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The Real Lost Generation

by Jeff Madrick

The Anti-Economist

Harper’s Magazne (December 2013)

In late August, I traveled with colleagues from the Roosevelt Institute in New York to New Orleans, where we had invited a panel of community organizers to join us in discussing youth unemployment. The problem affects every major US city – American teens and young adults have never, since record-keeping began, done worse in the job market than in the past decade – but it is worse in New Orleans than almost anywhere else. The organizers spoke to us of what they called Opportunity Youth, a group defined as those under the age of twenty-four who are neither in school nor working. Opportunity Youth are disproportionately minority men. Many have been incarcerated or suffer from poor health. Some have caregiving responsibilities that overwhelm them. In New Orleans, 23 percent of eighteen- to twenty-four-year-olds are out of school and unemployed; the national number – seventeen percent – isn’t much better. Researchers estimate that there are 6.7 million young people nationwide who fit the bill.

“It’s criminal”, the economist Andrew Sum told me recently. “No one in Washington is defending them”. Sum is the director of Northeastern University’s Center for Labor Market Studies and is the nation’s leading expert on youth employment. Lately he’s been particularly interested in unemployment among teens. In the past decade, the percentage of teens working summer jobs has fallen nearly to post-World War Two lows. The all-time peak, of 58 percent, was in 1978; that figure experienced only minor fluctuations throughout the Eighties and Nineties, and in 2000 it stood at a healthy 52 percent. It is now down to thirty percent. For young people of color the numbers are worse – about one in five for black teens and one in four for Hispanic teens. The farther down a teen’s parents are on the income ladder, the lower this employment rate.

Sum and I are about the same age, and we reminisced about how determined American policymakers once were to ensure that teens could find summer employment. A lot of this determination had to do with fears of social unrest stirred up by the racial violence of the Sixties and, several decades later, the Rodney King riots in Los Angeles. One of the federal government’s responses was to create hundreds of thousands of summer jobs for teenagers at parks, construction sites, and nonprofits. But these programs mostly ended in the early years of the George W Bush Administration, after a decade of falling crime.

Although it is disheartening in itself that the threat of violence seems to be the sole effective political weapon the youth have, the major concern when they can’t get jobs is not street riots – it’s unproductive lives. Research shows clearly that your odds of staying in school and later getting a good job improve greatly if you have a job as a student. And youth joblessness has repercussions for the broader economy too, with effects rippling through the workforce as teens get older. The employment prospects for those between the ages of twenty and twenty-four have fallen more than for any other age group besides teens. In 2000, 72 percent of those young adults had steady employment; today, only 61 percent do. And when they are able to find work, their jobs don’t pay well: inflation-adjusted wages for men aged sixteen to twenty-four were about thirty percent lower in 2010 than in 1973. Among young women, wages dropped eleven percent in that time.

The economy is simply not producing enough jobs. Between 1992 and 2000, eighteen million people joined the workforce. Between 2000 and 2010, only 2.2 million were able to join. With far fewer jobs available, those with more experience get picked first, while those entering the workforce for the first time get picked last. The recession has exacerbated this trend, as older workers delay retirement in hopes of rebuilding the savings lost in the downturn. Those aged fifty-five and older are the only group whose labor-force participation has actually increased in recent decades. They are taking the part-time jobs kids used to get as store clerks and cashiers. They require less training than their younger counterparts. Those who are working to supplement savings or Social Security payments are especially willing to accept low wages. Meanwhile, recent college graduates are left to take the jobs that once went to high school graduates and even dropouts. Two in five say their jobs do not require a degree.

What happens when a nation fails its youth? That question is now being asked around the world. This summer, Pope Francis called youth unemployment one of the two gravest global problems (the other being the loneliness of the elderly). Youth unemployment averages 23 percent throughout Europe, which is currently in the throes of a serious recession.

At least European nations are openly discussing the issue and suggesting ways to address it. The European Union plans to expand its youth-employment initiatives, setting aside roughly $8 billion over the next seven years to finance work programs in regions where youth unemployment is high. Even German chancellor Angela Merkel, the continent’s staunchest champion of fiscal austerity, supports the effort. Under the Youth Guarantee, EU member states have committed to making sure that anyone under twenty-five who leaves school or becomes unemployed will “receive a high-quality offer of a job, an apprenticeship or a traineeship” within four months. No one is putting forward equivalent plans in the United States, where the employment programs that do exist are being cut back.

Since austerity hawks in Washington seem determined to hamper our recovery before it starts to generate real employment gains, we need to find other ways to improve the lot of young workers. A high proportion of these Americans, more than in any other demographic, are not sufficiently prepared to work. After World War Two, the United States graduated a higher proportion of teenagers from high school than any other nation in the world. As of 2011, it ranked eighteenth out of twenty-four wealthy nations. More than a million students drop out every year, at a time when educational credentials have become more important than ever in the job market. “Even to work in the fast-food industry, you often need a GED”, Jerome Jupiter of the Youth Empowerment Project told us in New Orleans.

There are now many programs in New Orleans aimed at Opportunity Youth, but the needs of these young people are complex. Local organizers are trying to keep kids in high school while enabling them to work as well. Education matters most, but the school system alone cannot overcome the profound effects of poverty, parental unemployment, drug abuse, and racism. The organizers in New Orleans devote a lot of attention to their kids, which makes these programs extremely labor-intensive.

“The scope and depth of it is paralyzing”, says Cherie LaCour-Duckworth, of the Urban League of New Orleans. “We need to address the root causes as to why youth and young adults are having a difficult time finding employment, not just the sociological results”.

One promising factor is the attitude of these young people. According to a 2011 survey by Civic Enterprises, 85 percent of Opportunity Youth recognize the importance of education and a good job to living the life they want, and more than three quarters say that achieving these goals is their personal responsibility. “What makes me hopeful is the kids themselves; they really want to get an education, get a job, and contribute to society”, says Amy Barad, who directs the Reconnecting Opportunity Youth Initiative at Tulane University. The Civic Enterprises survey finds that most believe they will eventually achieve their goals.
And there are programs across the country that work. Through Project U-Turn, the city of Philadelphia has raised its high school graduation rate from 52 percent in 2006 to 64 percent last year. In Cincinnati, a nonprofit called Strive has obtained striking results in preparing children for kindergarten, improving high school graduation rates, and raising fourth graders’ reading and math scores. Results in Boston and Chicago have been less dramatic but still encouraging.

An expansion of these programs could bring vast improvements. If the employment-to-population ratio were the same today as it was in 2000, there would be nearly 3.6 million more teens with summer jobs and 2.4 million more young adults with full-time work. Yet the federal government has essentially turned its back on the young. In 1993, Bill Clinton signed a bill creating AmeriCorps, a domestic program modeled on the Peace Corps, which enrolls eighteen- to twenty-four-year-olds in intensive community-service work in exchange for stipends, health-care coverage, and job training. Since 2005, efforts to expand the program have gone nowhere. Another notable federal program, YouthBuild, provides young people jobs constructing affordable housing while they complete a GED or earn a high school diploma, but its $80 million of federal funding is now being cut back under congressional sequestration.

Any wide-ranging solutions will require the broad collaboration of government at all levels with nonprofit organizations, universities, and businesses. The programs that exist require more support. Initiatives like AmeriCorps could be expanded, and perhaps linked to college-debt forgiveness. The best bet for funding in these times of public and private budgetary cutbacks may be tax credits for companies who hire teens and first-year college graduates.

But no one in Washington says a word about the youth-employment crisis, Sum told me. Our failure to address the problem, he explained, will lead to long-term difficulties for the economy. Without good work prospects, young people will pay less in taxes over the years and depend more on Medicaid, food stamps, and other social assistance; the prison population will continue to grow. Academic researchers have put hard numbers on what each Opportunity Youth is costing America. A report published in 2012 put the lifetime figure at more than a million dollars in lost tax revenues and increased social costs. With an estimated 6.7 million Opportunity Youth in America right now, the total lost wealth will be well into the trillions of dollars. And this, of course, does not account for less quantifiable impacts. The disconnection of youth from jobs and school has led to declines in the marriage rate, household formation, and home ownership – to unhappy and unstructured lives. This is an American tragedy, and its dimensions are growing.

 

 

(c) Copyright 2014 Harper’s Magazine

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Historical Trigger Points

Viewing the Ukraine Crisis From Russia’s Perspective

by Floyd Rudmin from Tromso, Norway

CounterPunch Weekend Edition (March 28 to 30 2014)

Events in Ukraine are moving fast and faster. Dangers of economic paralysis in Ukraine and of wider war with Russia are very real. This essay will argue that we all need to notice our historical biases in perceiving and misperceiving events. My own bias is anti-war. Now is not the time in human history for geopolitical power plays and military alliances. Now is the time for coordinated international actions on climate and economy. I am a professor of social and community psychology at the University of Tromso in Arctic Norway, near the Russian border. I have no special knowledge of Russia other than conventional sources (Google Scholar, Wikipedia, JSTOR). My surname is Lithuanian, from my grandfather’s emigration in 1897 when Lithuania was controlled by Russia.

James Joyce’s famous statement that “history is a nightmare” from which we should try to awake, aptly describes current events in the Ukraine. All nations involved in these events are biased by the remembered, misremembered, forgotten, and mythologized history they carry in their heads. Chaos in Maidan Square, neo-fascists in positions of power in Kiev, Russia annexing Crimea, these are inkblots that everyone sees differently depending on the historical visions that dominate their minds. Our national memories have the passion and power to drive us blindly to hatreds and to war. The histories we believe set us up for easy manipulations and disastrous actions.

Hillary Clinton, on March 5, said that Putin’s concern for Russians in Ukraine is like Hitler’s concern for Germans in Poland and Czechoslovakia. It is also like Ronald Reagan’s concern for US medical students in Grenada by which he justified his 1983 invasion of that small island nation. Clinton said, “We can learn from this tactic that has been used before”. That is good advice if we consider this tactic of

(a) personifying a nation by its leader’s personal name and

(b) then labelling that leader “Hitler”.

This is sure way to activate a demon in the American national memory and to mobilize the United States to again fight evil personified by the new Hitler. John Kerry said Assad is Hitler. John McCain said Castro is Hitler. George Bush said Saddam was Hitler. Donald Rumsfeld said Chavez was Hitler. The list of leaders the US has targeted as Hitler includes Allende (Chile), Noriega (Panama), Ortega (Nicaragua), Milosevic (Serbia), Arafat (Palestine), Gaddafi (Libya), Ahmadinejad (Iran), and Kim (North Korea).

Hitler, in fact, was defeated by the USSR more than by the USA. After the Battle of Stalingrad in February 1943 and the Battle of Kursk in August 1943, Germany had effectively lost World War Two. D-Day was a year later, in June 1944. Soviet armies caused more than ninety percent of total German casualties. Nevertheless, Americans remember that it was they who defeated Hitler.

Americans also “Remember the Alamo”. In 1835, American settlers in the Mexican territory of Texas felt threatened by the government of Santa Anna in Mexico City, which had come to power by coup. In 1836, the American settlers in Texas declared independence, and later negotiated annexation by the United States. Thus, Americans can, if they wish, appreciate that Crimeans felt threatened by the government in Kiev, which came to power by coup, and that Crimeans also declared independence, and also then negotiated annexation by the nation of their origin. However, unlike Texas, Crimea had previously been part of Russia for 170 years.

Just as the Alamo is an iconic historic site for Americans, so, too, is the Crimean fortress of Sevastopol an iconic historic site for Russians. Both symbolize steadfast courage and sacrifice in the face of overwhelming force. The Siege of the Alamo in 1836 lasted thirteen days, with 1,500 Mexican soldiers overwhelming 250 Americans who died heroically defending liberty and independence. The first Siege of Sevastopol in 1854, lasted two years, with 175,000 British, French, Turkish, German, Italian, Polish and Swiss soldiers overwhelming 35,000 Russian soldiers heroically defending Russian Crimea. The second Siege of Sevastopol in 1941 lasted one year, with more than 200,000 German, Romanian, Italian and Bulgarian forces overwhelming 106,000 Soviet soldiers heroically defending Russian Crimea. When Americans feel emotional remembering the Alamo, they can begin to imagine the depth of emotion Russians must feel remembering Sevastopol.

America experienced invading foreign forces during its War of Independence in the 1770s, and again on a small scale during the War of 1812. But only two foreign attacks are seared into the American psyche with historic force. One is the December 7 1941, attack on Pearl Harbor which lasted less than two hours and killed 2,400 Americans. The other is the September 11 2001, attack on New York City and Washington, DC which lasted less than three hours and killed 3,000 victims. Americans’ anger to avenge those attacks is deep and enduring, allowing no limits of cost, no limits of law, to prevent such attacks happening again. Thus, Americans can, if they wish, appreciate Russia’s reactions to being attacked by foreign armies, and can understand why Russia also will allow no limits of cost, no limits of law, to prevent such attacks happening again.
The USA has not suffered invasions because it is bounded by large oceans east and west, and by powerless, peaceful nations north and south. Russia has no protective natural barriers, and has had aggressive neighbors on three sides. Although they may forget or deny this history, Turks, Poles, Swedes, French, Germans, British, and Japanese have each invaded Russia more than once. For example, in the early 1600s, Poland twice invaded Russia when its government was in disarray. Russians of all social classes united in popular uprising and saved the nation. In 1613, the Romanov Tsar instituted a holiday called “Day of Moscow’s Liberation from Polish Invaders” which is now celebrated every November 4 as “Unity Day”. In the early 1700s, Sweden invaded Russia with 40,000 troops but was defeated by Peter the Great’s use of scorched-earth retreat across vast distances. Only the Swedish king and 543 soldiers survived.

It is not something unique in the personalities of Tsar Peter or President Putin that drives Russia to require non-threatening neighbors. It is the collective Russian memory of invasion. Each era of history has had its military super-power, and each super-power in turn attacked Russia:

The Mongol Super-power: The Mongol Empire was the largest in history, conquering the Chinese Empire and Persian Empire. In 1238, the Mongols crossed the Volga River with 35,000 mounted archers backed by 70,000 Turks including Chinese siege equipment for attacking walled cities. They conquered most Russian regions as well as Crimea. In 1240, the Mongols captured Kiev and killed most of its 50,000 inhabitants. An estimated 500,000 Kievan Rus’ (Russians, Ukrainians, Byelorussians) died during the Mongol invasion. For several centuries afterwards, regional khans continued attacking Russia. For example, in 1382, the Golden Horde sieged Moscow, slaughtered 24,000 Muscovites, and took thousands of captives.

The Ottoman Super-power: At the height of its power in the 1600s, the Ottoman Empire controlled half of the Mediterranean world and all of the Black Sea and Red Sea regions. The Crimean Tatars supplied the Ottoman slave trade by “harvesting the steppe”, taking an estimated two million captives between 1500 and 1700. For example, in 1571, a combined Crimean and Ottoman force of 120,000 invaded Russia, burned Moscow, killed an estimated 80,000 Russians, and took 150,000 captives to slave markets in Crimea. Historians count more than fifty Tatar attacks. The last “harvest” of Russians was in 1769. In the 7th Russo-Turkish War, Russians conquered Crimea and finally freed themselves from Tatar attacks and slavery. In 1783, Russia annexed Crimea. This is the same time in history that the American colonies finally freed themselves from oppressive British taxation.

The Napoleonic Super-power: Napoleon harnessed the passionate ideals of the French Revolution to coercive diplomacy and to new military tactics of massed armies and mobile artillery and was thus invincible in conquering Continental Europe in only nine years. In 1812, Napoleon assembled the largest army Europe had ever seen, comprised of an estimated 600,000 troops, including 98,000 from Poland. Although Napoleon won battles at Vilnius, Smolensk and Borodino, the Russian strategy of scorched-earth retreat across vast distances, including the evacuation and burning of Moscow, starved and demoralized the invading army. Relatively few survived the winter retreat from Moscow. Russian deaths are estimated to have been 150,000 to 400,000 soldiers and as many civilian.

The Nazi Super-power: Hitler harnessed the passionate ideals of fascism to coercive diplomacy and to new military tactics of blitzkrieg and was thus invincible in conquering Continental Europe in only two years. In 1941, Hitler assembled the largest army Europe had ever seen, comprised of an estimated 3.2 million German soldiers and about 500,000 from Italy and Romania. Although Hitler conquered vast stretches of territory, he failed to capture Moscow, Leningrad, Stalingrad or the Caspian oil fields. Soviet deaths were an estimated eight to thirteen million soldiers and as many as twenty million civilians. For example, 200,000 soldiers and 1.2 million civilians died in the Siege of Leningrad. In contrast, total US deaths during World War Two were 418,000 military and fewer than 2,000 civilians.

The US Super-power: The US has harnessed the passionate ideals of democracy to coercive diplomacy and new tactics of covert operations, advanced weapons technology and economic warfare to achieve what it calls, “full spectrum dominance”. Considering its own immense military resources and those of the other 27 NATO nations it controls, plus the resources of its Asian allies of Australia, New Zealand, Japan and South Korea, the US commands the greatest military might the world has ever seen. As with past super-powers, the US and its NATO allies seem to be setting their sights on Russia. Perhaps Cold War history causes them to confuse Russia with the USSR and its many atrocities under the dictatorships of Stalin (native Georgian) and Khrushchev (native Ukrainian). Or perhaps racist perceptions of Russians as “untermensch” are still active in Western minds. Or maybe the vast resources of Russia are too attractive to leave untaken.

President Gorbachev allowed the re-unification of Germany based on promises from President Bush and Chancellor Kohl that NATO would not expand eastwards, and then NATO did exactly that, even inviting Ukraine and Georgia to prepare for membership. Georgia is closer to India than it is to the North Atlantic. The US has been determined to install anti-missile systems in Poland, purportedly to shoot non-existent Iranian ICBMs, but suspiciously capable of nullifying Russia’s nuclear deterrence. Recent telephone intercepts show that US State Department officials (Victoria Nuland and Geoffrey Pyatt) selected an anti-Russian replacement government for the Ukraine when the elected, constitutional government was still in power. Then chaos in Kiev caused by unidentified snipers resulted in the elected Ukrainian government collapsing. As per US planning, the selected anti-Russian replacement government took power in Kiev and was quickly declared legitimate by NATO nations.

It is easy to see why Russia would perceive these events as another super-power preparing to attack Russia. It is perfectly predictable that Russia would react in ways to defend itself, no matter what the costs. It is mental manipulation by historical trigger-words to claim that Putin is “Hitler”, or that Stalin’s “Red Army” again threatens Europe. Because Americans know nothing of Russian history and have no national experience of foreign invasion, they cannot escape the confines of their own Cold War rhetoric. They cannot imagine history seen from a Russian perspective. Europeans, however, know the horror of war on their own territory, and well remember their own history of attacking Russia. In this crisis, it is the European nations who need to stand up and shake the super-power awake before an incident turns into conventional war turns into missile war turns into nuclear war. Those transitions could take thirty minutes. At this moment in human history, the world community has more pressing priorities than re-enacting our historical nightmares.

_____

Floyd Rudmin is Professor of Social & Community Psychology at the University of Tromso in Norway. He can be reached at frudmin@psyk.uit.no

 

http://www.counterpunch.org/2014/03/28/viewing-the-ukraine-crisis-from-russias-perspective/

Categories: Uncategorized

Captain Erikson’s Equation

by John Michael Greer

The Archdruid Report (March 26 2014)

Druid perspectives on nature, culture, and the future of industrial society

I have yet to hear anyone in the peak oil blogosphere mention the name of Captain Gustaf Erikson of the Ă…land Islands and his fleet of windjammers. For all I know, he’s been completely forgotten now, his name and accomplishments packed away in the same dustbin of forgotten history as solar steam-engine pioneer Augustin Mouchot, his near contemporary. If so, it’s high time that his footsteps sounded again on the quarterdeck of our collective imagination, because his story – and the core insight that committed him to his lifelong struggle – both have plenty to teach about the realities framing the future of technology in the wake of today’s era of fossil-fueled abundance.

Erikson, born in 1872, grew up in a seafaring family and went to sea as a ship’s boy at the age of nine. At nineteen he was the skipper of a coastal freighter working the Baltic and North Sea ports; two years later he shipped out as mate on a windjammer for deepwater runs to Chile and Australia, and eight years after that he was captain again, sailing three- and four-masted cargo ships to the far reaches of the planet. A bad fall from the rigging in 1913 left his right leg crippled, and he left the sea to become a shipowner instead, buying the first of what would become the 20th century’s last major fleet of windpowered commercial cargo vessels.

It’s too rarely remembered these days that the arrival of steam power didn’t make commercial sailing vessels obsolete across the board. The ability to chug along at eight knots or so without benefit of wind was a major advantage in some contexts – naval vessels and passenger transport, for example – but coal was never cheap, and the long stretches between coaling stations on some of the world’s most important trade routes meant that a significant fraction of a steamship’s total tonnage had to be devoted to coal, cutting into the capacity to haul paying cargoes. For bulk cargoes over long distances, in particular, sailing ships were a good deal more economical all through the second half of the 19th century, and some runs remained a paying proposition for sail well into the 20th.

That was the niche that the windjammers of the era exploited. They were huge – up to 400 feet from stem to stern – square-sided, steel-hulled ships, fitted out with more than an acre of canvas and miles of steel-wire rigging. They could be crewed by a few dozen sailors, and hauled prodigious cargoes: up to 8,000 tons of Australian grain, Chilean nitrate – or, for that matter, coal; it was among the ironies of the age that the coaling stations that allowed steamships to refuel on long voyages were very often kept stocked by tall ships, which could do the job more economically than steamships themselves could. The markets where wind could outbid steam were lucrative enough that at the beginning of the 20th century, there were still thousands of working windjammers hauling cargoes across the world’s oceans.

That didn’t change until bunker oil refined from petroleum ousted coal as the standard fuel for powered ships. Petroleum products carry much more energy per pound than even the best grade of coal, and the better grades of coal were beginning to run short and rise accordingly in price well before the heyday of the windjammers was over. A diesel-powered vessel had to refuel less often, devote less of its tonnage to fuel, and cost much less to operate than its coal-fired equivalent. That’s why Winston Churchill, as head of Britain’s Admiralty, ordered the entire British Navy converted from coal to oil in the years just before the First World War, and why coal-burning steamships became hard to find anywhere on the seven seas once the petroleum revolution took place. That’s also why most windjammers went out of use around the same time; they could compete against coal, but not against dirt-cheap diesel fuel.

Gustav Erikson went into business as a shipowner just as that transformation was getting under way. The rush to diesel power allowed him to buy up windjammers at a fraction of their former price – his first ship, a 1,500-ton bark, cost him less than $10,000, and the pride of his fleet, the four-masted Herzogin Cecilie, set him back only $20,000. A tight rein on operating expenses and a careful eye on which routes were profitable kept his firm solidly in the black. The bread and butter of his business came from shipping wheat from southern Australia to Europe; Erikson’s fleet and the few other windjammers still in the running would leave European ports in the northern hemisphere’s autumn and sail for Spencer Gulf on Australia’s southern coast, load up with thousands of tons of wheat, and then race each other home, arriving in the spring – a good skipper with a good crew could make the return trip in less than 100 days, hitting speeds upwards of fifteen knots when the winds were right.

There was money to be made that way, but Erikson’s commitment to the windjammers wasn’t just a matter of profit. A sentimental attachment to tall ships was arguably part of the equation, but there was another factor as well. In his latter years, Erikson was fond of telling anyone who would listen that a new golden age for sailing ships was on the horizon: sooner or later, he insisted, the world’s supply of coal and oil would run out, steam and diesel engines would become so many lumps of metal fit only for salvage, and those who still knew how to haul freight across the ocean with only the wind for power would have the seas, and the world’s cargoes, all to themselves.

Those few books that mention Erikson at all like to portray him as the last holdout of a departed age, a man born after his time. On the contrary, he was born before his time, and lived too soon. When he died in 1947, the industrial world’s first round of energy crises were still a quarter century away, and only a few lonely prophets had begun to grasp the absurdity of trying to build an enduring civilization on the ever-accelerating consumption of a finite and irreplaceable fuel supply. He had hoped that his sons would keep the windjammers running, and finish the task of getting the traditions and technology of the tall ships through the age of fossil fuels and into the hands of the seafarers of the future. I’m sorry to say that that didn’t happen; the profits to be made from modern freighters were too tempting, and once the old man was gone, his heirs sold off the windjammers and replaced them with diesel-powered craft.

Erikson’s story is worth remembering, though, and not simply because he was an early prophet of what we now call peak oil. He was also one of the very first people in our age to see past the mythology of technological progress that dominated the collective imagination of his time and ours, and glimpse the potentials of one of the core strategies this blog has been advocating for the last eight years.

We can use the example that would have been dearest to his heart, the old technology of windpowered maritime cargo transport, to explore those potentials. To begin with, it’s crucial to remember that the only thing that made tall ships obsolete as a transport technology was cheap abundant petroleum. The age of coal-powered steamships left plenty of market niches in which windjammers were economically more viable than steamers. The difference, as already noted, was a matter of energy density – that’s the technical term for how much energy you get out of each pound of fuel; the best grades of coal have only about half the energy density of petroleum distillates, and as you go down the scale of coal grades, energy density drops steadily. The brown coal that’s commonly used for fuel these days provides, per pound, rather less than a quarter the heat energy you get from a comparable weight of bunker oil.

As the world’s petroleum reserves keep sliding down the remorseless curve of depletion, in turn, the price of bunker oil – like that of all other petroleum products – will continue to move raggedly upward. If Erikson’s tall ships were still in service, it’s quite possible that they would already be expanding their market share; as it is, it’s going to be a while yet before rising fuel costs will make it economical for shipping firms to start investing in the construction of a new generation of windjammers. Nonetheless, as the price of bunker oil keeps rising, it’s eventually going to cross the line at which sail becomes the more profitable option, and when that happens, those firms that invest in tall ships will profit at the expense of their old-fahioned, oil-burning rivals.

Yes, I’m aware that this last claim flies in the face of one of the most pervasive superstitions of our time, the faith-based insistence that whatever technology we happen to use today must always and forever be better, in every sense but a purely sentimental one, than whatever technology it replaced. The fact remains that what made diesel-powered maritime transport standard across the world’s oceans was not some abstract superiority of bunker oil over wind and canvas, but the simple reality that for a while, during the heyday of cheap abundant petroleum, diesel-powered freighters were more profitable to operate than any of the other options. It was always a matter of economics, and as petroleum depletion tilts the playing field the other way, the economics will change accordingly.

All else being equal, if a shipping company can make larger profits moving cargoes by sailing ships than by diesel freighters, coal-burning steamships, or some other option, the sailing ships will get the business and the other options will be left to rust in port. It really is that simple. The point at which sailing vessels become economically viable, in turn, is determined partly by fuel prices and partly by the cost of building and outfitting a new generation of sailing ships. Erikson’s plan was to do an end run around the second half of that equation, by keeping a working fleet of windjammers in operation on niche routes until rising fuel prices made it profitable to expand into other markets. Since that didn’t happen, the lag time will be significantly longer, and bunker fuel may have to price itself entirely out of certain markets – causing significant disruptions to maritime trade and to national and regional economies – before it makes economic sense to start building windjammers again.

It’s a source of wry amusement to me that when the prospect of sail transport gets raised, even in the greenest of peak oil circles, the immediate reaction from most people is to try to find some way to smuggle engines back onto the tall ships. Here again, though, the issue that matters is economics, not our current superstitious reverence for loud metal objects. There were plenty of ships in the 19th century that combined steam engines and sails in various combinations, and plenty of ships in the early 20th century that combined diesel engines and sails the same way. Windjammers powered by sails alone were more economical than either of these for long-range bulk transport, because engines and their fuel supplies cost money, they take up tonnage that can otherwise be used for paying cargo, and their fuel costs cut substantially into profits as well.

For that matter, I’ve speculated in posts here about the possibility that Augustin Mouchot’s solar steam engines, or something like them, could be used as a backup power source for the windjammers of the deindustrial future. It’s interesting to note that the use of renewable energy sources for shipping in Erikson’s time wasn’t limited to the motive power provided by sails; coastal freighters of the kind Erikson skippered when he was nineteen were called “onkers” in Baltic Sea slang, because their windmill-powered deck pumps made a repetitive “onk-urrr, onk-urrr” noise. Still, the same rule applies; enticing as it might be to imagine sailors on a becalmed windjammer hauling the wooden cover off a solar steam generator, expanding the folding reflector, and sending steam down belowdecks to drive a propeller, whether such a technology came into use would depend on whether the cost of buying and installing a solar steam engine, and the lost earning capacity due to hold space being taken up by the engine, was less than the profit to be made by getting to port a few days sooner.

Are there applications where engines are worth having despite their drawbacks? Of course. Unless the price of biodiesel ends up at astronomical levels, or the disruptions ahead along the curve of the Long Descent cause diesel technology to be lost entirely, tugboats will probably have diesel engines for the imaginable future, and so will naval vessels; the number of major naval battles won or lost in the days of sail because the wind blew one way or another will doubtless be on the minds of many as the age of petroleum winds down. Barring a complete collapse in technology, in turn, naval vessels will no doubt still be made of steel – once cannons started firing explosive shells instead of solid shot, wooden ships became deathtraps in naval combat – but most others won’t be; large-scale steel production requires ample supplies of coke, which is produced by roasting coal, and depletion of coal supplies in a postpetroleum future guarantees that steel will be much more expensive compared to other materials than it is today, or than it was during the heyday of the windjammers.

Note that here again, the limits to technology and resource use are far more likely to be economic than technical. In purely technical terms, a maritime nation could put much of its arable land into oil crops and use that to keep its merchant marine fueled with biodiesel. In economic terms, that’s a nonstarter, since the advantages to be gained by it are much smaller than the social and financial costs that would be imposed by the increase in costs for food, animal fodder, and all other agricultural products. In the same way, the technical ability to build an all-steel merchant fleet will likely still exist straight through the deindustrial future; what won’t exist is the ability to do so without facing prompt bankruptcy. That’s what happens when you have to live on the product of each year’s sunlight, rather than drawing down half a billion years of fossil photosynthesis: there are hard economic limits to how much of anything you can produce, and increasing production of one thing pretty consistently requires cutting production of something else. People in today’s industrial world don’t have to think like that, but their descendants in the deindustrial world will either learn how to do so or perish.

This point deserves careful study, as it’s almost always missed by people trying to think their way through the technological consequences of the deindustrial future. One reader of mine who objected to talk about abandoned technologies in a previous post quoted with approval the claim, made on another website, that if a deindustrial society can make one gallon of biodiesel, it can make as many thousands or millions of gallons as it wants. Technically, maybe; economically, not a chance. It’s as though you made $500 a week and someone claimed you could buy as many bottles of $100-a-bottle scotch as you wanted; in any given week, your ability to buy expensive scotch would be limited by your need to meet other expenses such as food and rent, and some purchase plans would be out of reach even if you ignored all those other expenses and spent your entire paycheck at the liquor store. The same rule applies to societies that don’t have the windfall of fossil fuels at their disposal – and once we finish burning through the fossil fuels we can afford to extract, every human society for the rest of our species’ time on earth will be effectively described in those terms.

The one readily available way around the harsh economic impacts of fossil fuel depletion is the one that Gunnar Erikson tried, but did not live to complete – the strategy of keeping an older technology in use, or bringing a defunct technology back into service, while there’s still enough wealth sloshing across the decks of the industrial economy to make it relatively easy to do so. I’ve suggested above that if his firm had kept the windjammers sailing, scraping out a living on whatever narrow market niche they could find, the rising cost of bunker oil might already have made it profitable to expand into new niches; there wouldn’t have been the additional challenge of finding the money to build new windjammers from the keel up, train crews to sail them, and get ships and crews through the learning curve that’s inevitably a part of bringing an unfamiliar technology on line.

That same principle has been central to quite a few of this blog’s projects. One small example is the encouragement I’ve tried to give to the rediscovery of the slide rule as an effective calculating device. There are still plenty of people alive today who know how to use slide rules, plenty of books that teach how to crunch numbers with a slipstick, and plenty of slide rules around. A century down the line, when slide rules will almost certainly be much more economically viable than pocket calculators, those helpful conditions might not be in place – but if people take up slide rules now for much the same reasons that Erikson kept the tall ships sailing, and make an effort to pass skills and slipsticks on to another generation, no one will have to revive or reinvent a dead technology in order to have quick accurate calculations for practical tasks such as engineering, salvage, and renewable energy technology.

The collection of sustainable-living skills I somewhat jocularly termed “green wizardry”, which I learned back in the heyday of the appropriate tech movement in the late 1970s and early 1980s, passed on to the readers of this blog in a series of posts a couple of years ago, and have now explored in book form as well {1}, is another case in point. Some of that knowledge, more of the attitudes that undergirded it, and nearly all the small-scale, hands-on, basement-workshop sensibility of the movement in question has vanished from our collective consciousness in the years since the Reagan-Thatcher counterrevolution foreclosed any hope of a viable future for the industrial world. There are still enough books on appropriate tech gathering dust in used book shops, and enough in the way of living memory among those of us who were there, to make it possible to recover those things; another generation and that hope would have gone out the window.

There are plenty of other possibilities along the same lines. For that matter, it’s by no means unreasonable to plan on investing in technologies that may not be able to survive all the way through the decline and fall of the industrial age, if those technologies can help cushion the way down. Whether or not it will still be possible to manufacture PV cells at the bottom of the deindustrial dark ages, as I’ve been pointing out since the earliest days of this blog {2}, getting them in place now on a home or local community scale is likely to pay off handsomely when grid-based electricity becomes unreliable, as it will. The modest amounts of electricity you can expect to get from this and other renewable sources can provide critical services (for example, refrigeration and long-distance communication) that will be worth having as the Long Descent unwinds.

That said, all such strategies depend on having enough economic surplus on hand to get useful technologies in place before the darkness closes in. As things stand right now, as many of my readers will have had opportunity to notice already, that surplus is trickling away. Those of us who want to help make a contribution to the future along those lines had better get a move on.

_____

John Michael Greer is the Grand Archdruid of the Ancient Order of Druids in America {3} and the author of more than thirty books on a wide range of subjects, including peak oil and the future of industrial society. He lives in Cumberland, Maryland, an old red brick mill town in the north central Appalachians, with his wife Sara.

Links:

{1} http://www.newsociety.com/affil.mvc?Affil=ARCH&Page=../Books/G/Green-Wizardry

{2} http://thearchdruidreport.blogspot.com/2006/08/why-renewable-energy-matters.html

{3} http://www.aoda.org/

http://thearchdruidreport.blogspot.jp/2014/03/captain-eriksons-equation.html

Categories: Uncategorized

Total Abenomics Fail …

… Slams Japan Where It Hurts Most

by Wolf Richter

Testosterone Pit (March 25 2014)

Nippon Steel & Sumitomo Metal Corporation, headquartered in Tokyo, was formed by merger in 2012 and that instant became the world’s second largest steel producer. Its Nippon Steel & Sumikin Galvanizing plant in Rayong Province, Thailand, began production in late 2013 {1}. In August, the company opened a steel plant in Mexico. More plants are being built in India and China to supply automakers. It already has a crankshaft plant in the US. The plant in Thailand is run by the company’s steelworks in Nagoya, Japan, which has fewer engineers today than it had twenty years ago.

This is the same song that has been playing all across Japan. The data has confirmed that investment in Japan by Japanese corporations has been lagging, while they’ve plowed enormous amounts of money into building production facilities overseas – money that the Bank of Japandemonium has been printing and handing out for free. It’s all part of Prime Minister Shinzo Abe’s glorious economic religion, lovingly named after him, that he has been trying to shove down people’s throats. Abenomics was supposed to perform some sort of top-down economic miracle. But the opposite has been happening.

Abenomics apologists have pointed out that these investment decisions had been made before the hapless Japanese had to take the leap of faith with Abenomics. Okay, but now these executives are talking about their plans for the future: turns out, they’re scrambling to pour money into Southeast Asia and other parts of the world. And to heck with investing in Japan!

It wasn’t even close. Of these executives, 48% said they’re planning to increase capital investments overseas in fiscal 2014, but only a minuscule 14.8% said they’d do so in Japan {2}

Alas, for the economy to expand as promised by Abenomics and as predicted by soothsayers, companies would have to invest in Japan and produce in Japan, both for domestic demand and for export. That was the stated purpose of demolishing the yen and reducing the tax burden on Japan Inc.

Instead, Southeast Asia is the most popular destination for Japanese corporate moolah, with 36.4% of the executives planning to increase investments there, up 3.8 percentage points from the last survey in December. Another 17.6% were planning to plow more money into Latin America, up 2.6 points. And 17.5% were eyeing the US for more investment, up 5.3 points. That’s the glorious power of Abenomics.

But within Asia there were some big shifts. Thailand, embroiled in political turmoil, lost some of its cachet among Japanese executives. Now only 37.2% of them plan to increase investments there, down five points. And Indonesia dropped 7.1 points to 29.7%. But the Philippines are starting to look rosier.

Then there are China and Vietnam. Japanese companies cut their investments in China from $13.5 billion in 2012 to $6.5 billion in 2013, in part due to the soaring costs of labor, and in part due to the political frictions and bouts of saber-rattling between both countries. According to the Business Times, Japan External Trade Organization (JETRO) found that the cutbacks in Thailand were even more drastic: from $7 billion to $2.5 billion {3}.

But in Vietnam, Japanese capital investments jumped from $169 million in 2010 to $4.5 billion in 2013. Among the 125 new projects were the Nghi Son refinery, a Bridgestone plant, and a Panasonic Industrial Devices facility. Based on JETRO’s surveys of labor markets, Japanese companies paid Vietnamese workers an average wage of $3,000 in 2013, which was more than they paid in Laos, Cambodia, and Myanmar. But it was just one-eighth of the average wage they paid in Singapore and half of the wage they paid in Thailand. So seventy percent of the Japanese corporations that have already invested in Vietnam are planning to invest more. They’re all looking for that spot where low wages coincide with a skilled workforce, decent infrastructure, and political stability: the ever-elusive greener grass in manufacturing.

In addition to blowing the Bank of Japandemonium’s freshly printed and free money on capital investments overseas, Japanese executives have other exciting foreign adventures in mind: Mergers and Acquisitions. So 46.6% of the executives admitted that they were actively looking for targets {4}. That’s up four percentage points from a year ago. Of them, 71% were looking in the US and Europe, and 52% were looking in the emerging markets.

If – and that’s a big if – it would boost their international competitiveness, they might even look at targets in Japan … When Japanese companies finally spend money in Japan, it’s not in form of capital investments to increase production, create jobs, and boost wages, which would actually move the economy in the right direction. Heck no! It’s to buy other companies, which leads to consolidations and cost cuts, hence shutdowns of plants, branches, and offices. Abenomics is working its glorious magic at every twist and turn.

Abenomics was to save Japan. But the plan has already gone totally to heck. Not in small increments over the years with minor ups and downs, but in relentless month-to-month leaps whose viciousness surprised even the deep cynic in me. Read … “The Madness of Abenomics In One (Crazy) Chart” {5}.

Links:

{1} http://asia.nikkei.com/Business/Companies/Japan-steel-giant-eyes-overseas-expansion

{2} http://asia.nikkei.com/Business/Trends/Survey-shows-more-Japan-firms-plan-to-boost-capital-spending-in-SE-Asia.

{3} http://businesstimes.com.vn/tired-china-afraid-thailand-japanese-capital-heading-vietnam/

{4} http://asia.nikkei.com/Business/Deals/Survey-finds-45-of-Japanese-presidents-consider-MAs

{5} http://www.testosteronepit.com/home/2014/2/21/the-madness-of-abenomics-in-one-crazy-chart.html
http://www.testosteronepit.com/home/2014/3/25/total-abenomics-fail-slams-japan-where-it-hurts-most.html

Categories: Uncategorized

Economic Suicide

Abe’s Kamikazenomics Slashes GDP to 0.7 Percent

by Mike Whitney

CounterPunch (March 24 2014)

Abenomics has been great for stock speculators and corporate bigwigs, but for everyone else, not so much. The fact is – despite all the media hype and monetary fireworks – Prime Minister Shinzo Abe’s three-pronged strategy to end twenty years of deflation has been a total bust. But don’t take my word for it, check out this clip from Reuters and see for yourself:

 

 

In the fourth quarter of last year, Japan’s economy grew at an annual rate of just 0.7 percent, revised figures show, slower than the initial estimate of 1.0 percent on weaker business investment and consumption … {1}

 

 

See? Japan’s economy is dead as a doornail. No sign of life at all. What more proof do you need than that?

And Abenomics won’t end deflation either. That’s another fiction. The weaker yen is just going to force working people and retirees on fixed income to reduce their consumption which will intensify the slump. Heck, even the IMF has figured that one out. Take a look at this clip from one of their recent pieces:

 

 

The average Japanese worker has been dipping into his savings to finance consumption growth. But there’s a limit to how far he can do this. The savings rate as a percent of disposable income has declined from around five percent a decade ago to close to zero today, leaving little further room for spending from savings … Looking forward, real wages are set to come under even greater pressure this year and next with higher underlying inflation and successive increases in the consumption-tax rate. {2}

 

 

It sounds to me like the IMF is telling old Shinzo that his plan sucks, doesn’t it?

Whoever thought that dumping trillions of dollars into the financial system would end deflation had a couple screws loose. That’s not how it works. The Fed loaded up on $4 trillion in financial assets and inflation is still hovering at a measly one percent. So if the theory doesn’t work in the US, why would it work in Japan?

It won’t. The way to generate inflation is by circulating money in the economy and increasing the velocity. That means full employment and higher wages. That means fiscal stimulus and redistributive taxation. That means fixing the damn economy. But Abe’s not going to do that because it doesn’t jibe with his class war strategy which is what drives the current policy. Now check this out from Roger Arnold at The Street:

 

 

The essential policy tools of Abenomics are massive monetary and fiscal stimulus aimed at forcing the yen lower, which should cause exports to rise and domestic production to increase, leading to increased domestic job production and consumption: the virtuous cycle. In the process, Japan also increased sovereign debt, which must be serviced by the government. The servicing of that debt is supposed to come from an increase in tax receipts to be made available by the increased domestic production and consumption.

But it isn’t working.

The failure of Abenomics to stimulate economic activity and raise tax receipts enough to pay for the stimulus is now causing the government to double back on these programs with a counter-cyclical consumer tax increase of about 3%, which will be implemented in April. In other words, Abenomics is making the real economic and fiscal situations in Japan worse, not better. They are digging a bigger sovereign debt hole and accelerating the trajectory toward insolvency … Investors would be wise to avoid Japan altogether now, and probably permanently. {3}

 

 

That’s probably good advice, although I think Japan’s implosion will take much longer than Arnold seems to believe. But that’s beside the point. What matters is the that policy doesn’t work. The economy isn’t growing, personal consumption is weak, the trade deficit, the current account deficit and the national debt are all ballooning at the same time, and the Japanese people are growing more pessimistic. And on top of it all, a three percent sales tax is set to kick in at the beginning of April which is going to send the economy stumbling back into recession. (Abe pushed through the tax hike to placate his right-wing constituents even though the risks to the economy were obvious.)

So, it’s all bad, unless you’re high-flying stock trader or a money-grubbing corporate CEO, that is. Then things have never been better. Get a load of this in the Wall Street Journal:

 

 

While Japan Inc may be whistling a happy tune on the back of robust profit growth and a weaker yen thanks to the pro-business agenda of Prime Minister Shinzo Abe, a key survey released Wednesday shows that consumers aren’t in a similar Abenomics-induced state of rapture.

The Cabinet Office’s monthly Consumer Confidence Index contracted for the third straight month in February to 38.2. That’s the worst reading since Mr Abe entered office in January 2013 and the lowest since September 2011. Respondents were even more pessimistic than during Mr Abe’s year-long term as prime minister between September 2006 and September 2007 …

Even though recent data showed the basic earnings of workers in the world’s third-largest economy rose for the first time in almost two years in January, respondents in the February survey were less optimistic about their income growth, the value of their assets, and their overall livelihood than they were a month earlier.

The downbeat reading prompted the government to downgrade its assessment, saying it is “on a weak note”. {4}

 

 

To say the Japanese are depressed, would be an understatement. Your average Joe is “even more pessimistic” than he was when Abe stepped down in 2007 and the economy was on the brink of rigor mortis. Does that sound like the “Happy Days are here again” blabber you’ve been reading in the media or hearing from liberal pundits like the madcap Dr Krugman?

Also, according to a Cabinet Office survey that appeared in the Japan Times on Saturday, only 22 percent of respondents “think the economy is headed in the right direction”, while 76 percent are worried about the impact the consumption tax will have on the economy.

How’s that for a ringing endorsement of Abe’s Kamikazenomics? The only people who still believe in Abe’s song and dance are the ivory tower set at Princeton and Yale. Everyone else has thrown in the towel.

Abenomics is a public relations scam designed to shift more payola to voracious stock speculators and their thieving corporate counterparts. It’s a fraud wrapped in a lie. That’s all there is to it. But there are victims, that’s for dang-sure. Just check out this article in Bloomberg and you’ll see what I mean:

 

 

Japanese Prime Minister Shinzo Abe looks set to drive an indicator of economic hardship to a 33-year high by increasing taxes and prices amid stagnant wages. The misery index, which adds the jobless rate to the level of inflation, will climb to seven percentage points in the three months starting April 1 when Japan raises its sales levy to eight percent from five percent, based on the median estimates of economists in Bloomberg News surveys of unemployment and consumer prices. That would be the highest level for the measure since June 1981 when Japan was emerging out of depression after the oil shocks in the 1970s.

Bank of Japan monetary stimulus designed to spur economic growth and achieve two percent inflation has weakened the yen by 6.8 percent in the past twelve months, eroding the value of wages to a record low. Abe, the son of an ex-foreign minister who grew up in a house with servants, is under fire from the opposition party after the cost of living surged to a five-year high.

“Inflation is really tough”, said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Company, which oversees more than $77 billion. “Those who speak favorably about inflation might have been born in wealthy families and never experienced the hardship that inflation brought”. {5}

 

 

The Misery Index is peaking and all you hear in the US is a bunch of baloney about glorious Abenomics and the miraculous effect of money printing. What a joke. People are hurting big-time in Japan, and shifty Shinzo is only adding to their pain with his monetary Hara-kiri. It’s madness. Wages dropped for nineteen months in a row before they got a “one-off” bump-up last month of 0.1 percent, which is a big nothingburger. The overall trend is down, down, down. On top of that, roughly 35 percent of Japan’s workforce is part-time employment; no pension, no bennies, no job security, no nothing. Things slow down, and you get booted down the stairwell with not as much as a “Goodbye, Charlie!” They probably don’t even bother with the perfunctory pink slip. Just grab your lunchbox, and “out you go”.

So how does Abe figure he’s going to generate inflation when workers are flat on their backs and don’t have enough scratch to buy the widgets that Japan Inc produces?

The whole thing is a non starter, which is why I think this “fighting deflation” trope is a big freaking smokescreen to hide what’s really going on, which is a massive transfer of wealth to the investor class via asset inflation. That’s what’s really happening, right? Abenomics is just a way to produce fat returns during extended periods of slow growth and deepening stagnation. The big boys figured out how to overcome the very conditions that they created with their unbounded avarice. I guess they figure that, just because everyone else has to suffer through a goddamn Depression, doesn’t mean they have to too.

You got to hand it to these guys, they think of everything.

Links:

{1} http://www.reuters.com/article/2014/03/10/us-japan-economy-current-idUSBREA2901320140310

{2} http://blog-imfdirect.imf.org/2014/03/20/abenomics-time-for-a-push-from-higher-wages/

{3} http://www.thestreet.com/story/12538531/1/arnold-abenomics-failure-is-the-global-canary.html

{4} http://blogs.wsj.com/japanrealtime/2014/03/12/japanese-consumer-pessimism-hits-new-high-under-abe/

{5} http://www.bloomberg.com/news/2014-03-11/misery-index-rising-to-33-year-high-on-abenomics-japan-credit.html

_____

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press, 2012). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

http://www.counterpunch.org/2014/03/24/economic-suicide

Categories: Uncategorized

The Madness of Abenomics

In One (Crazy) Chart

by Wolf Richter

Testosterone Pit (February 21 2014)

There are two areas where Abenomics, the democratically elected economic religion of Japan, has succeeded: creating inflation without causing wages to rise, thus whittling down real incomes; and devaluing the yen by 25%, thus wiping out a quarter of the magnificent wealth of the Japanese without telling them directly. Grudging admiration is due Prime Minister Shinzo Abe for these accomplishments.

But in other areas, his record is spotty. One of the goals of watering down the yen is to goose exports by making them cheaper overseas and reduce imports by making them more expensive to consumers and businesses at home. It would crank up manufacturing and lead to a glorious trade surplus that would inflate GDP, turn Abe into a hero, and save Japan. That was the plan.

That plan has gone to heck. Not in small increments over the years, but in relentless month-to-month leaps whose viciousness surprised even the deep cynic in me.

So exports in January, at 5.25 trillion yen, rose 9.5% from a year earlier, the Ministry of Finance reported. Alas, it was only about half the rate at which the yen had been devalued over the twelve-month period, and so by volume, exports dropped.

But Imports, which should have dropped as they’re getting more expensive due to the watered-down yen, soared 25% to 8.04 trillion yen. Japanese businesses and consumers had gone on a buying spree of goods made in China and elsewhere.

The resulting trade deficit skyrocketed 70.8% to 2.79 trillion yen. It was the worst trade deficit ever. It was almost twice as bad as the prior “worst deficit ever”, recorded in January 2013. In January 2010, Japan still had a trade surplus of 43 billion yen! It was the nineteenth month in a row of trade deficits, the worst such sequence since anyone started counting, worse even than the fourteen-month series in 1979 and 1980.

It was the sequel of a relentless deterioration: As the January trade deficit had been the worst January ever, December had been the worst December ever, November the worst November ever, October the worst … an unbroken series of deterioration all the way through 2011. The madness of Abenomics in one crazy chart:

http://www.testosteronepit.com/storage/Japan-Trade-Balance_2011-2014_01.png?__SQUARESPACE_CACHEVERSION=1392961985966

But don’t blame the shutdown of nuclear reactors. Sure, Japan has to import more liquefied natural gas and coal for power generation to make up for the loss of nuclear power. So the value of LNG imports rose 21.4% year over year – or 129.8 billion yen, largely due to the devaluation of the currency, not increased use of LNG. And the value of coal imports rose 14.8%, or 26.8 billion yen. Combined, 156.6 billion yen. Without that increase, the trade deficit would have been 2.63 trillion yen instead of 2.79 trillion yen. It wouldn’t have changed anything. It would still be by far the worst trade deficit ever.

And Japan doesn’t import LNG and coal from China, but it is with China that the trade deficit has exploded. Despite the well-orchestrated display of annoyance and aggression on both sides, Japan and China are joined at the hip through trade, and China is Japan’s largest trading partner.

To cut through the fog surrounding exports to China, a quarter of which are transshipped through Hong Kong, I combine the trade figures for China and Hong Kong. Exports to both reached 1.1 trillion yen, up 8.8% – less than half the rate of the devaluation of the yen! But imports from China and Hong Kong soared 34.0% to a record 1.92 trillion yen. Once upon a time, Japan was one of the few major countries that had trade surpluses with China. But in January, the trade deficit with China and Hong Kong nearly doubled to 826 billion yen.

Where was the damage? Imports of manufactured goods, such as iron and steel products, soared 29% from a year earlier. Imports of machinery, including computers: up 37.4%. Electrical machinery, including semiconductors, audiovisual equipment, and telecommunications equipment: up 33.7%. Transportation equipment: up 41.0%. Japanese companies used to excel in these categories. While some have gotten run over by international competition, others still excel at designing and making these products. They just manufacture them overseas.

Japanese companies have long shifted production offshore to take advantage of cheap labor, though they’ve been lagging behind their US counterparts. But since the earthquake in March 2011, they’ve gone on an offshoring binge to diversify their supply chains that had bogged down, and to escape electricity constraints, rising rates, and rolling blackouts in the wake of the Fukushima fiasco. They’re also locating production plants closer to their customers in their largest markets, particularly China, and particularly in the auto industry.

Now they have another reason: translating profits from foreign operations into the devalued yen applies a thick layer of glossy lipstick to their income statements – and the markets are blinded by this form of illusory sex appeal.

What these Japanese heroes are not doing is repatriating their foreign profits. They understand the fact of Abenomics; they don’t want to see their capital get demolished in the devaluation. Hence, these funds stay overseas, are reinvested overseas, and are spent overseas. The Japanese economy ends up holding the bag. That too is part of the madness of Abenomics.

So, Kudos to the Bank of Japan. Its heroic money-printing campaign has borne fruit. The people may not have noticed how much of their wealth has gone up in smoke, but they’re noticing other things. Read … Crazy “Abenomics Orgy In Japan Is Ending Already – Pounding Hangover Next” at http://www.testosteronepit.com/home/2014/2/3/crazy-abenomics-orgy-in-japan-is-ending-already-pounding-han.html
http://www.testosteronepit.com/home/2014/2/21/the-madness-of-abenomics-in-one-crazy-chart.html

Categories: Uncategorized

A Revival of the Axis?

Neo-Fascism and the Resurgence of Militarism in Japan

by Carla Stea

Global Research (March 17 2014)

On December 26 2013, Japanese Prime Minister Shinzo Abe visited the Yasakuni Shrine, paying tribute to some of the most infamous war criminals in human history. In an action violating the basic tenets of human conscience and decency enshrined in the United Nations Charter, he showed his contempt for fierce protests and denunciations of this visit stated by both South Korea and North Korea, China, the Foreign Policy Adviser of the European Union, Catherine Ashton, the Russian Federation, Germany, the UN Secretary General, US President Obama and US Ambassador to Japan, Caroline Kennedy, among others.

The ominous implications of Abe’s visit to the Yasakuni Shrine, which pays homage to Japanese militarism, are being revealed in numerous actions by Abe’s right-wing government.

Among the most abhorrent of the Japanese war criminals honored by the infamous Shrine, and by Prime Minister Abe’s visit, is Iwane Matsui, the main architect of the Nanjing massacre of a half-million unarmed Chinese men, women and children within a period of a few weeks, which began on December 13 1937, and the horrific details of which are recounted in Iris Chang’s devastating account, The Rape of Nanking (1997), which states, page 6:

 

 

Americans think of World War Two as beginning on December 7 1941, when Japanese carrier planes attacked Pearl Harbor. Yet Asians must trace the war’s beginnings all the way back to Japan’s first steps toward the military domination of East Asia – the occupation of Manchuria in 1931. Just as Hitler’s Germany would do half a decade later, Japan used a highly developed military machine and a master-race mentality to set about establishing its right to rule its neighbors … In 1935 parts of Chahar and Hopeh were occupied, in 1937 Peking, Tientsin, Shanghai and finally Nanking fell.

The Rape of Nanking should be remembered not only for the number of people slaughtered but for the cruel manner in which many met their deaths. Chinese men were used for bayonet practice and in decapitation contests. An estimated 20,000 to 80,000 Chinese women were raped. Many soldiers went beyond rape to disembowel women, slice off their breasts, nail them alive to walls. Fathers were forced to rape their daughters, and sons their mothers, as other family members watched. Not only did live burials, castration, the carving of organs, and the roasting of people become routine, but more diabolical tortures were practiced, such as hanging people by their tongues on iron hooks, or burying people to their waists and watching them get torn apart by German Shepherds.

If an event can be held up as an example of the unmitigated evil lying just below the surface of unbridled military adventurism, that moment is the Rape of Nanking.

 

 

The grave of Matsui is only one of more than fourteen Class A war criminals given honored burial at the Yasakuni Shrine. He lies in state among the graves of other Japanese war criminals who presided over horrific atrocities perpetrated elsewhere in China, Korea, Malaysia, and throughout Asia. The slaughter in China alone during the 1931 to 1945 Japanese aggression exceeds 35 million Chinese citizens.

It was primarily the patriotism, military and political genius and heroism of the Chinese Communist army and people, led by Mao Tse Tung, Chou En Lai and Chu Teh that finally overcame virtually insurmountable obstacles, and forced the Japanese out of China by the end of World War Two.

If Prime Minister Abe’s visit to the notorious Yasakuni shrine had been an isolated incident, it could have been attributed to gross insensitivity, stupidity and arrogance. But that visit was not an isolated incident, and heralded dangerous tendencies. The glorification of Japanese war criminals reveals the Japanese Prime Minister’s failure to experience and express remorse and guilt, and a failure to accept the obligation to atone for those heinous actions.

This failure to express remorse reveals a dangerous tendency to repeat these crimes. Abe’s recalcitrance, which produced shock-waves in much of the world, is further manifest in his revision of Japan’s 1947 constitution, a revision which will re-establish and expand the Japanese army, no longer restricted for solely defensive purposes. According to the December 27 New York Times, “A new defense plan calls for the acquisition of drones and amphibious assault vehicles to prepare for the prospect of a prolonged rivalry with China”. The same article states:

 

 

Washington has generally been keen for Japan to take on a more active military presence in the region to counterbalance China’s growing might.

 

 

Japan’s failure to accept responsibility for its horrific war crimes from 1931 to 1945, together with its pathological attempt to glorify its war criminals, while simultaneously attempting to whitewash their crimes, was exacerbated last week with the announcement by Yoshihida Suga, the chief cabinet secretary, that Japan will “revisit apology to wartime sex slaves”.

The Kono Statement acknowledged Japan had coerced women in their conquered territories to provide sex to Japanese soldiers in World War Two. Prior to the Kono Statement, Japan had doubly victimized these women by not only enslaving and violating them sexually, but then further degrading these victims by describing them as prostitutes. Although on March 15 2014 Prime Minister Abe reversed his position, and said that his government would not revisit the 1993 apology, according to the New York Times:

 

 

Mr Abe’s previous appeals to end what he calls masochistic views of Japan’s history had raised concerns, among South Korean and other former victims of Japanese aggression, that his administration would seek to whitewash his nation’s wartime atrocities.

Even before he took office, American officials warned Mr Abe that any perceived historical revisionism could isolate Japan at a time when the United States needed its largest Asian ally to help face the challenge of a resurgent China. Political analysts said they doubted Friday’s statements would be enough to appease Ms Park, and that Mr Abe’s real target may be the United States with whom he has sought to build close ties.

 

 

One World War Two Japanese war criminal neither convicted nor executed for his war crimes, but instead living comfortably on a government pension, was Shiro Ishii who ran unit 731, Japan’s clandestine biological bacteriological and chemical warfare research team in the Chinese city of Harbin. Prior to 1945 more than two million Chinese citizens died as a result of Japanese germ weapons used on civilians or in combat. According to Stephen Endicott and Edward Hagerman in their book, The United States and Biological Warfare (1999),

 

 

The decision of the US government in 1947 to grant participants in the Japanese bacteriological program immunity from war crimes prosecutions in return for exclusive acquisition of the results, especially results of deadly experiments on human subjects, indicated how intent policy makers were on pursuing the possibilities of biological warfare. US leaders acknowledged among themselves that the Japanese experiments were actually war crimes deserving of punishment and they contemplated the risks of the US and the international public’s discovering the deal…

What the two countries had been hiding was the record of the first major biological warfare program in the world, which had begun in 1932 and included operational uses of biological weapons against Chinese armies. More significantly, they were hiding a history of tests on at least ten thousand prisoners of war – mostly Chinese, but including some Russian and probably Americans, in the judgement of US intelligence – who were put to death after hideous experiments. Some of these experiments later came to light in all their gruesome detail: some prisoners were given inoculations of lethal bacteria and their health was monitored; if they survived, the experiments continued until death occurred. Other prisoners were tied to stakes five meters apart in a field, then fragmentation bombs loaded with anthrax, cholera, plague bacilli or gas gangrene were exploded by an electric current about fifty meters away; some died immediately from bomb splinters, but others lingered in severe torment while medical scientists recorded the course of their vital functions until they too expired. In these death factories in Manchuria, vivisections took place on live human beings. For purposes of secrecy, the people designated for experiments were kept in a special prison, and the medical scientists usually referred to them as “logs”.

The program was created under the cover of water purification units. At its heart was Unit 731, led by Shiro Ishii, a medical doctor, a PhD, and a career officer whose efforts had carried him to the rank of lieutenant general in the Japanese Kwantung army in Manchuria. Intensely anti-communist and convinced of the inevitability of war with the Soviet Union, the Kwantung leaders advocated a “strike to north” strategy. Opposing a move south against the colonies of the western powers, the army envisioned conquests in Northern China and Siberia”.

 

 

It is perverse, indeed, to regard germ-warfare experiments conducted on live human beings as an example of Japan’s glorious history. But the effort to glorify Japan’s wartime atrocities provides the ideology needed to prepare for future military aggression. In Tokyo, in a quantum leap toward whitewashing World War Two Axis fascism, and literally obliterating evidence of its horrors, it was reported this month that in Tokyo public libraries, 265 copies of The Diary of Anne Frank (1944), were recently vandalized, mutilated and destroyed, along with all books referring to her. Almost everything was destroyed, and the few remaining copies were removed from library shelves to protect them from destruction.

This world famous Diary of Anne Frank is the immortal, heartbreaking record of a remarkable young Jewish girl hidden, along with her family, in an attic in Holland, her death tragically ordained when, at the age of fifteen, the Nazis discovered the hiding place, and Anne and her entire family perished in nazi concentration camps. These books had earlier been available at public libraries in Tokyo.

This ultimate form of “Holocaust Denial” could not have been an accident, or a coincidence. This calculated and systematic desecration of a poignant and beautiful diary of a holocaust victim is a historic treasure, considered by many to be a sacred document representing all holocaust victims. Its violent mutilation is a symbolic destruction of the documented memory of the horrors of fascism in Europe, the record of hideous nazi atrocities committed by Axis powers allied with Japan during World War Two. “Only people imbued with bigotry and hatred would seek to destroy Anne’s historic words of courage, hope and love in the face of impending doom”, stated the Simon Wiesenthal Center.

On November 15 2013, by a majority of 126 votes, the United Nations Third Committee adopted Resolution A/C.3/68/L.65/Rev.1 sponsored by forty countries including the Russian Federation, Iran, Syria, Venezuela, Vietnam, Bolivia, Cuba, the DPRK, entitled: “Combating Glorification of Nazism and Other Practices that Contribute to Fuelling Contemporary Forms of Racism, Racial Discrimination, Xenophobia and Related Intolerance”. The resolution states:

 

 

4. Expresses deep concern about the glorification, in any form, of the nazi movement, neo-nazism, and former members of the Waffen SS organization, including by erecting monuments and memorials and holding public demonstrations in the name of the glorification of the nazi past, the nazi movement and neo-nazism, as well as by declaring or attempting to declare such members and those who fought against the anti-Hitler coalition and collaborated with the nazi movement participants in national liberation movements.

6. Expresses deep concern at recurring attempts to desecrate or demolish monuments erected in remembrance of those who fought against Nazism during the Second World War, as well as to unlawfully exhume or remove the remains of such persons, and in this regard urges States to fully comply with their relevant obligations, inter alia, under article 34 of Additional Protocol 1 to the Geneva Conventions of 1949.

 

 

It is consistent with the right-wing party of Japanese Prime Minister Abe’s attempt to glorify Japanese World War Two war criminals that Japan did not support this resolution, and abstained, along with the European Union countries and Ukraine, which are currently hosting and supporting militant neo-nazi movements. This UN Anti-Nazi Resolution was actually opposed this year, as it has been all preceding years, by the United States (usually in virtual isolation).

The Diary of Anne Frank has the worldwide status of a literary monument. The desecration of almost all copies of her book, and all related books from the public libraries in Tokyo strongly implies the interest of fascist sympathizers in Japan to obscure and conceal the war crimes of Europe’s World War Two Nazis, who were Japan’s Axis cohorts. and provide an unblemished reputation for Japan’s World War Two alliance with genocidal Nazis.

In early February, US Secretary of State John Kerry met in Washington with Japanese Foreign Minister Fumio Kishida, and asserted that the US will defend Japan against any attack, reaffirming the 1960 US-Japan Security Treaty assuring US protection for Japan. On February 23 2014, The New York Times published details of that alliance: “In Japan’s Drill With the US, a Message for Beijing”: Camp Pendleton, California,

 

 

In the early morning along a barren stretch of beach here last week, Japanese soldiers and American marines practiced how to invade and retake an island captured by hostile forces. Memo to Beijing: Be forewarned. American military officials, viewing the cooperative action of the former World War Two enemies from a nearby hillside, insisted that the annual exercise called Iron fist, had nothing to do with last fall’s game of chicken between Tokyo and Beijing over islands that are largely piles of rocks in the East China Sea. But Lieutenant Colonel John O’Neal, commander of the 15th Marine Expeditionary Unit said that this year the Japanese team came with a ‘new sense of purpose’ … Prime Minister Shinzo Abe of Japan approved a five-year defense plan that took the pacifist nation further toward its most assertive military posture since World War Two. This year’s Iron Fist, Colonel O’Neal said, included drones and the kinds of air support that would be needed to protect Japanese and American troops retaking an island, though the ‘shaping’ that would normally be done in a real-world assault – when Air Force and Navy bomb intended targets before carrying out an actual ground invasion – was only implied.

 

 

Lost, or deliberately obscured, is the fact that China has been the victim of horrific Japanese aggression which grotesquely slaughtered more than 35 million Chinese citizens in the 20th Century. The US attempt to portray Japan as the victim of China is another example of the Orwellian obfuscation of history, the massacre of truth that characterizes both Japanese and United States narratives. (Japanese civilians were the victims of the US bombing of Hiroshima and Nagasaki, not the Japanese military) The US-Japan Security Treaty of 1960 stipulates that an attack on Japan will be regarded as an attack on the United States. Prime Minister Abe is seeking to transform Japan’s constitution to permit engagement of the Japanese armed forces in aggressive wars. But it is difficult to imagine a resurgent military posture by Japan without tacit encouragement from Washington.

The highest stage of monopoly capitalism is fascism. The 2008 global economic crisis of capitalism, still unresolved, is forcing ill-advised and counterproductive “austerity measures” on decaying capitalist societies throughout Europe and in Japan, where Prime Minister Abe is restructuring the economy into the very pro-market system which is producing riots throughout Western Europe, as living standards deteriorate drastically, and the income inequality gap becomes an abyss.

On January 29 2014, the UN Security Council held a meeting on “War, its lessons, and the Search for a Permanent Peace”. The Ambassador of the Republic of Korea, Mr Oh Yoon stated:

 

 

First, Yasukuni Shrine is a facility that enshrined not only ordinary soldiers, but also Class A war criminals from the Second World War and many Japanese Imperial Army and Military police personnel who inflicted the most unimaginable atrocities on the peoples of the region during the wars and during its colonial rule. As mentioned by the Japanese representative, Japan’s political leader recently paid tribute to the Yasakuni Shrine, despite strong appeals not to do so issued by many countries of the region and in the world. The Japanese representative conveniently said that the Prime Minister did so to make peace.

How preposterous is that? Worshiping heinous war criminals cannot bring any peace to a region where the people have suffered so much from the heinous acts of those honored criminals. Paying tribute to the Yasukuni shrine is nothing more than an attempt to glorify its past. The explanation that the government offers can be received only as unintelligent to outsiders. If Japan truly wants to actually contribute to world peace, it is most important for Japan to face up to history and to build trust by expressing deep remorse and apologizing to the governments and peoples of the region.

 

 

Mr Ri Tong Il of the Democratic People’s Republic of Korea stated:

 

 

As for past crimes committed by Japan against the peoples of Korea, China and South-East Asian countries, a precedent cannot be found in the history of humanity regarding the degree of savageness and brutality. It is a common issue. It does not concern only Asian countries but all humanity. The reality is that Japan is now hell-bent on denying and covering up its past crimes. Recently, it went as far as to commit a further error by stabbing at the wounded hearts of the victims and their States. The most representative example is the visit to the Yasakuni Shrine by Mr Abe, Prime Minister of Japan. That visit is a totally anachronistic crime intended to prompt the Japanese people to revive their militarist ambition and to incite them to commit another crime against humanity, thereby deluding the entire Japanese territory and population towards its own total destruction.

 

 

Mr Liu Jieyi, Permanent Representative of China stated:

 

 

Japanese Prime Minister Abe’s visit to the Yasakuni Shrine is an affront to historical justice, human conscience and principles of the Charter of the United Nations, the world’s victory over fascism and the post-war international order. During the Second World War, the Japanese army forcibly recruited large numbers of comfort women from China, Korea and other countries and committed egregious crimes against humanity … Thus far, the Japanese Government has not offered an apology or compensation for the issue of comfort women, and by rights, it should continue to be jointly condemned by the international community. Are we to understand that to pay tribute to war criminals and glorify wars of aggression is to declare a wish for peace? The Charter puts it very clearly: the founding of the United Nations was to save succeeding generations from the scourge of war. Are we to understand that altering textbooks and covering up the truth of history is the correct way to make future generations realize the mistakes that have been made and avoid the path of war?

 

 

Is it a coincidence that while Japan is preparing the ideological “justification” for resurgent militarism, this year’s Munich Security Conference stated that Berlin plans to abandon restrictions on the use of military force? Is the revival of the Axis being prepared by these widespread falsifications of fact that can only be described as the rape of historic truth?

At the Davos Conference in January, Prime Minister Abe made the explosive remark that the present tension between China and Japan resembled the situation between Germany and Britain before World War One; and in another falsification of fact, he asserted that China’s increase in military expenditures are destabilizing the region. In reality, Japan’s per capita military expenditures are quadruple the size of China’s. Further, Japan is Washington’s major ally in Asia, and considering John Kerry’s reaffirmation of the 1960 treaty that commits the United States to protect Japan (Kerry’s recent commitment to Japanese Foreign Minister Fumio Kishida that the United States would defend Japan against attack), Abe’s remarks in Davos can only be interpreted as an exaggerated form of propaganda further provoking – and implicitly threatening China. With US support, Japan could well provoke, stage or fabricate an “incident”, similar to the fabricated “Tonkin Bay” incident prior to the US attack on North Vietnam.

In The Grand Chessboard (1998), Zbigniew Brzezinski states (page 55):

 

 

Potentially the most dangerous scenario would be a grand coalition of China, Russia and perhaps Iran, an ‘antihegemonic’ coalition united not by ideology but by complementary grievances … Averting this contingency, however remote it may be, will require a display of US geostrategic skill on the western, eastern and southern perimeters of Eurasia simultaneously.

 

 

Today, at the United Nations, the US implemented this strategy. Knowing, a priori, that their provocative resolution, based on a gross falsification of historic fact, would not be adopted, the US nevertheless put the resolution to a vote, for the explicit purpose of publicly “isolating” Russia, which they knew must veto the resolution, and leaving China no realistic alternative but to abstain from voting. This was a way of driving a wedge between Russia and China, which had previously stood courageously together and vetoed UN Security Council resolutions which would have led inevitably to Security Council support of NATO military aggression in many parts of the world.

Pathetically, indeed shamefully, thirteen security council members submitted to this farce, and supported the conniving resolution. The Ukranian ambassador, previously representing President Yanukovich, betrayed his President and joined the Kiev nazi-infiltrated putch. He is now the darling poster-boy of Western imperialist aggression, pompously exceeding his mandate, and calling for the expulsion of China and Russia from their P-5 strength. He would very likely replace them with nazi sympathizers, entirely betraying, also, the purpose of the United Nations, which was established following the nazi and fascist Japanese military scourge of World War Two, to prevent any possible recurrence of global fascism.

US Assistant Secretary of State Victoria Nuland earlier admitted at the National Press Club in Washington, that the US has spent more than five billion dollars on NED projects, with 65 projects recently established in Ukraine alone. The United States engineered a violent neo-nazi coup against the democratically elected Ukranian President, Yanukovich, in one of its classic operations destabilizing and overthrowing democratically elected presidents, throughout the world, who reveal independence of US NATO control. This strategy was implemented in Iran, Guatemala, Brazil, Chile, Honduras, Indonesia, et cetera, et cetera.

Having succeeded in again destroying a democratically elected government by operating, like a cancer, according to Brzezinski’s prescription of “co-opting elites”, the US then accused Russia of aggression in Crimea. It would be poetic justice if Eastern Ukraine joined Crimea and opted to be incorporated within the Russian Federation, thus leaving the US puppet government in Kiev in control of a “Rump Ukraine”.

Inexorably, the Axis appears to be returning, like a metastasized cancer, to drive the world toward World War Three. Perhaps the only force that can prevent this is the one Brzezinski so fears, an alliance between Russia and China. One can only hope that the leaders of Russia and China outmaneuver Brzezinski, because this game of chess is being played with the lives of the entire human species. And the suicidal nature of capitalism is driving the world to the brink of extinction.

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