These issues do not affect most of my friends in the Unites States, frankly, because they are what would be considered to be high middle-class income earners in stable careers and working at large companies that provide family coverage as a benefit.  It is also true, though, that those friends — should they elect to leave their cushy jobs and form a startup, or move into consulting — will incur risk that they or their families could go without coverage.

This is one of those quixotic situations that often arise when there is no basic guarantee in a society.  Even the upper middle class must consider career and life decisions within the context of health care.  Leaving the warm embrace of your employer to pursue some new innovation is a tough decision, for more reasons than there should be, as a result.  So many employers view their health care packages as an employee retention tool and are not motivated to alter this.  COBRA does nothing to protect workers who leave their positions voluntarily, after all.

Regardless, lower-income families are under pressure in the US.  I posted this in response to a friend on Facebook:

… which is largely rhetoric but is probably true.  How can people who are repressed by the system (limited education, limited time) participate in the debate about restructuring that system?  With 40% voter turnout in recent US elections, we can see this actually impacting the functioning of a democracy in a real way.  The US is presently governed by an elite — much like China, and much like the Soviet Union.  And like modern-day Russia, the multi-billion dollar federal electoral process is now “democracy theatre” as the appearance of leadership is contested by two groups:  one which I will call the compassionate elites, and the other comprised of a group I can only describe as diffident elites.

In any case, and as I said above, the outcome of the US Health Care debate will reveal a lot more about which Elitist group holds sway over the other; or put more succinctly, which of the two groups of Elites is better able to hold in check the corporate interests the finance their electoral campaigns while simultaneously establishing some sort of remedy for the country’s desperately ill system.  The process will enjoy neither the participation from, or support of, the very lower-middle-class and poor majority that the system should benefit the most.

They are too busy trying to survive.

Many tend to argue that our status as a desirable place to live is the major driver of our seeming resilience, or that the 2010 Olympics (a 3-week event) is maintaining property values.  These certainly don’t hurt, but there is the small issue of the average joe’s capacity to pay. As I pointed out in January, there is little on the books to explain how an average Vancouver family could afford to buy a house. What’s the sustaining economic factor pinning up personal incomes, allowing them to fork over $1 Million for a simple 2500 s.f. fixer-upper?

There may not be more bottom in local real estate … but I’m not buying the party line, here, either. 

I believe there may be an unseen force that has been sustaining growth and holding up the real estate market — and, indeed, the economy — in British Columbia through the current global downturn.  Researchers claim that the marijuana growth industry employs between 90,000 – 150,000 people in the province directly. The Economist pegged the drug trade in BC (with Vancouver as its distribution hub) at greater than $7 Billion per year.  This includes the importation of heroin and cocaine (which frequently serves as a form of payment for the receipt of BC pot) by more than 130 gangs, who vie for control of distribution and importation on the streets of Greater Vancouver daily, resulting in a record-breaking murder spree, as the following map portrays.

View Metro Vancouver homicides in a larger map…

A film released in 2007 called “The Union” debunks many myths about marijuana and the pot trade — but more revealingly digs into the impact that the growth and distribution of pot has on the BC economy.  Much of this data came from a 2004 report by SFU professor Stephen Easton entitled “Marijuana Growth in British Columbia“.   Take some time out of your day to watch the movie here:

What we learn from the report, the movie, and other publicly available data is that the growth of Marijuana, largely indoors, drives demand for real estate and for services associated with it.  Landlords are often complicit in tolerating the development of grow-ops by pot entrepreneurs and turn a blind eye in exchange for premium rents — an essential in a market so overheated by price inflation that mortgages can cost $4,000/month for a single-family dwelling.  Contractors earn a fortune outfitting basements with hydroponics, heat lamps and rigging for plants.  Realtors, investment firms, brokers, and a plethora of financial services professionals launder the proceeds of drug growing and distribution through real estate investments.

You simply cannot inject $7 Billion into a population of 4 Million without that money having a major, major effect. If the $7.2 Billion figure is to be believed, then the pot industry in British Columbia trumps even the province’s forest industry, employing more people and contributing more to the economy.  According to Statistics Canada, the lumber industry employs only 145,000 people and contributes $7.6 Billion annually (as at 2006) nationwide, with BC accounting for 63% — or $4.8 Billion.  Our precious timber harvest nets a far lower bounty than a crop which is grown in basements, hidden in remote valleys, and incubated in rail cars concealed in sprawling underground caverns.  This has, obviously, led to a growing movement to legalize marijuana and bring an end to decades of official prohibition.

But short of adopting a rational policy, what can a government do to embrace the impact of a massive underground economy?  As tax revenue starts to tail off from the dwindling legitimate industries suffering from the downturn you need to make up the shortfall somehow.  Fortunately, drug dealers and pot growers alike buy cars, clothes, boats, and consumer electronics … they also buy expensive dinners, go out on the town for drinks, and throw cash around enjoying themselves.

Our province’s seemingly pragmatic answer:  More consumption taxes, in the form of a broadly-applied Harmonized Sales Tax (HST).  In our province, many consumables have always been exempt from provincial sales tax, while a goods and services tax (federal) applies across the board.  Provincial sales tax, for those items which are covered, has in recent years been 7%; whereas the GST was reduced twice in the last few years from 7% to 6% to 5%.  The Harmonized Sales Tax allows the province to assume administration and handling of all consumption taxes, and applies both provincial and federal sales taxes to nearly every transaction in the system.  And we in BC will be getting an HST in the summer of 2010.

Consumption taxes levied at the cash register are the only way for governments to monetize an underground economy, and our politicians know it.  While none among them is brave enough to actually champion a realistic policy towards drugs like Marijuana, the HST is a perfect way to generate 5% for the provincial coffers from the billions flowing through the province from the pot industry.  That’s $360 million for the kitty folks, not to mention the extra get from those of us who haplessly obey the law and pay our taxes on income — a fact which compounds the problem.

With these policies (prohibition and increased taxation) we are left with the worst of both worlds:  rampant and increasing gang violence and property crimes stemming from the illegal drug trade and those victimized by it; hundreds of millions of dollars wasted on law enforcement trying to plug the leaky dam; and increased taxes across the board for no substantial increase in services.  The only people who truly benefit are those in the drug industry, while those of us who DON’T engage in the trade of pot (or worse drugs) are simply forced to pay higher taxes to subsidize the whole circus. Drug dealers and gang bangers alike don’t fear the law … they have only one real enemy: decriminalization and regulation.

The end of Prohibition in the United States nearly put the mobsters out of business in the 1930s, forcing them to adapt their practises to an economy where they simply could not compete with commercial liquor makers. Let me ask you this:  when was the last time you heard about someone caught in the crossfire as two rum runners blasted it out in front of their favourite night club?  I didn’t think so. 

When the Fraser Institute, a notorious conservative think-tank, is advocating a re-evaluation of the policy of prohibition on drugs, don’t you think it’s time to take an honest look and engage in a constructive, evaluative debate? By all medical evidence, pot seems to be less harmful than commercially-produced cigarettes. Why are we letting criminals enjoy all of the profits?

It’s a car so popular that it was requested for the upcoming Transformers movie by the director. Graceful, aggressive styling made it clear that, where Priuses and their ilk have become the equivalent of a worsted hemp-wool sweaters, this would not be your mom’s Hybrid.

… on the other hand, here’s a car I definitively would NOT buy:

Guess which one will be gracing showrooms of GM Dealers (if any remain) in 2010?

Sad, but true… while there have always been huge gaps between concept car vehicles and their production counterparts, this one is particularly disappointing. General Motors has proved that compromise was the victor during the prototype-to-production engineering for the Volt. It is, to say the least, about as unimpressive as other Hybrid designs like the Prius or the Civic Hybrid. It’s dull, homely, and familial.

I’m not sure who does the market research for Hybrid and Electric vehicles at GM, but they’ve got it wrong. With their stock price tanking, employees fleeing, plants closing, and sales dropping GM and its Chevy brand needed to pull a rabbit from their hats, and the Chevy Volt held out the best hope for shaking up the market with an affordable, cool vehicle with the thin veneer of environmental friendliness. That’s what wealthy, tech-savvy professionals want to drive on their long commutes… those same tech-savvy professionals who live in Blue States and went to see Al Gore’s movie.

The Volt concept vehicle was cool — even practically so. And it hit us where we live — at the corner of “hip” and “conscientious”. So most of us would not have been surprised to see it hit showroom floors pretty-much as-is and if so, it would have been red hot. With its aggressive styling and good looks, the Volt would have shown celebritards that there’s a much flashier way to show the world that you’re green; and with its Prius-esque price the Volt would have allowed the rest of us who wish we could afford (to wait for) a Tesla something reasonable and far less frumpy than the alternatives.

Chevy has shown the Production car now, which will hit the streets in 2011 with a design that is inferior to a Toyota that hit the streets in 2004. In 7 years — seven years!! — Chevy has proven that the best they can come up with is a pale, limp-wristed “metoo”.

Viva la mediocrity! How long before American taxpayers are asked to bail out their ailing auto makers?

This is the condemnation of Ethanol that many of us have been waiting for — and it frames a problem I have discussed here and here. To wit: in a world of finite natural resources and arable land, policies which encourage us to grow fuel in fields inevitably lead to deforestation and competition with food crops.

The deforestation is a double-whammy: trees clean our atmosphere of carbon, converting CO2 to Oxygen. The fewer trees remain, the less carbon is processed by the earth’s biomass, and the more of it bleeds into our atmosphere. This further accelerates Global Warming.

But now, with rising food prices, it’s become quite clear that humans are competing with gas tanks for food crops. The inevitable result of this is famine, and as we’ve seen through previous famines, the inevitable result of those are wars.

Frankly, without some rational though on sustainability (which we won’t be getting from the U.S. anytime soon) we are only hitting the gas pedal on global warming and strife.

“30m tonnes of extra maize going to ethanol this year amounts to half the fall in the world’s overall grain stocks.“    

This is, however, the cornerstone of Bush’s energy policy.  He views biofuels as an alternative fuel source technology, and technology as his “way out” of the end of Peak Oil.  It’s a strategy that recklessly fiddles with the levers of supply and demand, and pays no attention whatsoever to the fundamental laws of nature.   As The Economist also points out, it’s also a source of rebalancing power, in essence breathing new life into rural communities and lining farmers’ pockets.  This might be true were we all to ascribe to the Republican notion of the hardscrabble farmer, mining the earth for its nurturing treasures to support his struggling family.  This Rockwellian picture, however, is no longer particularly accurate.  It’s a facade perpetuated to make the lining of the pockets of Agribusiness palatable to the electorate — what invariably happens is that subsidies and price optimizations end up in the coffers of companies like Monsanto.We are left in a position where government intervention has therefore had three key effects:

1. Depletion of natural resources (farmland) at an accelerated rate and;
2. Quixotically, less food available for us to consume at higher prices and;
3. Indentured servitude of harvesters at the hands of megacorps in the agribusiness.

It’s just another wealth transfer that is picking the planet clean.  Corn is only economically viable as an alternative fuel source because of subsidies and incentives.  Corn itself was originally subsidized to offset decades of grain subsidies.  The result is that little else is grown on arable land in America these days.  These subsidies discourage the growth of more natural crops and foodstuffs that could feed us efficiently and naturally, instead driving the farmer toward lower-hanging fruit, pardon the pun.  Corn is in everything we eat.  High-Fructose Corn Syrup has replaced sugar and natural sweeteners, and as our bodies seem incapable of processing it we grow fatter.  Grains are used to feed cattle and we are encouraged to gorge ourselves on high-fat, disease-infested beef.  Fundamentally, though, we should simply not be burning our food in gas tanks.  We will ultimately starve ourselves for it.  We need to nix the subsidies and diversify our foodstuffs, we need to educate and reward people for eating healthy foods, we need to pursue rational energy policy and quit looking for stopgaps, and we need to accept that fossil fuels will not represent our future.

Within the talk he made the fascinating point that if China destroys the planet pursuing least-cost goods production, and the US destroys the planet with the least-cost distribution and consumption mechanisms while sending all of its money back to China, that the consequences for both economies and societies are dire. He refers to this as its own form of Mutually Assured Destruction. An interesting point in itself.

But that economy is not a reflection of the ecosystems to which it is very closely tied, nor is it tied to the priorities that we, as societies, must maintain. We have always paid more to fuel our vehicles than we have to fuel our bodies, but this quixotic miscarriage of effort was not particularly problematic so long as our food and our fossil fuels came from different places. Rice paddies to not typically compete with oilfields.

I think that most of us intuitively agree with the fact that food sustenance is a much more important priority than transport. And while the two are interdependent, corn subsidies have knocked the whole dependency chain deeply out of alignment. The thesis I attempt to draw your attention to here is that without those subsidies, at least for the time being, the whole notion of “growing energy” in fields would be akin to mania. And without them, at least in the interim, the whole notion of our food supply competing for arable land with our fuel supply would be a non-issue.

Agflation is here. The cost of raw materials such as grains, rice, and especially corn is rising across the board. This means the cost of your daily meals will soon be rising as well, and the culprit is likely you — or at least it’s the twats you voted for. It’s not a good sign for a foundering U.S. economy, either, as “official” inflation reports tend to track just those sorts of items when measuring prosperity and struggle in inflationary markets.

Our planet, thanks to global warming and a mixture of other predicaments such as population growth and rampant warfare, barely has the resources to feed us all through agriculture, much less power our vehicles, industry, and cities. And while economic systems are supposed to be causing our allocation of resources etc. to fall into a natural balance, in this case there is substantial governmental interference which is creating an artificial economy around corn. Furthermore, many experts say that our past century, even when taking the extended drought of the 1930s into account, was unusually ideal for agriculture, and these days we ain’t doing so well. As the chart below illustrates, drought is the rule, rather than the exception to it, on the Great Plains.

There’s a perfect storm here which is diverting resources from your lunch plate to your gas tank. The basis for this imbalance are the subsidies for corn farmers in Canada and the U.S., as I’ve pointed out before. Corn is evil. And we wouldn’t grow as much of it as we do in North America, if it weren’t for the fact that it’s so heavily subsidized. The numbers for the U.S. alone are staggering.

No wonder farmers have been turning over rice and wheat and sugar crops to grow corn. With subsidies, they’re able to sell the corn on the market at prices substantially lower than it costs to produce. Of course, that’s especially fun if you’re a Mexican Farmer trying to grow maize as your family has done for hundreds of years, and there happen to be no subsidies in your own country. This has happened to Canada, mostly because of NAFTA and its proximity to the U.S. But it’s tempting, in the face of stiff competition from subsidized American farmers, for regulators around the world to attempt the same meddlesome subsidies in order to sustain their industries.

The second driver in the emergence of Ethanol also owes itself to interference by politicians and lobbyists: it can be traced back to a key loophole in the supposedly stringent fuel economy requirements placed on automobile manufacturers, called CAFE. As Timothy Carney points out:

“In 1975, following the Arab oil embargo, Congress created CAFE standards to force automakers and car buyers toward more fuel-efficient cars. An automaker’s ‘CAFE’ is the average miles per gallon of its entire fleet (weighted by number of sales per model) for a given year. … Current law requires all automakers to have a CAFE of 27.5 mpg for cars and 22.2 mpg for light trucks.”

Sounds great, right? Only problem is that auto manufacturers need only pay fines in order to escape the strangulation that CAFE restrictions would otherwise place on their big SUVs. The U.S. government has collected about $500 Million from the manufacturers.

The loophole is more recent, and it’s driving ethanol into the mainstream, which doesn’t bode well for those of us who like our corn-on-the-cob, not in our tank. In 1988, the US congress enacted the “Alternative Motor Fuels Act, creating an exemption from CAFE standards for auto manufacturers interested in developing what we now call “Flex-Fuel” vehicles, which run on E-85, a mixture of 85% ethanol (derived from corn) and 15% gasoline. It’s also why most of these Flex Fuel vehicles are big gas guzzlers, like GM’s Silverado and Suburban (listed here). Thanks to the AMFA, those bad boys are now exempt from the dreaded CAFE, saving millions of dollars in annual fines. This is of course regardless of whether you choose to use E-85 at the pump or not. As Carney adds,

“the federal government would multiply ethanol’s mileage by 6.6 and assume all flex-fuel cars would use ethanol half the time. This means a car that gets 20 mpg on gasoline and 15 mpg on ethanol would be treated for CAFE purposes as if it got 60 mpg.”

Typically, true alternative motor fuels such as Hydrogen, Electricity or Flux Capacitor were not invited to the AMFA party. It was strictly focused on E85. And now, with higher CAFE standards in the works, the U.S. Congress is poised to drive even more car models to the road using E85.

The result of this will be an even deeper investment in Ethanol, and further diversion away from the production of actual food on our farms. Surprisingly, even usually intelligent folks like Vinod Khosla and Tom Daschle have jumped on the Ethanol Bandwagon. Khosla has bet big on Ethanol, and the two waged a propaganda war, penning an OpEd piece in the NY Times called “Miles Per Cob” and speaking on radio shows like the one below:

powered by ODEO

The reality is far from the rosy picture they paint of America growing its own gasoline in perpetuity. It takes precious energy to produce Ethanol from crops, and of course since the cost of the raw materials is artificially deflated, there is little to advise the value of E85 once the true costs of the fuel are accounted for. And the emphasis on E85 as any sort of saviour is actually diminishing efforts to develop sustainable alternative fuel strategies, as it substantially displaces their economic benefits.

An unexpected benefit of all of this diversion of corn into the fuels market might be a return by our candymakers and soft drink manufacturers to real sugar, as maize prices skyrocket. The omnipresence of High-Fructose Corn Syrup, as I have asserted, is probably a major contributor to the North American obesity epidemic.

I am reading with increasing dismay about the steady march of Ethanol into the North American psyche as an alternative to buying fuel in the form of light, sweet crude oil from those mean, nasty Arabs. On the surface the idea behind biodiesel and ethanol is appealing and touches all of the perceived pain points of the modern, SUV-driving, suburbanite nuclear family: we can be energy-independent in North America, since the one commodity we have plenty of is space. Canola and Corn, the prime sources for biodiesel and ethanol, are hearty plants that can grow with less effort than potatoes, lettuce, or other food sources, too; theoretically in places where growing those latter crops can be tough. The promise, therefore, of guilt-free living is a simple one with universal appeal: we can have our gas-guzzlers, and eat it, too!

Indeed, this whole Ethanol fuel thing would be all hunky-dory if only it didn’t take dozens of gallons of oil derivatives per acre on a seasonal basis to grow it. The ONLY reason why Ethanol is a “cheaper” source of fuel is because of all of the government subsidies which exist in the US and Canada to nurture the growth of canola and corn instead of real crops that could end up on our dinner table, not to mention subsidies at the pump in the form of tax breaks for the oil companies. Those subsidies of course find their way into the coffers of companies like Monsanto, BASF, and Bayer CropScience, who market genetically-modified crops and integrated pesticides, controls, fertilizers to cash-strapped farmers. But here’s the hitch: we still need to import oil to grow our gasoline in an Ethanol scenario. Without oil-based fertilizers and pesticides, and diesel for tractors and farm equipment, we would have no corn.

Our fields should be used to grow food, not gasoline. Show me a country that doesn’t subsidize corn as a crop, and I’ll show you a country that thinks that Ethanol is a big fat joke.

A Harper’s Article recommended a few years ago that we simply follow the money. As we know, that path usually leads us to politicians.

BUSH is of course a big Ethanol supporter because it suits the short-sighted needs of his constituents: namely, red-state farmers and their enslavers: biotech companies like Monsanto who collectively spend hundreds of millions of dollars per year lobbying in Washington and suing farmers for such inanities as “breach of patent”. For Bush, it’s also a way to show the voting public that the oh-so-progressive Republicans are taking direct action to avoid the perceived impending oil crisis.

North America in particular is addicted to corn, and it’s affecting us around every corner:

• Our obesity epidemic is in large part the result of the overuse of High Fructose Corn Syrup as a replacement for sugar,
  
• The evolution of new species of control-resistant weeds and insect is due to the corruptive influence of Genetically-Modified Corn and Canola,
  
• And now, we’re hooking ourselves up to the Ethanol addiction. Yippee!
  

Soon enough every square inch of arable land will be occupied by canola and corn destined for soft drinks, junk food, and gas tanks. We’ll be paying less at the fuel pump but exponentially more for imported wheat, vegetables, and other food stuffs. And the intricate system of subsidies which allows people to declare that HFCS is cheaper than sugar, and ethanol is cheaper than crude oil, will continue to skew the economic system so that these crops look viable, until someone has the cojones to stand up and declare how ridiculous the whole circle jerk has become.

Politicians frequently meddle in the economics of our food supply with dramatic, though unintended, consequences. That’s how we ended up with corn subsidies in the first place. Of course, no politician wants to confront the reality here, which is that North American farming practises have become so poor that hearty weed-like plants such as Corn and Canola are just about the only remaining crop that can grow in the increasingly depleted soil table of our farmlands, a problem which Europeans confronted centuries ago — by changing (gasp!) their behaviour.

Like Hydrogen, Ethanol is a storage medium for fuel. It’s not a source.

-Ian.

I think that, just to be sure, the US should install warning labels
on all fingers indicating that putting them in proximity to one’s
mouth while holding food could result in dire obesity, particularly in North America. But does
anyone really think that Warning Labels are meaningful anymore, after
decades of useless labels on CDs, Cigarettes, and Ladders?

In the longer term I think that history will illustrate that the real
problem isn’t simply, “sugar” (which is a generic term referencing
dozens of different additives) but instead High Fructose Corn Syrup,
or what I call “engineered sugar”. HFCS was born in the 1970s, in
part to address two things: the high cost of sugar, due to America’s
ongoing embargo of Cuba (which has traditionally ranked highly within
the top five exporters of sugar); and the dramatic overproduction of
corn, due to America’s moronic ongoing subsidy of its growth by
farmers (which has also resulted in the wholly unnecessary emergence
of Ethanol, BioDiesel, and lots of other stupid Corn-Into-Gold
technologies).

High Fructose Corn Syrup is not natural. Its existence is the result
of a mad chemist’s array of processes, fermentations, chain
reactions, and engineering. As such it’s natural to assume that we
organisms might have a really hard time ingesting, processing, and
excreting it safely. Consumed in high enough quantities (which most
of us do today) it has been revealed to effectively turn our bodies
into mush.

What’s circumstantially different between the relatively svelte
peoples of Europe and the statistically obese heifers of North
America is the quality of the sugars we intake. Europeans consume
lots of sucrose (from beet and cane) and us Americans eat mostly
biochemically-engineered sugars. We’re fat. They ain’t.
Confectioners can’t even use the term “chocolate” in the EU unless
their product uses real sugars, which is one reason why Mars bars in
the UK kick ass on North American ones.

So go ahead and label Soda cans all you want, but it’s pure,
unmitigated folly and will have no appreciable effect on the number
of forklift cases faced by paramedics in the future.

You really wanna cope with the obesity problem?

– Educate children (and adults) in schools on how to eat
better in SIMPLE terms
– Stop subsidizing the growth of corn and other crops we
don’t need
– Stop fucking with our food supply unless you’re going to test thoroughly the effects
– Disincentivize the sale and distribution of junk food with extra taxes, etc.
– Close forever the revolving door between the FDA and Monsanto

.. of course we won’t do that, because the Fat Kids can’t afford
expensive Washington/Ottawa lobbyists as can Monsanto, Yum! Foods,
and McDonald’s. Instead, the problem will just continue to amplify
until — like the hormonally-unbalanced, permanently ill beef cattle
of the North American livestock industry — many of the people of our
countries will be managed in a continuous state of illness and sloth,
taxing our social services to the maximum while displacing the truly
sick. All of this at no expense and to the massive profitability of
a dwindling (through consolidation) number of megacorporations
(including, of course, health providers who triage and manage the
lingering deaths of the populace) in the BioTechnology, Food, and
Health Care industries.

High Fructose Corn Syrup is a poison by many names (dextrose, glucose-
fructose, etc.), and is so pervasive in North American foods that
it’s almost impossible to avoid consuming it. My Snapple that
contains the “Best Stuff On Earth!” lists glucose-fructose second in
quantity only to water on the label. Just about the only package on
my desk today that doesn’t contain any HFCS is my bottle of Evian.

Some info:

http://www.westonaprice.org/modernfood/highfructose.html
http://www.washingtonpost.com/ac2/wp-dyn/A8003-2003Mar10
http://www.madsci.org/posts/archives/jun99/927695713.Ch.r.html

A short term answer: go organic.

But what happens to society when only rich people can afford to eat a
healthy diet, free from chemicals and engineered foods?

-Ian.