Author Archives: gmattei1

Reaction 10 for ECO/SOC 935

How Worker-Owned Companies Work

Worker-owned businesses look like a positive alternative to profit and growth-driven private businesses and corporations. Generally, the latter type of businesses is oriented toward keeping the stockholders’ satisfaction high. Additionally, they show less loyalty to their workers and communities: should profit demand fewer workers or moving the company elsewhere, these businesses usually do not think twice about firing employees or abandoning the local community. This is not so for worker cooperatives, which exist for the workers, because of the workers, and commit to the local economy. These cooperatives cannot change headquarters unless all of the workers move with it. The great thing about these co-ops is that the workers are happy to work in and own the company. Furthermore, it is not like they are too idealistic and cannot remain in business: “it’s a real business,” says one worker in the video, “we have goals to meet. But there’s just this environment that we all love what we’re doing and it’s very meaningful to us, and we all want it to work.” Part of the reason why these co-ops work well is that “the great majority of people are more integrated and involved, and that’s why we can be more competitive and compete with the best businesses in the world.” Work makes sense and has meaning beyond profit. Work ethics assumes new and welcome heights.

Of course, the worker-owned businesses are affected by economic recessions much like privately-owned businesses. However, worker co-ops in Spain and in the United States, for example,  “have done better than other similar sized businesses in the current economic crisis. When sales and profits are down, worker owners don’t just close the doors. People take a hard look and try to figure out what they can do to make things better.” These people work hard to keep the business afloat because they view it not only as their place of employment, but also as their own company. Naturally, some co-ops are better off than others at a certain point in time. Therefore, Mondragon Cooperatives, a federation of 120 worker-owned-and-run companies in Spain, set up what they call a “rainy day fund.” Every year by means of this fund, profitable Mondragon co-ops make money available to the co-ops which are going through harder times. Additionally, if a co-op is not particularly profitable a given year, the workers “may agree to reduce their pay on a temporary basis until business picks up again. That way nobody has to lose their job.”

Worker owned businesses were not always this prosperous. Some of the businesses that started up in “a wave of optimism” in the 1970s failed because they were either not professional enough and closed or not cooperative enough and were bought by corporations. However, newer co-ops have learned from past co-op failures and work to avoid making the same mistakes. They have become “sophisticated businesses that are more agile and nimble than conventional firms while retaining their co-op purpose.”  Most co-ops manage to run rather smoothly. Co-ops make sure that potential employees are a good fit for the job by allowing them to work for a trial period to see if they are comfortable with working in a cooperative. Additionally, existing members of co-ops have the final say of whether potential employees can join, but “people who would not feel comfortable in this environment weed themselves out.” New members get an initial training in co-op management and ongoing practice in leadership development. Clearly, there are a variety of “stages of selection and development” to ensure that co-op members have the disposition and ability to work together gracefully.

Since there are no so-called “bosses” in worker-owned businesses, decisions are taken in a more democratic way. Depending on the number of people in a co-op, different co-ops may have different management structures. Some of the cooperatives on the smaller side of the spectrum operate by consensus. This is because each member can be heard when they get together to discuss issues. Since this is not very practical with larger communities, many co-ops have an employee-elected board of directors to make the necessary decisions. Regardless of which model co-ops employ, only people who work in the co-op (or stakeholders) can have a say in how the business is run so that the “co-op tends to serve the needs and wishes of its members as opposed to absentee owners [or stockholders].”

The author notes that most workplaces can take on some aspects of cooperatives. For instance, many workplaces can encourage more input and feedback from their employees in order to become more democratic: they may request “ideas and criticisms from staff without penalizing someone who challenges (constructively) how things are currently done in an effort to do things better.” Moreover, “decision making and finances can be more transparent, so every employee has an idea of the risks and limitations that the enterprise faces and their own contribution to that.”

Naomi Klein on Capitalism and Climate Change

Climate change is what should be an indisputable issue. Sadly, there is a climate denial movement. It is led in part by certain people who believe that the means of dealing with climate change that require a degree of regulation fundamentally challenge their libertarian principles. It is also led by a “very powerful” fossil fuel lobby. Despite the efforts of this movement, the majority of Americans believe that some climate change is happening (63% according to Live Science). However, the percentage of the American public that accepts that climate change is human caused has dropped significantly from 71% in 2007 to 44% in 2011, and a 2013 Yale study holds that this percentage has further dropped to 41%.

There are a few different reasons for this diminishing critical awareness dealing with climate change. Klein notes that climate change is a collective problem. Therefore, “we can only respond collectively.” The environmental movement attempted to personalize the problem and have people “recycle” and “buy a hybrid car.” Klein holds that this does not work because, although people get wound up in the short-run personal solution, in the long-run, these efforts lack the “collective social support” they so desperately need. Klein is of the opinion that we as mere citizens are not equally responsible for climate change as the fossil fuel corporations. She trusts that people would be willing to drive less, and therefore reduce their carbon emissions, if there were a “fantastic public transit system” available to them. She argues that there has been “a tremendous amount of willingness and goodwill for people to change their behavior.” However, people get demoralized when they witness emissions still rising because “the corporations aren’t changing how they do business” and feel that their personal actions are miniscule and make no significant difference. Finally, Klein argues that the “big environmental groups” are not being urgent or aggressive enough in presenting this climate crisis. Simply saying that “you can change you light bulb” and that “we’ll have this complicated piece of legislation called cap and trade that you don’t really understand, but that basically means that companies can keep polluting … and, you know, somebody else is going to plant trees on the other side of the planet” is not going to convince people of the graveness of the situation. The vital point here is that when “you hold up a supposed emergency and actually don’t ask anything of people, anything major, they actually think you might be lying, that it might not really be an emergency after all.”

Fortunately, there are a few possible solutions. Klein suggests that it would be great to have market incentives to encourage renewable energy, but that there must also be a form of government that is prepared to design and enforce boundaries to protect the environment. Nevertheless, the best solution would be to have an independent movement. There must be some type of planning to confront this situation, but it need not be centralized. Klein sustains that “there needs to be much more decentralization and a much deeper definition of democracy than we have right now.” She illustrates this notion by pointing out that efforts to build wind farms in the United States and Great Brittan have been faced by resistance from the communities. Conversely, wind farms have thrived in Germany and Denmark because communities there demand that the renewable energy be community controlled rather than centrally planned. This example demonstrates that decentralization actually encouraged change and that these people democratically decided to take matters into their own hands. Obviously, a new cultural transformation needs to ensue.

American Society and Capitalism Papers

The chapters from the two books offer a variety of suggestions to extend democracy in the United States. One I would like to mention is “massive public investment on public transportation in infrastructure.” Since the “automobile-based urban transportation system” in the States has a huge negative impact on the environment, a high-quality public transportation system with fewer externalities sounds like a good alternative and must be rendered as such. The authors suggest that “automobile drivers need to pay the true cost of driving cars” and that there should be taxes to incentivize the use of public transportation. This, they say, “should not be regarded as a way of creating artificially cheap public transportation that unfairly competes with cars, but rather as a way of embodying the true value to society of public transportation.” This approach would require a major transformation in the cultural habits of our society. Such a transformation would conflict with deeply ingrained cultural values and celebrated personal rights.

Another suggestion is to have public control over energy development. This requires a “diverse set of policies.” The one I would like to focus on is rather similar to the aforementioned notion of incentivizing energy efficient transportation. It suggests that the “price of different energy sources needs to reflect the long-term, negative externalities of their use.” If inefficient energy production and use is taxed, people are naturally incentivized to invest in energy efficient cars, buildings, etc. thereby taking a step towards reducing climate change. Corporations especially should have “excess profit” taxes to pay for their “externalized costs, or their depletion of the public-resources commons.”

An attractive idea for a measure of the societal progress the above suggestions (and the methods noted in the two previous sections of this paper) is the genuine progress indicator, or GPI. It is a more wholesome measure than simply the gross domestic product (GDP) for example, because while the GDP focuses on economic growth (and not its social or environmental side effects), the GPI also measures human and environmental costs of “uneconomic growth.” Its central objective is to include “potential negative indicators” ranging from “excessive growth, including resource depletions, ozone depletion, various forms of pollution, and loss of farmlands or wetlands or forests,” to “social dangers, such as crime, health effects, family breakdown, the effects of overcrowding,” and numerous other consequences of overdevelopment. This alternative measure would move societies’ focus from mere economic growth to a range of social aspects that should be just as important. Once people are more aware of the importance and value of these other aspects, they can adjust their priorities accordingly.

Works Cited

Klein, Naomi. Interviewed by Bill Moyers. Moyers & Company. 2012. Retrieved from:

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

Riley, Theresa. “How Worker-Owned Companies Work.” Moyers & Company. 2013. Retrieved from:

Pappas, Stephanie. “Climate Change Disbelief Rises in America.” Live Science. 2014. Retrieved from:

Marlon, J.R., Leiserowitz, A., and  Feinberg, G. (2013) Scientific and Public Perspectives on Climate Change. Yale University. New Haven, CT: Yale Project on Climate Change Communication. Retrieved from:


Reaction 9 for ECO/SOC 935

Jeremy Grantham on Our Debt Solution

I understand Jeremy Grantham’s central opinion to be around a certain attitude towards a view of the economy. There is a grave flaw, he stresses, with any model of continuous growth in a fixed environment. The keyword here is “fixed,” meaning finite or limited, but definitely not expanding. However, capitalism seems to operate with an expectation and need for perpetual growth. One measure of yearly national economic growth is the Gross Domestic Product, or GDP. Many politicians, economists, and businesspeople push for growth, insisting that the US GDP is much lower than it was during the 20th century. Yet, Grantham, co-founder and Chief Investment Strategist for Grantham Mayo Van Otterloo, argues that going back to the level of annual economic growth in GDP equal to the 3% yearly increases of the “good old days” of the 20th century is improbable, to say the least. In fact, there are two imposing reasons for this: population, and natural resources.

The issue with population is that it is “a huge input into GDP – it’s population times productivity, well, population plus productivity – and the [workforce] population [increase], which often hit 1.5% [in the 20th c.] has dropped all the way down to maybe 0.2-0.3” and that these are “kind of official numbers” adjusted for the fact that people in the States work somewhat less each year. Additionally, the fact that women started working in the 20th c. greatly increased the number of people hours offered to the work force; however, the acceleration of women entering the workforce has “completely finished” since its peak around the year 2000. Because of these factors combined, Grantham believes that people should not expect more than a 0.2% increase in hours offered to the workforce, which is about 1% lower than it used to be. Consequently, a 3% increase in GDP in the 21st c. would only happen if there were to be an offsetting 1% increase in productivity. Grantham flatly points out that “there is no possibility of that.”

The other salient issue is that much of this century’s economy rests upon natural resources. Many of these resources are being depleted. Additionally, as some of these resources – fossil fuels to be exact – become scarce, they cost much more to extract. Grantham is aware of the trend “to pump all that good oil … [and] to pump all that traditional natural gas,” but he warns that if we definitely intend to dig all the coal and scramble through the tar sands, the immense cost will not only be paid financially, but also environmentally. The problem is that there is a large industry behind these fossil fuels. And if people have much of their stock value in the oil or coal reserves, then they will be “pretty reluctant to entertain the thought that it would be poisonous to the long term wellbeing to pump it out.” Therefore, it is difficult to challenge this big business.

Grantham notes that past civilizations all peaked and failed. Yet, he offers optimism by suggesting that our global civilization has hope because of two “gifts” none of those past civilizations had that might “let us off the hook,” namely: control over the fertility rate and innovation in alternative energy. He comments that in recent history, as countries got richer, people had fewer children, which then could help in boosting GDP per capita. The use of alternative energy would also help by suppressing the need to use finite resources. If we humans can implement these two strategies, we can “get off this terrible trap of expanding” before we run out of finite resources. We do have the necessary means to “move fairly seamlessly if we choose to make the effort to a renewable source of energy that will not run out.”

An additional issue Grantham tackles is the relationship between economic growth and debt. He disputes the notion that debt can eventually lead to economic growth by noting that although “we have been conned into believing by the financial world that debt is everything” the actual historical evidence says differently. In fact, since the early 1980s, the United States almost tripled its ratio of debt to GDP, yet the growth rate actually slowed down. Of course there must have been other reasons, but “there’s no room in that equation to believe that increasing debt has anything to do with long-term growth.” He repeatedly affirms there is absolutely no evidence throughout history that increasing debt increases GDP.

In addition to that, and just as interestingly, Grantham holds that in the long run, debt is “not as significant as people think.” He comments that managing debt can, of course, be a delicate matter. He also says that in his opinion, it is “substantially too high,” but that “you shouldn’t try to make it low in a hurry, but you should have a 20-year plan to chip away.” Yet, however careful we should be in getting out of debt, it is not “the overwhelming thing that will nominate our future.” In fact, he says that it distracts us from the real world because it belongs more properly to the separate accounting world. “[This separate world] is paper. The real world is the quantity and quality of your people, and the quantity and quality of your capital spending.” Therefore, people and governments should focus more on improving school systems, infrastructure, and the general quality of life.

End of Growth

Rather like Grantham, Richard Heinberg of Post Carbon Institute strongly believes that growth will never again reach the rate it had in the 20th c., but goes on to say that perpetual growth as a whole does not have much of a future in this world. He too speaks of fossil fuels and cost of extracting them.

To begin with, he notes that oil discoveries in the United States peaked in the 1930s, and that US oil production peaked in the 1970s. Therefore, ever since those dates, US oil discoveries and production have been going steadily downhill. This is inevitably the course every oil-rich country will run, for oil reserves are finite. Because of this, the nature of oil industry itself is shifting. Back in early to mid 20th c., oil could be found in on-shore areas in large pools in the ground. This oil was “relatively cheap” to drill, and the amount of energy recovered for every unit of energy invested in exploration and production was between 50 and 100 to 1, according to Heinberg. However, since this oil has already been used up, oil companies need to find other oil wells. Many are now drilling a mile or two off shore in ocean water, for example, with no guarantee for profit: “a single exploratory well can cost half a billion dollars and still com up dry.” Oil can also be found in tar sands and tight oil reserves, but the methods for extracting it are costly and controversial. Heinberg states that the world is not about to run out of oil any day now. Rather, people have been extracting it using the “low-hanging fruit principle”: people dig up the “cheapest, best and easiest stuff first and leave the more expensive, harder-to-get, environmentally risky stuff for later.” Heinberg brings attention to the fact that we are now in the “later” phase.

Apart from the environmental issues with retrieving this oil with non-traditional methods, there is an additional economic problem. Since this oil costs more to retrieve, its costs are unavoidably passed onto the consumers. Now, an important fact to know is that oil price spikes have been correlating quite soundly with the beginning of economic recessions since 1970. In fact, there has never been “a single occasion since 1970 when we’ve seen a rapid increase in oil prices when we haven’t seen a recession.” Thus, if oil prices rise to over $100 dollars a barrel and stay there because of the means of extraction used, economic growth gets undercut. To make matters worse, Heinberg holds that companies extracting this non-traditional oil have been focusing on the “sweet spots” where there is the most oil: “what we’ve been seeing so far is the best it’s ever going to get.”

Although this information is not very optimistic, Heinberg suggests some strategies to work around this predicament. He proposes to move toward getting off of this growth model to be more sustainable. Some approaches could be finding an alternative measurement to GDP and moving toward more worker-owned businesses to eradicate the usual corporate “grow-or-die” mentality. Another interesting proposition he made is to completely abolish the use of fossil fuels (as fertilizers and pesticides, etc.) from agriculture and the food system. Heinberg truly believes that if we “aim to stabilize our economies in a sensible way, downsizing the financial system in relation to manufacturing and agriculture, reorganizing our priorities, we can be happier. We can live more fulfilled, integrated lives.”

Masdar: A Green City

An ambitious innovative effort into renewable energy and sustainability is currently underway in the United Arab Emirates. Masdar is a city being built in the emirate Abu Dhabi, and is completely self-sufficient, creating and running on its own supply of energy. It is intended as a huge research laboratory which attracts scientists from all over the world. It also employs energy efficient architecture to naturally maintain temperatures low within the city and its buildings.

Because the city is situated in the desert, maintaining a reasonable temperature to live in is a vital aspect of whether the city is going to thrive or not. Keeping temperature control environmentally healthy is quite an issue. Yet, “once you optimize the passive nature of the buildings, then it’s just a question of using the minimum amount of energy of the AC system to get to the right [temperature] level.” Masdar has buildings built in proximity to each other so that one is almost always in the shade of another. Furthermore, the buildings are structured so that the wind is channeled between them, keeping the city well ventilated.

Energy efficient transportation is another key focus in Masdar. In fact, the city is designed to be completely car-less. It has its own transportation system – the Personal Rapid Transit system (PRT). The PRT is composed of electric driverless cars powered by lithium ion batteries that can last 4 hours. These batteries can be recharged at any PRT station. The PRT can run 24 hours a day, seven days a week because it is computerized. As mentioned before, the cars have no driver. Rather, they drive along select magnetic routs underneath the city.

The city also acts as a “living lab.” Scientists actively research many things dealing with environmental sustainability. Some mentioned in the video included research on water, environment and health; future energy systems; alternative and efficient electromagnetic transportation; and micro electronics and advanced materials. A specific project brought up in the video was on fuel created from algae. Once perfected, it could be made to power anything from car to jet engines. The scientists in the lab discovered that they could use up CO2 to help the algae grow. The scientist interviewed said that “you’re kind of killing two birds with one stone” because they were taking CO2 out of the atmosphere to literally grow needed fuel.

I rather appreciated these three resources. I valued learning about some of these environmental issues and the few presented solutions. I was also pleasantly surprised to learn about large-scale project because I found it to be encouraging. For me, it really illustrated Grantham’s statement that we have the necessary means to move seamlessly to a renewable source of energy and more sustainable living. All this is hopeful and encouraging especially in the face of so much evidence of the depletion of natural resources and of environmental abuse.

Works Cited

Grantham, Jeremy. Interviewed by Charlie Rose. Bloomberg TV. Retrieved from:

Heinberg, Richard. “The End of Growth.” Festival of Dangerous Ideas. 2012. Retrieved from:

Masdar: A Green City. Bloomberg TV. 2013. Retrieved from:

Reaction 8 for ECO/SOC 935

  1. Trash Inc.

There are various sustainability issues with the current Westernized consumption model. Some include the production materials, the methods of production, and the consumerist behavior. I shall now focus on the consumption of goods in the consumerist society and specifically on the production of waste. A defining point in this consumption is that, sooner or later, goods become no longer usable and must be discarded. There is a whole industry built upon this final stage in the pattern of consumption. It is a 52 billion dollar per year business in the United States. Here in the States alone, there are 250 million tons of garbage produced each year. This is enough trash to cover the entire area of the state of Texas twice. Some of this “throwaway” culture is promoted by manufacturing companies. For example, my family used to own a perfectly good vacuum cleaner that still used the vacuum cleaner bags. Yet, when the bags were no longer produced, we had no way of using it and therefore had to throw away the whole vacuum cleaner. Throwing away stuff creates the problem of properly discarding it at one end and of dedicating physical space to receive the discarded items at the other. The most efficient way of discarding an item would be to find a way to recycle most of it. However, it is quite evident that much of the fault lies with the consumers as well. In the documentary, it was mentioned that 80% of what is thrown away in the States is actually recyclable. Only 28% gets recycled and we cannot claim that there are no facilities.

Fortunately, there are some corporate efforts to support sustainability. Foss Manufacturing Company is a textile company in New Hampshire that recycles plastic bottles into synthetic fabric. The company produces goods ranging from t-shirts to carpets. Unfortunately, 70% of its raw materials – the recycled plastic bottles – comes from places other than the United States. Of the 51 billion plastic bottles used in the States every year, only 22% gets recycled.

Another manufacturing company making efforts to operate sustainably is BMW, Spartanburg, South Carolina. The documentary stated that “the cars [the x3, x5, and x6 SUVs] may run on premium, but the factory runs on trash.” In fact, as trash in landfills decomposes, it releases methane gas, which is then captured. This landfill natural gas is then filtered, cleaned, and pressurized. After the necessary safety procedures, the clean gas is pumped through a pipeline to the BMW factory. BMW’s decision to exploit trash is not only sustainable, but it also saves the company 7 million dollars a year. Bobby Hitt, the man who envisioned this idea, said that “you win on the environment, and you win on the balance sheet.” This seems like a great solution. Yet, one thing I would have liked to hear from the documentary is what happens to the remains of the filtered and cleaned landfill gas. Whenever something is filtered, the unnecessary or harmful part is usually discarded. I would have liked some reassurance from the documentary that these remains were ecologically dealt with.

  1. Bill Gates: Innovating to Zero

One issue on climate change that is continuously discussed is the increase of CO­2 and temperature. Gates argues that CO­2 emissions must be brought down to zero to stop increasing temperatures. To do so, one of the factors of the following CO2 equation must be brought down to zero.

CO2 = P x S x E x C  →   (P)eople, (S)revices per person, (E)nergy per service, and (C)O2 per unit energy

If any one factor is reduced to zero, CO2 emissions will be reduced to zero because any number multiplied by zero is zero. If each factor is examined, it can be seen that not one of the first three can be plausibly eliminated. The world’s population cannot be simply reduced to zero. The services per person constitute what most people call “civilization,” and energy must be expended to provide these services. The only remaining factor to be reduced is CO2 per unit energy. The problem is that much of the world’s energy comes from CO emitting fuels (mainly non-renewable fossil fuels). Gates suggests that, in his opinion, the most effective alternative energy sources are: carbon capture and storage, nuclear, wind, solar photovoltaic, and solar thermal. He stresses that by 2050, there must be an 80% reduction of CO2 emissions. To get there the developed countries will have had to shift their energy generation completely. He closes with some suggestions for innovating to zero.  Ultimately, there must be basic research funding, market incentives to reduce CO2, entrepreneurial opportunity, and a rational regulatory framework.

  1. Disruption

Climate change was publicly and scientifically announced in 1988. More than a quarter-century later, scientists and activists are still striving to push towards ecological energy-production and sustainability. This is not an easy task. Although various industrialized nations agreed to make substantial cuts in greenhouse gas emissions in 1999 with the Kyoto Protocol, the immensely influential United States withdrew from the Protocol in 2001 under President Bush. Furthermore, the environmental situation is as urgent as ever. Most environmental experts agree that the highest survivable temperature increase is 2° Centigrade (3.6° F) warmer than pre-industrial times. A 2° increase is roughly equal to 1 trillion tons of burnt carbon. It sounds like a lot, but unfortunately, we are already more than halfway (600 billion) there in 2014. The documentary states that “at the rate we are going, we will have completely exhausted that carbon budget within 30 years.”

Part of the problem is that there is not enough regulation. The film notes that “these big, massive polluters get to dump megatons of carbon in the atmosphere for free” and that this “makes coal and oil and other fossil fuels more competitive against solar and wind and other sources than they deserve to be.” This goes back to the aforementioned market incentives to reduce CO2­­ emissions Bill Gates said must be provided. Without incentives, it is no wonder that these polluters act the way they do and are less costly to the public than ecologically efficient resources. The question is: if financial incentives will not be readily available, will there be enough political muscle to impose the necessary regulatory changes? In fact, another part of the problem is that there is a political problem behind the environmental issue. The film explicitly notes that environmental activists are “up against the fossil fuel lobby that has complete access to the political class and the ability to bribe through legal means and blackmail through the use of attack ads and so on. Even people who oppose them have trouble opposing them too strongly because they are on some ways economically dependent on them.”

Finally, the documentary argues that climate disruption is a social injustice issue. When climate change causes huge tidal waves, monsoons, or earthquakes, it is usually the poor and the people in undeveloped countries that suffer the most, especially those living on coastal regions. Most times they have no way to defend themselves from these “natural” catastrophes, and have a difficult time recovering if they do survive.

The film states that what we need is a vision for what the post-carbon age looks like that is “inspiring enough and delivers enough in terms of jobs, in terms of new opportunities, in terms of better health.” Additionally, it is suggested that a 100% renewable economy is within reach: “it’s not something that we need to keep researching because it’s always off in the distance. No, it’s here. It’s a question of political will.”

  1. Capitalism Papers

Mander starts the chapter by differentiating between real economy and virtual economy. Real economy is where “capital is used to find and process resources from nature, to transform them into commodities, or where direct services are provided to people” (94). Virtual economy is based on investments in financial instruments which have almost no connection to real production or services. Capitalism requires both economies to grow indefinitely. Yet, the real economy is based on resources, markets, and labor, none of which are continuously expandable on our finite planet. This unsustainable pattern inevitably depletes the planet. However, the most common measure of economic growth, the GDP, does not take this environmental damage into account. The example given was that “when Exxon Valdez spilled eleven million gallons of oil into Alaska’s Prince William Sound, it appeared on economic ledgers as a positive event” (102) because the cleanup entailed job creation and capital redistribution.

A problem with the virtual economy Mender points out is that it has few positive effects on the real economy. First of all, it is only accessible to people with surplus capital, money they do not need for everyday living. Additionally, some politicians argue for lower taxes and tax breaks for ultra-wealthy investors engaging in the virtual economy, because supposedly, this gives the wealthy reason to reinvest the new excess money in the real economy in “job-creating productive activity” (105). Yet, events almost never unfold according to this theory.

Shifting focus back to the sustainability issue, there has been the quite outraging practice of financial speculation of food supplies I wish to touch upon.  This practice entails speculating on food-growing lands (especially in Africa) with no intention to actually grow food. This process is known as “arbitrage.” This is neither an efficient use of the land, nor socially just in my opinion. This land could be used to grow food to feed the many people experiencing starvation. Additionally, when the land is being used to cultivate food, the products are usually bound for wealthier nations, not for local communities (110). To make matters worse, when land is bought from African governments, many times, the thousands of farmers who had been living on these lands until this point are thrown off and considered “landless poor” (110).

In conclusion, there are various sustainability issues with the current economical habits of consumption and perpetual growth. Clearly, we cannot continue on this track. Fortunately, in addition to the environmentalists, there are some industries that make an effort to produce ecologically and promote sustainability. The problem is that these efforts have not yet reached a global scale while the threat is closing in. Economic incentives have not been evident enough to encourage a system change. In addition, we seem to lack a political leadership willing to back scientific evidence of the impending catastrophe. Hopefully, endeavors such as the 350 Disruption movement will convince governments, corporations, and populations that change must be implemented soon.

Works Cited

Trash Inc: the Secret Life of Garbage. CNBC, 2010. Film. Retrieved from:

Disruption: Climate. Change. Kelly Nyks & Jared P. Scott., 2014. Film. Retrieved from:

Gates, Bill. “Bill Gates on Energy: Innovating to Zero.” TED Talks. 2010. Retrieved form:

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Reaction 7 for ECO/SOC 935

The type of capitalism currently present in the United States may very well be detrimental to democracy. In fact, there are a few immensely wealthy individuals who are very influential as a result of this wealth. They constitute a sort of oligarchy, or small group of privileged citizens from a dominant class with political power. The vital concern here is that, as David Stockman said in his interview with Bill Moyers, “money dominates politics. And as a result, we have neither capitalism nor democracy (David Stockman on Crony Capitalism).” We have what he calls “Crony Capitalism.” Winters states that whereas “oligarchy rests on the concentration of material power, democracy [rests] on the dispersion of non-material power.” He also suggests that oligarchy could be understood as the “politics of wealth defense.” An imposing issue is that, even in a democracy, oligarchs retain “near-veto power” on threats to their wealth. According to Winters, they employ:

            lawyers, accountants, wealth management consultants, revolving door lobbyists, think-tank debate framers and even key segments of the insurance industry … [for] the defensive redeployment of their money and income across a global geography of jurisdictions, banks and offshore havens through the use of tailor-made tax instruments,   evasive trusts, and shell corporations.

In addition to finding ways to defend their wealth, these oligarchs also influence lawmaking with their financial power. These oligarchs can firstly, offer more financial support to favorable politicians than most people can, and secondly, afford to spend thousands of dollars on lobbyists. A single oligarch may be able to spend on and influence politics as much as a large coordinated group of average citizens. Moreover, these oligarchs generally band together to defend their wealth against a common threat even if they disagree on other political matters (Winters). One baffling show of power from the oligarchs dates back to the early 20th century. These oligarchs went on a tax strike through tax avoidance and even evasion. Winters notes that between 1916 and 1925, “tax filings by the rich dropped by an average of 50 percent.” The oligarchs used lawyers to find ways to avoid these taxes and make it “costly and politically risky” for the government to get its taxes (Winters). They demonstrated exactly how powerful they were. Of course, since the government could not simply forgo this revenue, the rest of the taxpayers had to fill in for the oligarchs’ share. Although that case was settled, the wealth defense industry has only grown, and the oligarchs now employ much more sophisticated ways to avoid taxation, and “legalize” new forms of wealth retention.

To further worsen this matter, various oligarchs are part of ALEC, the American Legislative Exchange Council. ALEC is an organization in which corporations work closely with legislators. Essentially, ALEC is a way to lobby: member legislators are invited to lavish ALEC events at which they can luxuriously be persuaded by corporation representatives to grant said corporations unabashed support. ALEC, in fact, passes on drafts of laws which favor the corporations and which legislators are invited to present to their respective legislative bodies. In other instances legislators are convincingly encouraged to oppose laws that would hinder corporations’ business, etc. Yet, the central difference between ALEC’s way of lobbying and regular lobbying is that, officially, ALEC is not a “lobby” and is actually registered as a non-profit educational organization. As a non-profit organization it is therefore exempted from taxation. Openly lobbying would take away this exemption. This double dipping adds injury to insult.

Arizona State Representative Steve Farley said that corporations do have the right to get involved with politics, but strongly feels that they have no right to “lobby and not register as lobbyists” (United States of ALEC). He further denounces ALEC’s aforementioned events because regular citizens have no idea of “what’s really gone on and how the legislator has gotten that idea and where it is coming from” (United States of ALEC).

Another huge issue is that oligarchs politically support the capitalist free market, but they actually operate in a controlled environment. These “too big to fail” companies can count on government bailouts like the one of 2008. In a truly “free” market, risk can either result in profit or failure. Conversely, the oligarchs’ risk will at worst result in government bailouts. Stockman argued that “you can’t save the free enterprise by suspending the rules just at the hour they’re needed” and that “if they’re too big to fail, they’re too big to exist” (David Stockman on Crony Capitalism). Additionally, these “too big to fail” companies felt entitled to the billions of dollars to each of them from the 2008 bailouts. Yet, cynically many of these top-percentage earners are quick to denounce the welfare system as detrimental to the Nation; in their view poor families have too easily grown accustomed to the government’s hand outs.

Fortunately, there are some efforts to oppose this so-called crony capitalism. The American Legislative and Issue Campaign Exchange (ALICE) is a “transparent, non-corporation, out-in-the-open web-based library of model laws on a range of public interest issues” (United States of ALEC). It is dedicated to educating people about this harmful type of capitalism and ALEC. Through organizations like ALICE, the American people can be informed on the drawbacks of this crony capitalism and decide whether to join the effort to oppose it.

Works Cited

Stockman, David. “David Stockman on Crony Capitalism.” Moyers & Company. 2012. Retrieved from:

United States of ALEC. Moyers & Company. 2012. Retrieved from:

Winters, Jeffrey A. “Oligarchy and Democracy.” The American Interest. 2011. Retrieved from:

Reaction 6 for ECO/SOC 935

Corporations have a huge influence in the world. They have negative effects on our democracy, the environment and global economies. One of the main issues spawns from the fact that corporations have been legally recognized to have certain rights. They are legally permitted to financially support politicians, they usually evade serious punishment from criminal activity and they exploit cheap foreign labor. Before diving into this discussion, I find it useful to define the term “corporation”. A corporation is created when a group of people decides to invest its money in a company. This corporation “operates legally as an individual person,” and can now buy and sell property, ask for loans, sue and be sued (The Corporation). Unlike partnerships, corporations can exist even if a “partner” dies. Most importantly, shareholders cannot be sued individually, only the corporations can (Totenberg).

It is important to know that corporations not always wielded as much power as they do today. In the mid-19th century, corporations were mainly private-public partnerships and served the purpose of “building or creating something the government could not do on its own” for the public (Riley). These corporations had unambiguous conditions in their state-issued contracts. The charters determined for how long corporations could work on a project, the quantity of capitalization and exactly what to do, create or maintain (The Corporation). In fact, it was noted in The Corporation that “in both law and the culture the corporation was considered a subordinate entity that was a gift to the people in order to serve the public good.” Yet, when the 14th Amendment passed in 1868 to grant the newly freed slaves equal rights and protection, the corporations started demanding for inclusion under the security of the Amendment. This allowed corporations to be involved in federal election campaigns. In the early 1900s, however, there was a corporate corruption scandal regarding past presidential campaigns. This led Congress to forbid corporate engagement in federal election campaigns. This ban persisted until 1978, when the 1st Amendment was extended to include corporations and gave them the right to spend on state ballot initiatives (Totenberg). This right was further expanded to allow corporations to spend money as they see fit on local, state and federal candidate elections as of the 2010 Citizens United act (Totenberg).

There are various problems that have come along with the fact that the Supreme Court awarded corporations legal status. For one thing, corporations exist for longer than one lifetime, so they can save more money and influence more people over a longer period of time than physical human beings. Thus, the fact that they have legal recognition offers them unbalanced power compared to human legal recognition. Additionally, corporations can spend millions to support politicians that have viewpoints favorable to the company’s long-term interests. So, technically, a corporation, as well as group of people constituting it, can support and supply financial means to a favorable politician or party. This means that the people in a corporation can spend money from their own bank account as well as from the corporation’s on politics they approve of. Most people cannot afford to play this kind of game just to have political influence. Mander argues that to permit a corporation to “operate on the scale that it does, and to dominate society and governments, and to gain nearly dictatorial control over electoral processes, acting solely on behalf of its own built-in self-interest, is suicidal for human societies and murderous to the natural world” (69). This deeply corrupts the democratic system. Finally, corporations do not always even engage in legal behavior. The greater problem with this is that, because shareholders are not individually liable, the punishment is exerted on the corporation as a whole. It was noted in The Corporation that many corporations view fines on environmental health violations or lawsuits on worker safety simply as business decisions: if the fine/lawsuit is expected to cost less than fixing the problem at the source, then corporations decide to carry on just as they are and pay the fine. Additionally, in cases of health hazards or the death of workers or unaffiliated people living near an industrial accident, corporations can be sued and/or fined and someone in the leadership may be jailed, but the corporation keeps on existing. In this sense, it has super-human legal rights. If a person were to engage in such criminal activity, (s)he would be separated from society and restrained from any further action. These rules simply do not apply to corporations.

I would like to clarify that, in my opinion, capitalism and corporations are not one and the same. I think that, although there may be other applications of capitalism, this type of corporation I have been focusing on (one whose actions are dictated by the thirst for greater profits) is a product of the type of capitalism experienced in the United States. Moreover, there exist not-for-profit corporations that are fundamentally different from the ones discussed above. Both Mander and Totenberg argue that these nonprofit corporations are not the real issue. The profit-driven corporations that are the problem may, however, be reformed. In fact, there is already at least one organization working to persuade corporations to have other motivators in addition to profit. Benefit “B” Corporation is a certification that is bestowed on companies and businesses that pledge to “meet comprehensive social and environmental performance standards, higher accountability standards and to build constituency for public policies that support sustainable business models” (Riley). This movement prompts corporations to pursue not only profits, but also environmental sustainability and social well-being.

Works Cited

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Riley, Theresa. “What is a Benefit (B) Corporation?” Moyers & Company. 2012. Retrieved from:

The Corporation. Episodes 1-23. 2007. Retrieved from:

Totenberg, Nina. “When Did Companies Become People? Excavating The Legal Evolution.” National Public Radio. 2014. Retrieved from:

Reaction 4 for ECO/SOC 935

Our country is unequivocally encumbered by economic inequality. And although there is this wide-spread notion in the United States that “people should get what they deserve and deserve what they get” (Olin Wright & Rogers 183), it is being hotly debated that this inequality is a social injustice. The way Olin Wright & Rogers describe social injustice is that it is not simply the unfairness of “bad luck;” rather, it is an inequality that is unfair, and that could potentially be remedied (183). They give the example that it is unfair for some children to be born with physical disabilities, but that condition in itself is not an injustice. They mention that it becomes a social injustice when we as a society can take action to lessen the effect of the unfairness of bad luck on these people’s lives and fail to do so. Two examples Olin Wright & Rogers give are the lack of curb cuts in sidewalks (an injustice for people in wheelchairs) and the lack of affordable prosthetic limbs (an injustice for amputees) (184).

Having now defined social injustice, it may be apparent that we have striking injustices right here in the States. For example, a study done at Brandeis University noted by observing the same set of families over a span of 25 years, that the total wealth gap between the Caucasian and African-American families nearly tripled. In fact, the gap increased from $85,000 in 1984, to $236,500 in 2009 (Shapiro, Meschede & Osoro). Additionally, the study’s evidence pointed not to personal attributes and behavioral choices as the reasons for this gap, but rather to “policy and the configuration of both opportunities and barriers in workplaces, schools, and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most important spheres of everyday life” (Shapiro, Meschede & Osoro).  Although there are laws to protect from racial discrimination, they do not appear to be reinforced effectively enough.

Yet, this inequality is not merely a matter of race. The “Daily Conversation” notes in its video Wealth Inequality in America that whole bottom 80% (in terms of finance) of the American public has just 7% of the Nation’s wealth. Furthermore, the top 1% has a full 40% of the Country’s wealth. This fact points to the incredible disparity that impacts even the middle class. An average worker – and the video stressed the difference between “average” and “lowest-paid,” must work for more than a month to earn what the CEO might make in an hour (The Daily Conversation).

This inequality is unhealthy for a country, literally as well as figuratively. Comparisons between nations show that their average health and their GDP are not really correlated. But, when the comparison is done within a nation, that is, between individual citizens of a same country, the correlation is much higher. Indeed, social epidemiologist, author and advocate Richard Wilkinson says that “even the people just below the top have less good health than the people at the top.” He further explains that, compared to more equality-based countries, more unequal countries do worse on: life expectancy, math & literacy, infant mortality, homicides, imprisonment, teenage births, trust, obesity, mental illness (including drug & alcohol addiction), and social mobility (Wilkinson). In unequal societies people tend to lose their modesty and are much more strained by stressful situations in public than by stressful situations in private. This is because status is much more important in unequal societies than in more equitable ones (Wilkinson). Thus, Olin Wright & Rogers hold that inequality undermines a sense of community within a society. Going back to the subject of health, Wilkinson also added that, according to a study done by UNICEF, children’s wellbeing is also worse in unequal countries. So, even though inequality is known to have these “side effects,” Wilkinson says that the States, and for that matter, also the UK, are twice as unequal as some of the other market democracies, such as Japan and the Nordic countries.

Inequality is clearly detrimental. Yet, two of its driving components are the notions of fair-play and fair-share. Fair-play ties into the aforementioned idea that people deserve what they get and get what they deserve. It is based upon the theory that if the rules of the economic game are the same for everyone, success or failure is completely up to the individual. As long as there is something “approximating equal opportunity, inequality of results is not a moral problem” (Olin Wright & Rogers 187). The fair-share view is rather different: it holds that everyone has a right to “a share of society’s resources sufficient to live a dignified, flourishing life” regardless of the levels of success (Olin Wright & Rogers 187). Yet, taken individually, neither view can effectively solve the problem of wealth inequality.

As mentioned in the film Park Avenue: Money, Power and the American Dream by “Why Poverty,” fair-play is difficult to even achieve. “Why Poverty” parallels the American Dream and the dynamics of economics to a game of Monopoly. In theory, anyone can play, but if the game has already been started, it is much harder for the newcomer to catch up. This is because certain opportunities are unfair or completely absent, all of the rules have been decided, property has already been bought up, and much of the wealth is in the hands of other players. Staying with this parallelism, one could argue that the “newcomer” is actually the whole bottom 80% mentioned above. I think it is worth pointing out that as Olin Wright & Rogers say, “high levels of inequality on income and wealth undermine the principles of fair play itself” (188).

Fair-share, on the other hand, may improve inequality, but it would do so at the expense of those who are wealthier. It would seem unfair for people who work hard to earn money to have to pay (through taxes) for the “sufficient” share of society’s resources to be supplied to people who do not work as hard. Additionally, the wealthier population counters this ideology by saying that by redistributing too much wealth, the economy may collapse, and thus the poor would be even worse off than before. This would happen because, supposedly, the poor would start to lose the incentive to work if they see that they are being supported by the richer portion of society. This would imply that the more a person earns, the more incentive this person has to work. Olin Wright & Rogers counter this presupposition by highlighting the fact that the incentives required to get people to work and invest “are not themselves affected by the level of inequality in a society” (191). Simply put, they are saying that a CEO who earns 380 times what his average worker earns (as denounce by The Daily Conversation), does not have 380 times the incentive of his average worker. The proportion is totally unbalanced. Additionally, Olin Wright & Rogers argue that CEOs in the States are not much more talented or hard-working, and do not require greater incentive, than their Japanese or German counterparts.

Because neither the ­fair-play nor the fair-share approach taken on its own would engender a more just situation, Olin Wright & Rogers stress the fact that fair play and fair share interact and should be taken together (188). I tend to agree. If someone is dedicated to the idea of equal opportunity of fair play, then some form of fair shares should at least be considered to level the playing ground. Only after having a more equitable starting point can people attain equal opportunities and truly experience fair play.

Works Cited

Daily Conversation, The. Wealth Inequality in America. “The Daily Conversation.” Mar. 2013. Retrieved from:

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

Shapiro, Thomas, Tatjana Meschede and Sam Osoro. The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide. “Institute on Assets and Social Policy.” Feb. 2013. Retrieved from:

Wilkinson, Richard G. How Economic Inequality Harms Societies. “Ted Talks.” July 2011. Retrieved from:

—. “We quite suddenly realized that we were looking at a general pattern”: Q&A with Richard Wilkinson. “Ted Blog.” Oct. 2011. Retrieved from:

Reaction 4 for ECO/SOC 935

There were many important points in the readings, of course, but I believe that most of them rest on the single fact that poverty and economic inequality are closely interconnected. Furthermore, it is highly worth noting that these problems are of different degrees across countries and these variations revolve around the local public policies. In fact, since the official poverty levels are the thresholds below which “adequate nutrition, housing, clothing, and other basic necessities” (Olin Wright & Rogers 208) are unattainable, they depend all too heavily upon the cultural models and social norms of the country at hand. For example, in many countries in Europe, the poverty level is roughly half (0.50) the median income, whereas in the United States, it is approximately thirty percent (0.30) of the median income (Porter).

An imposing problem here is that the United States is not simply a wealthy nation with daunting levels of poverty. It is, in effect, also a nation in which the growth in GDP in the past 40 years has not resulted in notably diminished poverty rates (Olin Wright & Rogers 210). In what reveals itself to be a vicious cycle, poverty has generated much wealth inequality, which has, in turn, created more poverty. Wealth inequality is more intricate than straight-out income inequality. The difference resides in the fact that income is the “flow of money a person has available over a given unit of time” (Olin Wright & Rogers 216). Wealth, on the other hand, is the amount of money and other assets a person owns at any given moment. The labor market earnings (income) inequality puts the relative few individuals with higher income in a more favorable position to invest in wealth-generating assets than people with more ordinary incomes. And, as it turns out, most of the profit in the American economy comes from the speculation of buying and selling of a range of assets rather than directly from the production of goods and services (Olin Wright & Rogers 231). To render this wealth inequality more tangible, it is enough to consider the concept of net worth. A person’s net worth is the difference between the value of all of his/her assets and any debts this person has. Olin Wright and Rogers state that the “average net worth of the top 1 percent is a hundred times greater than the average net worth of the bottom 90 percent of the U.S. population” (217).

So where does all this inequality come from? There are two main explanations: the “blame the victim” approach, and the “blame society” approach. The first implies that, because the free market is supposedly equal for everyone, there is a flaw within the poor, and the fact that they are in poverty is somehow their own fault: they are not productive, and therefore they “don’t deserve a better quality of life” (Little). This is also based on the assumption that there is a “culture of poverty” in which the poor all have amoral attitudes, are lazy, and are so-called “welfare queens” And this is an especially good explanation for providing reasons for poverty that do not morally threaten the more privileged members of society. The most apparent loophole in this theory is that poor children have not accumulated any faults during their lifetime. .

The “blame society” approach implies that there is an inherent fault in the economic system. In this case, the rules of the game and the power relations in society are to blame for economic inequality and poverty. Part of the issue is the marginalization, or inability to “get access to the necessary means to acquire a basic livelihood” (Olin Wright & Rogers 225). There is a disparity between the distribution of skills in the population and the allocation of jobs in the economy. Nonetheless, there is increasing earning inequalities between the people who do have a job. The two main reasons are technological change, which raises the demand for employees with a high education and technical skills, and globalization, which enables international competition from low-wage foreign producers.

Because these are far from being easy problems to solve, the government has tried to alleviate the burden on the poorer population through various initiatives. Social welfare, as it is known, is a controversial topic. Its two core forms are direct targeted government spending, such as tuition subsidies for university students, public housing, nutrition programs for poor children, etc. (Olin Wright & Rogers 231), and tax subsidies, such as tax breaks, home mortgage deductions, etc. Yet, welfare is criticized because it may provide an incentive to the poor to remain under the poverty level in order to receive this support rather than to get a job that marginally increases their income but denies them the availability of welfare. Government support is also criticized because of a conflict of group interests: to reduce poverty, the government needs to spend money. To be able to afford this spending, the government must raise taxation, which in turn, reduces the income and wealth of richer households. The opposition to increased taxation is one of the reasons the government has a more difficult time dealing with poverty.

Yet, even people actively trying to diminish poverty do not agree with the welfare model. Dr. Mical Raz, author of What’s Wrong with the Poor?: Psychiatry, Race and the War on Poverty, says that we “cannot pathologize the poor men and women in order to argue that they need more services or more help… we have to move away from this model and focus on what children have and how we can utilize these advantages to further help them in their development.” Activists like Dr. Raz would like to do away with this helplessness model where poor people are looked at as lacking something which the government must provide, and introduce an attitude of discovery of what these people do have. At its core, it is somehow an invitation to correcting these imbalances by challenging the current pervasive assumptions and by dramatically shifting the paradigm from the disempowering “disease model” to a constructive “strength model.”

Now, Olin Wright and Rogers propose some possible way of reducing this poverty and inequality. Their solutions surprised me and challenged me to expand my thoughts on what could be done. So far, I had simply assumed that the capitalist market directed most economic interactions in the USA, and I had not considered the possibility of separating certain aspects of the economy from the capitalist model. The first of their ideas included partially decoupling standards of living (determined by calculating the social wage, plus labor market earnings, plus income derived from wealth) from earnings by means of a more comprehensive social wage (publicly provided goods and services such as healthcare, transportation, libraries, etc.), which is not too surprising. Their next suggestion did surprise me however: decoupling paid employment from the capitalist market by establishing a substantial amount of jobs with reasonable wages created directly by the public. Their final possibility is somewhat less likely to be employed even though it is definitely worth thinking about. It is about decoupling income from earnings and creating an unconditional basic income. The idea is to supply everyone with a minimal sufficient pay to offer “real freedom to all.”

Works Cited

Little, Daniel. “Why a War on Poverty?” Understanding Society. Web. 8 Oct. 2013. Retrieved from:

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

Porter, Eduardo. “The Measure of Our Poverty.” Economix. Web. 20 Sep. 2013. Retrieved from:

Raz, Mical. “How to Combat Poverty: Lessons from History.” The Takeaway. 9 Dec. 2013. Retrieved from: