re not a world-class city.” If not world class, then what? A regional financial center? That’s already Chicago, and to a lesser extent Minneapolis. A biotech hub? Boston and San Diego are way out in front. Some think Detroit has a future in TV and movies, but Hollywood is skeptical. (“Best incentives in the country,” one producer says. “Worst crew.”) How about high tech and green manufacturing? Possibly, given the engineering and manufacturing talent that remains. But still there’s the problem of what to do with the city’s enormous amount of abandoned land, conservatively estimated at 40 square miles in a sprawling metropolis whose 139-square-mile footprint is easily bigger than San Francisco, Boston, and Manhattan combined. If you let it revert to nature, you abandon all hope of productive use. If you turn it over to parks and recreation, you add costs to an overburdened city government that can’t afford to teach its children, police its streets, or maintain the infrastructure it already has.

Faced with those facts, a growing number of policymakers and urban planners have begun to endorse farming as a solution. Former HUD secretary Henry Cisneros, now chairman of CityView, a private equity firm that invests in urban development, is familiar with Detroit’s land problem. He says he’s in favor of “other uses that engage human beings in their maintenance, such as urban agriculture.” After studying the city’s options at the request of civic leaders, the American Institute of Architects came to this conclusion in a recent report: “Detroit is particularly well suited to become a pioneer in urban agriculture at a commercial scale.” In that sense, Detroit might actually be ahead of the curve. When Alex Krieger, chairman of the department of urban planning and design at Harvard, imagines what the settled world might look like half a century from now, he sees “a checkerboard pattern” with “more densely urbanized areas, and areas preserved for various purposes such as farming.

The notion of a walled city, a contained city — that’s an 18th-century idea.” And where will the new ideas for the 21st century emerge? From older, decaying cities, Krieger believes, such as New Orleans, St. Louis, Cleveland, Newark, and especially Detroit — cities that have become, at least in part, “kind of empty containers.” This is a lot to hang on Hantz. Most of what he knows about agriculture he’s picked up over the past 18 months from the experts he’s consulting at Michigan State and the Kellogg Foundation. Then there’s the fact that many of his fellow citizens are openly rooting against him. Since word leaked of his scheme last spring, he has been criticized by community activists, who call the plan a land grab. Opponents have also raised questions about the run-ins he’s had with regulators at Hantz Financial. But Detroit is nothing if not desperate for new ideas, and Hantz has had no trouble getting his heard. “It all sounds very exciting,” says the DEGC’s Jackson, whose agency is working on assembling a package of incentives for Hantz, including free city land. “We hope it works.”

Detroit’s civic history is notable for repeated failed attempts to revitalize its core. Over the past three decades leaders have embraced a series of downtown redevelopment plans that promised to save the city. The massive Renaissance Center office and retail complex, built in the 1970s, mostly served to suck tenants out of other downtown buildings. (Today 48 of those buildings stand empty.) Three new casinos (one already bankrupt) and two new sports arenas (one for the NFL’s dreadful Lions, the other for MLB’s Tigers) have restored, on some nights, a little spark to downtown Detroit but have inspired little in the way of peripheral development. Downtown is still eerily underpopulated, the tax base is still crumbling, and people are still leaving. The jobless rate in the city is 27%. Nothing yet tried in Detroit even begins to address the fundamental issue of emptiness — empty factories, empty office buildings, empty houses, and above all, empty lots. Rampant arson, culminating in the annual frenzy of Devil’s Night, is partly to blame. But there has also been a lot of officially sanctioned demolition in Detroit. As white residents fled to the suburbs over the decades, houses in the decaying neighborhoods they left behind were often bulldozed.

Abandonment is an infrastructure problem, when you consider the cost of maintaining far-flung roads and sewer systems; it’s a city services problem, when you think about the inefficiencies of collecting trash and fighting crime in sparsely populated neighborhoods; and it’s a real estate problem. Houses in Detroit are selling for an average of $15,000. That sounds like a buying opportunity, and in fact Detroit looks pretty good right now to a young artist or entrepreneur who can’t afford anyplace else — but not yet to an investor. The smart money sees no point in buying as long as fresh inventory keeps flooding the market. “In the target sites we have,” says Hantz, “we [reevaluate] every two weeks.”

As Hantz began thinking about ways to absorb some of that inventory, what he imagined, he says, was a glacier: one broad, continuous swath of farmland, growing acre by acre, year by year, until it had overrun enough territory to raise the scarcity alarm and impel other investors to act. Rick Foster, an executive at the Kellogg Foundation whom Hantz sought out for advice, nudged him gently in a different direction. “I think you should make pods,” Foster said, meaning not one farm but many. Hantz was taken right away with the concept of creating several pods — or lakes, as he came to think of them — each as large as 300 acres, and each surrounded by its own valuable frontage. “What if we had seven lakes in the city?” he wondered. “Would people develop around those lakes?”

To increase the odds that they will, Hantz plans on making his farms both visually stunning and technologically cutting edge. Where there are row crops, Hantz says, they’ll be neatly organized, planted in “dead-straight lines — they may even be in a design.” But the plan isn’t to make Detroit look like Iowa. “Don’t think a farm with tractors,” says Hantz. “That’s old.” In fact, Hantz’s operation will bear little resemblance to a traditional farm. Mike Score, who recently left Michigan State’s agricultural extension program to join Hantz Farms as president, has written a business plan that calls for the deployment of the latest in farm technology, from compost-heated greenhouses to hydroponic (water only, no soil) and aeroponic (air only) growing systems designed to maximize productivity in cramped settings.

He’s really excited about apples. Hantz Farms will use a trellised system that’s compact, highly efficient, and tourist-friendly. It won’t be like apple picking in Massachusetts, and that’s the point. Score wants visitors to Hantz Farms to see that agriculture is not just something that takes place in the countryside. They will be able to “walk down the row pushing a baby stroller,” he promises. Crop selection will depend on the soil conditions of the plots that Hantz acquires. Experts insist that most of the land is not irretrievably toxic. The majority of the lots now vacant in Detroit were residential, not industrial; the biggest problem is how compacted the soil is. For the most part the farms will focus on high-margin edibles: peaches, berries, plums, nectarines, and exotic greens. Score says that the first crops are likely to be lettuce and heirloom tomatoes.

Hantz says he’s willing to put up the entire $30 million investment himself — all cash, no debt — and immediately begin hiring locally for full-time positions. But he wants two things first from Jackson at the DEGC: free tax-delinquent land, which he’ll combine with his own purchases, he says (he’s aiming for an average cost of $3,000 per acre, in line with rural farmland in southern Michigan), and a zoning adjustment that would create a new, lower tax rate for agriculture. There’s no deal yet, but neither request strikes Jackson as unattainable. “If we have reasonable due diligence,” he says, “I think we’ll give it a shot.”

Detroit mayor Dave Bing is watching closely. The Pistons Hall of Fame guard turned entrepreneur has had what his spokesman describes as “productive discussions” with Hantz. In a statement to Fortune, Bing says he’s “encouraged by the proposals to bring commercial farming back to Detroit. As we look to diversify our economy, commercial farming has some real potential for job growth and rebuilding our tax base.” Hantz, for his part, says he’s got three or four locations all picked out (“one of them will pop”) and is confident he’ll have seeds in the ground “in some sort of demonstration capacity” this spring. “Some things you’ve got to see in order to believe,” he says, waving his cigar. “This is a thing you’ve got to believe in order to see.”

Many have a hard time making that leap. When news of Hantz’s ambitious plan broke in the Detroit papers last spring, few people even knew who he was. A little digging turned up a less-than-spotless record at Hantz Financial Services. The firm has paid fines totaling more than $1 million in the past five years, including $675,000 in 2005, without admitting or denying guilt, “for fraud and misrepresentations relating to undisclosed revenue-sharing arrangements, as well as other violations,” according to the Financial Industry Regulatory Authority. (Hantz responds, “If we find something that isn’t in compliance, we take immediate steps to correct the problem.”)

Hantz Farms’ first hire, VP Matt Allen, did have an established reputation in Detroit, but it wasn’t a good one. Two years ago, while he was press secretary for former Detroit mayor Kwame Kilpatrick, Allen pleaded guilty to domestic violence and obstructing police after his wife called 911. He was sentenced to a year’s probation. Hantz says he has known Allen for many years and values his deep knowledge of the city. “He has earned a second chance, and I’m willing to give it to him,” he says. Some of Hantz’s biggest skeptics, ironically, are the same people who’ve been working to transform Detroit into a laboratory for urban farming for years, albeit on a much smaller scale. The nonprofit Detroit Agriculture Network counts nearly 900 urban gardens within the city limits. That’s a twofold increase in two years, and it places Detroit at the forefront of a vibrant national movement to grow more food locally and lessen the nation’s dependence on Big Ag.

None of those gardens is very big (average size: 0.25 acre), and they don’t generate a lot of cash (most don’t even try), but otherwise they’re great: as antidotes to urban blight; sources of healthy, affordable food in a city that, incredibly, has no chain supermarkets; providers of meaningful, if generally unpaid, work to the chronically unemployed; and beacons around which disintegrating communities can begin to regather themselves. That actually sounds a lot like what Hantz envisions his farms to be in the for-profit arena. But he doesn’t have many fans among the community gardeners, who feel that Hantz is using his money and connections to capitalize on their pioneering work. “I’m concerned about the corporate takeover of the urban agriculture movement in Detroit,” says Malik Yakini, a charter school principal and founder of the Detroit Black Community Food Security Network, which operates D-Town Farm on Detroit’s west side. “At this point the key players with him seem to be all white men in a city that’s at least 82% black.”

Hantz, meanwhile, has no patience for what he calls “fear-based” criticism. He has a hard time concealing his contempt for the nonprofit sector generally. (“Someone must pay taxes,” he sniffs.) He also flatly rejects the idea that he’s orchestrating some kind of underhanded land grab. In fact, Hantz says that he welcomes others who might want to start their own farms in the city. “Viability and sustainability to me are all that matters,” he says. And yet Hantz is fully aware of the potentially historic scope of what he is proposing. After all, he’s talking about accumulating hundreds, perhaps even thousands, of acres inside a major American city. And it’s clear that he views Hantz Farms as his legacy. Already he’s told his 21-year-old daughter, Lauren, his only heir, that if she wants to own the land one day, she has to promise him she’ll never sell it. “This is like buying a penthouse in New York in 1940,” Hantz says. “No one should be able to afford to do this ever again.” That might seem like an overly optimistic view of Detroit’s future. But allow Hantz to dream a little. Twenty years from now, when people come to the city and have a drink at the bar at the top of the Renaissance Center, what will they see? Maybe that’s not the right vantage point. Maybe they’ll actually be on the farm, picking apples, looking up at the RenCen. “That’s the beauty of being down and out,” says Hantz. “You can actually open your mind to ideas that you would never otherwise embrace.” At this point, Detroit doesn’t have much left to lose.

CITY SERVICES
http://www.instructables.com/id/Bicyle-Power-for-Your-Television,-Laptop,-or-Cell-/
http://www.treehugger.com/files/2010/01/pedal-power-in-detroit-green-gym-for-homeless.php
Pedal-Power in Detroit: Green Gym for the Homeless
BY Roberta Cruger / 01.27.10

Between 1950 and 1980, Detroit lost 500,000 trees to Dutch elm disease, urban expansion and attrition, according to Paul Bairley, director of Urban Forestry for The Greening of Detroit. Among the city’s various environmental initiatives, it’s looking to slash residential land use by 30 percent, letting areas grow into natural greenways. There are green job initiatives, and for the homeless, a community center provides training for eco-conscious work and just opened a human-generated workout room. With green gyms popping up in Seattle and Hong Kong, why aren’t we tapping into sweat equity everywhere?

Gives new meaning to upcyling
Converting otherwise wasted energy, from the kinetic motion of treadmills, elliptical machines, and stationary bikes, into renewable energy is cost-effective and energy-efficient. That’s what a community organization in Detroit did this week with its new green gym, for people living in its transitional housing and other shelter programs, staff and volunteers. “Not only is this gym a good idea for the environment, but it will help build the general health of our clients who often struggle with diabetes or heart disease,” states Rev. Faith Fowler, the executive director.

The Cass Green Gym’s facility offers weight machines, boxing bags, a treadmill, and stationary bikes featuring Green Revolution technology that generates electricity. Cass Community Social Services (CCSS), located on Detroit’s Cass Avenue, projects that full classes with ten people, is enough power to light three homes for an entire year. It will redirect it back to the building’s electrical grid, reducing operating costs.

The company, Green Revolution, taps into pedal power, providing exercise machines and consulting to facilities, harnessing the energy of gym rats into green power. Its technology can be installed on most brands of indoor cycling equipment. At its retrofit gym in Ridgefield, Connecticut, a typical cycling class with 20 bikes has the potential to produce up to 3.6 Megawatts (3,600,000 watts) of renewable energy a year. This is equivalent to lighting 72 homes for a month, and reduces carbon emissions by over 5,000 pounds.

CCSS also links job training and permanent employment with ways to reduce the footprint. One venture, modeled after a Native American enterprise in Oklahoma, recycles old illegally dumped tires from vacant lots and converts them into mud mats. So far, formerly homeless men have collected more than 5,000 tires and sold over 2,000 mats. Another of its programs involves x-ray recycling, removing patient information from films and packaging the remains for recycling. And its document shredding effort will reuse the paper for insulation in seniors and low-income homes. As a native Detroiter, who worked a block from this center, renewal efforts are personally meaningful to me — and it should be for all of us. It was heartening to read a Time article on addressing urban post-industrial problems: “we could regenerate not just a city but our sense of who we are.”

PATHWAYS OF
http://www.jamesgriffioen.net/index.php?/prairies/feral-houses/
http://www.jamesgriffioen.net/trailmode.png
http://www.sweet-juniper.com/2009/06/streets-with-no-name.html
Streets With No Name
BY James Griffioen / June 23, 2009

This past winter, the snow stayed so long we almost forgot what the ground looked like. In Detroit, there is little money for plowing; after a big storm, the streets and sidewalks disappear for days. Soon new pathways emerge, side streets get dug out one car-width wide. Bootprints through parks veer far from the buried sidewalks. Without the city to tell him where to walk, the pilgrim who first sets out in fresh snowfall creates his own path. Others will likely follow, or forge their own paths as needed. In the heart of summer, too, it becomes clear that the grid laid down by the ancient planners is now irrelevant. In vacant lots between neighborhoods and the attractions of thoroughfares, bus stops and liquor stores, well-worn paths stretch across hundreds of vacant lots. Gaston Bachelard called these les chemins du désir: pathways of desire. Paths that weren’t designed but eroded casually away by individuals finding the shortest distance between where they are coming from and where they intend to go.


photo by James Griffioen

It is an urban legend on many college campuses that many sidewalks and pathways were not planned at all, but paved by the university after students created their own paths from building to building, straying from those originally prescribed. The Motor City, like a college campus, has a large population that cannot afford cars, relying instead on bikes and feet to meet its needs. With enormous swaths of the city returning to prairie, where sidewalks are irrelevant and sometimes even dangerous, desire lines have become an integral yet entirely unintended part of the city’s infrastructure. There are hundreds of these prescriptive easements across neglected lots throughout the city. Desire lines are considered by many landscape architects to be proof of a flaw in the design of a physical space, or more gently, a sign that concrete cannot always impose its will on the human mind. But what about a physical space that no longer resembles its intended design, a city where tens of thousands of homes have been abandoned, burned, and buried in their own basements? While actual roads and sidewalks crumble with each season of freezing and thawing, Detroiters have taken it upon themselves to create new paths, in their own small way working to create a city that better suits their needs.


photo by James Griffioen

Academics around the world argue about whether the first paths were created by hunters following game trails. There are scientists who study ants to better understand highways. They have created mathematical models for trail formation. When the great cities were built, sometimes roads were built along ancient paths. The Romans imposed grids on every city but their own. In Detroit many of the streets are named for the Frenchmen whose ribbon farms stretching north from the river were covered in asphalt: Beaubien, Dequindre, Campau, Livernois, Chene. In many cities, there are streets named for dead men once revered throughout the land but now mostly forgotten (Fulton, Lafayette, Irving) and others named for men no one remembers. In Detroit, there are streets no one has named. And they belong to anyone.


photo by James Griffioen

LAST DAYS
http://www.guardian.co.uk/film/2010/mar/10/detroit-motor-city-urban-decline
Detroit is a city in terminal decline. When film director Julien Temple arrived in town, he was shocked by what he found – but he also uncovered reasons for hope
BY Julien Temple / 10 March 2010

When the film- maker Roger Graef approached me last year to make a film about the rise and fall of Detroit I had very few preconceptions about the place. Like everyone else, I knew it as the Motor City, one of the great epicentres of 20th-century music, and home of the American automobile. Only when I arrived in the city itself did the full-frontal cultural car crash that is 21st-century Detroit became blindingly apparent. Leaving behind the gift shops of the “Big Three” car manufacturers, the Motown merchandise and the bizarre ejaculating fountains of the now-notorious international airport, things become stranger and stranger. The drive along eerily empty ghost freeways into the ruins of inner-city Detroit is an Alice-like journey into a severely dystopian future. Passing the giant rubber tyre that dwarfs the nonexistent traffic in ironic testament to the busted hubris of Motown’s auto-makers, the city’s ripped backside begins to glide past outside the windows.

Like The Passenger, it’s hard to believe what we’re seeing. The vast, rusting hulks of abandoned car plants, (some of the largest structures ever built and far too expensive to pull down), beached amid a shining sea of grass. The blackened corpses of hundreds of burned-out houses, pulled back to earth by the green tentacles of nature. Only the drunken rows of telegraph poles marching away across acres of wildflowers and prairie give any clue as to where teeming city streets might once have been. Approaching the derelict shell of downtown Detroit, we see full-grown trees sprouting from the tops of deserted skyscrapers. In their shadows, the glazed eyes of the street zombies slide into view, stumbling in front of the car. Our excitement at driving into what feels like a man-made hurricane Katrina is matched only by sheer disbelief that what was once the fourth-largest city in the US could actually be in the process of disappearing from the face of the earth. The statistics are staggering – 40sq miles of the 139sq mile inner city have already been reclaimed by nature.

One in five houses now stand empty. Property prices have fallen 80% or more in Detroit over the last three years. A three-bedroom house on Albany Street is still on the market for $1. Unemployment has reached 30%; 33.8% of Detroit’s population and 48.5% of its children live below the poverty line. Forty-seven per cent of adults in Detroit are functionally illiterate; 29 Detroit schools closed in 2009 alone. But statistics tell only one part of the story. The reality of Detroit is far more visceral. My producer, George Hencken, and I drove around recce-ing our film, getting out of the car and photographing extraordinary places to film with mad-dog enthusiasm – everywhere demands to be filmed – but were greeted with appalled concern by Bradley, our friendly manager, on our return to the hotel. “Never get out of the car in that area – people have been car-jacked and shot.”

Law and order has completely broken down in the inner city, drugs and prostitution are rampant and unless you actually murder someone the police will leave you alone. This makes it great for filming – park where you like, film what you like – but not so good if you actually live there. The abandoned houses make great crack dens and provide cover for appalling sex crimes and child abduction. The only growth industry is the gangs of armed scrappers, who plunder copper and steel from the ruins. Rabid dogs patrol the streets. All the national supermarket chains have pulled out of the inner city. People have virtually nowhere to buy fresh produce. Starbucks? Forget it. What makes all this so hard to understand is that Detroit was the frontier city of the American Dream – not just the automobile, but pretty much everything we associate with 20th-century western civilisation came from there. Mass production; assembly lines; stop lights; freeways; shopping malls; suburbs and an emerging middle-class workforce: all these things were pioneered in Detroit.

But the seeds of the Motor City’s downfall were sown a long time ago. The blind belief of the Big Three in the automobile as an inexhaustible golden goose, guaranteeing endless streams of cash, resulted in the city becoming reliant on a single industry. Its destiny fatally entwined with that of the car. The greed-fuelled willingness of the auto barons to siphon up black workers from the American south to man their Metropolis-like assembly lines and then treat them as subhuman citizens, running the city along virtually apartheid lines, created a racial tinderbox. The black riots of 1943 and 1967 gave Detroit the dubious distinction of being the only American city to twice call in the might of the US army to suppress insurrection on its own streets and led directly to the disastrous so-called white flight of the 50s, 60s and 70s.

The population of Detroit is now 81.6% African-American and almost two-thirds down on its overall peak in the early 50s. The city has lost its tax base and cannot afford to cut the grass or light its streets, let alone educate or feed its citizens. The rest of the US is in denial about the economic catastrophe that has engulfed Detroit, terrified that this man-made contagion may yet spread to other US cities. But somehow one cannot imagine the same fate befalling a city with a predominantly white population. On many levels Detroit seems to be an insoluble disaster with urgent warnings for the rest of the industrialised world. But as George and I made our film we discovered, to our surprise, an irrepressible positivity in the city. Unable to buy fresh food for their children, people are now growing their own, turning the demolished neighbourhood blocks into urban farms and kick-starting what is now the fastest-growing movement across the US. Although the city is still haemorrhaging population, young people from all over the country are also flooding into Detroit – artists, musicians and social pioneers, all keen to make use of the abandoned urban spaces and create new ways of living together.

With the breakdown of 20th-century civilisation, many Detroiters have discovered an exhilarating sense of starting over, building together a new cross-racial community sense of doing things, discarding the bankrupt rules of the past and taking direct control of their own lives. Still at the forefront of the American Dream, Detroit is fast becoming the first “post-American” city. And amid the ruins of the Motor City it is possible to find a first pioneer’s map to the post-industrial future that awaits us all. So perhaps Detroit can avoid the fate of the lost cities of the Maya and rise again like the phoenix that sits, appropriately, on its municipal crest. That is why George and I decided to call our film Requiem for Detroit? – with a big question mark at the end.

MEANWHILE

ICE HOUSE DETROIT
http://www.flickr.com/groups/icehousedetroit/
http://icehousedetroit.blogspot.com/
“It should be noted that The Michigan State land bank’s executive director Carrie Lewand-Monroe, And Development Specialist Khalilah Burt both extended themselves for a community based project in a manner that is not so commonly seen in other States. It is because of their continued interest in community stabilization, and their goal of fostering the development of the blighted, tax reverted properties that they got behind our project from the very beginning. Michigan State Land Bank- thank you for keeping Michigan a productive State.”

Michigan State Land Bank
http://www.michigan.gov/dleg/0,1607,7-154-34176-200357–,00.html
http://www.michigan.gov/dleg/0,1607,7-154-34176-127130–,00.html
http://www.michigan.gov/dleg/0,1607,7-154-34176_37400—,00.html

THE NON-MYTHOLOGICAL $1 DOLLAR HOUSE
http://www.guardian.co.uk/business/2010/mar/02/detroit-homes-mortgage-foreclosures-80
Detroit homes sell for $1 amid mortgage and car industry crisis
BY Chris McGreal / 2 March 2010
One in five houses left empty as foreclosures mount and property prices drop by 80%

Some might say Jon Brumit overpaid when he stumped up $100 (£65) for a whole house. Drive through Detroit neighbourhoods once clogged with the cars that made the city the envy of America and there are homes to be had for a single dollar. You find these houses among boarded-up, burnt-out and rotting buildings lining deserted streets, places where the population is shrinking so fast entire blocks are being demolished to make way for urban farms. “I was living in Chicago and a friend told me that houses in Detroit could be had for $500,” said Brumit, a financially strapped artist who thought he had little prospect of owning his own property. “I said if you hear of anything just a little cheaper let me know. Within a week he emails me a photo of a house for $100. I thought that’s just crazy. Why not? It’s a way to cut our expenses way down and kind of open up a lot of time for creative projects because we’re not working to pay the rent.”

Houses on sale for a few dollars are something of an urban legend in the US on the back of the mortgage crisis that drove millions of people from their homes. But in Detroit it is no myth. One in five houses now stand empty in the city that launched the automobile age, forged America’s middle-class and blessed the world with Motown. Detroit has been in decline for decades; its falling population is now well below a million – half of its 1950 peak. But the recent mortgage crisis and the fall of the big car makers into bankruptcy has pushed the town into a realm unique among big cities in America.

A third of the population are unemployed. Property prices have fallen 80% or more in large parts of Detroit over the last three years. The average price of a home sold in the city last year has been put at $7,500 (£4,900). The recent financial crash forced wholesale foreclosures among people unable to pay their mortgages or who walked away from houses that fell to a fraction of the value of the loans they had taken out on them. Banks are selling off properties in the worst neighbourhoods, which are usually surrounded by empty and wrecked housing, for a few dollars each. But even better houses can be had at a fraction of their former value.

Technically, Brumit paid $95 for the land and $5 for the house on Lawley Street – which fitted what estate agents euphemistically call an opportunity. Brumit said: “It had a big hole in the roof from the fire department putting out the last of two arson attempts. Both previous owners tried to set it on fire to get out of the mortgages. So there’s a big hole about 24ft long and the plumbing had almost entirely been ripped out and most of the electrics too. It was basically a smoke damaged, structurally intact shell with a snowdrift in the attic.” Setting fire to houses to claim the insurance and kill off the mortgage is not uncommon in Detroit; a blackened, wooden corpse of a house sits at the bottom of Brumit’s street. But it is more common for owners to just walk away from their homes and mortgages.

On the opposite side of Lawley Street Jim Feltner and his workers were clearing out a property seized by a bank. “I used to be a building contractor. I was buying up places and doing them up. Now I empty out foreclosures. I do one or two of these a day all over the city,” he said. “I’ve been in Detroit 40 years and I’ve watched the peak up to $100,000 for houses that right now aren’t worth more than $20,000 tops. I own a bunch of properties. I have 10 rentals and I can’t get nothing for them, and they’re beautiful homes.”

Feltner’s workers are dragging clothes, boots and furniture out of the bedrooms and living room, and dumping them in the front yard until a skip arrives. Kicked to one side is a box of 1970s Motown records. A teddy bear lies spreadeagled on the floor. “You could get about five grand for this place,” said Feltner. “Nice house once you clean it out. All the plumbing and electricals are in it. Roof don’t leak.” Brumit said a man called Jesse lived there. “Jesse had mentioned that he was probably going to get out of there because he knew he could buy a place for so much less than he owed. That’s a drag. You don’t want to see people leaving,” he said.

The house next door is abandoned. On the next street, one third of the properties are boarded up. It’s a story replicated across Detroit. Joan Wilson, an estate agent in the north-west of the city, whose firm is offering a three-bedroom house on Albany street for $1, says that more than half of the houses she sells are foreclosures in the tens of thousands of dollars. “The vast majority of people that call to enquire, almost the first thing out of their mouth is that they want to buy a foreclosure. I have had telephone calls from people looking online that live, for example, in England or California, who’ve never set foot in the area. They’re calling about one specific house they see online. I tell them they need to look at the neighbourhood. Is it the only house standing within a mile?”

But what is blight to some is proving an opportunity to remake parts of the city for others living there. The Old Redford part of Detroit has suffered its share of desolation. The police station, high school and community centre are closed. Yet the area is being revitalised, led by John George, a resident who began by boarding up an abandoned house used by drug dealers 21 years ago and who now heads the community group Blight Busters. They are pulling down housing that cannot be saved and creating community gardens with fresh vegetables free for anyone to pick. “There’s longstanding nuisance houses, been around seven, eight, nine years. We will go in without a permit and demolish them without permission,” said George. “If you, as an owner, are going to leave something like that to fester in my neighbourhood, obviously you either don’t care or aren’t in a position to take responsibility for your property, so we’re going to take care of it for you.” Blight Busters has torn down more than 200 houses, including recently an entire block of abandoned housing in Old Redford. “We need to right-size this community, which means removing whole blocks, and building farms, larger gardens, putting in windmills. We want to downsize – right-size – Detroit,” George said.

Houses that can be rescued are done up with grants from foundations. “Detroit has some of the nicest housing stock in the country. Brick, marble, hardwood floors, leaded glass. These houses were built for kings,” George added. “We gave a $90,000 house to a lady who was living in a car. She had four children. It didn’t cost her a dime. We had over a thousand people apply for it. It’s probably worth $35,000 now.” Old Redford is seeing piecemeal renewal. One abandoned block of shops has been converted to an arts centre and music venue with cafes. One of the few remaining cinemas in Detroit – and one that’s among the last in the US with an original pipe organ – has been revived and is showing Breakfast at Tiffany’s. Brumit calculates that he has spent $1,500 to buy and do up his house, principally by scavenging demolition sites. He will move in with his wife and four-month-old child once it is complete, probably in the summer. He said: “The Americans we know got ripped off by the American dream. But [the renovation] is the most like moving out of the country that we can actually do. We’re the minority in terms of ethnicity and this is a rich environment … there’s 30% open space in the city and that doesn’t include the buildings that should be torn down. You’re in a city riding your bike around and you hear birds and stuff. It’s incredible.”

TIGGERRIFIC

DDD PROJECT
http://www.tyreeguyton.com/
http://www.heidelberg.org/FAQ.html
http://hamtramckstar.com/index.php/auburndale_st
http://www.thedetroiter.com/b2evoArt/blogs/index.php?blog=2&title=why_art_3_paint_the_town_orange
http://www.thedetroiter.com/nov05/disneydemolition.php
(Editor’s note: This statement arrived anonymously in our inbox recently and we felt it would be of interest to our readers.)

In the “D”, “D” doesn’t really stand for “Detroit”, but “Demolition.” Take a look around and you’ll notice a great number of buildings marked on the front with a circled “D” in faint chalk. Off to the side, many of these same buildings will also have a noticeable dot, courtesy of our own native son, Tyree Guyton. These dotted buildings have stood for so long that they have become, arguably, the most memorable landmarks of our fair city. In addition to Tyree Guyton, Detroit has had more than its fair share of artists who have taken notice of this situation and done something about it. Recently, however, we have taken up a particular project that has actually netted results – faster than anyone, especially us, could have anticipated.

The artistic move is simple, cover the front in Tiggeriffic Orange – a color from the Mickey Mouse series, easily purchased from Home Depot. Every board, every door, every window, is caked in Tiggeriffic Orange. We paint the facades of abandoned houses whose most striking feature are their derelict appearance. A simple drive would show you some of our most visible targets. Just off I-75, around the Caniff/ Holbrook exit, on the west side, towers a three story house, saturated so deeply in orange that it reflects color onto the highway with the morning sun. Also, on the east side of the highway by the McNichols exit, is another house screaming orange. In that same area, where the Davison Highway and John C Lodge M-10 Highway intersect, sit a series of two houses painted orange, most visible from the Lodge side. In our only location not visible from the highway, on the Warren detour between 94 and 96 on Hancock Street, sat a house so perfectly set in its color that it garnered approval from the Detroit Police Department.

Two of four locations have already been demolished. Of the four, the building on Dequindre, by the Caniff/ Holbrook exit, remains, as does the site that intersects the Lodge and Davison. There was no “D” on any of the façades, only burnt boards, broken glass, and peeling paint. Rallying around these elements of decay, we seek to accentuate something that has wrongfully become part of the everyday landscape. So the destruction of two of these four houses raises a number of interesting points. From one perspective, our actions have created a direct cause and effect relationship with the city. As in, if we paint a house orange, the city will demolish it. In this relationship, where do the city’s motivations lie? Do they want to stop drawing attention to these houses? Are the workers simply confused and think this is the city’s new mark for demolition? Or is this a genuine response to beautify the city?

From another perspective, we have coincidently chosen buildings that were set to be demolished within the month. However, with so many circled “D”s on buildings, it seems near impossible that chance would strike twice. In any case, what will be the social ramifications of these actions? Each of these houses serves within the greater visual and social landscape of the city. If the city doesn’t rebuild, will it be better to have nothing there rather than an abandoned house? In addition, each of these houses served as a shelter for the homeless at some point in time. Now there are, at least, two less houses for them. Why didn’t the city simply choose to renovate? Everything affects not only our experience now, but also that of the next generation. So before they are all gone, look for these houses. Look at ALL the houses in Detroit. If you stumble upon one of these houses colored with Tiggeriffic Orange, stop and really look. In addition to being highlights within a context of depression, every detail is accentuated through the unification of color. Broken windows become jagged lines. Peeling paint becomes texture. These are artworks in themselves.

If you see a house that you would like to see painted orange, paint it. Afterwards, email the good people at thedetroiter.com at ws [at] thedetroiter [dot] com. These buildings aren’t scenery. Don’t look through or around them. Take action. Pick up a roller. Pick up a brush. Apply orange.

The dialogue is going. Our goal is to make everyone look at not only these houses, but all the buildings rooted in decay and corrosion. If we can get people to look for our orange while driving through the city, then they will at the same time, be looking at all the decaying buildings they come across. This brings awareness. And as we have already seen, awareness brings action.

Yours Truly,
the DDD project

SEE ALSO

INCHVESTING
http://makeloveland.com/
http://7billionfriends.tumblr.com/
http://1000inchesinloveland.blogspot.com/
http://www.npr.org/templates/story/story.php?storyId=124252909&ft=1&f=1001
Inchvesting In Detroit: A Virtual Realty
BY Sarah Hulett / March 4, 2010

For $1, you can own a piece of Detroit. It will be a small piece: 1 square inch, to be exact. But your deed to that microplot of land will also buy you passage into an online community that could yield big ideas for the city. Jerry Paffendorf is not your typical real estate developer. But then, the people lining up to buy into his project are not your typical investors. He calls them “inchvestors.” Paffendorf’s project is called Loveland. And it’s a hybrid: part virtual and part physical. “What we want to do is we want to build this wild social network of people that’s literally built out of the dirt and the ground,” Paffendorf says. The physical part is a vacant lot on Vernor Highway in east Detroit. Paffendorf bought the property at auction for $500. Then he put 10,000 square inches up for sale, and people from all over the planet began snapping them up. They’ve now all been sold to nearly 600 people. The “deeds” Paffendorf mails out are not legally valid, so the people who buy inches won’t get to vote in Detroit, or have to pay taxes.

A Real-Life SimCity
Some inchvestors have sentimental ties to the city, and they just liked the idea of having a physical stake in the place where they — or their parents or grandparents — grew up. But a lot of them are attracted by the project’s virtual possibilities and say Loveland is sort of like the SimCity computer game, but with real land. Rita King is the biggest “landholder” in Loveland, with 1,000 square inches. She works for IBM, and she’s an entrepreneur with a firm that helps companies use social media and virtual worlds. King is excited about the project’s potential to help the real city in which Loveland sits. “Because Loveland is physically located in Detroit, it takes those 500 inchvestors, and it ties us to Detroit, which means that the development of Detroit is now of critical importance to hundreds of people who don’t live or work in Detroit,” King says. “And now I, for one, am starting to look very closely at Detroit, and how can I help Detroit level up along with Loveland in our small way.” “Leveling up” is a phrase from the world of video games. It’s what happens when the character you’re playing makes it to the next level in the game. And for many, it’s an apt description of what Detroit needs to do. King says she expects the online component of Loveland to include interactive maps and stories. And proceeds from the project’s next phase are expected to be used to fund grants for nonprofit groups around Detroit.

Feedback From Locals Not Always Positive
But for all the excitement about the possibilities Loveland holds among high-minded techno-futurists, the project is also fodder for derision and mockery in some quarters. Here’s a sampling of some of the comments posted to an online discussion board called Detroit YES: “Sounds like a pyramid scheme … without the pyramid.” – “A virtual art project? That sounds to me like a project that’s almost an art project.” – “This guy’s laughing all the way to the bank.” Bill Johnson, who goes by the pseudonym “Gnome” on Detroit YES, thinks the project is just exploitation. “You know in places outside Detroit, we’ve got a bad reputation as sort of a pitiful, worthless place,” Johnson says. “And this guy’s preying on that. That’s what he’s really peddling.”

An Optimism
Paffendorf says Detroit is a place of opportunity and creativity. He shares an optimism about the city and his project with Ricki Collins. She’s 9 years old and lives next door to the empty lot Paffendorf bought. Hers is the only house left on the block. “I want people to remember this place. Remember it. And I want people to come over so we can get to know each other, learn new things about each other,” Ricki says. It’s not clear how many of the people who have bought into the project will actually visit their square-inch plots in person. But King says she intends to make the trek from New York City. She also plans to install a mailbox so people can send things to and from the site.

ARTISTS IN RESIDENCE
http://www.powerhouseproject.com/index.php?/updates/move-to-detroit/
http://mitchcope.com/projects/detroit-book/
http://www.powerhouseproject.com/index.php?/property/the-neighborhood/
http://www.visitdesign99.com/index.php?/studio/the-neighborhood-project/
http://www.dia.org/PressReleases/showpressreleases.asp?ID=649

http://www.nytimes.com/2009/03/08/opinion/08barlow.html
For Sale: The $100 House
BY Toby Barlow / March 8, 2009

Recently, at a dinner party, a friend mentioned that he’d never seen so many outsiders moving into town. This struck me as a highly suspect statement. After all, we were talking about Detroit, home of corrupt former mayor Kwame Kilpatrick, beleaguered General Motors and the 0-16 Lions. Compared with other cities’ buzzing, glittering skylines, ours sits largely abandoned, like some hulking beehive devastated by colony collapse. Who on earth would move here? Then again, I myself had moved to Detroit, from Brooklyn. For $100,000, I bought a town house that sits downtown in the largest and arguably the most beautiful Mies van der Rohe development ever built, an island of perfect modernism forgotten by the rest of the world. Two other guests that night, a couple in from Chicago, had also just invested in some Detroit real estate. That weekend Jon and Sara Brumit bought a house for $100.

Ah, the mythical $100 home. We hear about these low-priced “opportunities” in down-on-their-luck cities like Detroit, Baltimore and Cleveland, but we never meet anyone who has taken the plunge. Understandable really, for if they were actually worth anything then they would cost real money, right? Who would do such a preposterous thing? A local couple, Mitch Cope and Gina Reichert, started the ball rolling. An artist and an architect, they recently became the proud owners of a one-bedroom house in East Detroit for just $1,900. Buying it wasn’t the craziest idea. The neighborhood is almost, sort of, half-decent. Yes, the occasional crack addict still commutes in from the suburbs but a large, stable Bangladeshi community has also been moving in.

So what did $1,900 buy? The run-down bungalow had already been stripped of its appliances and wiring by the city’s voracious scrappers. But for Mitch that only added to its appeal, because he now had the opportunity to renovate it with solar heating, solar electricity and low-cost, high-efficiency appliances. Buying that first house had a snowball effect. Almost immediately, Mitch and Gina bought two adjacent lots for even less and, with the help of friends and local youngsters, dug in a garden. Then they bought the house next door for $500, reselling it to a pair of local artists for a $50 profit. When they heard about the $100 place down the street, they called their friends Jon and Sarah. Admittedly, the $100 home needed some work, a hole patched, some windows replaced. But Mitch plans to connect their home to his mini-green grid and a neighborhood is slowly coming together.

Now, three homes and a garden may not sound like much, but others have been quick to see the potential. A group of architects and city planners in Amsterdam started a project called the “Detroit Unreal Estate Agency” and, with Mitch’s help, found a property around the corner. The director of a Dutch museum, Van Abbemuseum, has called it “a new way of shaping the urban environment.” He’s particularly intrigued by the luxury of artists having little to no housing costs. Like the unemployed Chinese factory workers flowing en masse back to their villages, artists in today’s economy need somewhere to flee. But the city offers a much greater attraction for artists than $100 houses. Detroit right now is just this vast, enormous canvas where anything imaginable can be accomplished. From Tyree Guyton’s Heidelberg Project (think of a neighborhood covered in shoes and stuffed animals and you’re close) to Matthew Barney’s “Ancient Evenings” project (think Egyptian gods reincarnated as Ford Mustangs and you’re kind of close), local and international artists are already leveraging Detroit’s complex textures and landscapes to their own surreal ends. In a way, a strange, new American dream can be found here, amid the crumbling, semi-majestic ruins of a half-century’s industrial decline. The good news is that, almost magically, dreamers are already showing up. Mitch and Gina have already been approached by some Germans who want to build a giant two-story-tall beehive. Mitch thinks he knows just the spot for it.

PREVIOUSLY
http://www.archive.org/details/LostLandscapesOfDetroit2010
http://www.archive.org/details/DetroitC1965
http://www.archive.org/details/detroit_youve_never_met_1
http://www.archive.org/details/detroit_youve_never_met_2

RIOTS of 1943

http://apps.detnews.com/apps/history/index.php?id=185
BY Vivian M. Baulch + Patricia Zacharias / Detroit News / 2.11.99

“Recruiters toured the South convincing whites and blacks to head north with promises of high wages in the new war factories. They arrived in such numbers that it was impossible to house them all. Blacks who believed they were heading to a promised land found a northern bigotry every bit as pervasive and virulent as what they thought they had left behind in the deep south. And southern whites brought their own traditional prejudices with them as both races migrated northward. The influx of newcomers strained not only housing, but transportation, education and recreational facilities as well. Wartime residents of Detroit endured long lines everywhere, at bus stops, grocery stores, and even at newsstands where they hoped for the chance to be first answering classified ads offering rooms for rent. Even though the city enjoyed full employment, it suffered the many discomforts of wartime rationing. Child-care programs were nonexistent, with grandma the only hope — provided she wasn’t already working at a defense plant. Times were tough for all, but for the Negro community, times were even tougher. Blacks were excluded from all public housing except the Brewster projects. Many lived in homes without indoor plumbing, yet they paid rent two to three times higher than families in white districts. Blacks were also confronted with a segregated military, discrimination in public accommodations, and unfair treatment by police.

Woodward was the dividing line between the roving black and white gangs. Whites took over Woodward up to Vernor and overturned and burned 20 cars belonging to blacks, looting stores as they went. The virtual guerrilla warfare overwhelmed the 2,000 city police officers and 150 state police troopers. A crowd of 100,000 spectators gathered near Grand Circus Park looking for something to watch. Despite Detroit’s history of problems, the Seal of the City of Detroit offers hopeful and timeless mottoes: “Speramus meliora” (We hope for better things) and “Resurget Cineribus” (It will rise from the ashes.)”

RIOTS of 1967
http://www.67riots.rutgers.edu/d_index.htm



“Affordable housing, or the lack thereof, was a fundamental concern for black Detroiters. When polled by the Detroit Free Press regarding the problems that contributed most to the rioting in the previous year, respondents listed “poor housing” as one of the most important issues, second only to police brutality. (Detroit Free Press 1968, Thomas 1997:130-131). In Detroit, the shortage of housing available to black residents was further exacerbated by “urban renewal” projects. In Detroit, entire neighborhoods were bulldozed to make way for freeways that linked city and suburbs. Neighborhoods that met their fate in such manner were predominantly black in their composition. To build Interstate 75, Paradise Valley or “Black Bottom”, the neighborhood that black migrants and white ethnics had struggled over during the 1940s, was buried beneath several layers of concrete. As the oldest established black enclave in Detroit, “Black Bottom” was not merely a point on the map, but the heart of Detroit’s black community, commercially and culturally. The loss for many black residents of Detroit was devastating, and the anger burned for years thereafter.”


photo by James Griffioen

CITIES GONE FALLOW
http://www.thelandbank.org/programs.asp
http://www.geneseeinstitute.org/assistance/index.html
http://www.mott.org/news/pressreleases/20091203landbank.aspx
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html
US cities may have to be bulldozed in order to survive
BY Tom Leonard / 12 Jun 2009

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature. Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area. The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint. Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country. Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes. Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside. “The real question is not whether these cities shrink – we’re all shrinking – but whether we let it happen in a destructive or sustainable way,” said Mr Kildee. “Decline is a fact of life in Flint. Resisting it is like resisting gravity.” Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was “both a cultural and political taboo” about admitting decline in America. “Places like Flint have hit rock bottom. They’re at the point where it’s better to start knocking a lot of buildings down,” she said.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000. Unemployment is now approaching 20 per cent and the total population has almost halved to 110,000. The exodus – particularly of young people – coupled with the consequent collapse in property prices, has left street after street in sections of the city almost entirely abandoned. In the city centre, the once grand Durant Hotel – named after William Durant, GM’s founder – is a symbol of the city’s decline, said Mr Kildee. The large building has been empty since 1973, roughly when Flint’s decline began.

Regarded as a model city in the motor industry’s boom years, Flint may once again be emulated, though for very different reasons.
But Mr Kildee, who has lived there nearly all his life, said he had first to overcome a deeply ingrained American cultural mindset that “big is good” and that cities should sprawl – Flint covers 34 square miles. He said: “The obsession with growth is sadly a very American thing. Across the US, there’s an assumption that all development is good, that if communities are growing they are successful. If they’re shrinking, they’re failing.”


photo by James Griffioen

But some Flint dustcarts are collecting just one rubbish bag a week, roads are decaying, police are very understaffed and there were simply too few people to pay for services, he said. If the city didn’t downsize it will eventually go bankrupt, he added. Flint’s recovery efforts have been helped by a new state law passed a few years ago which allowed local governments to buy up empty properties very cheaply. They could then knock them down or sell them on to owners who will occupy them. The city wants to specialise in health and education services, both areas which cannot easily be relocated abroad.

The local authority has restored the city’s attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas. Mr Kildee estimated another 3,000 needed to be demolished, although the city boundaries will remain the same. Already, some streets peter out into woods or meadows, no trace remaining of the homes that once stood there. Choosing which areas to knock down will be delicate but many of them were already obvious, he said. The city is buying up houses in more affluent areas to offer people in neighbourhoods it wants to demolish. Nobody will be forced to move, said Mr Kildee. “Much of the land will be given back to nature. People will enjoy living near a forest or meadow,” he said. Mr Kildee acknowledged that some fellow Americans considered his solution “defeatist” but he insisted it was “no more defeatist than pruning an overgrown tree so it can bear fruit again”.

CONTACT
Daniel Kildee
http://www.co.genesee.mi.us/treasurer/intro.html
email : dkildee [at] sbcglobal [dot] net

‘FOOD DESERT’
http://www.guernicamag.com/spotlight/1182/food_among_the_ruins/
Food Among the Ruins
BY Mark Dowie / August 2009

Detroit, the country’s most depressed metropolis, has zero produce-carrying grocery chains. It also has open land, fertile soil, ample water, and the ingredients to reinvent itself from Motor City to urban farm. Were I an aspiring farmer in search of fertile land to buy and plow, I would seriously consider moving to Detroit. There is open land, fertile soil, ample water, willing labor, and a desperate demand for decent food. And there is plenty of community will behind the idea of turning the capital of American industry into an agrarian paradise. In fact, of all the cities in the world, Detroit may be best positioned to become the world’s first one hundred percent food self-sufficient city.

Right now, Detroit is as close as any city in America to becoming a food desert, not just another metropolis like Chicago, Philadelphia, or Cleveland with a bunch of small- and medium-sized food deserts scattered about, but nearly a full-scale, citywide food desert. (A food desert is defined by those who study them as a locality from which healthy food is more than twice as far away as unhealthy food, or where the distance to a bag of potato chips is half the distance to a head of lettuce.) About 80 percent of the residents of Detroit buy their food at the one thousand convenience stores, party stores, liquor stores, and gas stations in the city. There is such a dire shortage of protein in the city that Glemie Dean Beasley, a seventy-year-old retired truck driver, is able to augment his Social Security by selling raccoon carcasses (twelve dollars a piece, serves a family of four) from animals he has treed and shot at undisclosed hunting grounds around the city. Pelts are ten dollars each. Pheasants are also abundant in the city and are occasionally harvested for dinner.

Detroiters who live close enough to suburban borders to find nearby groceries carrying fresh fruit, meat, and vegetables are a small minority of the population. The health consequences of food deserts are obvious and dire. Diabetes, heart failure, hypertension, and obesity are chronic in Detroit, and life expectancy is measurably lower than in any American city.


photo by James Griffioen

Not so long ago, there were five produce-carrying grocery chains—Kroger, A&P, Farmer Jack, Wrigley, and Meijer—competing vigorously for the Detroit food market. Today there are none. Nor is there a single WalMart or Costco in the city. Specialty grocer Trader Joe’s just turned down an attractive offer to open an outlet in relatively safe and prosperous midtown Detroit; a rapidly declining population of chronically poor consumers is not what any retailer is after. High employee turnover, loss from theft, and cost of security are also cited by chains as reasons to leave or avoid Detroit. So it is unlikely grocers will ever return, despite the tireless flirtations of City Hall, the Chamber of Commerce, and the Michigan Food and Beverage Association. There is a fabulous once-a-week market, the largest of its kind in the country, on the east side that offers a wide array of fresh meat, eggs, fruit, and vegetables. But most people I saw there on an early April Saturday arrived in well polished SUVs from the suburbs. So despite the Eastern Market, in-city Detroiters are still left with the challenge of finding new ways to feed themselves a healthy meal.

One obvious solution is to grow their own, and the urban backyard garden boom that is sweeping the nation has caught hold in Detroit, particularly in neighborhoods recently settled by immigrants from agrarian cultures of Laos and Bangladesh, who are almost certain to become major players in an agrarian Detroit. Add to that the five hundred or so twenty-by-twenty-foot community plots and a handful of three- to ten-acre farms cultured by church and non-profit groups, and during its four-month growing season, Detroit is producing somewhere between 10 and 15 percent of its food supply inside city limits—more than most American cities, but nowhere near enough to allay the food desert problem. About 3 percent of the groceries sold at the Eastern Market are homegrown; the rest are brought into Detroit by a handful of peri-urban farmers and about one hundred and fifty freelance food dealers who buy their produce from Michigan farms between thirty and one hundred miles from the city and truck it into the market.


photo by James Griffioen

There are more visionaries in Detroit than in most Rust-Belt cities, and thus more visions of a community rising from the ashes of a moribund industry to become, if not an urban paradise, something close to it. The most intriguing visionaries in Detroit, at least the ones who drew me to the city, were those who imagine growing food among the ruins—chard and tomatoes on vacant lots (there are over 103,000 in the city, sixty thousand owned by the city), orchards on former school grounds, mushrooms in open basements, fish in abandoned factories, hydroponics in bankrupt department stores, livestock grazing on former golf courses, high-rise farms in old hotels, vermiculture, permaculture, hydroponics, aquaponics, waving wheat where cars were once test-driven, and winter greens sprouting inside the frames of single-story bungalows stripped of their skin and re-sided with Plexiglas—a homemade greenhouse. Those are just a few of the agricultural technologies envisioned for the urban prairie Detroit has become.

There are also proposals on the mayor’s desk to rezone vast sections A-something (“A” for agriculture), and a proposed master plan that would move the few people residing in lonely, besotted neighborhoods into Detroit’s nine loosely defined villages and turn the rest of the city into open farmland. An American Institute of Architects panel concludes that all Detroit’s residents could fit comfortably in fifty square miles of land. Much of the remaining ninety square miles could be farmed. Were that to happen, and a substantial investment was made in greenhouses, vertical farms, and aquaponic systems, Detroit could be producing protein and fibre 365 days a year and soon become the first and only city in the world to produce close to 100 percent of its food supply within its city limits. No semis hauling groceries, no out-of-town truck farmers, no food dealers. And no chain stores need move back. Everything eaten in the city could be grown in the city and distributed to locally owned and operated stores and co-ops. I met no one in Detroit who believed that was impossible, but only a few who believed it would happen. It could, but not without a lot of political and community will.

There are a few cities in the world that grow and provide about half their total food supply within their urban and peri-urban regions—Dar es Salaam, Tanzania; Havana, Cuba; Hanoi, Vietnam; Dakar, Senegal; Rosario, Argentina; Cagayan de Oro in the Philippines; and, my personal favorite, Cuenca, Equador—all of which have much longer growing seasons than Detroit. However, those cities evolved that way, almost unintentionally. They are, in fact, about where Detroit was agriculturally around one hundred and fifty years ago. Half of them will almost surely drop under 50 percent sufficiency within the next two decades as industry subsumes cultivated land to build factories (à la China). Because of its unique situation, Detroit could come close to being 100 percent self-sufficient.

First, the city lies on one hundred and forty square miles of former farmland. Manhattan, Boston, and San Francisco could be placed inside the borders of Detroit with room to spare, and the population is about the same as the smallest of those cities, San Francisco: eight hundred thousand. And that number is still declining from a high of two million in the mid-nineteen fifties. Demographers expect Detroit’s population to level off somewhere between five hundred thousand and six hundred thousand by 2025. Right now there is about forty square miles of unoccupied open land in the city, the area of San Francisco, and that landmass could be doubled by moving a few thousand people out of hazardous firetraps into affordable housing in the eight villages. As I drove around the city, I saw many full-sized blocks with one, two, or three houses on them, many already burned out and abandoned. The ones that weren’t would make splendid farmhouses.


photo by James Griffioen

As Detroit was built on rich agricultural land, the soil beneath the city is fertile and arable. Certainly some of it is contaminated with the wastes of heavy industry, but not so badly that it’s beyond remediation. In fact, phyto-remediation, using certain plants to remove toxic chemicals permanently from the soil, is already practiced in parts of the city. And some of the plants used for remediation can be readily converted to biofuels. Others can be safely fed to livestock.

Leading the way in Detroit’s soil remediation is Malik Yakini, owner of the Black Star Community Book Store and founder of the Detroit Black Community Food Security Network. Yakini and his colleagues begin the remediation process by removing abandoned house foundations and toxic debris from vacated industrial sites. Often that is all that need be done to begin farming. Throw a little compost on the ground, turn it in, sow some seeds, and water it. Water in Detroit is remarkably clean and plentiful.

Although Detroiters have been growing produce in the city since its days as an eighteenth-century French trading outpost, urban farming was given a major boost in the nineteen eighties by a network of African-American elders calling themselves the “Gardening Angels.” As migrants from the rural South, where many had worked as small farmers and field hands, they brought agrarian skills to vacant lots and abandoned industrial sites of the city, and set out to reconnect their descendants, children of asphalt, to the Earth, and teach them that useful work doesn’t necessarily mean getting a job in a factory.

Thirty years later, Detroit has an eclectic mix of agricultural systems, ranging from three-foot window boxes growing a few heads of lettuce to a large-scale farm run by The Catherine Ferguson Academy, a home and school for pregnant girls that not only produces a wide variety of fruits and vegetables, but also raises chickens, geese, ducks, bees, rabbits, and milk goats.
Across town, Capuchin Brother Rick Samyn manages a garden that not only provides fresh fruits and vegetables to city soup kitchens, but also education to neighborhood children. There are about eighty smaller community gardens scattered about the city, more and more of them raising farm animals alongside the veggies. At the moment, domestic livestock is forbidden in the city, as are beehives. But the ordinance against them is generally ignored and the mayor’s office assures me that repeal of the bans are imminent.

About five hundred small plots have been created by an international organization called Urban Farming, founded by acclaimed songwriter Taja Sevelle. Realizing that Detroit was the most agriculturally promising of the fourteen cities in five countries where Urban Farming now exists, Sevelle moved herself and her organization’s headquarters there last year. Her goal is to triple the amount of land under cultivation in Detroit every year. All food grown by Urban Farming is given free to the poor. According to Urban Farming’s Detroit manager, Michael Travis, that won’t change.

Larger scale, for-profit farming is also on the drawing board. Financial services entrepreneur John Hantz has asked the city to let him farm a seventy-acre parcel he owns close to the Eastern Market. If that is approved and succeeds in producing food for the market, and profit for Hantz Farms, Hantz hopes to create more large-scale commercial farms around the city. Not everyone in Detroit’s agricultural community is happy with the scale or intentions of Hantz’s vision, but it seems certain to become part of the mix. And unemployed people will be put to work.

Any agro-economist will tell you that urban farming creates jobs. Even without local production, the food industry creates three dollars of job growth for every dollar spent on food—a larger multiplier effect than almost any other product or industry. Farm a city, and that figure jumps over five dollars. To a community with persistent two-digit unemployment, that number is manna. But that’s only one economic advantage of farming a city.

The average food product purchased in a U.S. chain store has traveled thirteen hundred miles, and about half of it has spoiled en route, despite the fact that it was bioengineered to withstand transport. The total mileage in a three-course American meal approaches twenty-five thousand. The food seems fresh because it has been refrigerated in transit, adding great expense and a huge carbon footprint to each item, and subtracting most of the minerals and vitamins that would still be there were the food grown close by.


photo by James Griffioen

I drove around the city one day with Dwight Vaughter and Gary Wozniak. A soft-spoken African American, Vaughter is CEO of SHAR, a self-help drug rehab program with about two hundred residents recovering from various addictions in an abandoned hospital. Wozniak, a bright, gregarious Polish American, who, unlike most of his fellow Poles, has stayed in Detroit, is the program’s financial director. Vaughter and Wozniak are trying to create a labor-intensive economic base for their program, with the conviction that farming and gardening are therapeutic. They have their eyes on two thousand acres in one of the worst sections of the city, not far from the Eastern Market. They estimate that there are about four thousand people still living in the area, most of them in houses that should have been condemned and razed years ago. There are also six churches in the section, offering some of the best ecclesiastical architecture in the city.

I tried to imagine what this weedy, decrepit, trash-ridden urban dead zone would look like under cultivation. First, I removed the overhead utilities and opened the sky a little. Then I tore up the useless grid of potholed streets and sidewalks and replaced them with a long winding road that would take vegetables to market and bring parishioners to church. I wrecked and removed most of the houses I saw, leaving a few that somehow held some charm and utility. Of course, I left the churches standing, as I did a solid red brick school, boarded up a decade ago when the student body dropped to a dozen or so bored and unstimulated deadbeats. It could be reopened as an urban ag-school, or SHAR’s residents could live there. I plowed and planted rows of every imaginable vegetable, created orchards and raised beds, set up beehives and built chicken coops, rabbit warrens, barns, and corrals for sheep, goats, and horses. And of course, I built sturdy hoop houses, rows of them, heated by burning methane from composting manure and ag-waste to keep frost from winter crops. The harvest was tended by former drug addicts who like so many before them found salvation in growing things that keep their brethren alive.

That afternoon I visited Grace Lee Boggs, a ninety-three-year-old Chinese-American widow who has been envisioning farms in Detroit for decades. Widow of legendary civil rights activist Jimmy Boggs, Grace preserves his legacy with the energy of ten activists. The main question on my mind as I climbed the steps to her modest east side home, now a center for community organizers, was whether or not Detroit possesses the community and political will to scale its agriculture up to 100 percent food self-sufficiency. Yes, Grace said to the former, and no to the latter. But she really didn’t believe that political will was that essential. “The food riots erupting around the world challenge us to rethink our whole approach to food,” she said, but as communities, not as bodies politic. “Today’s hunger crisis is rooted in the industrialized food system which destroys local food production and forces nations like Kenya, which only twenty-five years ago was food self-sufficient, to import 80 percent of its food because its productive land is being used by global corporations to grow flowers and luxury foods for export.” The same thing happened to Detroit, she says, which was once before a food self-sufficient community. I asked her whether the city government would support large-scale urban agriculture. “City government is irrelevant,” she answered. “Positive change, leaps forward in the evolution of humankind do not start with governments. They start right here in our living rooms and kitchens. We are the leaders we are looking for.”

All the decaying Rust-Belt cities in the American heartland have at one time or another imagined themselves transformed into some sort of exciting new post-industrial urban model. And some have begun the process of transformation. Now it’s Detroit’s turn, Boggs believes. It could follow the examples of Pittsburgh, Cleveland, and Buffalo, and become a slightly recovered metropolis, another pathetic industrial has-been still addicted to federal stimulus, marginal jobs, and the corporate food system. Or it could make a complete break and become, if not a paradise, well, at least a pretty good place to live.

Not everyone in Detroit is enthusiastic about farming. Many urbanites believe that structures of some sort or another belong on urban land. And a lot of those people just elected David Bing mayor of the city. Bing’s opponent, acting mayor Ken Cockrel, was committed to expanding urban agriculture in Detroit. Bing has not said he’s opposed to it, but his background as a successful automotive parts manufacturer will likely have him favoring a future that maintains the city’s primary nickname: Motor City.

And there remains a lasting sense of urbanity in Detroit. “This is a city, not a farm,” remarked one skeptic of urban farming. She’s right, of course. A city is more than a farm. But that’s what makes Detroit’s rural future exciting. Where else in the world can one find a one-hundred-and-forty-square-mile agricultural community with four major league sports teams, two good universities, the fifth largest art museum in the country, a world-class hospital, and headquarters of a now-global industry, that while faltering, stands ready to green their products and keep three million people in the rest of the country employed?

Despite big auto’s crash, “Detroit” is still synonymous with the industry. When people ask, “What will become of Detroit?” most of them still mean, “What will become of GM, Ford, and Chrysler?” If Detroit the city is to survive in any form, it should probably get past that question and begin searching for ways to put its most promising assets, land and people, to productive use again by becoming America’s first modern agrarian metropolis.

Contemporary Detroit gave new meaning to the word “wasteland.” It still stands as a monument to a form of land abuse that became endemic to industrial America—once-productive farmland, teaming with wildlife, was paved and poisoned for corporate imperatives. Now the city offers itself as an opportunity to restore some of its agrarian tradition, not fifty miles from downtown in the countryside where most of us believe that tradition was originally established, but a short bicycle ride away. American cities once grew much of their food within walking distance of most of their residents. In fact, in the eighteenth and early nineteenth centuries, most early American cities, Detroit included, looked more like the English countryside, with a cluster of small villages interspersed with green open space. Eventually, farmers of the open space sold their land to developers and either retired or moved their farms out of cities, which were cut into grids and plastered with factories, shopping malls, and identical row houses.

Detroit now offers America a perfect place to redefine urban economics, moving away from the totally paved, heavy-industrial factory-town model to a resilient, holistic, economically diverse, self-sufficient, intensely green, rural/urban community—and in doing so become the first modern American city where agriculture, while perhaps not the largest, is the most vital industry.

DETROIT AS ENGLISH GARDEN
http://www.harpers.org/archive/2007/07/0081594
Detroit arcadia: Exploring the post-American landscape
BY Rebecca Solnit / July 2007

Until recently there was a frieze around the lobby of the Hotel Pontchartrain in downtown Detroit, a naively charming painting of a forested lakefront landscape with Indians peeping out from behind the trees. The hotel was built on the site of Fort Pontchartrain du Détroit, the old French garrison that three hundred years ago held a hundred or so pioneer families inside its walls while several thousand Ottawas and Hurons and Potawatomis went about their business outside, but the frieze evoked an era before even that rude structure was built in the lush woodlands of the place that was not yet Michigan or the United States. Scraped clear by glaciers during the last ice age, the landscape the French invaded was young, soggy, and densely forested. The river frontage that would become Detroit was probably mostly sugar maple and beech forest, with black ash or mixed hardwood swamps, a few patches of conifers, and the occasional expanse of what naturalists like to call wet prairie—grasslands you might not want to walk on. The Indians killed the trees by girdling them and planted corn in the clearings, but the wild rice they gathered and the fish and game they hunted were also important parts of their 
diet. One pioneer counted badger, bear, fisher, fox, mink, muskrat, porcupine, rabbit, raccoon, weasel, wildcat, wolf, and woodchuck among the local species, and cougar and deer could have been added to the list. The French would later recruit the Indians to trap beaver, which were plentiful in those once-riverine territories—détroit means “strait” or “narrows,” but in its thirty-two-mile journey from Lake St. Clair to Lake Erie, the Detroit River also had several tributaries, including Parent’s Creek, which was later named Bloody Run after some newly arrived English soldiers managed to lose a fight they picked with the local Ottawas.

Fort Pontchartrain was never meant to be the center of a broad European settlement. It was a trading post, a garrison, and a strategic site in the scramble between the British and the French to dominate the North American interior. Cadillac, the ambitious Frenchman who established the fort in 1701, invited members of several Indian nations to surround the fort in order to facilitate more frequent trading, but this led to clashes not just between nations but between races. Unknown Indians set fire to Fort Pontchartrain in 1703, and the Fox skirmished there in 1712. After the English took over in 1760, deteriorating relations with the local tribes culminated in the three-year-long, nearly successful Ottawa uprising known as Pontiac’s Rebellion.

This is all ancient history, but it does foreshadow the racial conflicts that never went away in Detroit, though now white people constitute the majority who surround and resent the 83 percent black city. It’s as if the fort had been turned inside out—and, in fact, in the 1940s a six-foot-tall concrete wall was built along Eight Mile Road, which traces Detroit’s northern limits, to contain the growing African-American population. And this inversion exposes another paradox. North of Eight Mile, the mostly white suburbs seem conventional, and they may face the same doom as much of conventional suburban America if sprawl and 
auto-based civilization die off with oil shortages and economic decline. South of Eight Mile, though, Detroit is racing to a far less predictable future.

It is a remarkable city now, one in which the clock seems to be running backward as its buildings disappear and its population and economy decline. The second time I visited Detroit I tried to stay at the Pontchartrain, but the lobby was bisected by drywall, the mural seemed doomed, and the whole place was under some form of remodeling that resembled ruin, with puddles in the lobby and holes in the walls, few staff people, fewer guests, and strange grinding noises at odd hours. I checked out after one night because of the cold water coming out of the hot-water tap and the generally spooky feeling generated by trying to sleep in a 413-room high-rise hotel with almost no other guests. I was sad to see the frieze on its way out, but—still—as I have explored this city over the last few years, I have seen an oddly heartening new version of the landscape it portrays, a landscape that is not quite post-apocalyptic but that is strangely—and sometime even beautifully—post-American.

This continent has not seen a transformation like Detroit’s since the last days of the Maya. The city, once the fourth largest in the country, is now so depopulated that some stretches resemble the outlying farmland and others are altogether wild. Downtown still looks like a downtown, and all of those high-rise buildings still make an impressive skyline, but when you look closely at some of them, you can see trees growing out of the ledges and crevices, an invasive species from China known variously as the ghetto palm and the tree of heaven. Local wisdom has it that whenever a new building goes up, an older one will simply be abandoned, and the same rule applies to the blocks of new condos that have been dropped here and there among the ruins: why they were built in the first place in a city full of handsome old houses going to ruin has everything to do with the momentary whims of the real estate trade and nothing to do with the long-term survival of cities.

The transformation of the residential neighborhoods is more dramatic. On so many streets in so many neighborhoods, you see a house, a little shabby but well built and beautiful. Then another house. Then a few houses are missing, so thoroughly missing that no trace of foundation remains. Grass grows lushly, as though nothing had ever disturbed the pastoral verdure. Then there’s a house that’s charred and shattered, then a beautiful house, with gables and dormers and a porch, the kind of house a lot of Americans fantasize about owning. Then more green. This irregular pattern occurs mile after mile, through much of Detroit. You could be traveling down Wa bash Street on the west side of town or Pennsylvania or Fairview on the east side of town or around just about any part of the State Fair neighborhood on the city’s northern border. Between the half-erased neighborhoods are ruined factories, boarded-up warehouses, rows of storefronts bearing the traces of failed enterprise, and occasional solid blocks of new town houses that look as though they had been dropped in by helicopter. In the bereft zones, solitary figures wander slowly, as though in no hurry to get from one abandoned zone to the next. Some areas have been stripped entirely, and a weedy version of nature is returning. Just about a third of Detroit, some forty square miles, has evolved past decrepitude into vacancy and prairie—an urban void nearly the size of San Francisco.

It was tales of these ruins that originally drew me to the city a few years ago. My first visit began somberly enough, as I contemplated the great neoclassical edifice of the train station, designed by the same architects and completed the same year as Grand Central station in Manhattan. Grand Central thrives; this broken building stands alone just beyond the grim silence of Michigan Avenue and only half a mile from the abandoned Tiger Stadium. Rings of cyclone fence forbid exploration. The last train left on January 5, 1988— the day before Epiphany. The building has been so thoroughly gutted that on sunny days the light seems to come through the upper stories as though through a cheese grater; there is little left but concrete and stone. All the windows are smashed out. The copper pipes and wires, I was told, were torn out by the scavengers who harvest material from abandoned buildings around the city and hasten their decay.

On another visit, I took a long walk down a sunken railroad spur that, in more prosperous times, had been used to move goods from one factory to another. A lot of effort had gone into making the long channel of brick and concrete about twenty feet below the gently undulating surface of Detroit, and it had been abandoned a long time. Lush greenery grew along the tracks and up the walls, which were like a museum of spray-can art from the 1980s and 1990s. The weeds and beer cans and strangely apposite graffiti decrying the 1993 passage of the North American Free Trade Agreement seemed to go on forever.

I took many pictures on my visits to Detroit, but back home they just looked like snapshots of abandoned Nebraska farmhouses or small towns farther west on the Great Plains. Sometimes a burned-out house would stand next to a carefully tended twin, a monument to random fate; sometimes the rectilinear nature of city planning was barely perceptible, just the slightest traces of a grid fading into grassy fields accented with the occasional fire hydrant. One day after a brief thunderstorm, when the rain had cleared away and chunky white clouds dotted the sky, I wandered into a neighborhood, or rather a former neighborhood, of at least a dozen square blocks where trees of heaven waved their branches in the balmy air. Approximately one tattered charred house still stood per block. I could hear the buzzing of crickets or cicadas, and I felt as if I had traveled a thousand years into the future.


photo by James Griffioen

To say that much of Detroit is 
ruins is, of course, to say that some of it isn’t. There are stretches of Detroit that look like anywhere in the U.S.A.—blocks of town houses and new condos, a flush of gentility spreading around the Detroit Institute of Arts, a few older neighborhoods where everything is fine. If Detroit has become a fortress of urban poverty surrounded by suburban affluence, the city’s waterfront downtown has become something of a fortress within a fortress, with a convention center, a new ballpark, a new headquarters for General Motors, and a handful of casinos that were supposed to be the city’s economic salvation when they were built a decade ago. But that garrison will likely fend off time no better
than Fort Detroit or the
 Hotel Pontchartrain.

Detroit is wildly outdated, but it is not very old. It was a medium-size city that boomed in the first quarter of the twentieth century, became the “arsenal of democracy” in the second, spent the third in increasingly less gentle decline, and by the last quarter was a byword for urban decay, having made a complete arc in a single century. In 1900, Detroit had a quarter of a million people. By midcentury the population had reached nearly 2 million. In recent years, though, it has fallen below 900,000. Detroit is a cautionary tale about one-industry towns: it shrank the way the old boomtowns of the gold and silver rushes did, as though it had been mining automobiles and the veins ran dry, but most of those mining towns were meant to be ephemeral. People thought Detroit would go on forever.

Coleman Young, Detroit’s first African-American mayor, reigned from 1974 to 1993, the years that the change became irreversible and impossible to ignore, and in his autobiography he sounds like he is still in shock: “It’s mind-boggling to think that at mid-century Detroit was a city of close to two million and nearly everything beyond was covered with corn and cow patties. Forty years later, damn near every last white person in the city had moved to the old fields and pastures—1.4 frigging million of them. Think about that. There were 1,600,000 whites in Detroit after the war, and 1,400,000 of them left. By 1990, the city was just over a million, nearly eighty percent of it was black, and the suburbs had surpassed Detroit not only in population but in wealth, in commerce—even in basketball, for God’s sake.”

The Detroit Pistons are now based in Auburn Hills. According to the 2000 census, another 112,357 whites left the city in the 1990s, and 10,000 more people a year continue to leave. Even three hundred bodies a year are exhumed from the cemeteries and moved because some of the people who were once Detroiters or the children of Detroiters don’t think the city is good enough for their dead. Ford and General Motors, or what remains of them—most of the jobs were dispatched to other towns and nations long agoin trouble, too. Interestingly, in this city whose name is synonymous with the auto industry, more than a fifth of households have no cars.

“Detroit’s Future Is Looking Brighter,” said a headline in the Detroit Free Press, not long after another article outlined the catastrophes afflicting the whole state. In recent years, Michigan’s household income has dropped more than that of any other state, and more and more of its citizens are slipping below the poverty line. David Littmann, a senior economist for the Michigan think tank the Mackinac Center for Public Policy, told the paper, “As the economy slows nationally, we’re going to sink much farther relative to the other states. We’ve only just begun. We’re going to see Michigan sink to levels that no one has 
ever seen.”

In another sense, the worst is over in Detroit. In the 1980s and 1990s, the city was falling apart, spectacularly and violently. Back then the annual pre-Halloween arson festival known as Devil’s Night finished off a lot of the abandoned buildings; it peaked in 1984 with 810 fires in the last three days of October. Some of the arson, a daughter of Detroit’s black bourgeoisie told me, was 
constructive—crackhouses being burned down by the neighbors; her own respectable aunt had torched one. Between 1978 and 1998, the city issued 9,000 building permits for new homes and 108,000 demolition permits, and quite a lot of structures were annihilated without official sanction.

Even Ford’s old Highland Park headquarters, where the Model T was born, is now just a shuttered series of dusty warehouses with tape on the windows and cyclone fences around the cracked pavement. Once upon a time, the plant was one of the wonders of the world—on a single day in 1925 it cranked out 9,000 cars, according to a sign I saw under a tree next to the empty buildings. Detroit once made most of the cars on earth; now the entire United States makes not even one in ten. The new Model T Ford Plaza next door struck my traveling companion—who, like so many white people born in Detroit after the war, had mostly been raised elsewhere—as auspicious. But the mall was fronted by a mostly empty parking lot and anchored by a Payless ShoeSource, which to my mind did not portend an especially bright future.

When I came back, a year after my first tour, I stopped at the Detroit Institute of Arts to see the Diego Rivera mural commissioned in 1932 by Henry Ford’s son, Edsel. The museum is a vast Beaux-Arts warehouse—“the fifth-largest fine arts museum in the United States,” according to its promotional literature—and the fresco covered all four walls of the museum’s central courtyard. Rivera is said to have considered it his finest work.

It’s an odd masterpiece, a celebration of the River Rouge auto plant, which had succeeded the Highland Park factory as Ford’s industrial headquarters, painted by a Communist for the son of one of the richest capitalists in the world. The north and south walls are devoted to nearly life-size scenes in which the plant’s gray gears, belts, racks, and workbenches surge and swarm like some vast intestinal apparatus. The workers within might be subsidiary organs or might be lunch, as the whole churns to excrete a stream of black Fords.

Rivera created this vision when the city was reveling in the newfound supremacy of its megafactories, but Detroit had already reached its apex. Indeed, the River Rouge plant—then the largest factory complex in the world, employing more than 100,000 workers on a site two and a half times the size of New York City’s Central Park—was itself built in suburban Dearborn. In 1932, though, capitalists and Communists alike shared a belief that the most desirable form of human organization—indeed, the inevitable form—was not just industrial but this kind of industrial: a Fordist system of “rational” labor, of centralized production in blue-collar cities, of eternal prosperity in a stern gray land. Even the young Soviet Union looked up to Henry Ford.

But Detroit was building the machine that would help destroy not just this city but urban industrialism across the continent. Rivera painted, in a subsidiary all-gray panel in the lower right corner of the south wall, a line of slumped working men and women exiting the factory into what appears to be an endless parking lot full of Ford cars. It may not have looked that way in 1932, but a lot of the gray workers were going to buy those gray cars and drive right out of the gray city. The city-hating Ford said that he wanted every family in the world to have a Ford, and he priced them so that more and more families could. He also fantasized about a post-urban world in which workers would also farm, seasonally or part-time, but he did less to realize that vision. Private automobile ownership was a double blow against the density that is crucial to cities and urbanism and against the Fordist model of concentrated large-scale manufacture. Ford was sabotaging Detroit and then Fordism almost from the beginning; the city had blown up rapidly and would spend the next several decades simply disintegrating.

Detroit was always a rough town. When Rivera painted his fresco, the Depression had hit Detroit as hard as or harder than anywhere, and the unemployed were famished and desperate, desperate enough to march on the Ford Motor Company in the spring of 1932. It’s hard to say whether ferocity or desperation made the marchers fight their way through police with tear-gas guns and firemen with hoses going full bore the last stretch of the way to the River Rouge plant. Harry Bennett, the thug who ran Ford more or less the way Stalin was running the Soviet Union, arrived, and though he was immediately knocked out by a flying rock, the police began firing on the crowd, injuring dozens and killing five. The battle of the Hunger March or the huge public funeral afterward would’ve made a good mural.

No, it wasn’t cars alone that ruined Detroit. It was the whole improbable equation of the city in the first place, the “inherent contradictions.” The city was done in by deindustrialization, decentralization, the post–World War II spread of highways and freeways, government incentives to homeowners, and disinvestment in cities that aided and abetted large-scale white flight into the burgeoning suburbs of those years. Chunks of downtown Detroit were sacrificed early, in the postwar years, so that broad arterial freeways—the Edsel Freeway, the Chrysler Freeway—could bring commuters in from beyond city limits.

All of this was happening everywhere else too, of course. The manufacturing belt became the rust belt. Cleveland, Toledo, Buffalo, and other cities clustered around the Great Lakes were hit hard, and the shrinking stretched down to St. Louis and across to Pittsburgh, Philadelphia, and Newark. Now that it has entered a second gilded age, no one seems to remember that New York was a snowballing disaster forty or fifty years ago. The old textile district south of Houston Street had emptied out so completely that in 1962 the City Club of New York published a report on it and other former commercial areas titled “The Wastelands of New York City.” San Francisco went the same way. It was a blue-collar port city until the waterfront dried up and the longshoremen faded away.

Then came the renaissance, but 
only for those cities reborn into more dematerialized economies. Vacant lots were filled in, old warehouses were turned into lofts or offices or replaced, downtowns became upscale chain outlets, janitors and cops became people who commuted in from downscale suburbs, and the children of that white flight came back to cities that were not exactly cities in the old sense. The new American cities trade in information, entertainment, tourism, software, finance. They are abstract. Even the souvenirs in these new economies often come from a sweatshop in China. The United States can be mapped as two zones now, a high-pressure zone of economic boom times and escalating real estate prices, and a low-
pressure zone, where housing might be the only thing that’s easy to come by.

This pattern will change, though. The forces that produced Detroit—the combination of bitter racism and single-industry failure—are anomalous, but the general recipe of deindustrialization, depopulation, and resource depletion will likely touch almost all the regions of the global north in the next century or two. Dresden was rebuilt, and so was Hiroshima, and so were the cities destroyed by natural forces—San Francisco and Mexico City and Tangshan—but Detroit will never be rebuilt as it was. It will be the first of many cities forced
to become altogether something else.

The Detroit Institute of Arts is in one of those flourishing parts of Detroit; it is expanding its 1927 building, and when I said goodbye to the Rivera mural and stepped outside into the autumn sunshine, workmen were installing slabs of marble on the building’s new facade. I noticed an apparently homeless dog sleeping below the scaffolding, and as I walked past, three plump white women teetered up to me hastily, all attention focused on the dog. “Do you have a cell phone?” the one topped by a froth of yellow hair shrilled. “Call the Humane Society!” I suggested that the dog was breathing fine and therefore was probably okay, and she looked at me as though I were a total idiot. “This is downtown Detroit,” she said, in a tone that made it clear the dog was in imminent peril from unspeakable forces, and that perhaps she was, I was, we all were.

I had been exploring an architectural-salvage shop near Rosa Parks Boulevard earlier that day, and when I asked the potbellied and weathered white man working there for his thoughts on the city, the tirade that followed was similarly vehement: Detroit, he insisted, had been wonderful—people used to dress up to go downtown, it had been the Paris of the Midwest!—and then it all went to hell. Those people destroyed it. My traveling companion suggested that maybe larger forces of deindustrialization might have had something to do with what happened to the city, but the man blankly rejected this analysis and continued on a tirade about “them” that wasn’t very careful about not being racist.

On the Web you can find a site, Stormfront White Nationalist Community, that is even more comfortable with this version of what happened to the city, and even less interested in macroeconomic forces like deindustrialization and globalization: “A huge non-White population, combined with annual arson attacks, bankruptcy, crime, and decay, have combined to make Detroit—once the USA’s leading automotive industrial center—
into a ruin comparable with those of the ancient civilizations—with the cause being identical: the replacement of the White population who built the city, with a new non-White population.” It could have been different. “In more civilized environs, these facilities might have easily been transformed into a manufacturing and assembly center for any number of industrial enterprises,” writes the anonymous author.

A few months before the diatribe in the salvage yard, I’d met a long-haired counterculture guy who also told me he was from Detroit, by which he, like so many others I’ve met, meant the suburbs of Detroit. When I asked him about the actual city, though, his face clenched like a fist. He recited the terrible things they would do to you if you ventured into the city, that they would tear you apart on the streets. He spoke not with the voice of a witness but with the authority of tradition handed down from an unknown and irrefutable source. The city was the infernal realm, the burning lands, the dragon’s lair at the center of a vast and protective suburban sprawl.

The most prominent piece of public art in Detroit is the giant blackened bronze arm and fist that serve as a monument to heavyweight boxing champion Joe Louis, who grew up there. If it were vertical it would look like a Black Power fist, but it’s slung from cables like some medieval battering ram waiting to be dragged up to the city walls.

Deindustrialization dealt Detroit a sucker punch, but the knockout may have been white flight—at least economically. Socially, it was a little more complex. One African-American woman who grew up there told me that white people seemed to think they were a great loss to the city they abandoned, “but we were glad to see them go and waved bye-bye.” She lived in Ann Arbor—the departure of the black middle class being yet another wrinkle in the racial narrative—but she was thinking of moving back, she said. If she had kids, raising them in a city where they wouldn’t be a minority had real appeal.

The fall of the paradise that was Detroit is often pinned on the riots of July 1967, what some there still refer to as the Detroit Uprising. But Detroit had a long history of race riots—there were vicious white-on-black riots in 1833, 1863, 1925, and 1943. And the idyll itself was unraveling long before 1967. Local 600 of the United Auto Workers broke with the union mainstream in 1951, sixteen years before the riots, to sue Ford over decentralization efforts already under way. They realized that their jobs were literally going south, to states and nations where labor wasn’t so organized and wages weren’t so high, back in the prehistoric era of “globalization.”

The popular story wasn’t about the caprices of capital, though; it was about the barbarism of blacks. In 1900, Detroit had an African-American population of 4,111. Then came the great migration, when masses of southern blacks traded Jim Crow for the industrialized promised land of the North. Conditions might have been better here than in the South, but Detroit was still a segregated city with a violently racist police department and a lot of white people ready to work hard to keep black people out of their neighborhoods. They failed in this attempt at segregation, and then they left. This is what created the blackest city in the United States, and figures from Joe Louis and Malcolm X to Rosa Parks and the bold left-wing Congressman John Conyers—who has represented much of the city since 1964—have made Detroit a center of activism and independent leadership for African Americans. It’s a black
 city, but it’s surrounded.

Surrounded, but inside that stockade of racial divide and urban decay are visionaries, and their visions are tender, hopeful, and green. Grace Lee Boggs, at ninety-one, has been politically active in the city for more than half a century. Born in Providence to Chinese immigrant parents, she got a Ph.D. in philosophy from Bryn Mawr in 1940 and was a classical Marxist when she married the labor organizer Jimmy Boggs, in 1953. That an Asian woman married to a black man could become a powerful force was just another wrinkle in the racial politics of Detroit. (They were together until Jimmy’s death, in 1993.) Indeed, her thinking evolved along with the radical politics of the city itself. During the 1960s, the Boggses were dismissive of Martin Luther King Jr. and ardent about Black Power, but as Grace acknowledged when we sat down together in her big shady house in the central city, “The Black Power movement, which was very powerful here, concentrated only on power and had no concept of the challenges that would face a black-powered administration.” When Coleman Young took over city hall, she said, he could start fixing racism in the police department and the fire department, “but when it came time to do something about Henry Ford and General Motors, he was helpless. We thought that all we had to do was transform the system, that all the problems were on the other side.”

As the years went by, the Boggses began to focus less on putting new people into existing power structures and more on redefining or dismantling the structures altogether. When she and Jimmy crusaded against Young’s plans to rebuild the city around casinos, they realized they had to come up with real alternatives, and they began to think about what a local, sustainable economy would look like. They had already begun to realize that Detroit’s lack of participation in the mainstream offered an opportunity to do everything differently—that instead of retreating back to a better relationship to capitalism, to industry, to the mainstream, the city could move forward, turn its liabilities into assets, and create an economy entirely apart from the transnational webs of corporations and petroleum. Jimmy Boggs described his alternative vision in a 1988 speech at the First Unitarian-Universalist Church of Detroit. “We have to get rid of the myth that there is something sacred about large-scale production for the national and international market,” he said. “We have to begin thinking of creating small enterprises which produce food, goods, and services for the local market, that is, for our communities and for our city. . . . In order to create these new enterprises, we need a view of our city which takes into consideration both the natural resources of our area and the existing and potential skills and talents of Detroiters.”

That was the vision, and it is only just starting to become a reality. “Now a lot of what you see is vacant lots,” Grace told me. “Most people see only disaster and the end of the world. On the other hand, artists in particular see the potential, the possibility of bringing the country back into the city, which is what we really need.” After all, the city is rich in open space and—with an official unemployment rate in the mid-teens—people with time on their hands. The land is fertile, too, and the visionaries are there.


photo by James Griffioen

In traversing Detroit, I saw a lot of signs that a greening was well under way, a sort of urban husbandry of the city’s already occurring return to nature. I heard the story of one old woman who had been the first African-American person on her block and is now, with her grandson, very nearly the last person of any race on that block. Having a city grow up around you is not an uncommon American experience, but having the countryside return is an eerier one. She made the best of it, though. The city sold her the surrounding lots for next to nothing, and she now raises much of her own food on them.

I also saw the lush three-acre Earth Works Garden, launched by Capuchin monks in 1999 and now growing organic produce for a local soup kitchen. I saw a 4-H garden in a fairly ravaged east-side neighborhood, and amid the utter abandonment of the west side, I saw the handsome tiled buildings of the Catherine Ferguson Academy for Young Women, a school for teenage mothers that opens on to a working farm, complete with apple orchard, horses, ducks, long rows of cauliflower and broccoli, and a red barn the girls built themselves. I met Ashley Atkinson, the young project manager for The Greening of Detroit, and heard about the hundred community gardens they support, and the thousands more food gardens that are not part of any network. The food they produce, Atkinson told me, provides food security for many Detroiters. “Urban farming, dollar for dollar, is the most effective change agent you can ever have in a community,” she said. Everywhere I went, I saw the rich soil of Detroit and the hard work of the gardeners bringing forth an abundant harvest any organic farmer would envy.

Everyone talks about green cities now, but the concrete results in affluent cities mostly involve curbside composting and tacking solar panels onto rooftops while residents continue to drive, to shop, to eat organic pears flown in from Argentina, to be part of the big machine of consumption and climate change. The free-range chickens and Priuses are great, but they alone aren’t adequate tools for creating a truly different society and ecology. The future, at least the sustainable one, the one in which we will survive, isn’t going to be invented by people who are happily surrendering selective bits and pieces of environmentally unsound privilege. It’s going to be made by those who had all that taken away from them or never had it in the first place.

After the Panic of 1893, Detroit’s left-wing Republican mayor encouraged his hungry citizens to plant vegetables in the city’s vacant lots and went down in history as Potato Patch Pingree. Something similar happened in Cuba when the Soviet Union collapsed and the island lost its subsidized oil and thereby its mechanized agriculture; through garden-scale semi-organic agriculture, Cubans clawed their way back to food security and got better food in the bargain. Nobody wants to live through a depression, and it is unfair, or at least deeply ironic, that black people in Detroit are being forced to undertake an experiment in utopian post-urbanism that appears to be uncomfortably similar to the sharecropping past their parents and grandparents sought to escape. There is no moral reason why they should do and be better than the rest of us—but there is a practical one. They have to. Detroit is where change is most urgent and therefore most viable. The rest of us will get there later, when necessity drives us too, and by that time Detroit may be the shining example we can look to, the post-industrial green city that was once the steel-gray capital of Fordist manufacturing.

Detroit is still beautiful, both in its stately decay and in its growing natural abundance. Indeed, one of the finest sights I saw on my walks around the city combined the two. It was a sudden flash on an already bright autumn day—a pair of wild pheasants, bursting from a lush row of vegetables and flying over a cyclone fence toward a burned-out building across the street. It was an improbable flight in many ways. Those pheasants, after all, were no more native to Detroit than are the trees of heaven growing in the skyscrapers downtown. And yet it is here, where European settlement began in the region, that we may be seeing the first signs of an unsettling of the very premises of colonial expansion, an unsettling that may bring a complex new human and natural ecology into being.

This is the most extreme and long-term hope Detroit offers us: the hope that we can reclaim what we paved over and poisoned, that nature will not punish us, that it will welcome us home—not with the landscape that was here when we arrived, perhaps, but with land that is alive, lush, and varied all the same. “Look on my works, ye mighty, and despair!” was Shelley’s pivotal command in his portrait of magnificent ruins, but Detroit is far from a “shattered visage.” It is a harsh place of poverty, deprivation, and a fair amount of crime, but it is 
also a stronghold of possibility.

That Rivera mural, for instance. In 1932 the soil, the country, the wilderness, and agriculture represented the past; they should have appeared, if at all, below or behind the symbols of industry and urbanism, a prehistory from which the gleaming machine future emerged. But the big panels of workers inside the gray chasms of the River Rouge plant have above them huge nude figures—black, white, red, yellow, lounging on the bare earth. Rivera meant these figures to be emblematic of the North American races and meant their fistfuls of coal, sand, iron ore, and limestone to be the raw stuff of industrialism. To my eye, though, they look like deities waiting to reclaim the world, insistent on sensual contact with the land and confident of their triumph over and after the factory that lies below them like an inferno.

PUBLIC SHARES OFFERED

SOMALI PIRATES OPEN ‘STOCK EXCHANGE’
http://www.reuters.com/article/idUSTRE5B01Z920091201
Somali sea gangs lure investors at pirate lair
BY Mohamed Ahmed / Dec 1, 2009

In Somalia’s main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate. Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea. The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore. It is a lucrative business that has drawn financiers from the Somali diaspora and other nations — and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved. “Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said. “The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”

Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4×4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets. Somalia’s Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital. The administration has no influence in Haradheere — where a senior local official said piracy paid for almost everything. “Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output,” said Mohamed Adam, the town’s deputy security officer. “The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”

In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea. Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there. Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere. Now he guards a Thai fishing boat held just offshore. “First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy,” he told Reuters. “So I chose this option, instead of dying in the desert or from mortars in Mogadishu.”

Haradheere’s “stock exchange” is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action. Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred. “Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks,” he said. “Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is ‘do or die’.” Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel. “I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony. “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”

CLASS A SHAREHOLDERS
http://www.undispatch.com/somali-pirates-buisiness-model

A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited as militiamen to provide protection on land of a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:
• Reimbursement of supplier(s)
• Financier(s) and/or investor(s): 30% of the ransom
• Local elders: 5 to 10 %of the ransom (anchoring rights)
• Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum — the profit — is divided between class-A shareholders.

PIRATE DEMOCRACY
http://www.peterleeson.com/Opportunism_and_Org_Under_the_Black_Flag.pdf
http://www.peterleeson.com/The_Calculus_of_Piratical_Consent.pdf

INVISIBLE HOOK OF THE MARKET
http://www.peterleeson.com/The_Invisible_Hook.pdf
http://freakonomics.blogs.nytimes.com/2009/04/20/pirate-economics-101-a-qa-with-invisible-hook-author-peter-leeson/
BY Ryan Hagen / April 20, 2009

The crew of the Maersk Alabama, having survived an attack by pirates in Somalia last week, has returned home for a much-deserved rest. But with tensions ratcheting up between the U.S. and the rag-tag confederation of Somali pirates, it’s worth looking to the past for clues on how to tame the outlaw seas. Peter Leeson, an economist at George Mason University (and an occasional Freakonomics guest blogger), offers a brisk and fascinating look at old-school piracy in his new book The Invisible Hook: The Hidden Economics of Pirates. Leeson agreed to sit down and answer some important piratical questions for us:

Q: The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand?
A: In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends. They’re connected, but the big difference is that, for Adam Smith, self-interest results in cooperation that generates wealth and makes other people better off. For pirates, self-interest results in cooperation that destroys wealth by allowing pirates to plunder more effectively.

Q: In the book, you write that pirates had set up their own early versions of constitutional democracy, complete with separation of powers, decades before the American Revolution. Was that only possible because they were outlaws, operating entirely outside the control of any government?
A: That’s right. The pirates of the 18th century set up quite a thoroughgoing system of democracy. The reason that the criminality is driving these structures is because they can’t rely on the state to provide those structures for them. So pirates, more than anyone else, needed to figure out some system of law and order to make it possible for them to remain together long enough to be successful at stealing.

Q: So did these participatory, democratic systems give merchant sailors an incentive to join pirate crews, because it meant they were freer among pirates than on their own ships?
A: The sailors had more freedom and better pay as pirates than as merchantmen. But perhaps the most important thing was freedom from the arbitrariness of captains and the malicious abuses of power that merchant captains were known to inflict on their crews. In a pirate democracy, a crew could, and routinely did, depose their captain if he was abusing his power or was incompetent.

Q: You write that pirates weren’t necessarily the bloodthirsty fiends we imagine them to have been. How does the invisible hook explain their behavior?
A: The basic idea is, once we recognize pirates as economic actors, businessmen really, it becomes clear as to why they wouldn’t want to brutalize everyone they overtook. In order to encourage merchantmen to surrender, they needed to communicate the idea that, if you surrender to us, you’ll be treated well. That’s the incentive pirates give for sailors to surrender peacefully. If they wantonly abused their prisoners, as they’re often portrayed as having done, that would have actually undermined the incentive of merchant crews to surrender, which would have caused pirates to incur greater costs. They would have had to battle it out more often, because the merchants would have expected to be tortured indiscriminately if they were captured.

So instead, what we often see in the historical record is pirates displaying quite remarkable feats of generosity. The other side of that, of course, is that if you resisted, they had to unleash, you know, a hellish fury on you. That’s where most of the stories of pirate atrocities come from. That’s not to say that no pirate ever indulged his sadistic impulses. But I speculate that the pirate population had no higher proportion of sadists than legitimate society did. And those sadists among the pirates tended to reserve their sadistic actions for times when it would profit them.

Q: So they never made anyone walk the plank?
A: There was no walking the plank. There’s no historical foundation for that in 17th- or 18th-century piracy.

Q: You write about piracy as a brand. It’s quite a successful one, having lasted for hundreds of years after the pirates themselves were exterminated. What was the key to that success?
A: There was a very particular type of reputation that pirates wanted to cultivate. It was a very delicate line to walk. They didn’t want to have a reputation for wanton brutality or complete madness. They wanted to be perceived as hair-trigger men, men on the edge, who if you pushed, if you resisted, they would snap and do something horrible to you. That way, the captives they took had an incentive to be very careful to comply with all of the pirates’ demands. At the same time, they wanted a reputation as being very brutal, as meting out these brutal, horrible tortures to captives who didn’t comply with their demands. Stories about those horrible tortures were relayed not only by word of mouth, but by early 18th-century newspapers. When a former prisoner was released, he would oftentimes go to the media and provide an account of his capture. So when colonials read these accounts in the media, that helped institutionalize the idea of pirates as these men on the edge. That worked marvelously for pirates. It was a form of advertising performed by legitimate members of society that again helped pirates reduce their costs.

Q: What kinds of lessons can we draw from The Invisible Hook in dealing with modern pirates?
A: We have to recognize that pirates are rational economic actors and that piracy is an occupational choice. If we think of them as irrational, or as pursuing other ends, we’re liable to come up with solutions to the pirate problem that are ineffective. Since we know that pirates respond to costs and benefits, we should think of solutions that alter those costs and benefits to shape the incentives for pirates and to deter them from going into a life of piracy.

CONTACT
Peter Leeson
http://www.peterleeson.com/Papers.html
http://economics.gmu.edu/faculty/pleeson.htm
email : pleeson [at] gmu [dot] edu

PIRATE UTOPIAS
http://books.google.com/books?id=SJEg0p4RCP4C&dq
http://www.hermetic.com/bey/taz3.html

CUTTHROAT CAPITALISM
http://www.wired.com/images/multimedia/magazine/1707/Wired1707_Cutthroat_Capitalism.pdf
http://www.fpif.org/fpiftxt/6033

ACTUAL PIRATE MAPS
http://www.icc-ccs.org/index.php
http://bbs.keyhole.com/ubb/showflat.php/Cat/0/Number/1242871/an/0/page/0
http://www.unosat.org/freeproducts/somalia/Piracy/UNOSAT_SOM_Piracy_Gulf_Aden_Sept08_Highres_v6.pdf

MAYBE EVEN THE DE FACTO GOVERNMENT
THEY ARE AT LEAST THE NAVY

MEN WITH GUNS AND BOATS
THAT’S REALLY ALL IT TAKES

“We don’t consider ourselves sea bandits. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.”

“WE JUST WANT THE MONEY”
http://www.iht.com/articles/2008/10/31/africa/31pirates.php
Somalia’s pirates flourish in a lawless nation
BY Jeffrey Gettleman / October 31, 2008

Boosaaso, Somalia: This may be one of the most dangerous towns in
Somalia, a place where you can get kidnapped faster than you can wipe
the sweat off your brow. But it is also one of the most prosperous.
Money changers walk around with thick wads of hundred-dollar bills.
Palatial new houses are rising up next to tin-roofed shanties. Men in
jail reminisce, with a twinkle in their eyes, about their days living
like kings. This is the story of Somalia’s booming, not-so-underground
pirate economy. The country is in chaos, countless children are
starving and people are killing one another in the streets of
Mogadishu, the capital, for a handful of grain. But one particular
line of work – piracy – seems to be benefiting quite openly from all
this lawlessness and desperation. This year, Somali officials say,
pirate profits are on track to reach a record $50 million, all of it
tax free.

“These guys are making a killing,” said Mohamud Muse Hirsi, the top
Somali official in Boosaaso, who himself is widely suspected of
working with the pirates, though he vigorously denies it. More than 75
vessels have been attacked this year, far more than any other year in
recent memory. About a dozen have been set upon in the past month
alone, including a Ukrainian freighter packed with tanks, antiaircraft
guns and other heavy weaponry, which was brazenly seized in September.
The pirates use fast-moving skiffs to pull alongside their prey and
scamper on board with ladders or sometimes even rusty grappling hooks.
Once on deck, they hold the crew at gunpoint until a ransom is paid,
usually $1 million to $2 million. Negotiations for the Ukrainian
freighter are still going on, and it is likely that because of all the
publicity, the price for the ship could top $5 million. In Somalia, it
seems, crime does pay. Actually, it is one of the few industries that
does.

“All you need is three guys and a little boat, and the next day you’re
millionaires,” said Abdullahi Omar Qawden, a former captain in
Somalia’s long-defunct navy. People in Garoowe, a town south of
Boosaaso, describe a certain high-rolling pirate swagger. Flush with
cash, the pirates drive the biggest cars, run many of the town’s
businesses – like hotels – and throw the best parties, residents say.
Fatuma Abdul Kadir said she went to a pirate wedding in July that
lasted two days, with nonstop dancing and goat meat, and a band flown
in from neighboring Djibouti. “It was wonderful,” said Fatuma, 21.
“I’m now dating a pirate.”

This is too much for many Somali men to resist, and criminals from all
across this bullet-pocked land are now flocking to Boosaaso and other
notorious pirate dens along the craggy Somali shore. They have turned
these waters into the most dangerous shipping lanes in the world. With
the situation clearly out of control, warships from the United States,
Russia, NATO, the European Union and India are steaming into Somalia’s
waters as part of a reinvigorated, worldwide effort to crush the
pirates. But it will not be easy. The pirates are sea savvy. They are
fearless. They are rich and getting richer, with the latest high-tech
gadgetry like handheld GPS units. And they are united. The immutable
clan lines that have pitted Somalis against one another for decades
are not a problem here. Several captured pirates interviewed in
Boosaaso’s main jail said that they had recently crossed clan lines to
open new, lucrative, multiclan franchises. “We work together,” said
Jama Abdullahi, a jailed pirate. “Good for business, you know?”

The pirates are also sprinkled across thousands of square miles of
water, from the Gulf of Aden, at the narrow doorway to the Red Sea, to
the Kenyan border along the Indian Ocean. Even if the naval ships
manage to catch pirates in the act, it is not clear what they can do.
In September, a Danish warship captured 10 men suspected of being
pirates cruising around the Gulf of Aden with rocket-propelled
grenades and a long ladder. But after holding the suspects for nearly
a week, the Danes concluded that they did not have jurisdiction to
prosecute, so they dumped the pirates on a beach, minus their guns.
Nobody, it seems, has a clear plan for how to tame Somalia’s unruly
seas. Several fishermen along the Gulf of Aden talked about seeing
barrels of toxic waste bobbing in the middle of the ocean. They spoke
of clouds of dead fish floating nearby and rogue fishing trawlers
sucking up not just fish and lobsters but also the coral and the
plants that sustain them. It was abuses like these, several men said,
that turned them from fishermen into pirates. Nor is it even clear
whether Somali authorities universally want the piracy to stop. While
many pirates have been arrested, several fishermen, Western
researchers and more than a half-dozen pirates in jail spoke of
nefarious relationships among fishing companies, private security
contractors and Somali government officials, especially those working
for the semiautonomous regional government of Puntland.

“Believe me, a lot of our money has gone straight into the
government’s pockets,” said Farah Ismail Eid, a pirate who was
captured in nearby Berbera and sentenced to 15 years in jail. His
pirate team, he said, typically divided up the loot this way: 20
percent for their bosses, 20 percent for future missions (to cover
essentials like guns, fuel and cigarettes), 30 percent for the gunmen
on the ship and 30 percent for government officials. Abdi Waheed
Johar, the director general of the fisheries and ports ministry of
Puntland, openly acknowledged in an interview this spring that “there
are government people working with the pirates.” But, he was quick to
add, “It’s just not us.”

What is happening off Somalia’s shores is basically an extension of
the corrupt, violent free-for-all that has raged on land for 17 years
since the central government imploded in 1991. The vast majority of
Somalis lose out. Young thugs who are willing to serve as muscle get a
job, albeit a low-paying one, that significantly reduces their life
expectancy. And a select few warlords, who have sat down and figured
out how to profit off the anarchy, make a fortune. Take Boosaaso, once
a thriving port town on the Gulf of Aden. Piracy is killing off the
remains of the local fishing industry because export companies are
staying away. It has spawned a kidnapping business on shore, which in
turn has scared away many humanitarian agencies and the food, medicine
and other forms of desperately needed assistance they bring. Reporting
in Boosaaso two weeks ago required no fewer than 10 hired gunmen
provided by the Puntland government to discourage any would-be
kidnappers.

Few large cargo ships come here anymore, depriving legitimate
government operations of much-needed port taxes. Just about the only
ships willing to risk the voyage are small, wooden, putt-putt
freighters from India, essentially floating jalopies from another era.
“We can’t survive off this,” said Bile Qabowsade, a Puntland official.
The shipping problems have contributed to food shortages, skyrocketing
inflation and less work for the sinewy stevedores who trudge out to
Boosaaso’s beach every morning and stare in vain at the bright
horizon, their bare feet planted in the hot sand, hoping a ship will
materialize so they will be able to make a few pennies hauling 100-
pound sacks of sugar on their backs.

And yet, suspiciously, there has been a lot of new construction in
Boosaaso. There is an emerging section of town called New Boosaaso
with huge homes rising above the bubble-shaped huts of refugees and
the iron-sided shacks that many fishermen call home. These new houses
cost several hundred thousand dollars. Many are painted in garish
colors and protected by high walls. Even so, Boosaaso is still a
crumbling, broke, rough-and-tumble place, decaying after years of
neglect like so much of war-ravaged Somalia. It is also dangerous in
countless ways. On Wednesday, suicide bombers blew up two government
offices, most likely the work of Islamist radicals trying to turn
Somalia into an Islamist state. Of course, no Somali government
official would openly admit that New Boosaaso’s minicastles were built
with pirate proceeds. But many people, including United Nations
officials and Western diplomats, suspect that is the case.

Several jailed pirates have accused Muse, a former warlord who is now
Puntland’s president, of being paid off. Officials in neighboring
Somaliland, a breakaway region of northwestern Somalia, said they
recently organized an antipiracy sting operation and arrested Muse’s
nephew, who was carrying $22,000 in cash. “Top Puntland officials
benefit from piracy, even if they might not be instigating it,” said
Roger Middleton, a researcher at the Royal Institute of International
Affairs in London. Actually, he added, “all significant political
actors in Somalia are likely benefiting from piracy.” But Muse said he
did not know anything about this. “We are the leaders of this
country,” he said. “Everybody we suspect, we fire from work.”

He said that Puntland was taking aggressive action against the
pirates. And Boosaaso’s main jail may be proof of that. The other day,
a dozen pirates were hanging out in the yard under a basketball hoop.
And that was just the beginning. “Pirates, pirates, pirates,” said
Gure Ahmed, a Canadian-Somali inmate of the jail, charged with murder.
“This jail is full of pirates. This whole city is pirates.” In other
well-known pirate dens, like Garoowe, Eyl, Hobyo and Xarardheere,
pirates have become local celebrities. Said Farah, 32, a shopkeeper in
Garoowe, said the pirates seemed to have money to burn. “If they see a
good car that a guy is driving,” he said, “they say, ‘How much? If
it’s 30 grand, take 40 and give me the key.’ ”

Every time a seized ship tosses its anchor, it means a pirate shopping
spree. Sheep, goats, water, fuel, rice, spaghetti, milk and cigarettes
– the pirates buy all of this, in large quantities, from small towns
up and down the Somali coast. Somalia’s seafaring thieves are not like
the Barbary pirates, who terrorized European coastal towns hundreds of
years ago and often turned their hostages into galley slaves chained
to the oars. Somali pirates are known as relatively decent hosts,
usually not beating their hostages and keeping them well-fed until
payday comes. “They are normal people,” said Said. “Just very, very
rich.”

“WE JUST SAW A BIG SHIP, SO WE STOPPED IT”
http://www.nytimes.com/2008/10/01/world/africa/01pirates.html
Somali Pirates Tell Their Side: They Want Only Money
BY Jeffrey Gettleman / October 1, 2008

Nairobi, Kenya — The Somali pirates who hijacked a Ukrainian freighter
loaded with tanks, artillery, grenade launchers and ammunition said in
an interview on Tuesday that they had no idea the ship was carrying
arms when they seized it on the high seas. “We just saw a big ship,”
the pirates’ spokesman, Sugule Ali, said in a telephone interview. “So
we stopped it.” The pirates quickly learned, though, that their booty
was an estimated $30 million worth of heavy weaponry, heading for
Kenya or Sudan, depending on whom you ask.

In a 45-minute interview, Mr. Sugule spoke on everything from what the
pirates wanted (“just money”) to why they were doing this (“to stop
illegal fishing and dumping in our waters”) to what they had to eat on
board (rice, meat, bread, spaghetti, “you know, normal human-being
food”). He said that so far, in the eyes of the world, the pirates had
been misunderstood. “We don’t consider ourselves sea bandits,” he
said. “We consider sea bandits those who illegally fish in our seas
and dump waste in our seas and carry weapons in our seas. We are
simply patrolling our seas. Think of us like a coast guard.”

The pirates who answered the phone call on Tuesday morning said they
were speaking by satellite phone from the bridge of the Faina, the
Ukrainian cargo ship that was hijacked about 200 miles off the coast
of Somalia on Thursday. Several pirates talked but said that only Mr.
Sugule was authorized to be quoted. Mr. Sugule acknowledged that they
were now surrounded by American warships, but he did not sound afraid.
“You only die once,” Mr. Sugule said.

He said that all was peaceful on the ship, despite unconfirmed reports
from maritime organizations in Kenya that three pirates were killed in
a shootout among themselves on Sunday or Monday night. He insisted
that the pirates were not interested in the weapons and had no plans
to sell them to Islamist insurgents battling Somalia’s weak
transitional government. “Somalia has suffered from many years of
destruction because of all these weapons,” he said. “We don’t want
that suffering and chaos to continue. We are not going to offload the
weapons. We just want the money.” He said the pirates were asking for
$20 million in cash; “we don’t use any other system than cash.” But he
added that they were willing to bargain. “That’s deal-making,” he
explained.

Piracy in Somalia is a highly organized, lucrative, ransom-driven
business. Just this year, pirates hijacked more than 25 ships, and in
many cases, they were paid million-dollar ransoms to release them. The
juicy payoffs have attracted gunmen from across Somalia, and the
pirates are thought to number in the thousands. The piracy industry
started about 10 to 15 years ago, Somali officials said, as a response
to illegal fishing. Somalia’s central government imploded in 1991,
casting the country into chaos. With no patrols along the shoreline,
Somalia’s tuna-rich waters were soon plundered by commercial fishing
fleets from around the world. Somali fishermen armed themselves and
turned into vigilantes by confronting illegal fishing boats and
demanding that they pay a tax. “From there, they got greedy,” said
Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting
attacking everyone.”

By the early 2000s, many of the fishermen had traded in their nets for
machine guns and were hijacking any vessel they could catch: sailboat,
oil tanker, United Nations-chartered food ship. “It’s true that the
pirates started to defend the fishing business,” Mr. Mohamed said.
“And illegal fishing is a real problem for us. But this does not
justify these boys to now act like guardians. They are criminals. The
world must help us crack down on them.” The United States and several
European countries, in particular France, have been talking about ways
to patrol the waters together. The United Nations is even considering
something like a maritime peacekeeping force. Because of all the
hijackings, the waters off Somalia’s coast are considered the most
dangerous shipping lanes in the world.

On Tuesday, several American warships — around five, according to one
Western diplomat — had the hijacked freighter cornered along the
craggy Somali coastline. The American ships allowed the pirates to
bring food and water on board, but not to take weapons off. A Russian
frigate is also on its way to the area. Lt. Nathan Christensen, a Navy
spokesman, said on Tuesday that he had heard the unconfirmed reports
about the pirate-on-pirate shootout, but that the Navy had no more
information. “To be honest, we’re not seeing a whole lot of activity”
on the ship, he said.

In Washington, Geoff Morrell, the Pentagon press secretary, declined
to discuss any possible American military operations to capture the
ship. “Our concern is right now making sure that there’s a peaceful
resolution to this, that this cargo does not end up in the hands of
anyone who would use it in a way that would be destabilizing to the
region,” Mr. Morrell told reporters at the Pentagon. He said the
United States government was not involved in any negotiations with the
pirates. He also said he had no information about reports that the
pirates had exchanged gunfire among themselves.

Kenyan officials continued to maintain that the weapons aboard were
part of a legitimate arms deal for the Kenyan military, even though
several Western diplomats, Somali officials and the pirates themselves
said the arms were part of a secret deal to funnel weapons to southern
Sudan. Somali officials are urging the Western navies to storm the
ship and arrest the pirates because they say that paying ransoms only
fuels the problem. Western diplomats, however, have said that such a
commando operation would be very difficult because the ship is full of
explosives and the pirates could use the 20 crew members as human
shields.

Mr. Sugule said his men were treating the crew members well. (The
pirates would not let the crew members speak on the phone, saying it
was against their rules.) “Killing is not in our plans,” he said. “We
only want money so we can protect ourselves from hunger.” When asked
why the pirates needed $20 million to protect themselves from hunger,
Mr. Sugule laughed and said, “Because we have a lot of men.”

‘NATIONAL VOLUNTEER COAST GUARD’
http://graphics8.nytimes.com/images/2006/07/03/world/03somalia.xlarge1.jpg
http://travel2.nytimes.com/2006/07/03/world/africa/03somalia.html
“The pirates adopt names like the National Volunteer Coast Guard,
which is used by a group that intercepts small boats and fishing
vessels in southern Somalia. Another of the four main piracy groups
along the coast calls itself the Somali Marines. Organized like a
military unit, with admirals, vice admirals and the like, the group
operates around Mogadishu.”

INTERVIEW
http://thelede.blogs.nytimes.com/2008/09/30/q-a-with-a-pirate-we-just-want-the-money/index.html
Q. & A. With a Pirate: “We Just Want the Money”
BY Jeffrey Gettleman / September 30, 2008

Somali pirates in small boats hijacked the Faina, a Belize-flagged
cargo ship owned and operated by Kaalbye Shipping Ukraine, on Sept.
25. Sugule Ali, the spokesman for the Somali pirates holding hostage
the Faina, a Ukrainian freighter loaded with weapons, spoke to me by
satellite telephone today from the bridge of the seized ship. In the
holds of the Faina, which the pirates seized on Thursday, are 33
Russian-built battle tanks and crates of grenade launchers, anti-
aircraft guns, ammunition and other explosives. American officials
fear that the weapons could fall into the hands of radical Islamist
insurgents who are battling Somalia’s weak government. My questions
were translated into Somali, and Mr. Ali’s responses into English, by
a translator employed by The New York Times.

Q. Tell us how you discovered the weapons on board.
A. As soon as we get on a ship, we normally do what is called a
control. We search everything. That’s how we found the weapons. Tanks,
anti-aircraft, artillery. That’s all we will say right now.

Q. Were you surprised?
A. No, we weren’t surprised. We know everything goes through the sea.
We see people who dump waste in our waters. We see people who
illegally fish in our waters. We see people doing all sorts of things
in our waters.

Q. Are you going to sell the weapons to insurgents?
A. No. We don’t want these weapons to go to anyone in Somalia. Somalia
has suffered from many years of destruction because of all these
weapons. We don’t want that suffering and chaos to continue. We are
not going to offload the weapons. We just want the money.

Q. How much?
A. $20 million, in cash. We don’t use any other system than cash.

Q. Will you negotiate?
A. That’s deal making. Common sense says human beings can make deals.

Q. Right now, the American Navy has you surrounded. Are you scared?
A. No, we’re not scared. We are prepared. We are not afraid because we
know you only die once.

Q. Will you kill the hostages if attacked?
A. Killing is not in our plans. We don’t want to do anything more than
the hijacking.

Q. What will you do with the money?
A. We will protect ourselves from hunger.

Q. That’s a lot of money to protect yourselves from hunger.
A. Yes, because we have a lot of men and it will be divided amongst
all of us.

Q. [There are 20 crew members, most of them Ukrainian, being held
hostage.] How are you interacting with the hostages? Eating with them?
Playing cards?
A. We interact with each other in an honorable manner. We are all
human beings. We talk to one another, and because we are in the same
place, we eat together.

Q. What if you were told you could leave peacefully, without arrest,
though without any ransom money. Would you do it?
A. [With a laugh] We’re not afraid of arrest or death or any of these
things. For us, hunger is our enemy.

Q. Have the pirates been misunderstood?
A. We don’t consider ourselves sea bandits [”sea bandit” is one way
Somalis translate the English word pirate]. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.

Q. Why did you want to become a pirate?
A. We are patrolling our seas. This is a normal thing for people to do
in their regions.

Q. Isn’t what you are doing a crime? Holding people at gunpoint?
A. If you hold hostage innocent people, that’s a crime. If you hold
hostage people who are doing illegal activities, like waste dumping or
fishing, that is not a crime.

Q. What has this Ukrainian ship done that was a crime?
A. To go through our waters carrying all these weapons without
permission.

Q. What is the name of your group? How many ships have you hijacked
before?
A. I won’t say how many ships we have hijacked. I won’t talk about
that. Our name is the Central Region Coast Guard.

SHIPS FIGHT BACK

http://www.telegraph.co.uk/news/worldnews/piracy/3849969/Chinese-ship-uses-Molotov-cocktails-to-fight-off-Somali-pirates.html
“Our crew, who had been well trained and prepared, used water cannon, self-made incendiary bombs [Molotov cocktails or petrol bombs], beer bottles and anything else that could be used to battle with them. Thirty minutes later, the pirates gestured to us for a ceasefire. Then the helicopter from the joint fleet came to help us.”

SOMALIA’S GROWTH ECONOMY
http://www.navytimes.com/news/2008/10/ap_somalia_pirates_100508/
Somali pirates in stare-down with global powers
BY Elizabeth A. Kennedy / Oct 15, 2008

Nairobi, Kenya — With a Russian frigate closing in and a half-dozen
U.S. warships within shouting distance, the pirates holding a tanker
off Somalia’s coast might appear to have no other choice than to wave
the white flag. But that’s not how it works in Somalia, a failed state
where a quarter of children die before they turn 5, where anybody with
a gun controls the streets and where every public institution has
crumbled. The 11-day standoff aboard the Ukrainian MV Faina begs the
question: How can a bunch of criminals from one of the poorest and
most wretched countries on Earth face off with some of the world’s
richest and well-armed superpowers?

“They have enough guns to fight for another 20 years,” Ted Dagne, a
Somalia analyst in Washington, told The Associated Press. “And there
is no way to win a battle when the other side is in a suicidal mind
set.” In Somalia, pirates are better-funded, better-organized and
better-armed than one might imagine in a country that has been in
tatters for nearly two decades. They have the support of their
communities and rogue members of the government — some pirates even
promise to put ransom money toward building roads and schools. With
most attacks ending with million-dollar payouts, piracy is considered
the biggest economy in Somalia. Pirates rarely hurt their hostages,
instead holding out for a huge payday. The strategy works well: A
report Thursday by a London-based think tank said pirates have raked
in up to $30 million in ransoms this year alone. “If we are attacked
we will defend ourselves until every last one of us dies,” Sugule Ali,
a spokesman for the pirates aboard the Faina, said in an interview
over satellite telephone from the ship, which is carrying 33 battle
tanks, military weapons and 21 Ukrainian and Latvian and Russian
hostages. One Russian has reportedly died, apparently of illness. The
pirates are demanding $20 million ransom, and say they will not lower
the price. “We only need money and if we are paid, then everything
will be OK,” he said. “No one can tell us what to do.”

Ali’s bold words come even though his dozens of fighters are
surrounded by U.S. warships and American helicopters buzz overhead.
Moscow has sent a frigate, which should arrive within days. Jennifer
Cooke of the Center for Strategic and International Studies in
Washington said hostage-taking is the key to the pirates’ success
against any military muscle looming from the U.S. and Russia. “Once
you have a crew at gunpoint, you can hold six U.S. naval warships at
bay and they don’t have a whole lot of options except to wait it out,”
Cooke said. The pirates have specifically warned against the type of
raids carried out twice this year by French commandos to recover
hijacked vessels. The French used night vision goggles and helicopters
in operations that killed or captured several pirates, who are now
standing trial in Paris. But the hostages are not the bandits’ only
card to play. Often dressed in military fatigues, pirates travel in
open skiffs with outboard engines, working with larger mother ships
that tow them far out to sea. They use satellite navigational and
communications equipment and an intimate knowledge of local waters,
clambering aboard commercial vessels with ladders and grappling hooks.

They are typically armed with automatic weapons, anti-tank rocket
launchers and grenades — weaponry that is readily available throughout
Somalia, where a bustling arms market operates in the center of the
capital. They also have the support of their communities and some
members of local administrations, particularly in Puntland, a
semiautonomous region in northeast Somalia that is a hotbed for
piracy, officials and pirates have told the AP. Abdulqadir Muse Yusuf,
a deputy minister of ports in Puntland, acknowledged there were
widespread signs that Puntland officials, lawmakers and government
officials are “involved or benefiting from piracy” and said
investigations were ongoing. He would not elaborate. Piracy has
transformed the region around the town of Eyl, near where many
hijacked ships are anchored brought while pirates negotiate ransoms.
“Pirates buy new luxury cars and marry two, three, or even four
women,” said Mohamed, an Eyl resident who refused to give his full
name for fear of reprisals from the pirates. “They build new homes —
the demand for construction material is way up.” He said most of the
well-known pirates promise to build roads and schools in addition to
homes for themselves. But for now, Mohamed says he has only seen
inflation skyrocket as the money pours in. “One cup of tea is about
$1,” he said. Before the piracy skyrocketed, tea cost a few cents.

Piracy in Somalia is nothing new, as bandits have stalked the seas for
years. But this year’s surge in attacks — nearly 30 so far — has
prompted an unprecedented international response. The Faina has been
the highest-profile attack because of its dangerous cargo. The U.S.
fears the arms could end up in the hands of al-Qaida-linked militants
in a country seen as a key battleground on terror. The United States
has been leading international patrols to combat piracy along
Somalia’s unruly 1,880-mile coast, the longest in Africa and near key
shipping routes. In June, the U.N. Security Council passed a
resolution that would allow countries to chase and arrest pirates
after attacks increased this year. But still, the attacks continue.
Dagne, an analyst in Washington, said that unless the roots of the
problem are solved — poverty, disease, violence — piracy will only
flourish. “You have a population that is frustrated, alienated, angry
and hopeless,” Dagne said. “This generation of Somalis grew up
surrounded by abject poverty and violence.”

READY TO DIE
http://www.longwarjournal.org/archives/2008/09/mystery_surrounds_hi.php
http://www.thetimes.co.za/PrintEdition/Article.aspx?id=851953
Pirates die strangely after taking Iranian ship
BY Andrew Donaldson / Sep 28, 2008

A tense standoff has developed in waters off Somalia over an Iranian
merchant ship laden with a mysterious cargo that was hijacked by
pirates. Somali pirates suffered skin burns, lost hair and fell
gravely ill “within days” of boarding the MV Iran Deyanat. Some of
them died. Andrew Mwangura, the director of the East African
Seafarers’ Assistance Programme, told the Sunday Times: “We don’t
know exactly how many, but the information that I am getting is that
some of them had died. There is something very wrong about that ship.”

The vessel’s declared cargo consists of “minerals” and “industrial
products”. But officials involved in negotiations over the ship are
convinced that it was sailing for Eritrea to deliver small arms and
chemical weapons to Somalia’s Islamist rebels. The drama over the Iran
Deyanat comes as speculation grew this week about whether the South
African Navy would send a vessel to join the growing multinational
force in the region. A naval spokesman, Lieutenant-Commander Greyling
van den Berg, told the Sunday Times that the navy had not been ordered
by the government to become involved in “the Somali pirate issue”.

About 22000 ships a year pass through the Suez Canal and the Gulf of
Aden, where regional instability and “no-questions-asked” ransom
payments have led to a dramatic rise in attacks on vessels by heavily
armed Somali raiders in speedboats. The Iran Deyanat was sailing in
those waters on August 21, past the Horn of Africa and about 80
nautical miles southeast of Yemen, when it was boarded by about 40
pirates armed with AK-47s and rocket-propelled grenades. They were
alleged members of a crime syndicate said to be based at Eyl, a small
fishing village in northern Somalia.

The ship is owned and operated by the Islamic Republic of Iran
Shipping Lines, or IRISL, a state-owned company run by the Iranian
military. According to the US Treasury Department, the IRISL regularly
falsifies shipping documents to hide the identity of end users, uses
generic terms to describe shipments and operates under various covers
to circumvent United Nations sanctions. The ship set sail from
Nanjing, China, at the end of July. According to its manifest, it was
heading for Rotterdam where it would unload 42500 tons of iron ore and
“industrial products” purchased by a German client. At Eyl, the ship
was secured by more pirates — about 50 on board, and another 50 on
shore.

But within days those who had boarded the ship developed mysterious
health trouble. This was also confirmed by Hassan Allore Osman,
minister of minerals and oil in Puntland, an autonomous region of
Somalia. He headed a delegation sent to Eyl when news of the toxic
cargo and illnesses surfaced. He told one news publication, The Long
War Journal, that during the six days he had negotiated with the
pirates, a number of them had become sick and died. “That ship is
unusual,” he was quoted as saying. “It is not carrying a normal
shipment.”

The pirates did reveal that they had tried to inspect the ship’s cargo
containers when some of them fell sick — but the containers were
locked. Osman’s delegation spoke to the ship’s captain and its
engineer by cellphone, demanding to know more about the cargo.
Initially it was claimed the cargo contained “crude oil”; later it was
said to be “minerals”. And Mwangura has added: “Our sources say it
contains chemicals, dangerous chemicals.” But IRISL has denied that —
and threatened legal action against Mwangura. The company has
reportedly paid the pirates 200000 — the first of several “ransom
instalments”, but that, too, has been denied.

SOMALI COAST AS TOXIC WASTE DUMP
http://english.aljazeera.net/news/africa/2008/10/2008109174223218644.html
‘Toxic waste’ behind Somali piracy
BY Najad Abdullahi / October 11, 2008 / 12:21 Mecca time

Somali pirates have accused European firms of dumping toxic waste off
the Somali coast and are demanding an $8m ransom for the return of a
Ukranian ship they captured, saying the money will go towards cleaning
up the waste. The ransom demand is a means of “reacting to the toxic
waste that has been continually dumped on the shores of our country
for nearly 20 years”, Januna Ali Jama, a spokesman for the pirates,
based in the semi-autonomous region of Puntland, said. “The Somali
coastline has been destroyed, and we believe this money is nothing
compared to the devastation that we have seen on the seas.”

The pirates are holding the MV Faina, a Ukrainian ship carrying tanks
and military hardware, off Somalia’s northern coast. According to the
International Maritime Bureau, 61 attacks by pirates have been
reported since the start of the year. While money is the primary
objective of the hijackings, claims of the continued environmental
destruction off Somalia’s coast have been largely ignored by the
regions’s maritime authorities.

Dumping allegations
Ahmedou Ould-Abdallah, the UN envoy for Somalia confirmed to Al
Jazeera the world body has “reliable information” that European and
Asian companies are dumping toxic waste, including nuclear waste, off
the Somali coastline. “I must stress however, that no government has
endorsed this act, and that private companies and individuals acting
alone are responsible,” he said. Allegations of the dumping of toxic
waste, as well as illegal fishing, have circulated since the early
1990s. But evidence of such practices literally appeared on the
beaches of northern Somalia when the tsunami of 2004 hit the country.

The UN Environment Programme (UNEP) reported the tsunami had
washed up rusting containers of toxic waste on the shores of Puntland.
Nick Nuttall, a UNEP spokesman, told Al Jazeera that when the barrels
were smashed open by the force of the waves, the containers exposed
a “frightening activity” that has been going on for more than decade.
“Somalia has been used as a dumping ground for hazardous waste
starting in the early 1990s, and continuing through the civil war
there,” he said. “European companies found it to be very cheap to get
rid of the waste, costing as little as $2.50 a tonne, where waste
disposal costs in Europe are something like $1000 a tonne. “And the
waste is many different kinds. There is uranium radioactive waste.
There is lead, and heavy metals like cadmium and mercury. There is
also industrial waste, and there are hospital wastes, chemical wastes
– you name it.”

Nuttall also said that since the containers came ashore, hundreds of
residents have fallen ill, suffering from mouth and abdominal
bleeding, skin infections and other ailments. “We [the UNEP] had
planned to do a proper, in-depth scientific assessment on the
magnitude of the problem. But because of the high levels of insecurity
onshore and off the Somali coast, we are unable to carry out an
accurate assessment of the extent of the problem,” he said. However,
Ould-Abdallah claims the practice still continues. “What is most
alarming here is that nuclear waste is being dumped. Radioactive
uranium waste that is potentially killing Somalis and completely
destroying the ocean,” he said.

Toxic waste
Ould-Abdallah declined to name which companies are involved in waste
dumping, citing legal reasons. But he did say the practice helps fuel
the 18-year-old civil war in Somalia as companies are paying Somali
government ministers to dump their waste, or to secure licences and
contracts. “There is no government control … and there are few
people with high moral ground … [and] yes, people in high positions
are being paid off, but because of the fragility of the TFG
[Transitional Federal Government], some of these companies now no
longer ask the authorities – they simply dump their waste and leave.”

Ould-Abdallah said there are ethical questions to be considered
because the companies are negotiating contracts with a government that
is largely divided along tribal lines. “How can you negotiate these
dealings with a country at war and with a government struggling to
remain relevant?” In 1992, a contract to secure the dumping of toxic
waste was made by Swiss and Italian shipping firms Achair Partners and
Progresso, with Nur Elmi Osman, a former official appointed to the
government of Ali Mahdi Mohamed, one of many militia leaders involved
in the ousting of Mohamed Siad Barre, Somalia’s former president. At
the request of the Swiss and Italian governments, UNEP investigated
the matter. Both firms had denied entering into any agreement with
militia leaders at the beginning of the Somali civil war. Osman also
denied signing any contract.

‘Mafia involvement’
However, Mustafa Tolba, the former UNEP executive director, told Al
Jazeera that he discovered the firms were set up as fictitious
companies by larger industrial firms to dispose of hazardous waste.
“At the time, it felt like we were dealing with the Mafia, or some
sort of organised crime group, possibly working with these industrial
firms,” he said. “It was very shady, and quite underground, and I
would agree with Ould-Abdallah’s claims that it is still going on…
Unfortunately the war has not allowed environmental groups to
investigate this fully.”

The Italian mafia controls an estimated 30 per cent of Italy’s waste
disposal companies, including those that deal with toxic waste. In
1998, Famiglia Cristiana, an Italian weekly magazine, claimed that
although most of the waste-dumping took place after the start of the
civil war in 1991, the activity actually began as early as 1989 under
the Barre government. Beyond the ethical question of trying to secure
a hazardous waste agreement in an unstable country like Somalia, the
alleged attempt by Swiss and Italian firms to dump waste in Somalia
would violate international treaties to which both countries are
signatories.

Legal ramifications
Switzerland and Italy signed and ratified the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and their
Disposal, which came into force in 1992. EU member states, as well as
168 other countries have also signed the agreement. The convention
prohibits waste trade between countries that have signed the
convention, as well as countries that have not signed the accord
unless a bilateral agreement had been negotiated. It is also prohibits
the shipping of hazardous waste to a war zone. Abdi Ismail Samatar,
professor of Geography at the University of Minnesota, told Al Jazeera
that because an international coalition of warships has been deployed
to the Gulf of Aden, the alleged dumping of waste must have been
observed.

Environmental damage
“If these acts are continuing, then surely they must have been seen by
someone involved in maritime operations,” he said. “Is the cargo aimed
at a certain destination more important than monitoring illegal
activities in the region? Piracy is not the only problem for Somalia,
and I think it’s irresponsible on the part of the authorities to
overlook this issue.” Mohammed Gure, chairman of the Somalia Concern
Group, said that the social and environmental consequences will be
felt for decades. “The Somali coastline used to sustain hundreds of
thousands of people, as a source of food and livelihoods. Now much of
it is almost destroyed, primarily at the hands of these so-called
ministers that have sold their nation to fill their own pockets.” Ould-
Abdallah said piracy will not prevent waste dumping. “The intentions
of these pirates are not concerned with protecting their environment,”
he said. “What is ultimately needed is a functioning, effective
government that will get its act together and take control of its
affairs.”

A PIRATE BOSS TALKS
http://www.guardian.co.uk/world/2008/nov/22/piracy-somalia
‘We consider ourselves heroes’ – a Somali pirate speaks
Asad ‘Booyah’ Abdulahi, 42, describes himself as a pirate boss,
capturing ships in the Gulf of Aden and Indian Ocean.
Interview by Xan Rice and Abdiqani Hassan / November 22 2008

“I am 42 years old and have nine children. I am a boss with boats
operating in the Gulf of Aden and the Indian Ocean. I finished high
school and wanted to go to university but there was no money. So I
became a fisherman in Eyl in Puntland like my father, even though I
still dreamed of working for a company. That never happened as the
Somali government was destroyed [in 1991] and the country became
unstable.

At sea foreign fishing vessels often confronted us. Some had no
licence, others had permission from the Puntland authorities but did
not want us there to compete. They would destroy our boats and force
us to flee for our lives. I started to hijack these fishing boats in
1998. I did not have any special training but was not afraid. For our
first captured ship we got $300,000. With the money we bought AK-47s
and small speedboats. I don’t know exactly how many ships I have
captured since then but I think it is about 60. Sometimes when we are
going to hijack a ship we face rough winds, and some of us get sick
and some die.

We give priority to ships from Europe because we get bigger ransoms.
To get their attention we shoot near the ship. If it does not stop we
use a rope ladder to get on board. We count the crew and find out
their nationalities. After checking the cargo we ask the captain to
phone the owner and say that have seized the ship and will keep it
until the ransom is paid. We make friends with the hostages, telling
them that we only want money, not to kill them. Sometimes we even eat
rice, fish, pasta with them. When the money is delivered to our ship
we count the dollars and let the hostages go.

Then our friends come to welcome us back in Eyl and we go to Garowe in
Land Cruisers. We split the money. For example, if we get $1.8m, we
would send $380,000 to the investment man who gives us cash to fund
the missions, and then divide the rest between us. Our community
thinks we are pirates getting illegal money. But we consider ourselves
heroes running away from poverty. We don’t see the hijacking as a
criminal act but as a road tax because we have no central government
to control our sea. With foreign warships now on patrol we have
difficulties. But we are getting new boats and weapons. We will not
stop until we have a central government that can control our sea.”

BIGGEST HIJACKED SHIP EVER
http://english.aljazeera.net/news/africa/2008/11/200811190427825729.html
Somali pirates strike again / November 19, 2008 / 09:02 Mecca time

Somali pirates have struck again in the Gulf of Aden, hijacking
another ship a day after seizing a Saudi oil supertanker with a cargo
worth $100m. The Delight, a Hong Kong-registered vessel carrying
33,000 tonnes of wheat, was sailing to Iran with 25 crew members when
it was seized, Chinese state news agency Xinhua said. A spokesman for
the US Navy’s Fifth Fleet in the Gulf confirmed on Tuesday that the
Delight had been hijacked. A Hong Kong government spokesman said
“this could be a serious matter for us. We will deal with it”.

Saudi tanker anchored
News of the latest hijack came as the hijackers of the Saudi Sirius
Star – the biggest vessel ever hijacked – anchored the vessel off
Somalia. The vessel was seized in the Indian ocean off East Africa on
Sunday in the boldest attack by pirates operating from lawless
Somalia. “We can confirm the ship is anchoring off the Somali coast at
Haradheere,” Lieutenant Nathan Christensen, a spokesman for the US
Fifth Fleet, said on Tuesday. Haradheere is situated roughly in the
centre of Somalia’s coastline.

The supertanker had been heading for the US via the Cape of Good Hope
at the southern tip of Africa, instead of heading through the Gulf of
Aden and the Suez Canal. The hijacking occurred despite an
international naval response, including from the Nato alliance and
European Union, to protect one of the world’s busiest shipping areas.
US, French and Russian warships are also off the Somali coast. The
pirates have driven up insurance costs, forced some ships to go round
South Africa instead of through the Suez Canal and secured millions of
dollars in ransoms. Last week, the European Union, in its first-ever
naval mission, launched a security operation off the coast of Somalia
to combat growing piracy and protect ships carrying aid agency
deliveries.

Outrageous act
Prince Saud al-Faisal, Saudi Arabia’s foreign minister called the
hijacking of the Sirius Star an outrageous act and promised to back an
EU-led initiative to step up security in shipping lanes off Africa’s
east coast. “This outrageous act by the pirates, I think, will only
reinforce the resolve of the countries of the Red Sea and
internationally to fight piracy,” he told reporters in Athens. The
vessel owned by Saudi oil giant Aramco was fully loaded when it was
attacked on Sunday more than 450 nautical miles southeast of Mombasa.
The standoff comes as another ship is seized off the coast of Somalia.
According to the International Maritime Bureau (IMB), a Thai fishing
boat with 16 crew members has been hijacked. Noel Choong, head of the
IMB piracy reporting centre, based in Kuala Lumpur, said the ship was
seized in the Gulf of Aden on Monday. Eight ships have now been
hijacked in the past two weeks.

‘Hitting the jackpot’
Andrew Mwangura, co-ordinator of the East African Seafarers’
Association, said: “The world has never seen anything like this …
The Somali pirates have hit the jackpot.” The association, based in
the Kenyan port city of Mombasa, has been monitoring piracy for years.
Mwangura said he thought a hijacked Nigerian tug was a “mother-ship”
for the November 15 seizure. “The supertanker was fully loaded, so it
was probably low in the water and not that difficult to board,” he
said, adding that the pirates probably used a ladder or hooked a rope
to the side.

Pirates are well organised in the Horn of Africa, where Somalia’s
northeastern tip juts into the Indian Ocean. Somalia has had no
effective government since the 1991 overthrow of Mohamed Siad Barre,
the former president, touched off a bloody power struggle that has
defied numerous attempts to restore stability. This year, Somali
pirates have attacked 90 ships, more than double the number in 2007,
according to the International Maritime Bureau, and are still holding
16 ships and more than 250 sailors.

CURRENTLY HELD FOR RANSOM
http://www.foxnews.com/story/0,2933,454124,00.html
Somali Pirates Keep Hundreds of Hostages in Pirate City of Eyl
Heres a list of ten of the biggest vessels still in pirates’ hands.

1. Sirius Star / Hijacked November 17
Cargo: 2 million barrels of oil, value $100 million
Crew: 25 men

2. MV Karagol / Hijacked November 12
Cargo: 4,000 tons of chemicals
Crew: 14 Turks

3. MV Stolt Strength / Hijacked November 10
Cargo: Phosphoric acid
Crew: 23 Filipinos

4. CEC Future / Hijacked November 7
Cargo: Unknown
Crew: 11 Russians, one Georgian, one Lithuanian

5. MV Yasa Neslihan / Hijacked October 29
Cargo: Iron ore
Crew: 20 Turks

6. MT African Sanderling / Hijacked October 15
Cargo: Unknown
Crew: 21 Filipinos

7. MV Faina / Hijacked September 25
Cargo: 33 T-72 Russian battle tanks
Crew: 17 Ukrainians, 2 Latvians, one Russian

8. MV Captain Stefanos / Hijacked September 21
Cargo: Unknown
Crew: 17 Filipinos, two other nationals

9. Centauri / Hijacked September 18
Cargo: 17,000 tons of salt
Crew: 25 Filipinos

10. MV Great Creation / Hijacked September 17
Cargo: Chemical fertilizer
Crew: 24 Chinese, one Sri Lankan

CATERERS HIRED TO PREPARE WESTERN-STYLE FOOD FOR HOSTAGES
http://www.google.com/hostednews/ap/article/ALeqM5jCRkrQxbXdCbH0TfHp3oGe_2W1KAD94IB2F00
Somali pirates transform villages into boomtowns
BY Mohamed Olad Hassan and Elizabeth Kennedy / 11.19.08

MOGADISHU, Somalia (AP) — Somalia’s increasingly brazen pirates are
building sprawling stone houses, cruising in luxury cars, marrying
beautiful women — even hiring caterers to prepare Western-style food
for their hostages. And in an impoverished country where every public
institution has crumbled, they have become heroes in the steamy
coastal dens they operate from because they are the only real business
in town. “The pirates depend on us, and we benefit from them,” said
Sahra Sheik Dahir, a shop owner in Harardhere, the nearest village to
where a hijacked Saudi Arabian supertanker carrying $100 million in
crude was anchored Wednesday.

These boomtowns are all the more shocking in light of Somalia’s
violence and poverty: Radical Islamists control most of the country’s
south, meting out lashings and stonings for accused criminals. There
has been no effective central government in nearly 20 years, plunging
this arid African country into chaos. Life expectancy is just 46
years; a quarter of children die before they reach 5. But in northern
coastal towns like Harardhere, Eyl and Bossaso, the pirate economy is
thriving thanks to the money pouring in from pirate ransoms that have
reached $30 million this year alone. “There are more shops and
business is booming because of the piracy,” said Sugule Dahir, who
runs a clothing shop in Eyl. “Internet cafes and telephone shops have
opened, and people are just happier than before.”

In Harardhere, residents came out in droves to celebrate as the
looming oil ship came into focus this week off the country’s lawless
coast. Businessmen gathered cigarettes, food and cold bottles of
orange soda, setting up kiosks for the pirates who come to shore to
resupply almost daily. Dahir said she even started a layaway plan for
them. “They always take things without paying and we put them into the
book of debts,” she told The Associated Press in a telephone
interview. “Later, when they get the ransom money, they pay us a lot.”
Residents make sure the pirates are well-stocked in khat, a popular
narcotic leaf, and aren’t afraid to gouge a bit when it comes to the
pirates’ deep pockets. “I can buy a packet of cigarettes for about $1
but I will charge the pirate $1.30,” said Abdulqadir Omar, an Eyl
resident. While pirate villages used to have houses made of corrugated
iron sheets, now, there are stately looking homes made of sturdy,
white stones. “Regardless of how the money is coming in, legally or
illegally, I can say it has started a life in our town,” said Shamso
Moalim, a 36-year-old mother of five in Harardhere. “Our children are
not worrying about food now, and they go to Islamic schools in the
morning and play soccer in the afternoon. They are happy.”

The attackers generally treat their hostages well in anticipation of a
big payday, hiring caterers on shore to cook spaghetti, grilled fish
and roasted meat that will appeal to Western palates. And when the
payday comes, the money sometimes literally falls from the sky.
Pirates say the ransom arrives in burlap sacks, sometimes dropped from
buzzing helicopters, or in waterproof suitcases loaded onto skiffs in
the roiling, shark-infested sea. “The oldest man on the ship always
takes the responsibility of collecting the money, because we see it as
very risky, and he gets some extra payment for his service later,”
Aden Yusuf, a pirate in Eyl, told AP over VHF radio.

The pirates use money-counting machines — the same technology seen
at foreign exchange bureaus worldwide — to ensure the cash is real. All
payments are done in cash because Somalia has no functioning banking
system. “Getting this equipment is easy for us, we have business
connections with people in Dubai, Nairobi, Djibouti and other areas,”
Yusuf said. “So we send them money and they send us what we want.”

Despite a beefed-up international presence, the pirates continue to
seize ships, moving further out to sea and demanding ever-larger
ransoms. The pirates operate mostly from the semiautonomous Puntland
region, where local lawmakers have been accused of helping them and
taking a cut of the ransoms. For the most part, however, the regional
officials say they have no power to stop piracy. Meanwhile, towns that
once were eroded by years of poverty and chaos are now bustling with
restaurants, Land Cruisers and Internet cafes. Residents also use
their gains to buy generators — allowing full days of electricity,
once an unimaginable luxury in Somalia.

PIRATES MAKE GOOD HUSBANDS
http://www.thenational.ae/article/20081021/OPINION/481690039/1006/rss
“Pirate Jama Shino in the Somali town of Garowe, threw the most lavish
wedding party for his second marriage and invited hundreds of people
from the local authorities and among citizens,” Hussameddin wrote.
“The bride and the young women who attended the party, said: “Marrying
a pirate is every Somali girl’s dream. He has power, money, immunity,
the weapons to defend the tribe and funds to give to the militias in
civil war,” – from an op-ed in the Egyptian paper, Al Ahram.

PIRACY CHIC
http://news.bbc.co.uk/1/hi/world/africa/7650415.stm
Somali pirates living the high life
BY Robyn Hunter / 2008/10/28

“No information today. No comment,” a Somali pirate shouts over the
sound of breaking waves, before abruptly ending the satellite
telephone call. He sounds uptight – anxious to see if a multi-million
dollar ransom demand will be met. He is on board the hijacked
Ukrainian vessel, MV Faina – the ship laden with 33 Russian battle
tanks that has highlighted the problem of piracy off the Somali coast
since it was captured almost a month ago. But who are these modern-day
pirates? According to residents in the Somali region of Puntland where
most of the pirates come from, they live a lavish life.

Fashionable
“They have money; they have power and they are getting stronger by the
day,” says Abdi Farah Juha who lives in the regional capital, Garowe.
“They wed the most beautiful girls; they are building big houses; they
have new cars; new guns,” he says. “Piracy in many ways is socially
acceptable. They have become fashionable.” Most of them are aged
between 20 and 35 years – in it for the money. And the rewards they
receive are rich in a country where almost half the population need
food aid after 17 years of non-stop conflict.

Most vessels captured in the busy shipping lanes of the Gulf of Aden
fetch on average a ransom of $2m. This is why their hostages are well
looked after. The BBC’s reporter in Puntland, Ahmed Mohamed Ali, says
it also explains the tight operation the pirates run. They are never
seen fighting because the promise of money keeps them together.
Wounded pirates are seldom seen and our reporter says he has never
heard of residents along Puntland’s coast finding a body washed
ashore. Given Somalia’s history of clan warfare, this is quite a feat.
It probably explains why a report of a deadly shoot-out amongst the
pirates onboard the MV Faina was denied by the vessel’s hijackers.
Pirate spokesman Sugule Ali told the BBC Somali Service at the time:
“Everybody is happy. We were firing guns to celebrate Eid.”

Brains, muscle and geeks
The MV Faina was initially attacked by a gang of 62 men. BBC Somalia
analyst Mohamed Mohamed says such pirate gangs are usually made up
of three different types:
* Ex-fishermen, who are considered the brains of the operation
because they know the sea
* Ex-militiamen, who are considered the muscle – having fought for
various Somali clan warlords
* The technical experts, who are the computer geeks and know how
to operate the hi-tech equipment needed to operate as a pirate –
satellite phones, GPS and military hardware.

The three groups share the ever-increasing illicit profits – ransoms
paid in cash by the shipping companies. A report by UK think-tank
Chatham House says piracy off the coast of Somalia has cost up to $30m
(£17m) in ransoms so far this year. The study also notes that the
pirates are becoming more aggressive and assertive – something the
initial $22m ransom demanded for MV Faina proves. The asking price has
apparently since fallen to $8m.

Calling the shots
Yemen, across the Gulf of Aden, is reportedly where the pirates get
most of their weapons from. A significant number are also bought
directly from the Somali capital, Mogadishu. Observers say Mogadishu
weapon dealers receive deposits for orders via a “hawala” company – an
informal money transfer system based on honour. Militiamen then drive
the arms north to the pirates in Puntland, where they are paid the
balance on delivery. It has been reported in the past that wealthy
businessmen in Dubai were financing the pirates. But the BBC’s Somali
Service says these days it is the businessmen asking the pirates for
loans.

Such success is a great attraction for Puntland’s youngsters, who have
little hope of alternative careers in the war-torn country. Once a
pirate makes his fortune, he tends to take on a second and third wife
– often very young women from poor nomadic clans, who are renowned
for their beauty. But not everyone is smitten by Somalia’s new elite.
“This piracy has a negative impact on several aspects of our life in
Garowe,” resident Mohamed Hassan laments.

He cites an escalating lack of security because “hundreds of armed
men” are coming to join the pirates. They have made life more
expensive for ordinary people because they “pump huge amounts of US
dollars” into the local economy which results in fluctuations in the
exchange rate, he says. Their lifestyle also makes some unhappy. “They
promote the use of drugs – chewing khat [a stimulant which keeps one
alert] and smoking hashish – and alcohol,” Mr Hassan says.

The trappings of success may be new, but piracy has been a problem in
Somali waters for at least 10 years – when Somali fishermen began
losing their livelihoods. Their traditional fishing methods were no
match for the illegal trawlers that were raiding their waters. Piracy
initially started along Somalia’s southern coast but began shifting
north in 2007 – and as a result, the pirate gangs in the Gulf of Aden
are now multi-clan operations. But Garowe resident Abdulkadil Mohamed
says, they do not see themselves as pirates. “Illegal fishing is the
root cause of the piracy problem,” he says. “They call themselves
coastguards.”

“THEY ARE STRONGER THAN US”
http://allafrica.com/stories/200808250109.html
‘Pirates Are Stronger Than Us’ – Eyl Mayor / 23 August 2008
“The mayor of a small coastal town in northeastern Somalia has
declared that local authorities are unable to stop pirates. Abdullahi
Said O’Yusuf, the mayor of Eyl in Puntland region, confirmed Radio
Garowe during a Saturday interview that four hijacked ships are being
held hostage near the town’s shores. “They are stronger than us,”
Mayor O’Yusuf said, while speaking of the pirates. He condemned
continued attacks on foreign ships traveling across the Indian Ocean,
while underlining that local authorities “cannot do anything” to stop
piracy. The Associated Press has reported that four ships – with
owners in Malaysia, Iran, Japan and Germany – and a total crew of 96
people are being held hostage by Somali pirates. Mayor O’Yusuf said
the pirates who hijacked the ships “are the same ones who received
ransom payments before,” referring to previous pirate attacks in the
region. According to the Mayor, pirates use ransom payments to “buy
houses in big cities” in different parts of the country.”

PUNTLAND, PORT OF EYL
http://www.maplandia.com/somalia/nugaal/eyl/
http://www.ireport.com/docs/DOC-150775
http://www.ireport.com/docs/DOC-150774
http://www.ireport.com/people/Moulidismail
http://en.wikipedia.org/wiki/Eyl
“Eyl is a town in the northern Puntland region of Somalia. The
prominent clans in the Eyl district are the Majeerteen and Leelkase
sub-clans of the Darod. Eyl is near the Hafun peninsula, the location
of most of Somalia’s casualties from the 2004 Indian Ocean Tsunami. As
of 2008 Eyl has become a pirate haven, with more than a dozen ships
being held captive by pirate crews. The Puntland government has
acknowledged that they are relatively powerless to stop pirate
activities. French commandos decided a hostage rescue in Eyl was too
dangerous, and carried out a rescue of two French sailors before they
could be taken there.”

PIRATE ACCOUNTANTS
http://news.bbc.co.uk/2/hi/africa/7623329.stm
Life in Somalia’s pirate town
BY Mary Harper / 18 September 2008

Whenever word comes out that pirates have taken yet another ship in
the Somali region of Puntland, extraordinary things start to happen.
There is a great rush to the port of Eyl, where most of the hijacked
vessels are kept by the well-armed pirate gangs. People put on ties
and smart clothes. They arrive in land cruisers with their laptops,
one saying he is the pirates’ accountant, another that he is their
chief negotiator.

With yet more foreign vessels seized off the coast of Somalia this
week, it could be said that hijackings in the region have become
epidemic. Insurance premiums for ships sailing through the busy Gulf
of Aden have increased tenfold over the past year because of the
pirates, most of whom come from the semi-autonomous region of
Puntland. In Eyl, there is a lot of money to be made, and everybody is
anxious for a cut.

Entire industry
The going rate for ransom payments is between $300,000 and $1.5m
(£168,000-£838,000). A recent visitor to the town explained how, even
though the number of pirates who actually take part in a hijacking is
relatively small, the whole modern industry of piracy involves many
more people. “The number of people who make the first attack is small,
normally from seven to 10,” he said. “They go out in powerful
speedboats armed with heavy weapons. But once they seize the ship,
about 50 pirates stay on board the vessel. And about 50 more wait on
shore in case anything goes wrong.”

Given all the other people involved in the piracy industry, including
those who feed the hostages, it has become a mainstay of the Puntland
economy. Eyl has become a town tailor-made for pirates – and their
hostages. Special restaurants have even been set up to prepare food
for the crews of the hijacked ships. As the pirates want ransom
payments, they try to look after their hostages. When commandos from
France freed two French sailors seized by pirates off the Somali coast
in September, President Nicolas Sarkozy said he had given the go-ahead
for the operation when it was clear the pirates were headed for Eyl –
it would have been too dangerous to try to free them from there.

The town is a safe-haven where very little is done to stop the pirates
– leading to the suggestion that some, at least, in the Puntland
administration and beyond have links with them. Many of them come
from the same clan – the Majarteen clan of the president of Somalia’s
transitional federal government, Abdullahi Yusuf.

Money to spend
The coastal region of Puntland is booming. Fancy houses are being
built, expensive cars are being bought – all of this in a country that
has not had a functioning central government for nearly 20 years.
Observers say pirates made about $30m from ransom payments last
year – far more than the annual budget of Puntland, which is about
$20m. When the president of Puntland, Adde Musa, was asked about
the reported wealth of pirates and their associates, he said: “It’s more
than true”.

Now that they are making so much money, these 21st Century pirates
can afford increasingly sophisticated weapons and speedboats. This
means that unless more is done to stop them, they will continue to
plunder the busy shipping lanes through the Gulf of Aden. They even
target ships carrying aid to feed their compatriots – up to a third of the
population. Warships from France, Canada and Malaysia, among others,
now patrol the Somali coast to try and fend off pirate attacks.

An official at the International Maritime Organisation explained how
the well-armed pirates are becoming increasingly bold. More than 30%
of the world’s oil is transported through the Gulf of Aden. “It is
only a matter of time before something horrible happens,” said the
official. “If the pirates strike a hole in the tanker, and there’s an
oil spill, there could be a huge environmental disaster”.

It is likely that piracy will continue to be a problem off the coast
of Somalia as long as the violence and chaos continues on land.
Conflict can be very good for certain types of business, and piracy is
certainly one of them. Weapons are easy to obtain and there is no
functioning authority to stop them, either on land or at sea.

BOARDING THE MOTHERSHIP
http://i2.cdn.turner.com/cnn/2008/WORLD/africa/08/21/somalia.pirates/art.somaliaship.jpg
http://www.google.com/hostednews/ap/article/ALeqM5gB7YMEDuCwwY9ncDOtPAkEI4-H2wD94I5IQO0
http://www.nationalpost.com/news/story.html?id=919833

“We want pre-emptive action against the mother ships before the
pirates carry out a hijacking,” said Captain Pottengal Mukundan,
director of the London-based International Maritime Bureau, which
monitors international piracy, referring to the ships pirates use as
bases from which to launch attacks. “The positions of the mother ships
are generally known. What we would like to see is the naval vessels
going to interdict them, searching them and removing any arms on
board. That would at least force the pirates to go back to Somalia to
pick up more arms before they could come back again,” he told Reuters
in an interview.

But the laws governing what navies can do to take on the pirates are
complex. Only if pirates are caught in the act of piracy — actually
boarding a ship and seizing it — can a naval ship intervene with the
full force of international law. Arriving 30 minutes after a vessel
has been boarded, when there is a degree of uncertainty over whether
those on board are pirates or not, is often too late, experts say.
Denmark recently had to return some suspected pirates to Somalia
because it couldn’t prove they were pirates after they were seized.

Mr. Mukundan said there were currently about four ‘mother ships’ —
seized dhows or other larger fishing boats anchored near international
waters — being used by pirates. The pirates live on the mother ships,
storing arms, fuel and other supplies on board, and then target ships,
which can include fuel tankers, by catching up to them in high-speed
boats and boarding them with rope ladders while heavily armed. Mr.
Mukundan acknowledged the legalities of taking on ‘mother ships’ were
tricky, but said it could be done if governments gave their naval
forces instructions to do it.”

CONVENTION ON THE HIGH SEAS
http://en.wikipedia.org/wiki/United_Nations_Convention_on_the_Law_of_the_Sea
http://en.wikisource.org/wiki/Convention_on_the_High_Seas
http://www.eaglespeak.us/2006/01/american-navy-ship-may-have-captured.html

“Piracy is an international crime consisting of illegal acts of
violence, detention, or depredation committed for private ends by the
crew or passengers of a private ship or aircraft in or over
international waters against another ship or aircraft or persons and
property on board. (Depredation is the act of plundering, robbing, or
pillaging.)

In international law piracy is a crime that can be committed only
on or over international waters (including the high seas, exclusive
economic zone, and the contiguous zone), in international airspace,
and in other places beyond the territorial jurisdiction of any nation.
The same acts committed in the internal waters, territorial sea,
archipelagic waters, or national airspace of a nation do not
constitute piracy in international law but are, instead, crimes within
the jurisdiction and sovereignty of the littoral nation.

Sea robbery is a term used to describe attacks upon commercial
vessels in ports and territorial waters. Such attacks are, according
to international law, not true acts of piracy but rather armed
robberies. They are criminal assaults on vessels and vessel crews,
just as may occur to truck drivers within a port area. Such attacks
pose a serious threat to trade. The methods of these attacks have
varied from direct force using heavy weapons to subterfuge in which
the criminals have identified themselves on VHF radio as the national
coast guard.

These maritime criminals are inclined to operate in waters where
government presence is weak, often lacking in both technical resources
and the political will to deal effectively with such attacks.
International law permits any warship or government vessel to repress
an attack in international waters. In a state’s territorial waters,
such attacks constitute an act of armed robbery and must be dealt with
under the laws of the relevant coastal state. These laws seldom, if
ever, permit a vessel or warship from another country to intervene.
The most effective countermeasure strategy is to prevent criminals
initial access to ports and vessels, and to demonstrate a consistent
ability to respond rapidly and effectively to notification of such a
security breach.

Acts of piracy can only be committed by private ships or private
aircraft. A warship or other public vessel or a military or other
state aircraft cannot be treated as a pirate unless it is taken over
and operated by pirates or unless the crew mutinies and employs it for
piratical purposes. By committing an act of piracy, the pirate ship or
aircraft, and the pirates themselves, lose the protection of the
nation whose flag they are otherwise entitled to fly.

To constitute the crime of piracy, the illegal acts must be
committed for private ends. Consequently, an attack upon a merchant
ship at sea for the purpose of achieving some criminal end, e.g.,
robbery, is an act of piracy as that term is currently defined in
international law. Conversely, acts otherwise constituting piracy done
for purely political motives, as in the case of insurgents not
recognized as belligerents, are not piratical.

International law has long recognized a general duty of all
nations to cooperate in the repression of piracy. This traditional
obligation is included in the 1958 Geneva Convention on the High Seas
and the 1982 LOS Convention, both of which provide: “[A]ll States
shall cooperate to the fullest possible extent in the repression of
piracy on the high seas or in any other place outside the jurisdiction
of any State.””

PIRACY AS A BUSINESS MODEL (cont.)
http://www.timesonline.co.uk/tol/news/world/africa/article5183662.ece

MORAL HAZARD (OR GETTING WHAT YOU PAY FOR)
http://timesofindia.indiatimes.com/USA/Somali_pirates_paid_up_to_30m_this_year_UN/articleshow/3734963.cms
PAID RANSOMS ARE PROOF OF CONCEPT, ENCOURAGING MORE PIRACY
http://www.npr.org/templates/story/story.php?storyId=95472602
http://www.npr.org/templates/story/story.php?storyId=97170630
Lucrative Piracy Business Thrives Off Somali Coast / November 18,
2008

The seizure Monday of a supertanker carrying $100 million of crude oil
off the coast of Somalia is one of many ship hijackings by pirates of
late. A cargo ship flying a Hong Kong flag also was taken over in the
Gulf of Aden on Tuesday — the seventh hijacking in the area in 12
days, according to The Associated Press. The magnitude of recent
piracy attacks is rising, and an interactive map maintained by the
International Chamber of Commerce shows where these attacks are
taking place. Many are focused around the eastern Horn of Africa, but
piracy in the waters around Indonesia also has been frequent. J. Peter
Pham, director of the Nelson Institute for International and Public
Affairs at James Madison University, says the recent spikes in piracy are
“a crime of both opportunity and expediency.”

“Somalia has lacked a government, effectively, since 1991 and the
current interim government — the 14th of its kind in a decade and a
half — is tottering on its last legs, so there is very little control
to prevent lawlessness,” he says. “There is also the fact that
increasingly commerce is moving in this direction — the demand for oil
and other resources. Roughly 11 percent of the world’s petroleum flows
through these waters.” For Somalis, Pham says, “this is really the
best thing they have going for them economically. Piracy and ransom
this year will exceed more than $50 million — it’s Somalia’s largest
income-earner.

“The ship owners and insurers have found that it’s more cost-effective
to pay ransoms. They are currently averaging slightly over $1 million
per vessel, and that’s cheaper than buying a new ship,” Pham says.
“The Saudi tanker that was seized [Monday] was just launched six
months ago and cost $150 million to build and the cargo on board is
worth $100 million, so I suspect the ship owners will be willing to
pay some fraction of that to get it back.” Pham says that most tankers
of that size are not armed, or if they are, they have small side arms.
The pirates come in fast speed boats, circle the vessel and threaten
to blow it out of the water with rocket-propelled grenades or shoulder-
launched missiles. “Faced with that prospect, most captains — to save
the life of their crew and save the vessels — will surrender control
of the vessel to the pirates,” Pham says.

POWER VACUUM
http://worldfocus.org/blog/2008/09/22/somali-pirates-sink-maritime-industry/1302/
http://worldfocus.org/blog/2008/11/18/chaos-on-and-off-somalias-shores/2749/
http://www.economist.com/world/mideast-africa/displaystory.cfm?story_id=12342212
The world’s most utterly failed state / Oct 2nd 2008

Tipped off by friends in ports from Odessa to Mombasa, Somali pirates
captured a Ukrainian freighter, the MV Faina, in the Gulf of Aden and
steered it to Somalia’s coast. At first they demanded $20m for the
release of ship and crew. The captain died, apparently of
“hypertension”, and several pirates may have then killed each other
after a quarrel. This recent incident was only the latest in a long
list of similar outrages and highlights the growing menace caused by
the total failure of the state of Somalia, the ultimate cause of the
virus of piracy in the region.

The ship was carrying 33 T-72 Russian tanks, anti-aircraft guns and
grenade launchers. Lighter weapons may have been offloaded on the
Somali shore before an American warship arrived on the scene. Kenya
claimed ownership of the cargo but the manifest suggests its
destination was south Sudan, with Kenya’s co- operation in its
delivery to be rewarded in the future with cheap south Sudanese oil.
At midweek, a Russian warship was steaming to the scene to take
responsibility for its citizens on the ship.

The attack was only one of at least 60 off Somalia this year. Foreign
navies can intercept vessels captured by pirates, but the desolation
and length of Somalia’s coastline give them little chance of stamping
out piracy without much larger and better co-ordinated forces. In
cahoots with gangs in Yemen, Somali pirates look set to go on hitting
vessels heading into or out of the Red Sea or passing through the Gulf
of Aden: about 10% of the world’s shipping.

It is big business. The pirates are increasingly sophisticated,
handsomely bankrolled by Somalis in Dubai and elsewhere. They are not
yet directly tied up with the Islamist insurgents in Somalia, though
they may yet have to pay cash to whoever controls their coastal havens
in return for uninterrupted business, thus assisting the purchase of
weapons and fuelling the violence. The nabbed ships are mostly
anchored off the village of Eyl in Puntland in the north-east or the
pirate town of Haradheere farther south (see map) until a ransom is
paid, which is usually within a month of capture. The average ransom
has tripled since 2007, as has the number of ships taken. Some $100m
may have been paid to pirates this year. By comparison, the United
Nations Development Programme’s annual budget for Somalia is $14m.

Piracy is a symptom of the power vacuum inside Somalia. The country’s
“transitional federal government”, headed by a warlord president,
Abdullahi Yusuf, and a bookish prime minister, Nur Hussein, is
powerless to stop its citizens raising the Jolly Roger, just as it
cannot halt the resurgent jihadists, some with al-Qaeda connections,
who have taken control of much of southern Somalia, including the port
town of Kismayo. Hundreds of thousands have fled street fighting in
the north of Mogadishu to camps outside the city; some head south to
refugee camps in Kenya. About 9,000 civilians have been killed in the
insurgency in the past year, according to human-rights groups.

The UN’s envoy to Somalia, Ahmedou Ould Abdullah, a former foreign
minister of Mauritania, is overseeing peace talks in nearby Djibouti
between the transitional government and the moderate wing of the
Alliance for the Reliberation of Somalia (ARS), an Islamist group
headed by a former teacher, Sharif Ahmed. The aim is to create a
genuine government of national unity before elections next year.

A condition of any agreement is the withdrawal of the 7,000-odd
Ethiopian troops now in Somalia. Mr Ould Abdullah wants to replace
them and a separate 2,200-strong African Union force of Ugandan and
Burundian troops with 8,000 UN peacekeepers. Ethiopia, which is losing
men and money, would be happy with that, if the peacekeepers were
somehow shoehorned in without the jihadists taking advantage of a
hiatus. America agrees, but only if the deployment of blue helmets is
matched by an effort to build a new Somali national army. Mr Ould
Abdullah is also keen for the International Criminal Court in The
Hague to indict some of the worst warlords, to show they cannot murder
their opponents with impunity. But it is unlikely, in present
circumstances, that UN peacekeepers will ever arrive. If the UN cannot
produce half its promised force for Darfur, despite a detailed plan
for one, Somalia stands little chance of getting any blue helmets at
all.

Feuding among Somali leaders makes matters worse. “Somalia is a victim
of its political, business and military elite,” says Mr Ould Abdullah.
“They’ve taken the country hostage.” A slender hope, backed by Britain
and some other EU countries, is that ordinary Somalis will eventually
force their leaders to put national interest above self-interest and
sign the proposed agreement in Djibouti. In any event, says another
diplomat, “There is no Plan B.”

As the peace talks limp on, the insurgency is getting stronger. It is
led by the Shabab (Youth), the armed wing of the Islamic Courts Union,
which ran Somalia with some success for a few months in 2006 until it
was smashed, at the end of that year, by the invading Ethiopians, with
American backing. The Shabab has since reconstituted itself, making
ground with tactics copied from Iraq: roadside bombings, the kidnap
and murder of foreigners, local aid-workers and peace campaigners, and
grenade attacks on video shacks showing films or football.

My enemy’s enemy is my friend
Its fighters come under the leadership of a wily red-bearded 70-year-
old jihadist, Hassan Dahir Aweys, and a former deputy commander of the
Islamic Courts, Mukhtar Robow. They are backed by Eritrea, which has
offered sanctuary to the radical rump of the ARS in its capital,
Asmara. Eritrea’s interest is not to help Somalia but to hurt its
bitter enemy, Ethiopia. The Shabab is also backed by fighters from the
Hawiye clan and by hungry young freelance gunmen who represent
Somalia’s huge lost generation. Half the population, 10m-odd before
the exodus, was born after Siad Barre’s regime fell in 1991. Since
then, it is guessed, only 10% have had even rudimentary education;
health care barely exists.

Few foreign governments have shown much interest in trying to end
Somalia’s woes. Diplomats charged with trying to do so are frustrated
and depressed. Meanwhile the suffering is mounting. The UN reckons
3.2m Somalis now survive on food aid. The piracy means that warships
have to escort ships bringing food. If fighting intensifies, that will
be harder—and manipulating food aid could become a weapon, as it was
during fighting in 1991 and 1992, when 300,000 Somalis starved to
death.

BUT FOR ORDINARY MIRACLES
http://www.royalafricansociety.org/index.php?option=com_content&task=view&id=501
http://thirtylettersinmyname.blogspot.com/2008/10/somalia-through-richard-dowdens-eyes.html
BY Hari Jagannathan Balasubramanian / October 06, 2008

…as I now read Richard Dowden’s Africa: Altered States, Ordinary
Miracles, the political outline is becoming clear: one man rule from
1969-1991; then civil war; a failed American rescue attempt; and then
no government; and more recently, Ethiopia meddling in its affairs.
The excerpts I’ll present here, though, are images of a modernizing
Somalia, of how in the absence of a government, a free market thrived
in the 90s and filled the void.

“In 1999 I went back to Somalia to see what had happened.
Considering there was no state and civil war sputtered on, life was
not as bad as I had expected. In some ways it was a lot better. Those
few aid agencies that stayed on were no longer run by expatriate
overlords but staffed by Somalis. Not many foreign aid workers wanted
to be there. Somalis had also managed to get the economy going –
without a single cent from the World Bank or IMF. The new economy was
largely built around a worldwide telephone banking system – a truly
free market system and , at the time, by far the world’s cheapest and
most efficient. Several Somalis who had worked in telecoms in America
bought dishes and telephone equipment and set up phone booths in small
towns. From here, for a dollar a minute, people could call cousins and
aunts and uncles all over the world.”

And how the cell phone is the perfect device for the wandering Somali
herder wanting to learn market prices:

“Somali herders move around in a yearly pattern. In the dry
season, towards the end of the year, they go down to the coast as they
have done for centuries to sell some of their animals to traders who
take them across the Red Sea to the markets of Saudi Arabia. I have
watched them at the port of Berbera, herds of camels and sheep driven
to holding areas where herders have to buy fodder for them and pay for
water at the trough markets. These herdsmen are at a big disadvantage
while they wait to sell their animals. But the mobile phone has
rescued them. They can call up traders in Jeddah directly to find out
the market price of animals there. They now know when to come down
out of the mountains and sell. A week later I watch a herdsman on the
outskirts of Berbera driving his herd towards the port with herding
stick in one hand and in the other a mobile phone – perfect technology
for the nomad.”’

CHEAPEST MOBILE SERVICE IN AFRICA
http://news.bbc.co.uk/2/hi/africa/4020259.stm
Telecoms thriving in lawless Somalia
BY Joseph Winter / 2004/11/19

Rising from the ruins of the Mogadishu skyline are signs of one of
Somalia’s few success stories in the anarchy of recent years. A host
of mobile phone masts testifies to the telecommunications revolution
which has taken place despite the absence of any functioning national
government since 1991. Three phone companies are engaged in fierce
competition for both mobile and landline customers, while new internet
cafes are being set up across the city and the entire country. It
takes just three days for a landline to be installed – compared with
waiting-lists of many years in neighbouring Kenya, where there is a
stable, democratic government. And once installed, local calls are
free for a monthly fee of just $10. International calls cost 50 US
cents a minute, while surfing the web is charged at 50 US cents an
hour – “the cheapest rate in Africa” according to the manager of one
internet cafe. But how do you establish a phone company in a country
where there is no government?

No monopoly
In some respects, it is actually easier. There is no need to get a
licence and there is no state-run monopoly which prevents new
competitors being established. And of course there is no-one to demand
any taxes, which is one reason why prices are so low. “The government
post and telecoms company used to have a monopoly but after the
regime was toppled, we were free to set up our own business,” says
Abdullahi Mohammed Hussein, products and services manager of
Telcom Somalia, which was set up in 1994 when Mogadishu was still
a war-zone. “We saw a huge gap in the market, as all previous services
had been destroyed. There was a massive demand.” The main airport
and port were destroyed in the fighting but businessmen have built
small airstrips and use natural harbours, so the phone companies are
still able to import their equipment. Despite the absence of law and
order and a functional court system, bills are paid and contracts are
enforced by relying on Somalia’s traditional clan system, Mr Abdullahi
says.

Mobile target
But in a country divided into hundreds of fiefdoms run by rival
warlords, security is a major concern. While Telcom Somalia has some
25,000 mobile customers – and a similar number have land lines – you
very rarely see anyone walking along the streets of Mogadishu chatting
on their phone, in case this attracts the attention of a hungry
gunman. The phone companies themselves say they are not targeted by
the militiamen, even if thieves occasionally steal some of their
wires. Mahdi Mohammed Elmi has been managing the Wireless African
Broadband Telecoms internet cafe in the heart of Mogadishu, surrounded
by the bustling and chaotic Bakara market, for almost two years. “I
have never had a problem with security,” he says and points out that
they have just a single security guard at the front door. Mr Abdullahi
says the warlords realise that if they cause trouble for the phone
companies, the phones will stop working again, which nobody wants. “We
need good relations with all the faction leaders. We don’t interfere
with them and they don’t interfere with us. They want political power
and we leave them alone,” he says.

Selling goats on the net
While the three phone companies – Telcom, Nationlink and Hormuud – are
engaged in bitter competition for phone customers, they have co-
operated to set up the Global Internet Company to provide the internet
infrastructure. Manager Abdulkadir Hassan Ahmed says that within 1.5km
of central Mogadishu, customers – mostly internet cafes – can enjoy
service at 150Mb/second through a Long Reach Ethernet. Elsewhere, they
can have a wireless connection at 11Mb/s. He says his company is able
to work anywhere in Somalia, whichever faction is in charge locally.
“Even small, remote villages are connected to the internet, as long as
they have a phone line,” he says. The internet sector in Somalia has
two main advantages over many of its Africa neighbours. There is a
huge diaspora around the world – between one and three million people,
compared with an estimated seven million people in Somalia – who
remain in contact with their friends and relatives back home. E-mail
is the cheapest way of staying in touch and many Somalis can read and
write their own language, instead of relying on English or French,
which restricts internet users to a smaller number of well educated
people. Just two days after it was opened, the Orbit internet cafe in
south Mogadishu’s km5 was already pretty busy, with people checking
their e-mail accounts, a livestock exporter sending out his invoices
and two nurses doing medical research.

Video calling
And Somalia’s telecoms revolution is far from over. “We are planning
to introduce 3G technology, including live video calling and mobile
internet, next year,” says Mr Abdullahi. But despite their success,
the telecoms companies say that like the population at large, they are
desperate to have a government. “We are very interested in paying
taxes,” says Mr Abdullahi – not a sentiment which often passes the
lips of a high-flying businessman. And Mr Abdulkadir at the Global
Internet Company fully agrees. “We badly need a government,” he says.
“Everything starts with security – the situation across the country.
“All the infrastructure of the country has collapsed – education,
health and roads. We need to send our staff abroad for any training.”
Another problem for companies engaged in the global telecoms business
is paying their foreign partners. At present, they use Somalia’s
traditional “Hawala” money transfer companies to get money to Dubai,
the Middle East’s trading and financial hub. With a government would
come a central bank, which would make such transactions far easier.
Taxes would mean higher prices but Mr Abdullahi says that Somalia’s
previous governments have kept taxes low and hopes this will continue
under the regime due to start work in the coming months. Somalia’s
telecoms companies are looking forward to an even brighter future with
the support of a functioning government – as long as it does not
impose punitive tax rates or state control in a sector which obviously
needs very little help to thrive.

MARKET SOLUTIONS
http://www.petermaass.com/core.cfm?p=1&mag=51&magtype=1
Ayn Rand Comes to Somalia
In the absence of government bureaucracy and foreign aid, business is
starting to boom in Mogadishu.
BY Peter Maass / The Atlantic Monthly / May 2001

The headquarters of Telecom Somalia is filled with the sights and
sounds of Mogadishu-style success. Customers pour through the
entrance, funneling past machine-gun positions that flank the front
doors. After a pat-down by security guards, who take temporary
possession of any guns and knives, they enter the lobby and line up at
the appropriate counters to pay their bills or order new service.
Clocks on a wall display the time in New York, Paris, London, Sydney,
and Karachi—reminders of an outside world that has pretty much left
Somalia for dead. Computer keyboards clatter as workers punch in
information. Customers chat and argue with one another in a gregarious
manner that makes the lobby feel like a town square—all the more so if
a goat that’s being herded down the street happens to stray inside.

Telecom Somalia is the largest company in Mogadishu. It has 700
employees, and it offers some of the best and cheapest phone service
in Africa. It also provides a clue to the possible resuscitation of
the world’s most famous failed state. In 1995, when the international
community decided to wash its hands of Somalia and the last United
Nations peacekeepers left the country, Mogadishu was a Hobbesian
horror show. It remains a miserable and unstable place, a city where
taxi drivers ruin their own vehicles, denting the body work and
smashing the windows, so that thieves will not bother to steal them.
But it is less dismal than it used to be, and better times may be on
the way, owing to a new generation of businessmen who are determined
to bring the lawless capital back to life.

Prime among the city’s entrepreneurial leaders is Abdulaziz Sheikh,
the chief executive of Telecom Somalia. When I visited him last
summer, in a small office on the fourth floor of the company’s
headquarters, he was being blasted by a hurricane-force air-
conditioner that nearly drowned out the constantly ringing phones on
his desk. “You need to be here twenty-four hours a day,” he said,
explaining that he lives as well as works on the premises. Sheikh had
the running-on-fumes look of a campaign chairman in a never-ending
race, but at least he appeared to be winning. Anyone can walk into the
lobby of his building, plunk down a $100 deposit, and leave with a
late-model Nokia that works throughout the city, in valleys as well as
on hilltops, at all hours. Caller ID, call waiting, conference
calling, and call forwarding are available. There are two other
cellular-phone firms in town, and the three recently entered into a
joint venture and created the first local Internet-service provider.
Not all battles here are resolved by murder.

Mogadishu also has new radio and television stations (one night I
watched the Somali equivalent of Larry King Live, in which the
moderator and his guest, one of the city’s leading Islamic clerics,
fielded questions from callers), along with computer schools and an
airport that serves several airlines (although these fly the sorts of
airplanes that Americans see only in museums). The city’s Bekara
market offers everything from toilet paper, Maalox, and Colgate
toothpaste to Viagra, sarongs, blank passports (stolen from the
Foreign Ministry a decade ago), and assault rifles. The international
delivery company DHL has an office in Mogadishu, where its methods can
be unorthodox: if a client has an urgent package that cannot wait for
a scheduled flight out of the country, the company will dispatch it on
one of the many planes that arrive illegally from Kenya every day
bearing khat, a narcotic leaf that is chewed like tobacco but has the
effect of cocaine.

Mogadishu has the closest thing to an Ayn Rand-style economy that the
world has ever seen—no bureaucracy or regulation at all. The city has
had no government since 1991, when the much despised President
Mohammed Siad Barre was overthrown; his regime was replaced not by
another one but by civil war. The northern regions of Somaliland and
Puntland have stabilized under autonomous governments, but southern
Somalia, with Mogadishu at its core, has remained a Mad Max zone
carved up by warlords for whom fighting seems as necessary as oxygen.
The prospect of stability is a curious miracle, not simply because the
kind of business development that is happening tends to require the
presence of a government, but because the very absence of a
government may have helped to nurture an African oddity—a lean
and efficient business sector that does not feed at a public trough
controlled by corrupt officials.

Similarly, the lack of large-scale (and often corrupting) foreign aid
might have benefits as well as drawbacks. Somali investors are making
things happen, not waiting for them to happen. For example, on the
outskirts of town, on a plot of land the size of several football
fields and surrounded by twenty-foot-high walls, workers recently
completed a $2 million bottling plant. Everyone refers to it as “the
Pepsi factory,” even though Pepsi is not involved. The project’s
investors say the plant will become a Pepsi factory: they figure that
if they begin producing soft drinks, Pepsi or some other international
company will want to get in on the market.

Many of the larger companies in Mogadishu, including the bottling
plant, have issued shares, although there is of course no stock
exchange or financial authority of any sort in the city. Everything is
based on trust, and so far it has worked, owing to Somalia’s tightly
woven clan networks: everyone knows everyone else, so it’s less likely
that an unknown con man will pull off a scam. In view of Somalia’s
history, this ad hoc stock market is not as implausible as it may
sound. Until a century ago, when Italy and Britain divided what is
present-day Somalia into colonial fiefdoms, Somalis got along quite
well without a state, relying on systems that still exist: informal
codes of honor and a means of resolving disputes, even violent ones,
through mediation by clan elders.

Of course, the lack of a government poses problems, especially with
respect to the warlords. Sheikh and his fellow businessmen have kept
them at bay by paying them protection money and by forming their own
militias. Those manning the machine guns outside Telecom Somalia are
employees of the company, and when the firm’s linemen go out to lay
new cables (they used to string overhead lines, but those got shot up
by stray gunfire), they, too, are protected by company gunmen. All of
this is costly, so the business leaders have taken steps to bring
about a new government—one that will keep its hands out of their
pockets and focus on providing security and public services. The
process began two years ago, when Sheikh and other entrepreneurs got
fed up with the blight of checkpoints, at which everyone was required
to pay small tributes to armed teenagers affiliated with various
warlords. The businessmen decided collectively to fund a militia to
get rid of the checkpoints, resulting in an armed force that is
overseen by the city’s Islamic clerics. Having succeeded in its main
mission, the militia now serves as an informal sort of police force,
patrolling the streets in an effort to stop petty crime.

With the checkpoints gone and the warlords weakened by the loss of a
key source of income, the business elite is bankrolling a transitional
government that was appointed at a peace conference last August. The
government does not yet control much more than the heavily guarded
buildings that are its temporary headquarters, but it has begun
deploying its own policemen in some parts of the city. The businessmen
are pooling their company security forces to bolster the government
and are trying to lure the warlords’ gunmen to its side with cash
incentives. In February one of the leading warlords, Mohamed Qanyareh,
agreed to support the government in exchange for ministerial posts for
himself and his allies.

If the business community succeeds in returning Mogadishu to something
resembling normalcy, it will have shown that a failed state, or at
least its capital city, can get back on its feet without much help
from the outside world. This would constitute not an argument against
outside intervention but, rather, a lesson that intervention doesn’t
have to be of the UN-led, billion-dollar variety. Before leaving the
city I met with Hussein Abdullahi, a well-educated businessman who
fled Mogadishu in 1991 and wound up in Toronto, driving a taxi. Three
years ago, during a return visit, he was struck by the fact that his
Somali friends were living better at home than he was in Canada, at
the bottom of the immigrant ladder. He decided to move back and now
manages a thriving pasta factory, a bread factory, and a medical
clinic. Sipping an ice-cold Coke in his office, Abdullahi offered to
share a secret that, he promised, could make me rich. A chubby man
with a beatific smile, he leaned forward conspiratorially. “Everything
is possible in Mogadishu now, everything,” he said. “If you have the
money and the knowledge, you can do whatever you want. It is virgin
here.” Perhaps so, but only in the way of scorched earth.

PRIVATE SECTOR FINDS WORKAROUNDS
http://rru.worldbank.org/PublicPolicyJournal/Summary.aspx?id=280
http://rru.worldbank.org/Documents/PapersLinks/280-nenova-harford.pdf
BY Tatiana Nenova and Tim Harford / 11/1/2004

Telecommunications: networks link up
Many local companies have teamed up with international giants such as
Sprint (U.S.) and Telenor (Norway), providing mobile phones and
building new landlines. Vigorous competition has pushed prices well
below typical levels in Africa, and Somalia now has 112,000 fixed
lines and 50,000 mobile subscribers, up from 17,000 lines before 1991.
Yet not all is well. Calling every phone subscriber in Hargeisa, in
the Northwest, would require connections from four telephone firms.
But firms in Mogadishu have now agreed on interconnection standards,
and those in Hargeisa appear to be following suit. The negotiations
were brokered by the Somali Telecom Association, set up with the help
of the United Nations and International Telecommunication Union (ITU)
and head-quartered in Dubai.[1]

Electricity: simple solutions yield results
Entrepreneurs have worked around Somalia’s lack of a functioning
electricity grid, payment systems, and metering. They have divided
cities into manageable quarters and provide electricity locally using
secondhand generators bought in Dubai. They offer households a menu of
choices (daytime, evening, or 24-hour service) and charge per
lightbulb.

Water: access but not cheap or safe
Public water provision is limited to urban areas, but a private system
extends to all parts of the country as entrepreneurs build cement
catchments, drill private boreholes, or ship water from public systems
in the cities. Prices naturally rise in times of drought.
Traditionally, destitute families have not had to pay for water, while
the slightly better-off borrow funds from relatives. Nevertheless,
after several years of drought the United Nations estimates that many
families in the Eastern Sanaag have debts of US$50–100 for water.
Moreover, access to safe water is low even by African standards
because neither regulators nor the market have been able to persuade
merchants to purify their water.

Air travel: outsourcing safety
In 1989 the national carrier (partly owned by Alitalia) operated just
one airplane and one international route.[2] Today the sector boasts
about 15 firms, more than 60 aircraft, 6 international destinations,
more domestic routes, and many more flights. But safety is a concern.
Airports lack trained air traffic controllers, fire services, runway
lights, and a sealed perimeter against stray animals, and checks on
aircraft and crew are inadequate. The makeshift solution:
international outsourcing. Somali carriers lease planes, often with
crews from Eastern Europe (the largest, Daallo Airlines, leases a
Boeing from the United Kingdom, to boost customer confidence). And
they operate out of Djibouti, Dubai, and Nairobi, using the facilities
there to check aircraft safety.

Private courts: quick but limited
A recent effort to endow Mogadishu with a functioning court collapsed
when the court tried to levy taxes and take over the privately run
port of El Ma’an. In any case Somalia lacks contract law, company law,
the concept of limited liability, and other key pillars of commercial
law. In some cases Somalis have used offshore registration of
businesses to import legal concepts and services. More commonly,
disputes are settled at the clan level, by traditional systems run by
elders and with the clan collecting damages. Such measures are free—
and fast by international standards. In a case involving the
oppression of minority shareholders in a large livestock company, out-
of-court talks were preferred, the company continued to operate
successfully, and the dispute was settled amicably. But clan-based
systems deal poorly with disputes outside the clan. In a dispute
involving the telecommunications company Aerolite, the interclan
committee of elders awarded the plaintiff from a weaker clan an
unfairly small settlement, and since it was not enforced, he received
nothing.

Currency: perfect competition for dollars [2001]
Sharp inflation in 1994–96 and 2000–01 destroyed confidence in three
local currencies. U.S. dollars are harder to forge, do not need to be
carried around in large fragile bundles, and, most important, retain
their value. The feeble capabilities of the central bank have allowed
free entry into the currency exchange business, which is as close to
perfectly competitive as is ever likely to be possible.

International fund transfers: hawala system
The hawala system, a trust-based money transfer system used in many
Muslim countries, moves US$0.5–1 billion into Somalia every year. A
person in New York wishing to send money to his family in Tog-waajale
gives the hawala agent in New York the sum in cash, paying a 5 percent
commission. The agent deposits the cash in a local bank account to be
transferred to the company bank account in Djibouti or Dubai, then
alerts the clearinghouse in Hargeisa, which passes details on to Tog-
waajale. When the recipient shows up, the local agent quizzes him
about his clan lineage using questions provided by the relative
overseas as security against fraud. The transaction is usually
completed within 24 hours. Hawala networks are unregulated and do not
always keep records of transactions, but they are coming under
pressure from efforts to combat money laundering.[3]

Savings accounts and traveler’s checks
Somalia has adopted the widespread African institution of rotating
credit associations, which rely on clan links for enforcement and
provide a safe haven for savings. More innovative is the system of
traveler’s checks for the pilgrimage to Mecca, or hajj. Nobody would
accept Somali checks, so Somali firms set up accounts in Saudi banks
and write checks to pilgrims that can be cashed in any branch.

Gaps in private sector provision
In some areas the private sector has made little progress. The Somali
road system, for example, is limited and in poor condition. For a
private supplier to build a road and collect fees to cover the costs
is apparently too hard, partly because of prohibitive transaction
costs and partly because fee-paying users are not the only ones who
benefit from roads. Primary education is another disappointing story.
Some 71 percent of primary schools are privately owned (typically by
parents or communities), but enrollment is just 17 percent. By
contrast, it is 82 percent in West Africa, where countries are richer
and more stable and the government is much more heavily involved in
the economy. Ideally, benevolent government would sort out both
problems. But government that is merely stronger might not help. Where
municipal governments along the Berbera–Hargeisa road have the power
to collect tolls, they do not spend them on maintenance. The failings
of the education system are partly because half of Somalis are nomads.
It is not clear that government would do much better, especially since
the private schools are locally acknowledged to be superior to those
run by local government. Rather than try to create a government system
from scratch, a better policy would be to improve the network of
higher-quality private schools.

Conclusion
The achievements of the Somali private sector form a surprisingly long
list. Where the private sector has failed—the list is long here too—
there is a clear role for government interventions. But most such
interventions appear to be failing. Government schools are of lower
quality than private schools. Subsidized power is being supplied not
to the rural areas that need it but to urban areas, hurting a well-
functioning private industry. Road tolls are not spent on roads.
Judges seem more interested in grabbing power than in developing laws
and courts. A more productive role for government would be to build on
the strengths of the private sector. Given Somali reliance on clan and
reputation, any measures allowing these mechanisms to function more
broadly would be welcome; credit and land registries would be a good
start. And since Somali businesses rely heavily on institutions
outside the economy, international and domestic policies supporting
such connections would help. For governments and aid agencies, the
capability of some business sectors to cope under the most difficult
conditions should give hope and guidance in other reconstruction
efforts. It may take less encouragement than is commonly thought for
stripped-down systems of finance, electricity, and telecommunications
to grow.

Notes
1. “Somalia Telecoms Boom without Government,” Somaliland Times, July
22, 2004.
2. United States Institute for Peace, Removing Barricades in Somalia:
Prospects for Peace(Washington, D.C., 1998).
3. Abdusalam Omer, “Supporting System and Procedures for the Effective
Regulation and Monitoring of Somali Remittance Companies
(Hawala)” (United Nations Development Programme, Nairobi, 2003).

KHAT MARKET FUTURES
http://www.globalpost.com/dispatch/africa/090715/somalias-addict-economy
Somaliland’s addict economy
BY Tristan McConnell / July 17, 2009

Somalia’s economy is dominated by trade in khat, a narcotic banned in the U.S. and much of Europe. Eye-popping, head-buzzing khat is loved by Somali men who chew the leaves for their stimulant effect. While most of war-torn Somalia’s economy is moribund, khat does a bustling trade estimated at well over $50 million annually. Doctors warn, however, that the drug is not only a drain on limited Somali resources but is also destroying lives.

Hargeisa is the capital of Somaliland, the northern territory nominally independent from Somalia which maintains peace and economic activity, especially the khat trade. Lounging on a rug on the second floor of an ostentatious glass and stone mansion overlooking Hargeisa, Mohamed Yusuf Moge, aptly known as “The Fat Mohamed,” lit up another cigarette. In front of him was a pile of leafless khat twigs. His eyes were wide and red-rimmed, a symptom of the leaves that have been chewed. “We bring in 80-tons of khat every day,” he said. “We have many vehicles and two airplanes for transporting our produce. We control the market: We are the De Beers of the khat industry!”

“We” is “571 Allah Amin,” a family business started 15 years ago that has grown to become Somaliland’s biggest khat importer. Moge is 571’s country rep. Although he would not reveal how much the company makes, it is estimated that its revenue is $320,000 a day. Downtown at the company depot, the second of the day’s trucks arrives from the highland farms of neighboring Ethiopia mid-morning. Thursday is the busiest day of the week because, as one man explained, Friday is the Muslim day of rest so everyone can sleep off their khat hangover.

As the khat truck pulled in, barrow boys and vendors crowded round the tailgate to unload the 70 kg sacks of khat wrapped in hay to keep it fresh. Inside are small bundles of shoots that are bought wholesale for $1 and sold retail for $1.50. “Business is good!” shouted Omar Hersi Warfa, 571’s depot manager, over the clamor. “We are working hard and people are chewing!” Khat vendor Shamis Abdullahi Nur, 50, squatting on the ground nearby, agreed. “Business is very good because of our security and peace,” she said as she directed a sack of khat to be loaded into the back of a beat-up station wagon for the drive across town to her stall. Others pushed smaller consignments away in wheelbarrows. “I’ve been selling khat for over 30 years and now is the best time. There was a time of war, a time when I was a refugee, but now you can see I am sitting here eating my mango,” she said with a sticky, happy smile

Street prices are highest in the early afternoon because this is gayiil time when most men chew the khat and shoot the breeze. They can be found sitting on carpets in shady spots close to khat kiosks, with an ashtray, a flask of sweet tea and a jug of water at their feet. Women often sell khat but are not invited to chew. But increasingly men are also chewing in the morning, the evening and throughout the night. The stoned man in a cotton wrap tottering in a daze along a crumbling potholed road with a fistful of green stems is a common sight. Some warn the national habit does psychological damage. In the mental wing of Hargeisa’s main hospital, a staff member walked past the patients, many of whom were chained to a bed or a post or sat staring vacantly on the floor. “The majority of the men here are affected by chewing khat, most are schizophrenic,” said Faisal Ibrahim.

Dr. Yassin Arab Abdi, the hospital’s chief doctor, said: “Chewing is part of it although there are many reasons for mental illness. Before they used to chew at a certain time for a few hours now there are four sessions 24-hours a day. These people are addicts.” Back at the khat mansion, “Fat Mohamed” Moge and his colleagues, however, extolled the virtues of the drug. “Khat plays a great role in our society. If there’s conflict people have to sit down, chew, talk about it,” Moge said. “It is not like a drug which destroys the mind. It is a stimulant. If you chew khat in the right manner it doesn’t affect you.” But, he admitted, “There are some guys who are addicted, this is because they are jobless and have nothing to do.”

Unfortunately this description applies to many Somali men. The last national government — a military dictatorship — collapsed in 1991. Since then the unrecognized state of Somaliland has declared itself independent while Somalia has descended deeper into war and chaos. Isolation on the one hand and war on the other have left the formal economy shattered with many surviving on remittances sent from relatives abroad. Yet it is not unusual for men to spend $5 or $10 a day on khat, making the habit a huge drain on very limited resources. The government’s entire annual budget is less than $50 million, around $14 a head for each of Somaliland’s 3.5 million citizens. Such is the love of khat that to outlaw it would be political suicide. Nevertheless a senior Somaliland politician, Musa Behe of the opposition Kulmiye party, said, “The Somali man works less because he chews khat. We won’t ban it but we need to raise awareness of the harm khat does.”

STILL HAS BORDERS
http://news.bbc.co.uk/2/hi/africa/country_profiles/1072592.stm
Profile : Somalia

Somalia has been without an effective central government since
President Siad Barre was overthrown in 1991. The self-proclaimed state
of Somaliland and the region of Puntland run their own affairs.
* Population: 8.7 million (UN, 2007)
* Capital: Mogadishu
* Area: 637,657sq km (246,201 sq miles)
* Major languages: Somali, Arabic, Italian, English
* Major religion: Islam
* Life expectancy: 47 years (men), 49 years (women)
* Monetary unit: 1 Somali shilling = 100 cents
* Main exports: Livestock, bananas, hides, fish
* GNI per capita: n/a

President: Abdullahi Yusuf Ahmed
Abdullahi Yusuf Ahmed, a former leader of the semi-autonomous Somali
region of Puntland, was chosen by Somalia’s interim parliament as
president of the Transitional Federal Government in October 2004. The
election took place in Kenya because the Somali capital was regarded
as being too dangerous. A former army officer and faction leader, Mr
Yusuf led a guerrilla movement in the 1970s aimed at ousting the
Somali dictator Siad Barre. In the 1990s he emerged as the pre-eminent
leader of his native Puntland region; he declared the territory
autonomous in 1998. He is said to have an authoritarian approach to
leadership.

Somalia’s disintegration is reflected in its media, which is
undeveloped, fragmented and often partisan. Broadcasters and
journalists operate in an atmosphere which is hostile to free
expression, and often dangerous. In spite of this, diverse and more
professional media outlets have emerged in recent years – in
particular, FM radio stations with no explicit factional links. The TV
and press sectors are weak and radio is the dominant medium. There are
around 20 radio stations, but no national, domestic broadcaster. Many
listeners tune to Somali-language media based abroad, in particular
the BBC Somali service. In secessionist Somaliland and Puntland the
authorities maintain a tight hold on broadcasting.

LOCAL NEWS / TV / RADIO
http://www.somalilandtimes.net/
http://www.hornafrik.com/english.htm
http://www.shabelle.net/
http://www.radiobanadir.com/
http://simbanews.com/
http://www.allsbc.com/english.php

BUT GET THIS:
http://en.wikipedia.org/wiki/List_of_unrecognized_countries

THE BREAKAWAY FUNCTIONING-DEMOCRACY OF SOMALILAND
http://en.wikipedia.org/wiki/Somaliland
http://www.somaliland.org/tag/eng/
http://www.apd-somaliland.org/
http://www.iprt.org/
http://www.un.org/webcast/pdfs/unia991.pdf
http://hargeisacaat.freeservers.com/
http://www.somalilandnet.com/
http://www.radiosomaliland.com/
http://upload.wikimedia.org/wikipedia/commons/e/e4/Map_of_somaliland_border_claims.jpg
http://en.wikipedia.org/wiki/Foreign_relations_of_Somaliland

“Due to its unrecognized status, The Republic of Somaliland has no
official contacts with any other nation. The current foreign policy of
Somaliland is to try to secure international recognition as a
sovereign, stable country, so that international aid can be more
readily secured. Somaliland was independent for a 3 day period in
1960, between the end of British colonial rule and its union with the
former Italian colony of Somalia which status then continued until the
unilateral declaration reestablishing its independence in 1991.
Somaliland’s claims to sovereignty rests on its former independent
status. In addition, the fact that the rest of Somalia is in a state
of chaos while Somaliland is under stable government also lends
credence to its claim. The attitude of the United Nations and the
African Union on the preservation of existing national borders has so
far prevented recognition of Somaliland, despite the examples of the
former status of British Somaliland, and the fact that Eritrea
successfully broke away from Ethiopia and became a recognized country.
An African Union fact-finding mission that visited Somaliland in early
2005 recently published a report that recommended favorable
consideration for recognizing Somaliland’s independence.”

OR: HOW TO START A GOVERNMENT FROM SCRATCH
http://www.somalilandgov.com/
“The population of Somaliland is estimated at around 3.5 million. The
average population growth rate is 3.1%. Population density is
estimated at approximately 25 persons per sq. kilometre. Fifty-five
percent of the population is either nomadic or semi-nomadic, while 45%
live in urban centres or rural towns. The average life expectancy for
the male is 50 and for females it is 55.

The Republic of Somaliland known as the Somaliland Protectorate under
the British rule from 1884 until June, 26th 1960 when Somaliland got
its independence from Britain. On July 1st 1960 it joined the former
Italian Somalia to form the Somali Republic. The union did not work
according to the aspirations of the people, and the strain led to a
civil war from 1980s onwards and eventually to the collapse of the
Somali Republic. After the collapse of the Somali Republic, the people
of Somaliland held a congress in which it was decided to withdraw from
the Union with Somalia and to reinstate Somaliland’s sovereignty.

The country has a republican form of government. The legislative
assembly is composed of two chambers – an elected elder’s chamber, and
a house of representatives. An elected President and an elected Vice-
president head the government. The President nominates the cabinet
which is approved by the legislature. There is an independent
judiciary

One of the provisions of the National Constitution of the Republic of
Somaliland is the establishment of a Bank to carry out Central Banking
functions. The bank of Somaliland (Baanka Somaliland) was thus
inaugurated in 1994 together with appropriate Banking Laws, to insure
that Banking regulations are carried out to the letter. Board of
Directors has accordingly been appointed together with a Governor of
the Bank, Vice-governor, and a Director General. In addition, the Bank
of Somaliland besides its functions as Central Bank, runs the
activities of Commercial sector.

The Bank’s main objectives are detailed in Article 3 of the
Constitutive Law of Somaliland Bank as follows: Fostering Monetary
stability maintaining the internal and external values of the
Somaliland Currency and promoting credit and exchange conditions
conductive to the balanced growth of the economy of the Republic and
within the limits of its powers, it shall contribute to the financial
and economic policies of the state.”

PUBLIC HOLIDAYS
1 MAY LABOUR DAY
18-19 MAY RESTORATION OF SOMALILAND SOVEREIGNTY
26 JUNE INDEPENDENCE DAY

PAPER CURRENCY
http://aes.iupui.edu/rwise/countries/somaliland.html
http://en.wikipedia.org/wiki/Image:Somaliland_100_shillings.jpg#file
http://worldcoingallery.com/countries/Somaliland.php
http://www.pjsymes.com.au/articles/somalia(part4).htm

IMPRESSIVE REALLY:
BACK IN THE CAPITOL (MOGADISHU)
http://flickr.com/photos/ctsnow/sets/72157600871632748/
http://news.bbc.co.uk/2/shared/spl/hi/picture_gallery/04/africa_mogadishu_life/html/1.stm
http://news.bbc.co.uk/1/hi/world/africa/7651204.stm
http://news.bbc.co.uk/1/hi/world/africa/7651414.stm
http://news.bbc.co.uk/1/hi/world/africa/7651397.stm
FOLKS BUY THEIR PASSPORTS FROM MR BIG BEARD

http://www.youtube.com/watch?v=pMf89xPcKxg


http://www.youtube.com/watch?v=yo58jeLV6Jw


http://www.youtube.com/watch?v=dlyhEWy9WPE

OTHER PLACES THAT DON’T EXIST
http://www.youtube.com/user/shootandscribble
http://shootandscribble.com/sr/1.html

DISPENSE WITH FORMALITIES
http://www.afrol.com/articles/10294
http://www.unpo.org/content/view/3905/236/
http://www.publications.parliament.uk/pa/cm200304/cmhansrd/vo040204/halltext/40204h03.htm
“Our foreign service hang-ups about recognition are getting in the way
of us… to build adequately on the efforts of the Government of
Somaliland to create a modern, democratic state. In effect, we are
putting the interests of the warmongers in the south ahead of those of
the peace-builders in the north.”

SELF-ORGANIZATION EFFORTS GO UNRECOGNIZED BY NEIGHBORING ANARCHIST ELITES
http://findarticles.com/p/articles/mi_m2242/is_1679_287/ai_n27865671
Democracy comes of age in Somaliland
BY Stefan Simanowitz / Contemporary Review / Dec 2005

The rising sun reveals two long lines of people snaking towards a
small concrete polling station in Gabiley, a town in rural Somaliland.
Many of them have walked considerable distances and queued all night
in order to vote in these, the first parliamentary elections held in
the territory for nearly forty years. But although voters across the
country have turned out in force, and although the election is deemed
free and fair by international observers, the result will not be
officially recognised beyond its territorial borders. Indeed, in the
eyes of the international community, Somaliland is a country that does
not exist.

Since its unilateral proclamation of independence in 1991, Somaliland,
an area the size of England and Wales in the north of Somalia, has
struggled to gain international recognition. Whilst neighbouring
Somalia has all but ceased to function as an administrative, judicial
and territorial entity, Somaliland has taken important steps towards
creating a stable working democracy in one of the poorest and most
dangerous regions of the world. A new constitution was adopted in 2001
following a referendum. In 2002 local elections passed off peacefully,
and in 2003 free and fair presidential elections took place. Having
thus laid the foundations of a functioning democracy, the
parliamentary elections of 29th September 2005 were seen as the final
step in the democratisation process and an important milestone in the
transition from a traditional clan-based, single-party-dominated
political structure to a stable multi-party democracy. Many
Somalilanders also regarded them as the final prerequisite for
international recognition.

However, despite the fact that Somaliland may fulfil the requirements
necessary for recognition as a sovereign state, the question of
recognition will be determined by a number of external geo-political
factors. These factors include the African Union’s position on the
sanctity of colonial borders and Somaliland’s role in the so-called
‘war on terror’.

Background
Somaliland was a British Protectorate for over eighty years during the
colonial period. In 1960, it gained independence but formed a hasty
union with the former Italian Somaliland to create the Somali
Republic. In 1969 Mohamed Siad Barre’s military coup brought Somalia’s
flirtation with democracy to an end and planted the seeds of a
secessionist struggle in Somaliland. This struggle culminated in a
brutal three-year civil war in which 50,000 people were killed and
half a million refugees fled. Between 1988 and 1991, Barre’s forces
massacred civilians, laid over two million mines and reduced cities to
rubble.

In 1991, the overthrow of Barre’s regime plunged Somalia into a state
of anarchy from which it is yet to emerge. Somaliland, however, was
quick to declare independence and, over the years, it has managed to
establish itself as a model of stability, good governance and economic
discipline. Rival militias have been demobilised, mines have been
cleared and refugees have been repatriated. The war-ravaged
infrastructure has been rebuilt and Somaliland now boasts modern
airports, hospitals, ports, power plants and universities. There is a
free press and the central bank manages an official currency with
relatively stable exchange rates. An unarmed police force and
independent judiciary maintain order.

What is most remarkable about this progress is that it has been
achieved with virtually no external help. Whilst economic development
has been heavily supported by Somalilanders in the Diaspora, lack of
international recognition has meant that Somaliland does not qualify
for bilateral aid or support from international financial
institutions. This international isolation has not, however, resulted
in isolationism. Lack of access to external aid has forced this
country of 3.5-million people to become more self-reliant than many
other African states. This self-reliance is reflected in what is
perhaps the most significant of Somaliland’s achievements: its system
of government.

Rather than having a Western democratic model of governance imposed
on them from outside, Somaliland has managed to fuse Western-style
institutions of government with its own traditional forms of social
and political organisation. Its bi-cameral parliament reflects this
fusion of traditional and modern, with the Senate consisting of
traditional elders, and the House of Representatives consisting of
elected representatives.

However, with its history of ‘tribalism’ and internecine fighting, the
key challenge for Somaliland’s new parliament is to try and replace
clan-based politics with party politics. For its first twelve years,
Somaliland had no political parties but instead followed more
traditional clan-based forms of political organisation. Political
parties were introduced during the presidential elections and it was
hoped that the recent parliamentary elections would help to usher in a
representative system without allowing representation to be overtly
clan-based. Clearly, if clan loyalties were to take precedence over
party loyalties, parliament would be seriously weakened. The
traditional clan-based political system had resulted in an under-
representation of some clans and it was hoped that having just three
non-clan-based parties would reduce the extent to which clan
allegiance affected the selection of candidates and the way in which
people voted. A limited number of political parties would force
alliances between clans to develop thereby increasing integration and
pluralism.

In the traditional clan system it is the male elders who make
decisions, and during the nomination process, many candidates were
indeed selected by elders along clan lines. The male-dominated nature
of the selection process was reflected in the fact that only seven of
the 246 candidates were female. There was also evidence that political
parties often chose candidates based on their perceived popularity and
support base. Whilst the absence of voter registration makes it hard
to analyse voter patterns, it would seem from the results that there
is some evidence that regional voting patterns reflect clan
preferences. There is also evidence however, that alliances were
sought between subgroups of different major clans across regions under
the different party umbrellas. This would indicate that, although
tribalism inevitably played some part in the election, it has been
weakened.

The election itself was very tightly fought. At one stage it seemed
inevitable that the president’s Democratic United National Party
(UDUB) would lose to the Solidarity Party (Kulmiye). However, UDUB was
able to use its powerbase as the governing party to maintain its
percentage of the popular vote, while Kulmiye lost considerable ground
to the Justice and Welfare Party (UCID). The close nature of the
result means that parliament will not be dominated by clan or party,
but will require much greater consensus-building coalitions. It will
nevertheless be interesting to see how party loyalties will be
negotiated against clan interests in the new parliament.

Election Day
Lack of international recognition meant that Somaliland was not able
to access forms of governance support commonly received by post-
conflict areas such as Iraq and Afghanistan. Nevertheless, the
elections were well organised and successfully conducted with over
800,000 voters turning out to the country’s 985 polling stations to
elect 82 members of parliament. This represents a turnout of over 90
per cent.

Like all elections in infant democracies there were some inevitable
teething problems of a practical, administrative and logistical
nature. The absence of a census and voter register meant that a
decision was made to allow voters to vote in any of Somaliland’s six
regions: the only requirements for voting being that voters were 16
years of age and spoke Somali. Inevitably, this led to widespread
attempts at underage and multiple voting. Due to the tradition of
women decorating their hands with henna it was decided that invisible
ink (and black lamps) should be used instead of indelible ink. This
generally proved an effective barrier to multiple voting; however
punishment for those caught varied. In some polling stations those
attempting to vote more than once were merely turned away, often only
to rejoin the queues. In other polling stations people had their shoes
and belts taken away and were made to sit outside the polling station
awaiting detention by the police. Whilst the fact that 30 per cent of
the population are nomadic makes census taking and voter registration
more difficult, there is confidence that both will be in place before
the local elections in 2007.

With illiteracy rates as high as 80 per cent and with many people
having had little or no experience of voting, substantial voter
education was attempted prior to the elections. In addition, ballot
papers had symbols beside the name of each candidate to make it easier
for those that could not read. On the day however, many voters, not
even knowing which way up to hold the ballot paper, chose to announce
their choice to the local chairperson, who marked the paper for them.
Whilst this compromised the secrecy of the voting process, it did not
seem to bother voters who were generally eager to talk about whom they
had voted for.

Shadow of Terror
The shadow that hung over the elections and continues to darken
Somaliland’s future is that cast by the threat of terrorism. On 25th
September the atmosphere in Hargeisa, Somaliland’s impoverished but
relaxed capital, changed. With the elections only days away, several
suspected Islamic militants were arrested following a shoot-out with
police. The following day a cache of arms, including heavy anti-tank
weapons, was discovered in the city. According to the Interior
Minister, one of the men arrested was a senior al-Qaeda operative
allegedly in the region to organise attacks on local leaders and
foreigners. This incident heightened fears of violence especially as
it coincided with the arrival of 76 international election observers
including potentially high-profile targets such as parliamentarians
from South Africa and Europe as well as a former US Ambassador. It
also provided a stark reminder of Somaliland’s precarious position in
the global war on terror.

Whilst Somaliland has managed to avoid the violent lawlessness and
extremism of Somalia, the discovery of Islamic militants in Hargeisa
does not come as a great surprise. Over the last two years, extremists
have murdered four foreign aid workers in Somaliland. Last month four
men were sentenced to death for murdering a British couple in 2003 in
a school they had built. Although the predominantly Sufi form of Islam
practised in Somaliland does not lend itself to extremism, concerns
have been raised by the presence of an increasing number of radical
clerics as well as the porous nature of the border with Somalia.
Mogadishu has become something of a haven for al-Qaeda-affiliated
fighters and Somalia was used as a transit point for the terrorists
who carried out the 1998 attacks on the US embassies in Kenya and
Tanzania, as well as the 2002 suicide bombing in Mombasa.

Whilst the threat of terrorism is clearly a problem for Somaliland, it
also presents an opportunity. Ironically, the discovery of al-Qaeda
operatives in the territory might do more to make Western governments
take notice of Somaliland than the free and fair conduct of their
elections. Somaliland is strategically positioned on the Gulf of Aden
and is also home to what could be an important navel base in Berbera.
Currently the only location in Africa where the US has a military base
is neighbouring Djibouti, and Somaliland is seen by the Americans as a
potentially important ally against the spread of extremism.

Somaliland is conscious that too close a relationship with the
Americans might not be popular with its population, but it also
recognises the advantages that collaboration with the US could bring
in terms of finance, security and long-term stability. By promoting
itself as a non-threatening strategic partner in the ‘war on terror’,
Somaliland could fast-track its entry into the international
community.

Recognition and beyond
Even if the US were to support Somaliland’s right to self-
determination, it is unlikely that they or any other country will
recognise Somaliland without the approval of the Organisation of
African Unity. One of the OAU’s central principles is that African
colonial borders should not be redrawn. This is based on a well-
grounded fear that recognition of ‘separatist’ states could cause the
continent to descend into chaos. However, there is a strong argument
that by breaking a union that it had entered into as an independent
state, Somaliland would be reverting to, rather than redrawing its
colonial borders. It is also worth noting that despite its reluctance
to acknowledge secessionist states, the OAU has recently recognised
the newly formed nations of Eritrea and Western Sahara. It is also
important to note that thirty new countries have been internationally
recognised since 1990, although most of these emerged from the
dissolution of the USSR and Yugoslavia.

Despite OAU intransigence, Somalilanders remain optimistic about the
possibility of recognition and the benefits it will bring. As well as
giving Somaliland access to bilateral aid, recognition would finally
give access to the mining and oil companies eager to exploit
Somaliland’s proven natural resources. Large-scale extraction of oil,
coal, gemstones and minerals could transform this country where 43 per
cent of the population are living in extreme poverty. Whilst
international recognition is not a panacea that will lift Somaliland
out of poverty or eradicate its problems with health, education, food
insecurity, water supply, and HIV/AIDS, it would undoubtedly speed
development.

Although there is still a distance to travel, Somaliland’s
accomplishments are impressive. It has created effective institutions
of state and attained a level of political maturity well beyond its
years. Somaliland provides a useful model of democracy that offers
lessons to us all. It reminds us that democracy is not a static,
prescriptive system but a living idea that is constantly adapting and
taking new forms. In Hargeisa, reminders of how far this small nation
has come are all around. When the rains come, a mass grave beside the
river is exposed. Bones protrude from the red earth, some still tied
at the wrist. Beside the airport road, a rusting Russian tank is
plastered with election posters: a reminder of Somaliland’s war-
ravaged past and a symbol of hope for a democratic future.

{Stefan Simanowitz is a writer and researcher. He was part of the
International Election Observer mission to Somaliland in September
2005.}

PUNTLAND SEPARATISTS
http://www.puntlandgovt.com/
http://www.somalilandtimes.net/sl/2005/218/1.shtml
http://en.wikipedia.org/wiki/Somaliland-Puntland_dispute
http://www.somaliawatch.org/archivejuly/000812601.htm

“Following the pattern of the Booroma National Charter, which
formalized the birth of Somaliland during 1993, a new entity – the
Puntland State of Somalia – was established in July 1998 out of a long
Constitutional process that lasted more than two months. The
institutional recognition of the role played by the traditional
leadership in Puntland in the seven-year period of peaceful self-
government in a stateless situation, has come only at the end of this
process. However, the mediation role of the elders has not been so
successful in other regions of Somalia for several reasons. Generally
speaking, outside the Majeerteen context, Somali society lacks a
stable hierarchy of paramount chiefs, and it follows that mediation
can achieve only a local dimension. Nevertheless, in the northwestern
regions (Somaliland) a regionalist feeling has widely spread in the
last thirty years. In this part of Somalia, after the collapse of the
State, the elders have collectively expressed this feeling better than
the SNM, frequently paralyzed by leadership competition.

The local concept of State sovereignty does not naturally match with
the rigid concept of State territory. Instead, it should expand in the
‘official’ territory of other countries in a flexible way and wherever
members of its community are found. This is exactly one of the options
offered to end the conflict and to reconstruct Somalia by the LSE
consultant to the European Union during 1995. Today, is effectively
put into effect in all Somali regions without respect of internal and
external borders. From another point of view, it is a slide back to a
legal status of the community group, confirmed by a citizenship which
corresponds to kinship. These are new elements of extreme importance
to those who are directly or indirectly committed to developing
alternative solutions in the African context, split up between State
sovereignty and ethnic allegiance. What is advancing in Somalia is a
more flexible and a more restricted idea of what the State is and
means in Africa (and elsewhere).”

SAYS WHO? : MAKHIR STATE SECEDES TOO
http://www.laasqoray.net/view_article.php?articleid=1011
http://en.wikipedia.org/wiki/Northern_Somali_sultanates
http://www.somalilandtimes.net/sl/2007/291/3.shtml

Badhan, Somaliland, August 18, 2007 – The semi-autonomous regional
state of Puntland (Majeerteenya) declared this week that the recent
formation of `Makhir state’ by eastern Sanag residents is `a load of
hoo ha and a dream’. In a press statement, The Puntland Minister of
Information, Mr Abdirahman Banga in recent press statement strongly
condemned last week’s declaration of a new state in eastern Sanag. Mr
Banga said that the people behind the declaration of Makhir State are
dreaming because it doesn’t exist.

The minister stressed that this area is 100% in the hands and control
of Puntland, though the area recently saw bloody clashes between
forces loyal to Puntland and Somaliland. Soon after the minister’s
statement, the self-appointed President of `Makhir’ state, Mr Jibril
Ali Salad, who used to be a Somaliland parliamentarian, spoke to the
local media in response to the minister’s statements. Mr Salad said,
“Puntland has no business to talk about our new state, and they are
powerless to stop us, and do not have the ability to even come here”.

“Makhir state is acknowledged by its people as a fully-fledged state
independent of Puntland and Somaliland,” added Jibril Ali Salad.
Makhir state was established last week in the Badhan district of
eastern Sanag and its president is Jibril Ali Salad, who up to early
this year was a member of Somaliland’s parliament House of
Representatives. Somaliland’s government has not made any comment
regarding this newly-established enclave inside its border.

MORE SELF-POLICING : ‘ENVIRONMENTAL PROTECTION CORPS’ (ACT LOCAL!)
http://www.dhahar.com/article.php?articleid=3603
http://www.dhahar.com/article.php?articleid=3583 [PHOTOS]
Environmental Protection Corps in Maakhir State of Somalia

The roots of the destructive nature of the charcoal trade in Sanaag
region was due to lack of rules and regulations stemmed from the
collapse of the central Somali Government. This finally came to an end
since the declaration of Maakhir State. The Environmental Protection
Corps (EPC) of Maakhir State is growing in numbers and contributing to
a larger slowdown of charcoal trade and illegal gaming of wild
animals.

The authority in Maakhir State has banned charcoal trade because of
the environmental destruction and desertification that it does to the
fragile Somali environment. Traders drastically cut entire swaths of
forests, and as a result the trade was flourishing due to the high
demand for charcoal in the Arab Gulf States and other countries in
Asia. These are the reasons why the Environment Protection Corps are
confronting the charcoal profiteers and their militia that have been
menacing the Gebi Valley and Sool Plateau.

It is important to highlight that the newly established Maakhir
Authority did not receive any international aid for this effort. This
largely local effort has made an immediate impact on preserving and
protecting the environment in the Gebi Valley and Sool Plateau. As
indicated by the President of Maakhir Jibril Salad in last Thursday’s
press release; ” Maakhir Administration used traditional conflict
resolution methods to stop the traders and their militia, however
these militia are heavily equipped with automatic firearms who would
not cooperate, but the most effective and successful method for
limiting the harmful distress of our environment was creating and
using the EPC forces.”

The EPC in Maakhir apprehended more than 80 criminals over the past 4
months and jailed them in the district of Dhahar. The administration
constructed a new program of materials, structures, and training to
educate militia while they are held in jail. Jama Dahir Kodah, one of
the program directors of the EPC, told the media that their next
sustainable occurring project is to implement a plantation program in
the region.

The EPC is divided into three forces in the following areas of Maakhir
State and the main base is in city of Dhahar, the capital city of
Boharo region, the new region in Sanaag that Maakhir created:
1) The first battalion is responsible for the protection in vast areas
which stretches from Baragaha-Qol in Southern Sanaag to Eilbuh in
Central Sanaag.
2) The Second Battalion is responsible for an area which stretches
from Dhahar to Western Part of Bari region of Somalia near Boosaaso.
3) The Third and most important battalion have bases along the highway
that links Maakhir to Puntland and does stop and search in suspected
vehicles.

SERIOUSLY
JUST REDO THE BORDERS
http://talesfromtheborderlands.blogspot.com/2007/09/crossing-african-borders.html
http://www.afriquefrontieres.org/
(IN A CAREFUL, RESPONSIBLE WAY, SURE)
http://www.sscnet.ucla.edu/polisci/wgape/meeting.html

TRADE INCENTIVES
http://www.iht.com/articles/2008/10/10/opinion/edhunter.php
INTERNATIONAL WILDLIFE PARKS
http://www.scidev.net/en/features/breaking-down-borders-in-africa.html

AT BEST ARBITRARY, AT WORST DELIBERATELY DIVISIVE + DESIGNED TO CREATE WEAKNESS
http://encarta.msn.com/sidebar_762512457/Africa%27s_Arbitrary_Borders.html
COLONIAL BORDERS DON’T HELP
http://www.dfa.gov.za/au.nepad/au_nutshell.htm
http://www.dfa.gov.za/docs/2003/au0815.htm
http://www.africa-union.org/root/au/index/index.htm
http://www.africa-union.org/root/au/OtherPages/Others/Useful_Links.htm
http://www.nepad.org/2005/files/video.php
http://www.triomedia.co.za/work/nepad/newsletters/2008/
http://www.sarpn.org.za/nepad.php

ABANDONING SOVEREIGNTY
http://news.bbc.co.uk/2/hi/africa/2115736.stm
African Union replaces dictators’ club
BY Paul Reynolds / 8 July, 2002

A new wind of change is blowing through Africa. The move from OAU
(Organisation of African Unity) to AU (African Union) is supposed to
be more than the dropping of one letter. It is supposed to represent a
shift from a “dictators’ club” to a people-based grouping. Everything
of course depends on implementation. And given the sad record – and
current problems, such as AIDS – there must be doubts about how much
can be achieved. AIDS alone is reducing life in some countries,
especially in southern Africa, to nothing more than an existence. Life
expectancies are being cut to levels unknown since the 19th Century.
The OAU was set up to develop Africa after colonialism – and to help
liberate Southern Africa from white rule.

Convenient
The African Union reflects the developments in many parts of Africa in
recent years, as democracy has started to take hold and a new emphasis
has emerged which concentrates less on the battles of the past and
more on the need to improve the lives of ordinary people. The key
shift is that the principle of state sovereignty has been abandoned.

It was the central belief of the OAU that nobody should interfere in
anyone else’s business. That was especially convenient for dictators.
Now the AU has as one of its aims the promotion of “democratic
principles and institutions, popular participation and good
governance.” It will have the right to initiate a so-called “peer
review” of a country’s record, intervene if there is genocide and war
crimes and impose sanctions. Everything of course depends on
implementation.

High hopes
Nobody is mourning the end of the OAU. Yet when it was founded in
Addis Ababa in 1963, Africa was full of pride and hope. Its leaders
were giants of their day. Africa was coming out of colonial rule and
many had led their nations to independence. It was a time to be bold.
One of the key figures was Dr Kwame Nkrumah, President of Ghana which
became independent (and dropped its colonial name the Gold Coast) in
1957. He believed that the African continent should be “united.” But
defining that unity was the problem. The OAU solved the problem by
praising unity in its language, but avoiding it in its practice. The
differences across the continent were just too many and the principle
which the OAU adopted, of non-interference and non-intervention,
simply meant that member states turned a blind eye to their
neighbours.

Tragedy
When one of the founding members, Emperor Haile Selassie of Ethiopia
gave a speech to the OAU, he was praised in its formal thanks for his
“wisdom.” When the man who overthrew him in 1974 (and later murdered
him and buried him under a latrine), Colonel Mengistu Haile Mariam,
subsequently welcomed delegates back to Addis Ababa, he was thanked
for his “warm and generous hospitality.” Colonel Mengistu went on to
declare his “red terror” in which tens of thousands of opponents were
slaughtered by his neighbourhood committees. It was one of the
tragedies of the OAU that all that happened in the city where it was
founded. There were coups all over the place – including Nigeria
(which had been the jewel in the British colonial crown in Africa and
the hope for parliamentary democracy), Libya (which brought Colonel
Gaddafi to power) and Uganda (in which Idi Amin rose to fame). Kwame
Nkrumah was overthrown in a coup himself. It symbolised the problems
Africa was having in developing stable government. The OAU could say
little and did nothing.

‘Interference’
Even after the recent elections in Zimbabwe, it was still bringing
forth its usual kind of statement when it objected to possible
American sanctions: “We are dismayed by this report, which amounts to
interference in the internal affairs of a member state.” It was more
successful over the years in trying to mediate in conflicts between
states. It helped mediate a border dispute between Algeria and Morocco
and between Somalia, Ethiopia and Kenya. One of the ironies was that
the OAU insisted on preserving the borders drawn by the colonial
rulers which often reflected spheres of influence rather than natural
divisions. The view at the time was also that Africa needed time to
settle down. And after all, it was achieving good economic growth of
about 5% a year in the 1960s. And the crisis in Southern Africa, where
white rule was being confronted, was regarded as more of a priority
for the OAU.

Faith lost
But Africa began to fail. Economic growth gave way to debt repayments;
the pioneering efforts to improve public health were swamped by AIDS,
wars were unending and famine stalked the land. The people lost faith
in governments and governments lost interest in the people. According
to Bernard Otabil of West Africa magazine: “The people did not feel
that the OAU satisfied their aspirations. It did not involve people on
the ground. It was top heavy.” The Secretary General of the OAU, Amara
Essy, who has helped to bring the new African Union about, was
scathing about the old grouping: “The OAU is the most difficult
organisation I have ever seen”, he told New African magazine. Mr
Otabil believes that the African Union is on the right course because
it is less grandiose and hopes to be more community based. It is also
offering an economic dimension and seeks African integration into the
world economy. One of the main tasks for the AU will be to push
forward with Nepad, the New Partnership for Africa’s Development. This
offers a bargain with the West – you give us aid and we will put our
house in order. It is a long way from 1963.

SUCCESS BUILDS FROM THE BOTTOM UP
http://www.mg.co.za/article/2006-02-10-au-supports-somali-split
African Union supports Somali split
BY Jean-Jacques Cornish / Feb 10 2006

Hopes of recognition for Somaliland’s 15-year independence have been
raised by the favourable report of an African Union mission that
visited the territory last year. The report, a copy of which the Mail
& Guardian has obtained, comes at a time when signs of a new
flexibility in African thinking on boundary issues are emerging. It
suggests that official African aid be tapped by this country of
3,5million people that was effectively destroyed by the Somali
dictator Siad Barre. With the fall of Barre in 1991, the former
British colony broke its union with southern neighbour, the former
Italian colony of Somalia. Since Barre’s departure, Somalia has been
without an effective government.

But Somaliland has pulled itself up by its bootstraps. It has had a
referendum to adopt a democratic Constitution and has organised
presidential and parliamentary elections. Independent international
observers have endorsed all of these. The Organisation of African
Unity refused to recognise Somaliland’s independence, citing the maxim
that there would be chaos if colonial boundaries were not observed in
post-independence Africa.

Unions between Senegal and Gambia, and Egypt and Sudan, among
others, have been broken without affecting the recognition of these
countries. The AU mission accepts this, stating in its report that
Somaliland’s “case should not be linked to the notion of ‘opening a
Pandora’s box’. As such, the AU should find a special method for
dealing with this outstanding case. “The lack of recognition ties the
hands of the authorities and people of Somaliland, as they cannot
effectively and sustainably transact with the outside to pursue the
reconstruction and development goals.

“Furthermore, given the acute humanitarian situation prevailing in
Somaliland, the AU should mobilise financial resources to help
alleviate the plight of the affected communities, especially those
catering for the internally displaced persons and the returnees.
Finally, given also the high potential for conflict between Mogadishu
and Hargeisa, the AU should take steps to discuss critical issues in
the relations between the two towns. That initiative should be taken
at the earliest possible opportunity.”

Iqbal Jhazbhay, an Africa analyst at the University of South Africa,
says the report illustrates a new mood in the AU, an organisation
Somaliland has officially applied to join. “The AU-sponsored peace
deal in Sudan allows for a referendum, five years from now, on whether
the south wants to go it alone. This could not have happened if it
were business as usual. The AU now goes for results, and takes account
of subjective facts and practical realities,” says Jhazbhay. “The AU
clearly recognises the stability created in Somaliland and the
infrastructural development. It is determined to bring peace to the
horn. It is looking at post-conflict reconstruction and it has the
capacity to handle these issues.”