How the increasing financialization of food effects farmers

Five questions for Frederick Kaufman, author of Bet the Farm: How Food Stopped Being Food

Posted February 8, 2013 by Ben Lilliston   

CommoditiesFoodFood securityLand GrabMarket speculation

 

In 2010, journalist Frederick Kaufman wrote in Harper’s Magazine about how Wall Street speculators wreaked havoc with wheat markets and, in turn, helped drive the 2008-09 food price crisis. Now, he’s out with a new book titled Bet the Farm: How Food Stopped Being Food that goes into depth on how the increasing financialization of food effects farmers, consumers and global hunger. Research for the book brought Kaufman to farms, food science research labs, agribusiness giants, the United Nations and the Chicago Mercantile exchange. Bet the Farm is an accessible, sharp critique of how our food system has become increasingly captured by the big banks and giant food and agribusiness companies. Kaufman graciously accepted our invitation to answer five questions about the new book.

You write about the remarkable growth of the pizza industry, not only here but around the world. How has that impacted the agricultural economy?

Global pizza constitutes layers upon layers of global commodities: At the bottom lies commodity wheat, in the middle, commodity milk and cheese, and more times than not the concoction is crowned with pepperoni, a combination of commodity beef and pork. And let's not forget the tomatoes, which are the closest we come to a commodity crop in the vegetable kingdom. So, while Domino's and Papa John's and Little Caesar's and Pizza Hut advertise millions of combinations and possibilities for pizza, the underlining structure of the retail pizza business is monocultural, herbicide- and insecticide- and water-intensive agricultural methods on vast tracts of commercial land. Perhaps there is an argument to be made that when it comes to farming, bigger is better. The problem is that the commodities themselves are increasingly being priced based on the activities of international financial institutions, not the farmers, millers and bakers. Global pizza has become less of a food, and more of an investment for those with the deepest pockets, and Wall Street has led the charge.

Why are efforts to set a strict definition for “sustainability” so important for the food industry and others?

We all believe we know what it means. But in research for Bet the Farm I found that "sustainability" has become one of the most important marketing terms and tactics of this new century: Sustainability sells. And when I went to the University of Arkansas to interview the men and women at the Walmart-funded sustainability research center, I discovered that no one really knows how to calculate sustainability. In the case of a can of tomatoes, we actually do not possess the math to weigh the environmental impact of the can against the water against the diesel against the tomatoes in the can. But that doesn't mean a sustainability label wouldn't sell that can of tomatoes!

From a bank’s perspective, why is food always a good investment—even, and perhaps particularly, in bad times? How does the banks’ growing involvement in commodity markets affect farmers and consumers?

Since 2008, there has been a mad rush to find investment "value." Stocks and bonds and real estate and even dollars and euros have become suspect. But the smart money knows that going forward, arable land and fresh water and basic food commodities will retain value, and even grow in value. Of course, it is great when you invest in a product and watch the line on the graph go up. Except for the fact that each uptick in the global price of food is also an uptick in the number of people who cannot afford the food, the growing number of the world's food insecure. And, as the price of commodities becomes ever more volatile on the international exchanges, farmers are increasingly being left behind. The largest investors are the ones who can hire the PhD's from MIT to manage their hedging operations. Meanwhile, small farmers simply have to pay more for all their inputs, from seeds and insecticides to their diesel fuel.

What concerns do you have with the U.N. World Food Program’s Purchase for Progress program?

Purchase for Progress (P4P) is a classic case where the richest and most developed countries on earth believe that the path for the success for the poorest and least developed nations should simply be a game of Simon Says. In other words, do what we did, because we got it right. The idea of P4P that I object to most is the blanketing of commodity markets over the nascent food markets in nations such as Tanzania and Rwanda and Uganda and Guatemala. These markets will benefit the largest plantation owners, the biggest growers and the largest millers and warehouses, not to mention the bankers who will put these markets together. Most farmers will be left behind. Commodity markets are great things, but they must grow organically from an agricultural context, and not a forced march to the future.

What steps might we take to return food to being food?

First step: Get Wall Street out of the global food supply. And that's simple: Bring back the so-called "position limits," which limit the number of futures and options contracts non-agricultural institutions can hold. That would make food less of an investment, and allow food to be what it is: In short, the most precious thing on earth. We can also ease plant patent laws, so that food can become less of a legal construct. In the United States, we can bring back the national strategic grain reserve, which we had under the Clinton Administration. These buffer stocks help blunt the peaks and valleys of food price and help farmers manage risks going forward. Finally, we need to encourage countries to stop using food as a political football, a tool of foreign policy. Every nation needs to develop its own systems of food security and support their farmers: big, medium, and small. 

Read more about Bet the Farm: How Food Stopped Being Food.

- See more at: http://www.iatp.org/blog/201302/five-questions-for-frederick-kaufman-author-of-bet-the-farm-how-food-stopped-being-food#sthash.D6lBPEvA.dpuf

Corruption, Accountability and Media Power

by Justin Schlosberg, Tom Mills

Justin Schlosberg is lecturer in journalism and media at Birkbeck, University of London and the author of Power Beyond Scrutiny, a book examining how the British media cover cases of institutional corruption.  In an interview with NLP’s Tom Mills he discussed media power and democratic accountability in the UK.

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So what is ‘Power Beyond Scrutiny’ about, and why did you write it?

It’s a book about the failure of accountability in recent high profile scandals that point to systemic corruption within the British establishment.  It’s based on case study research into corruption in the British arms trade, the death of government intelligence analyst David Kelly, and the release of US diplomatic cables by Wikileaks.  Despite putting a spotlight on these scandals, the serious news media consistently failed to scrutinise accountability failure, and are thus implicated in it.  This is a profoundly ideological force because it promotes a ‘system works’ conclusion to the exposure of institutional corruption when in fact, the very opposite is the case. 

And by ‘system’, you mean the system of democratic accountability in Britain? 

Exactly. 

You find flaws in both liberal and radical accounts of the media.  Could you describe these different models and why you feel they are inadequate? 

In a nutshell, conventional liberal accounts of the media posit that journalists will routinely go on the attack when more formal institutions of accountability become corrupted (such as public inquiries, police investigations, courts etc).  More nuanced versions based on pluralism suggest that although the fourth estate is subject to some degree of structural constraint, there are in-built checks and balances and dynamic shifts over time.  These ensure that the professional news media en masse do not fundamentally and systematically work to protect the interests of the powerful.  But these narratives don’t account for the distinction between crimes like MPs expense fraud on the one hand, and the UK’s complicity in secret rendition and torture on the other; or between corruption in the NHS and corruption in the British arms trade.  In the latter cases, genuine accountability is seems impossible because they target the heart of what former US President Eisenhower called the ‘military industrial complex’, and what C Wright Mills called the ‘Power Elite’.  It is the job of the serious news media, in my view, to conceal that reality rather than expose it. 

Radical models have tended to reach similar conclusions as regards the ‘function’ of the news media in late capitalist societies.  But it seems to me that they have not adequately accounted for the increasing scrutiny that IS applied to the military industrial complex by the serious news media (at least in Britain).  The problem is not so much that the media ignore such stories, but that they ‘end’ them in ways which obscure accountability failure.  The powerful get away with it and the closing frame is either one of ‘justice served’ or ‘nothing to see here’ after all.  Radical models have also tended to place too much emphasis, in my view, on the media’s entrenchment within the market as a root cause of ideological functionalism.  That doesn’t quite explain the problem as it exists in public service broadcasting or the cross-subsidised broadsheets.  Market dynamics are certainly a major if not definitive influence, but they are not the whole picture.  In particular, there are cultural blindspots within the world of professional journalism that are not easily reducible to the economic ‘base’. 

Right.  Because several of the serious and more critical media outlets are somewhat removed from market pressures.  The BBC is a public institution and the Guardian is owned by a trust.  So if market forces aren’t determining the patterns of coverage you describe in the book then what so you think are the key factors at play?  In other words, what structural or material factors lie behind these ‘cultural blindspots’ you identify? 

Well I think first we can distinguish between market pressures and competitive pressures.  BBC and Guardian journalists may be relatively removed from the former, but not they are still very much engaged in competition for ratings, prestige and credibility.  Indeed, the reputation of the serious news media is grounded in their capacity to deliver ‘exclusives’, which is a slightly more refined way of saying ‘scoops’.

So on the one hand, they are engaged in fierce competition which can restrain accountability, as we saw in the case of cablegate.  But on the other hand, there is a ‘group think’ that operates across the serious news media about what is news and this can be an even more powerful restraint than competition.  It was the herd mentality among public service television and broadsheet journalists which ensured that the David Kelly inquest campaign was marginalised and denied legitimacy for nearly seven years.  That sense of what stories or campaigns are legitimate is intimately tied to whether there is some kind of formal process of accountability either on the horizon of possibility or already in place.  This may explain why it took more than 20 years for the victims of Hillsborough to get some semblance of justice and nearly 40 years for the victims of Bloody Sunday.  Without the state sanction of a public inquiry, official investigation or some kind of legal process, the media tend to go quiet very quickly.  It’s always been this way – from Watergate to Hackgate.  Contrary to the liberal narrative of the fourth estate, serious news journalists are generally reactive rather than proactive agents of accountability. 

One of the findings from your investigation of the coverage of the Wikileaks disclosures was that evidence of wrongdoing by the British state was ignored or marginalised.  This seems to strongly support radical accounts of the media rather than the liberal ‘watchdog’ model.  What's your take on this? 

I agree entirely.  All the findings in the book share much more in common with radical functionalist rather than liberal ‘watchdog’ or pluralist models.  What was so striking about cablegate was that there were leaks which exposed serious institutional corruption in British foreign policy, particularly in regards to trans-Atlantic military co-operation.  And yet these leaks did not receive near the level of attention given to corruption in foreign states, or the more salacious stories about diplomatic and Royal faux-pas.  Even more striking was the frame which quickly emerged in television news suggesting that there was little to no public interest value in the leaks after all.  When John Simpson provided a round-up of the cables on BBC’s Newsnight he stated emphatically that the only ‘thing of interest’ was China’s apparent support for a united Korea under Seoul’s direction.  No mention of new evidence that Britain colluded with the US to undermine the Iraq War Inquiry, or subverted the passage of human rights legislation in Parliament to protect US cluster bomb munitions on British soil. 

All three of your case studies feature activists groups attempting to use or work with the media to advance their causes.  What can activists learn from your book about the possibilities and limitations of the mainstream media? 

I think the crucial finding lies in the nature of ‘closure’ in these stories.  When the BAe plea bargain settlements were announced in February 2010, campaigners were understandably moved to highlight the culpability of BAe and the ‘guilty’ verdict which underpinned the penalties.  But this meant that they were unwittingly complicit in a frame which ultimately suited the interests of both BAe and the government; one which implied that BAe had paid a penalty proportionate to its crimes, that it was a ‘reformed’ company, and that we can all move on from a story that had lingered in the news media for the best part of 25 years.  But what received scant attention in the news was the more accurate framing that BAe had gotten away with it.  They had avoided prosecution and any mention of the word ‘bribery’ or ‘corruption’; paid a set of penalties amounting to less than 1% of its annual turn-over and less than a quarter of what journalists themselves were predicting only weeks earlier; and for good measure they received a green light to expand their operations in the US, their biggest growth market.  It was a spectacular victory for BAe disguised as a spectacular defeat. 

Another key lesson from these cases is that all too often mainstream media coverage depends to a large extent on the existence of some kind of official due process – a public inquiry, judicial review, court battle, serious fraud investigation, etc.  That suggests activists may be better off concentrating their resources on legal campaigns rather than media campaigns.  Fortunately, there are a growing number of activist-minded lawyers engaged in public interest cases and their offer of fee-contingent or pro bono services is often what activates wider journalistic attention. 

There is a question that I think activists and indeed all of us need to ask in these cases – what is the most fundamental public interest issue at stake? Is it the fact that BAe used bribery to sell arms to Saudi Arabia or the fact that they got away with it? Was it the war of words between the government and BBC which foregrounded the death of David Kelly or the failed investigation and suppression of evidence in relation to the death itself? Was it the ethical legitimacy of Wikileaks or the evidence of corruption within the national security state which they exposed? These questions are not necessarily straightforward or obvious but they are critical.  How issues are framed and prioritised in complex controversies has a definitive bearing on accountability outcomes.  We might well ask the same kind of question in regards to the Leveson Inquiry – was it really about the ethical practice of journalists or the unaccountable power of their bosses? 

Have you been following the coverage of Edward Snowden and the NSA scandal?  There seem to be some strong echoes of your Wikileaks case study. 

I agree, though there are interesting distinctions.  For a start, Snowden does not seem like the kind of personality that can be easily smeared in the way that Assange was.  Second, it is not as easy to ignore or dismiss the significance of the leak because we are not getting the same kind of deluge that we got in cablegate.  Nevertheless, the coverage seems to be distorted in crucial ways, once again marginalising the frame of accountability failure.  NSA and GCHQ’s access to personal communications without judicial oversight is certainly abhorrent.  But the fact that UK and US officials have for years denied the existence of Prism – even in public and under oath – is a vivid reminder of how the exercise and abuse of real power is all too often beyond public oversight.  Regardless of what we think about Snowden or Assange, there is something fundamentally wrong with a democratic society that works to punish those who tell the truth and absolve those who lie. 

Tom Mills is a researcher and PhD candidate at the University of Bath and a co-editor of New Left Project.  

Land grabs often displace communities who rely on the land for their livelihoods

Reports of the global land rush come to Washington

Posted April 18, 2013 by Ben Lilliston   

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You can have food in the stores, but will people in the community be able to buy it?” This was the question posed by Buba Khan, of ActionAid in Africa, to attendees at a Congressional briefing IATP co-hosted last week with ActionAid, Oxfam America and the Heinrich Boll Foundation.

Khan was referring to the effects of “land grabs,” a growing global phenomenon spurred by rising demand for natural resources like agricultural land and mining. These land grabs often displace people and communities who rely on the land for their livelihoods, food and water, as well as deep historical and cultural connections.

At the Congressional briefing last week, speakers from Cambodia, Ghana and Guatemala spoke about how land grabs have occurred in their countries, and what role U.N. Voluntary Guidelines on the Responsible Governance of Land Tenure agreed to last year might play in developing new rules to protect local communities from powerful foreign investors.

Yune Mane, of the Cambodian Indigenous Youth Association, told attendees about how the Cambodian government had granted land to outside investors (often Chinese, French or Vietnamese) for giant rubber plantations or mining. As a result, Indigenous people in the country have lost their right to land and access to spiritual areas, affecting their access to food and increasing poverty. In Cambodia, there are actually strong laws protecting Indigenous rights, including the 2001 Land Law and 2002 Forest Law, Mane said, but enforcement of these laws has been poor.

In Guatemala, about 46 percent of smallholder farmers have lost their land in the last 15 years, reducing their ability to feed their families and increasing poverty, according to Laura Hurtado of Oxfam in Guatemala. Hurtado cited the entrance of palm and sugar plantations used for biofuels and food ingredients as being the major driver of land purchases in Guatemala.

Approximately 200 million hectares have been purchased in Africa over the last 10 years, Khan explained. Land is being bought by foreign governments and companies, mostly in secret deals, for food, biofuels, mining, forestry and livestock production. He cited Sun Biofuels’ 99-year lease on land in Tanzania as an example of how communities throughout the continent are losing control of their natural resources.

Richard Gaynor, of the Millenium Challenge Corporation (a quasi-U.S. government program that works with developing countries to reduce poverty and promote economic development), talked about the value of the U.N. Committee on Food Security’s Voluntary Guidelines on land tenure. As an example of how the guidelines have been useful, he pointed to an irrigation project in Senegal, which included two years of community engagement to ensure property rights were documented and respected, local design was included, and it was fully transparent. He believed that these types of participatory approaches with communities, and that follow the principles of the U.N. voluntary guidelines, are essential for the future.

The U.S. government’s role in land grabs has been mixed. The Obama administration has endorsed the CFS voluntary guidelines, but, as we reported earlier this year, the administration’s free trade agenda has strengthened the hand of foreign investors and contributed to land grabs.  

Congress has largely been silent about global land grabs. Meanwhile, the rush for control of the world’s natural resources shows no signs of slowing down.

- See more at: http://www.iatp.org/blog/201304/reports-of-the-global-land-rush-come-to-washington#sthash.Pqx5q4fn.dpuf

“Why is Michelle Obama’s food initiative promoting Wal-Mart?

Tollhouse tortillas won’t end hunger

Posted April 16, 2013 by Dale Wiehoff   

Food and HealthFood JusticeFoodFood securityJustice

    

 

 

Used under creative commons license from Michael Kappel.

Efforts to solve the problem of hunger and poverty by turning to the same corporations that helped create the problem have gone viral. Michelle Obama and the President of Mexico have hit on the same scheme (and the same companies) for solutions to hunger and the growing crisis of diet-related illnesses. Both will likely make matters worse.

In a recent commentary, Stacy Mitchell of the Institute for Local Self Reliance asks the question, “Why is Michelle Obama’s food initiative promoting Wal-Mart?” Wal-Mart and other giant food retailers are part of Michelle Obama’s Partnership for a Healthier America, a national campaign that includes in its goals eliminating “food deserts,” economically depressed communities with limited access to food. Wal-Mart, a scandal-riven corporation, has wreaked havoc on regional and local food retailers with its profits-at-any-cost business strategy that leads to thoroughly uncompetitive business environments. Local grocery stores, both chains and Mom and Pop operations, have succumbed to the market dominance of Wal-Mart, leaving many communities without a place to buy food. The Partnership’s promotion of opening new Wal-Marts in poor neighborhoods is like inviting the fox to live in the chicken coop after he’s eaten all the little chickens.

Similarly, Mexican president Enrique Peña Nieto has his own campaign called Crusade against Hunger to help the estimated 7.4 million Mexicans who are underfed. In addition to Wal-Mart, the Crusade includes Nestlé, the largest food company in the world, and PepsiCo, the second largest food and beverage company in the world. With combined annual net revenue of over $100 billion, these two food giants have played an important role in lowering the quality of the food—and the health of people—everywhere.

Nestlé’s project in the Mexican Crusade is called My Sweet Business, a training course for woman on making desserts. PepsiCo has volunteered to develop a product to improve the nutrition of children and pregnant and nursing woman, according to Baby Milk Action. Both attempts at alleviating hunger are barely disguised attempts to take control of a greater share of the food market of Mexico.

To help them along, the Mexican government is planning to assign the Mexican military, an institution with a record of human rights abuses and involvement with narco-gangs, to the Crusade. The nexus of global corporations, the Mexican military and the government of Enrique Peña Nieto does not bode well for the welfare of the millions of hungry people in Mexico. This story has a common link, going back to the neoliberal policies of Ronald Reagan and Bill Clinton, called NAFTA. This free trade agreement displaced millions of Mexican farmers and virtually destroyed Mexico’s’ ability to feed itself. In addition to turning over the country to global corporations, NAFTA and the maquiladora system of manufacturing played a significant role in building an economy based on illegal drug trafficking. Looking to Wal-Mart and Nestlé to help Mexico or the U.S. is a continuation of the failed policies of globalization that have undone the bonds of community and created a poorer and hungrier world.

- See more at: http://www.iatp.org/blog/201304/tollhouse-tortillas-won%E2%80%99t-end-hunger#sthash.994DC2qP.dpuf

Obesidade infantil e embalagens plásticas (ing)

The obesity epidemic: What do chemicals have to do with it Posted July 9, 2013 by Kathleen Schuler, MPH   

Food and HealthHealthy LegacyHealthObesity

 

Used under creative commons license from beana_cheese.

BPA, used in metal can linings, can have obesogenic effects—especially on developing children.

We are all hearing a lot about obesity these days and more people are obese than ever; one-third of American children and two-thirds of adults are overweight or obese. The American Medical Association has declared that obesity is a disease.

While some disagree with the designation of obesity as a disease, there is strong evidence that obesity is linked with diseases—specifically Type II diabetes and heart disease. There is also general agreement that obesity is a major public health problem. Preventing obesity would contribute to a healthier, happier population and save an estimated $190 billion per year in direct health care costs.

But how do we prevent obesity? We all know that we should eat healthier and exercise more to maintain a healthy weight, but few people are aware that avoiding exposure to certain chemicals could reduce their risk of obesity, especially during prenatal life and in childhood. An emerging body of science links chemicals that disrupt hormones to increased risk for obesity.

Fetuses and children are the most vulnerable to adverse health effects from hormone-disrupting chemicals. Like hormones themselves, these chemicals exert health impacts even at minute levels of exposure and exposures in the womb can have lifelong impacts.

As detailed in a new IATP fact sheet titled Chemicals and Obesity, an array of chemical obesogens may be contributing to the obesity epidemic. Obesogens are chemical agents that promote fat accumulation and alter feeding behaviors. They activate cell receptors to predispose them to fat accumulation. Obesogenic chemicals can affect the size and number of fat cells or the hormones that regulate appetite and metabolism. They can also cause changes in gene expression, or epigenetic changes, which can have intergenerational impacts.

It is now evident that a variety of environmental chemicals can act on cellular pathways to promote fat accumulation and obesity. We are all exposed to these chemicals every day through foods and food packaging and from an array of consumer products and building materials. Chemicals for which there is evidence of obesogenic activity include:

• Bisphenol A, a chemical used in food packaging and plastic.
• Phthalates, chemicals found in plastics and fragranced personal care products.
• Brominated flame retardants used in electronics and foam products.
• Perfluroalkyls, “Teflon chemicals” used in food packaging and nonstick cookware.
  
  

Evidence of obesity risk from chemical exposure is growing every day. A recent study found that girls aged between 9 and 12 with higher levels of BPA in their urine had a twofold increased risk for obesity.

In light of a growing obesity epidemic in the U.S., a comprehensive public health response is needed. In addition to initiatives to encourage healthy eating and exercise, we also need actions to prevent exposures to obesogenic chemicals, including:

1. Better regulation of toxic chemicals through reform of the Toxic Substances Control Act (TSCA). TSCA should be strengthened to require the phase out persistent, toxic bio-accumulative chemicals that build up in the food system and in the human body and to require basic safety testing on all new chemicals introduced into commerce.
2. Better state regulation of chemicals in children’s products through the Toxic Free Kids Act. www.healthylegacy.org/ Three of the above listed chemicals are on the Minnesota Priority Chemicals List.
3. Voluntary efforts by downstream businesses and retailers to require the phase out the worst chemicals, including those linked with obesity. www.mindthestore.org

Read IATP’s latest fact sheet, Chemicals and Obesity, for more.

- See more at: http://www.iatp.org/blog/201307/the-obesity-epidemic-what-do-chemicals-have-to-do-with-it#sthash.zcHuoDd5.dpuf

The Secret to Finland's Success With Schools, Moms, Kids—and Everything

The country has cheaper medical care, smarter children, happier moms, better working conditions, less-anxious unemployed people, and lower student loan rates than we do. And that probably will never change.

OLGA KHAZANJUL 11 2013, 8:58 AM ET

A child in Finland being happy, as usual. (Kacper Pempel/Reuters)

It's hard not to get jealous when I talk to my extended family.
My cousin's husband gets 36 vacation days per year, not including holidays. If he wants, he can leave his job for a brief hiatus and come back to a guaranteed position months later.
Tuition at his daughter's university is free, though she took out a small loan for living expenses. Its interest rate is 1 percent.
My cousin is a recent immigrant, and while she was learning the language and training for jobs, the state gave her 700 euros a month to live on.

"Everyone should get a slice of the cake so that they have what they need to realize their life projects."

They had another kid six years ago, and though they both work, they'll collect 100 euros a month from the government until the day she turns 17.
They of course live in Finland, home to saunas, quirky metal bands, and people who have for decades opted for equality and security over keeping more of their paychecks.
Inarguably one of the world's most generous -- and successful -- welfare states, the country has a lower infant mortality rate, better school scores, and a far lower poverty rate than the United States, and it's the second-happiest countryon earth (the U.S. doesn't break the top 10). According to the OECD, Finns on average give an 8.8 score to their overall life satisfaction. Americans are at 7.5.
Sometimes when I'm watching the web traffic for stories here at The Atlantic's global desk, I'll notice a surge in readership in one of a couple of archival stories we have about how fantastic Finland is -- usually thanks to Reddit or a link from another news site. One is about Finland's "baby boxes, " a sort of baby shower the Finnish government throws every mom. A package sent to expecting women contains all the essentials for newborns -- everything from diapers to a tiny sleeping bag. (Want to choose your own baby clothes? You can opt instead for the box's cash value, as my cousin did.)
The other popular story is about Finland's school system, which ranks as one of the world's best -- with no standardized testing or South Asian-style "cramming" but with lots of customization in the classroom. Oh, and students there also spend fewer hours physically in school than their counterparts in other Western countries.
As the U.S. raises student loan rates, considers cutting food stamps, guts long-term unemployment insurance, and strains to set up its first-ever universal healthcare system, it's easy to get sucked into articles about a country that has lapped America in certain international metrics but has also kept social protections in place. Like doting parents trying to spur an underperforming child, American liberals seem to periodically ask, "Why can't you be more like your brother?"

It's a good debate to have, and in some ways, it seems like there's no reason why the U.S. shouldn't borrow from Finland or any other Nordic country -- we're richer and just as committed to improving education and health, after all. Here's the difference: Finland's welfare system was hardwired into its economic development strategy, and it hasn't been seriously challenged by any major political group since. And just as Finland was ramping up its protections for workers, families, and the poor in the 1960s, Americans began to sour on the idea of "welfare" altogether. What's more, some economists argue that it'sbecause of all that American capitalism contributes to the global economy that countries like Finland -- kinder, gentler, but still wealthy -- can afford to pamper their citizens. With actual Pampers, no less.

***

Let's start with mandatory maternity leave, a favorite topic among the having-it-all, Leaning-In crowd. The U.S is one of the last countries on earth without it, but the Finnish state mandates four months of paid maternity leave, and on top of that, the mother and father can share an additional six-month "parental leave" period, with pay. After that, kids can either continue staying home with their mothers until they reach school age, or parents can instead send them to a publicly subsidized child-care center, where the providers are all extensively trained. The cost is on a sliding scale based on family income, but the maximumcomes out to about $4,000 a year, compared with $10,000 for comparable care in the U.S.
This is just one of the many reasons Finland is "the best place to be a mom," as the nonprofit Save the Children declared in May.
Can't get a job? Not to worry. Unemployment insurance in Finland lasts for 500 days, after which you can collect a means-tested Labor Market Subsidy for an essentially indefinite period of time. (The unemployment rate is a high-but-not-awful 8.2 percent).
At this point, if you've literally turned green with envy and need to see a doctor, you're in luck! In addition to dirt-cheap universal healthcare, Finland offers compensation for wages you might have lost while you were away from work, as well as a "Special Care Allowance" if you need to take some time off to take care of your sick kids.
All of this adds up to the stress equivalent of living in what is essentially a vast, reindeer-fur-lined yoga studio.
"It seems to me that people in Finland are more secure and less anxious than Americans because there is a threshold below which they won't fall," said Linda Cook, a political scientist at Brown University who has studied European welfare states. "Even if they face unemployment or illness, Finns will have some payments from the state, public health care and education."

***

Eero Järnefelt, Burning the Brushwood, 1893. (Wikimedia Commons)

The Finns didn't always have it this good. For much of the early 20th century, Finland was agrarian and underdeveloped, with a GDP per capita trailing other Nordic countries by 30 to 40 percent in 1900.
One advantage Finland did have, however, was enlightened policies towards gender. The country focused on beefing up child and maternal care in large part because women were at the core of Finland's independence and nation-building efforts at the turn of the 20th century. Finnish women were the second in the world to get the vote in 1906, and they were heavily represented in the country's first parliament.
Ellen Marakowitz, a lecturer at Columbia University who studies Finland, argues that because women helped form modern Finland, things like maternity leave and child benefits naturally shaped its welfare structure decades later.
"You have a state system that was built on issues concerning Finnish citizens, both men and women, rather than women's rights," she said. "Government was created in this equal footing for men and women."

BBC

Finland's strong trade unions pioneered its initial worker protections, but the state soon took those functions over. Today, roughly 75 to 80 percent of Finnsare union members (it's about 11 percent in the U.S.), and the groups dictate the salaries and working conditions for large swaths of the population.
And as the country worked to industrialize in the 1960s, its economic policymakers took on a mentality similar to that of CEOs at tech companies with awesome employee perks like free string cheese and massages.
"The thinking was, 'for a country of 5 million, we don't have many resources to waste. If people are happy, they'll maximize their work ethic, and we can develop,'" says Andrew Nestingen, a professor who leads the Finnish studies program at the University of Washington. The theory of the welfare state was that "everyone should get a slice of the cake so that they have what they need to realize their life projects."
The country's unemployment and disability system was in place by 1940, and subsequent decades saw the expansion of child benefits and health insurance.
Meanwhile, thanks to the country's strong agrarian tradition, the party that represents the rural part of Finland pushed through subsidies for stay-at-home (or stay-on-farm, in their case) mothers -- thus the current smorgasbord of inexpensive child-care options.
Over time, Finland was able to create its "cake" -- and give everyone a slice -- in large part because its investments in human capital and education paid off. In a sense, welfare worked for Finland, and they've never looked back.
"In the Finnish case, this has really been a part of our success story when it comes to economic growth and prosperity," said Susanna Fellman, a Finn who is now a professor of economic history at the University of Gothenburg in Sweden. "The free daycare and health-care has made it possible for two breadwinners -- women can make careers even if they have children. This is also something that promotes growth."
With this setup, Finns have incredible equality and very little poverty -- but they don't get to buy as much stuff. The OECD gives the U.S. a 10 when it comes to household income, the highest score, while Finland gets a measly 3.5.
And there are some major lifestyle differences: Finns live in houses and apartments that are about half the size of Americans', and their taxes on the wealthy, like those on capital gains, are much higher than ours. (Hence why taxesmake up a huge chunk of their GDP.) Professionals such as doctors make far less there, which helps medical care to stay reasonably priced. (The conservative Heritage Foundation ranks Finland as downright "repressed" in some categories, like government spending, on its "Index of Economic Freedom.")

Tax Policy Center

It's also worth noting that Finland isn't a total economic Wonderland, either: It's not growing very fast and will probably have issues with its aging population in coming years. The Bank of Finland recently predicted that the country might soon exceed the 60 percent debt-to-GDP ratio mandated by the European Union -- a common problem in Europe these days.
Some of Finland's more conservative politicians have suggested cutting public benefits there in the wake of the economic downturn -- but even with those cuts, social protections there would still be far more generous than ours.
And the economic redistribution there doesn't always work perfectly. Some municipalities inevitably find themselves with lower-quality hospitals and day cares, even when they're supposed to be roughly identical, and recently some pro-business groups have tried to edge the country toward greater privatization (though unions have pushed back.)
Still, the country's small, well-educated population and investments in technology have allowed it to avoid some of the problems currently plaguing other, similarly socialist European countries. Overall, most Finns love the welfare system that loves them back.
I asked my cousin's husband, Reijo, why he was willing to support such an arrangement even though he works full time.
"Money isn't everything. We value equality, not inequality," he said. Fair enough. But does he have any gripes about the Finnish way? Anything he would change? Perhaps kick some of those freeloaders off their indefinite unemployment?
No, he said, but he did point to one small issue: "I think that for university students it is not yet good enough. Many students have to work while they are studying."

***

Like Finland, the U.S. also set up massive safety-net programs, in the form of Medicare and Medicaid, in the 1960s. But paradoxically, many Americans began developing a deep aversion to government handouts at the same time.

The 1960s saw a rise in poverty and children born out of wedlock, particularly in urban communities. Sensational media stories about families "abusing" welfare -- especially when the putative abusers were portrayed as African-American -- helped cement opposition to public assistance. One study found that in the early 1970s, nearly three-quarters of magazine stories about welfare or poverty featured images of African-Americans, even though African Americans comprised only about a third of welfare recipients.
"I do think that racial divisions are an important factor here -- the sense among many people that universal benefits will take from 'us' and give to 'them' -- to a part of society that is seen as different, less deserving, imagined as racially different," Cook, from Brown University, said. "I think that many middle-class Americans favor social benefits for what they see as 'deserving' people who have worked and earned them -- so Medicare is good -- but universal health care would provide benefits for people who are imagined as not deserving."
In a 1976 speech, Ronald Reagan made mention of supposed "welfare queens" who make six-figure salaries while drawing government funds, stoking a sense of outrage over perceived waste in public assistance. (It was later shown that he used an exaggerated anecdote). Arguing that social insurance dis-incentivized work, and prioritizing markets and individual liberty, the growing new conservative movement eventually joined together businesses and working-class voters in pushing for cuts in government programs.
Though we seemingly support spending on the sick, poor, and elderly, in 2006,46 percent of Americans still thought the government spent "too much" on welfare, even 10 years after a total structural overhaul of welfare had passed.

***

Jefferey Sellers, a University of Southern California political scientist, foundanother key difference between the two nations: Finland has much more powerful local governments than the U.S., and they're tasked with executing the myriad functions of the welfare system -- from helping the poor to operating the day cares. Municipal taxes are redistributed and supplemented with grants, thus largely eliminating the problem of under-resourced areas. Local public expenditures are 20 percent of GDP in Finland, but just 10 percent in the U.S., he points out.
"The national government provides local governments with the financial means, legal powers, and the expertise to perform well," he said. Meanwhile, "Fiscal redistribution among local governments assures equality in how those services are distributed."
What's more, some economists argue that the only way countries like Finland can be so well-off and yet so cushy is because countries like the U.S. create the technology that powers the rest of the world -- with huge rewards for success but few safety nets in the case of failure.
"The entire world benefits because of Apple's iPhones," said Daron Acemoglu, an economist at MIT, admitting it was a relatable but not necessarily optimal example (Finland gave us Nokia and Linux's Linus Torvalds, after all). "If the United States did not provide incentives for Apple to come up with and develop the iPhone, then the entire world economy would lose the benefits it obtains from this product. The cutthroat reward structure in the United States is encouraging the creation of many products and technologies like this."
If America were to adopt some of Finland's "cuddly" benefits, the thinking goes, the entire world economy might slow down. For Finns, it would be out with the baby boxes, in with the subsistence farming again.
So what about education reform, then? Finnish school expert Pasi Sahlberg has written that Finnish schools are based on "improving the teaching force, limiting student testing to a necessary minimum, and placing responsibility and trust before accountability."
It's true that Finnish teachers design their own curricula and don't have to deal with test-score-based evaluations, but school officials there are also placing young minds in very well-equipped hands: All teachers have graduate degrees in education and their subject areas of expertise. And schools are funded based on need, so the most struggling schools get the most resources. There is no "Teach for Finland," as Sahlberg has said.
But in some ways, even the Finnish way of educating requires a strong welfare system as a foundation. The country has an extremely low child-poverty rate, which likely makes teaching without testing or score-keeping much easier. And how many American teachers would love to get a master's degree but aren't willing to take on the student loans that come with it?
"The easiest [explanation] is to say that Finland seems to be a well-performing system overall, as far as the international rankings are considered," Sahlberg told me. "So, it is no wonder the education system also works well."
The no-testing model also makes sense for a culture that's low on one-upmanship: "I think one of the more important things is that there's less of an emphasis on competition in Finland," Marakowitz said. "Many Finnish children don't know how to read before they go to school, and you need a certain kind of cultural setting for that. Some U.S. parents would be quite freaked out."

***

When Americans hold up Finland as a model, their arguments are usually dismissed with two indisputable facts: Finland is indeed much smaller than the U.S., making it easier to disperse generous benefits on a national scale. It's also far more homogeneous, making disputes over payouts less frequent and less racially charged.
Still, Cook says, the claims of homogeneity are a bit over-stated. Finland has both sizeable Swedish- and Russian-speaking communities, and right-leaning parties like the "True Finns" want to pare back the little immigration the country does have. (Even the True Finns, though, love the welfare state.)
Building on the success of Finland's local governments, individual U.S. states could conceivably be more like mini-Finlands -- just look at Massachusetts, which had a comprehensive health-care system before the rest of the nation. But creating and enforcing 50 separate safety nets would require a level of oversight the U.S. federal government just doesn't have. Even Obamacare was challenged aggressively in court and has faced opposition from some two dozen states.
Fellman described Finland's welfare state as a "virtuous circle" -- Finns' social cohesion props up the welfare state, which in turn promotes greater harmony. But in a way, America's economic competitiveness, focus on innovation, and lack of safety net all reinforce one another, too.
The very reason we're so frequently googling what we can learn from "Finland's school success," after all, is that we want to stay one step ahead
.

The Huge Threat to Capitalism: close relationships between business people and government

The Huge Threat to Capitalism That Republicans Are Ignoring

In the 1950s, Communist ideology posed the biggest threat to the free market. Today, crony capitalism is more corrosive.

CONOR FRIEDERSDORFJUL 22 2013, 9:30 AM ET

Reuters

Over the weekend, the New York Times published a jaw-dropping story about how Wall Street investment banks are slyly manipulating commodities markets to make billions at the expense of consumers.
Is that description too abstract? Here's the lead example:

Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers' aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country. Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process "a merry-go-round of metal."

Only a tenth of a cent or so of an aluminum can's purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year -- and add the tons of aluminum used in things like cars, electronics and house siding -- and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.

Kevin Drum writes:

Did you follow that?

Some genius at Goldman apparently had a brainstorm after reading the detailed rules that determine the spot price of aluminum. They figured that if storage times could be artificially lengthened, prices would go up and Goldman could make a killing. So they bought an aluminum storage business with the explicit goal of making customers wait a longer time for their aluminum. And they made a killing. The Times hastens to add that Goldman has done nothing illegal. Of course not. Why bother when "special exemptions" granted by the Federal Reserve and "relaxed regulations" approved by Congress allow you to make billions legally?

Preventing this sort of thing ought to be a high priority for anyone who wants to see free-market capitalism succeed in America. So long as our economic system resembles what Adam Smith described -- the profit motive benefiting everyone, as if by an invisible hand -- much of the American public can be counted on to support politicians who campaign as unapologetic capitalists, even if people are rewarded unequally, based on the value their labor is producing.
But if "capitalism" starts to be associated in the public mind with Wall Street profiting by deliberately slowing down industrial productivity (or with Mitt Romney making millions by buying companies and gaming the tax implications of shuttering them), Americans are not going to support capitalism. They're going to regard it as a rigged system that only profits wealthy insiders. 
In the short term, Republicans and Democrats alike benefit by allying themselves with the wealthy insiders. Like the GOP, President Obama has benefited from Wall Street money. But in the longer term, enough stories like this New York Times scoop will destroy Republicans, because rhetorically, they're the ones insisting that the market is beneficial and more or less fair, even as a transparently corrupt financial sector consumes a larger percentage of the overall economy.
I'm emphatically for free markets. I have the highlighted copy of The Constitution of Liberty to prove it. But the party of free markets has a self-interested obligation to attack crony capitalism. The party has been failing for years. Democrats have too, but they have less to lose. 
"Many of us already view the financial industry as little more than a gigantic shakedown of the American public," Drum writes. "But even so, there are still days when we can be dumbfounded by the sheer scale and gall of their machinations." It isn't enough for the right to point to faulty government regulations and bailouts that have abetted financial-industry shakedowns.
Republicans need to wean themselves from certain donors and make fixing American capitalism a priority, and to go on the offensive against Democrats for their part in Wall Street dysfunction, if they're going to persuade voters that the party of free market capitalism is worth supporting.
A good place to start: rules of the road that make increasing productivity more profitable than decreasing it.
I prefer a theoretical Republican solution to a theoretical Democratic solution, but if Democrats have an actual desire to regulate Wall Street, and Republicans have nothing, that's no choice at all. The GOP has to start attacking Wall Street misbehavior even when it doesn't take the most obvious form: a direct, explicit bailout check from taxpayers to the most well-connected banks.
Earlier this year, George Will wrote, "By breaking up the biggest banks, conservatives will not be putting asunder what the free market has joined together. Government nurtured these behemoths by weaving an improvident safety net and by practicing crony capitalism. Dismantling them would be a blow against government that has become too big not to fail. Aux barricades!"
Co-sign.