DOLLARS

TPP and Inequality

March | April 2014

PAGE 7

Obamacare and Class Warfare

&SENSE
PAGE 9

Trashing the Finger Lakes

PAGE 17

The Gig Economy

Real World Economics PAGE 28

Pot Economics
U.S. & CAN: $4.50
 DOLLARS
&SENSE
Real World Economics
Dollars & Sense magazine explains the workings
of the U.S. and international economies and pro-
vides left perspectives on current economic affairs.
It is edited and produced by a collective of econo-
mists, journalists, and activists who are committed
to social justice and economic democracy.
the d&s collective
Betsy Aron, Arpita Banerjee, Nancy Banks,
Ellen Frank, John Miller, Kevin O’Connell,
Larry Peterson, Linda Pinkow, Paul Piwko,
Smriti Rao, Alejandro Reuss,
Dan Schneider, Bryan Snyder,
Chris Sturr, Jeanne Winner
staff
magazine editors Alejandro Reuss, Chris Sturr
business manager Nancy Banks
development director Linda Pinkow
interns
Oscar Courchaine, Seth Grande,
Aaron Markiewitz, Megan Ramette
work study
Autumn Beaudoin
associates
Aziza Agia, Randy Albelda,
Teresa Amott, Sam Baker, Marc B ­ aldwin,
Rose Batt, Rebecca Bauen, Phineas ­Baxandall,
Marc Breslow, Jim Campen, Chuck Collins,
James Cypher, Laurie Dougherty,
Laura Dresser, Janice Fine, Ellen Frank,
Tami J. Friedman, Sue Helper, Thea Lee,
David Levy, Arthur ­MacEwan, Mieke Meurs,
Marc Miller, Ellen Mutari, Amy Offner,
Laura Orlando, Robert Pollin, Adria Scharf,
Abby Scher, Susan Schacht, Chris Tilly,
Ramaa Vasudevan, Thad Williamson
design
layout Chris Sturr and Alejandro Reuss
front cover Chris Sturr
front cover image Wikimedia Commons
(public domain)
printing   Boyertown Publishing
Dollars & Sense (USPS 120-730) is pub­l ished
bimonthly by the Economic Affairs Bureau, Inc.,
One Milk Street, Boston, MA 02109, a non-profit
corporation. ISSN: 0012-5245. 617-447-2177. Fax:
617-447-2179. E-mail: dollars@dollarsandsense.org.
Periodical postage paid at Boston, MA, and additional
mailing offices.
For subscription information, contact Dollars & Sense,
PO Box 3000, Denville, NJ 07834 (1-877-869-5762). To
subscribe online, go to www.dollarsandsense.org.
Please allow 4–6 weeks for delivery.
POSTMASTER: Send address changes to Dollars &
Sense, PO Box 3000, Denville, NJ 07834-9811. All
articles copyrighted. Dollars & Sense is indexed in
Sociological Abstracts, PAIS Bulletin, Alternative
Press Index, and The Left Index. Subscriptions: 1 year,
$24.95; 2 years, $39.95; institutions, $45/year;
Canada, $33/year; other foreign, $49/year (airmail),
plus $20 for institutions. Back issues available for
$5.00 prepaid, or on microfilm from UMI, 300 N.
Zeeb Road, Ann Arbor, MI 48106.
www.dollarsandsense.org
< From the Editors
Of, By, and For ... Whom?
I s government the solution? Is it part of the problem?
The U.S. right likes to vilify government—for all the wrong reasons.
Minimum wage laws? Environmental regulations? The right says they’re “job killers.”
Dean Baker refutes that old canard about the wage floor in his Comment, “Don’t Believe
the ‘Job Killer’ Hype,” while explaining why a minimum wage hike would be a net winner
for low-wage workers. Arthur MacEwan makes a similar case on environmental regula-
tion—while posing a more fundamental question: “Do we really want to create jobs by
engaging people to do socially destructive things?”
The ACA, or “ObamaCare”? The Wall Street Journal editors go ballistic about the new
law’s projected negative effects on labor supply. John Miller shows the editors’ argument
for what it is: a damaging admission that the need for health coverage keeps workers in
thrall to employers, and that even a flawed health-care reform can help free workers to quit
bad jobs. Miller goes on to argue that a truly universal program could do much more.
Expansion of the money supply during a recession? The right has been screaming
about looming “hyperinflation” for years. Steve Pressman’s In Review argues that at-
tempts to draw parallels between the present and historical episodes of hyperinflation
are badly misleading. Let’s focus instead, he argues, on the disaster of mass unemploy-
ment, where government intervention is crucial.
As readers of Dollars & Sense know, our writers frequently propose public solutions to
social problems. You will find, however, no idealization of government here.
Can government policies help combat problems like inequality, barriers to economic de-
velopment, or environmental degradation? It depends on the policies—and the policies
themselves depend on forces acting on the government. More often than not, the high and
mighty dominate government policy. What business and its ideologists call “free market” poli-
cies are not simply reductions in the size of government. They eliminate some forms of gov-
ernment intervention and substitute others. Where are the capitalists railing against “intellec-
tual property” rights as a terrifying extension of government power? Tell us if you find one.
Much of this issue looks, in one way or another, at the complexities of government policy.
Dan Schneider’s “Pot Economics” notes that we are, at long last, seeing the rollback of
disastrous pot-prohibition laws, which have exacted a high toll in lives ruined and trea-
sure sunk. What will take their place, however, remains to be seen—and depends on the
shape of new kinds of marijuana regulation.
Patricia Rodriguez’s “Lake Country, Not Trash Country!” looks at the struggles over large-
scale trash dumping in upstate New York. Here, local environmental activists have had to
navigate a maze of government entities, not all of them sympathetic, trying to stay a step
ahead of corporations adept at manipulating government officials to serve their interests.
Roger Bybee, in his Making Sense “TPP: Trumping Public Priorities,” gives us the clear-
est case of corporate dominance. Big corporations are crafting the Trans-Pacific
Partnership (TPP) to roll back “public-interest protections on labor, food safety, drug pric-
es, financial regulation, domestic procurement laws, and a host of other matters.” The
story, however, doesn’t end there. Widespread public resistance may block the agree-
ment, despite the corporate power play.
Matías Vernengo looks at the uncertain economic situation in Argentina, headlined by
the drop in the value of the country’s currency. The gloating from the international busi-
ness press is unmistakable: Argentina’s demand stimulation and income redistribution
must not serve as an example to others! In reality, Vernengo argues, Argentina is not in a
severe crisis—but it is still unclear what path the government will take. A rapprochement
with global creditors, or a deeper move toward domestic economic development?
Not that this is new. This issue’s 40th anniversary excerpt takes a look back at what D&S
had to say about the New York City bankruptcy in 1975. Back then, it was obvious not only to
D&S, but also to Mayor Abe Beame, Governor Hugh Carey, and even the Daily News, that gov-
ernment could choose to intervene on behalf of ordinary people, or instead the federal gov-
ernment could side with the creditors and tell the city and its people) to “drop dead.” D&S
 DOLLARS
&SENSE
Real World Economics

NUMBER 311 | MARCH/APRIL 2014

C o n te n t s

t h e r eg u la r s

4 the short run

5 two cents
Reply to Alperowitz Review

6 comment
page 7 page 23 CBO Minimum-Wage Report

7 making sense
feat u r e s The TPP and Inequality

11 Pot Economics 9 up against the wall street journal

What’s the future of the American marijuana market? Obamacare and Class Warfare
DAN SCHNEIDER
27 in review
active culture Frederick Taylor, The Downfall
17 Lake Country, Not Trash Country! of Money
The struggle for environmental protection in New York State’s
Finger Lakes region. 28 economy in numbers
P a t ricia R o dr I g u e z The Gig Economy

23 Don’t Cry for Argentina—Not Yet! 30 ask dr. dollar

The country’s recent policy moves do not mean its economic model Jobs vs. Environment?
is doomed. But they may not be the best way forward.
B Y M A T Í A S V E R N E N GO 31 40th anniversary excerpt
The Deficit that Swallowed
Manhattan

MARCH/APRIL 2014  l  DOLLARS & sense  l  3

< The Short Run
By Aaron Markiewitz, Megan Ramette, and Alejandro Reuss
Hyping Inflation
You might have heard about the re-
cent scientific findings supporting the
hypothesis of “cosmic inflation” (or
just “inflation”), which suggests a dra-
matic increase in the size of the uni-
verse during an infinitesimal fraction
of a second after the Big Bang.
Here at D&S, this made us ask: How
does cosmic inflation compare to the
kind that mainstream economists have
been telling us to expect here on earth,
due to central bank policies dramatical-
ly expanding the money supply?
1) Cosmic inflation, astronomers tell
us, happened over 13 billion years ago.
Inflation, mainstream economists tell us,
is perpetually “just around the corner.”
2) The Big Bang was very, very big. The
universe expanded by about one million
trillion trillion trillion trillion trillion trillion
times in less than a hundred millionth of
a trillionth of a trillionth of a second
(Wikipedia). Inflation in the United
4  l  dollars & sense  l  MARCH/APRIL 2014
States and Europe is running below the
already-low 2% annual rate central banks
have targeted. It is very, very small.
3) Astronomers have been searching
for proof of inflation for a long time, but
they are not guilty of turning a blind
eye to the scourge of unemployment.
Too bad we can’t say the same for the
economists. —AR
Criminal Enterprise
Looking for a new job? Bounty hunting
may be just for you! In early February,
Human Rights Watch reported dra-
matic growth in private probation
firms in recent months. Unlike tradi-
tional “bail enforcement officers” (the
private bounty hunters portrayed in
action movies and “reality” TV shows),
these new firms are focusing less on
the hunting and more on the bounty.
These “offender-funded” corpora-
tions receive contracts from courts in
several states to monitor people con-
victed of misdemeanors, all at no cost
to the taxpayer. Instead, the person on
probation must pay the fees, or else risk
jail time, even if the original offense
was only a parking ticket. The Human
Rights Watch report includes heart-
rending stories of people “threatened
with jail for failing to pay probation fees
they simply cannot afford.”
How lucrative could this racket be?
According to Human Rights Watch, the
upstart industry collected over $40 mil-
lion last year from Georgia residents
alone. And that’s only the beginning, as
the United States has 2.3 million people
incarcerated and an additional 4.8 million
under court supervision (probation and
parole). Expansion is on the horizon, and
for-profit companies would consider it a
crime to pass up such opportunity. —AM
Fracked Up
When people think about hydraulic frac-
turing (or “fracking”), they’re likely to pic-
ture water that ignites when a match is
held to it. But pollution from fracking has
very serious health consequences as well
(see Rob Larson, “Frackonomics,” D&S,
July/Aug 2013). Researchers at the
Colorado School of Public Health have
now discovered a new one: The rate of
congenital heart defects is 30% higher in
areas with over 125 wells inside a one-
mile radius, compared to areas with no
wells within 10 miles.
Colorado has more than 50,000 ac-
tive oil and gas wells, over 90% of
which are fracked. Clean Water Action
estimates that another 50,000 wells will
be added within the next 15-20 years.
The findings about birth defects have
made Coloradoans even more vocal in
opposing fracking. Still, according to
Aljazeera America, Mark Salley, com-
munications director of the state’s
Department of Public Health and
Environment, insisted, “Colorado has
some of the most stringent [environ-
mental and public-health] rules in the
country.” What department does he
work in, again? —MR D&S
< Two Cents
Letters to the editors
Revisiting Alperovitz
To the editors:
I was disappointed to read Steven
Pressman’s review of Gar Alperovitz’s ex-
cellent and important book What Then
Must We Do? Straight Talk About the Next
American Revolution (Nov/Dec 2013). The
review misstates Alperovitz’s position in
important ways. Specifically, Pressman
presents Alperovitz as being “against
strengthening unions.” He also claims
that Alperovitz believes labor unions fell
because of lack of popular support.
Both claims are misleading:
Alperovitz clearly favors strengthen-
ing unions wherever this is possible
and also notes that existing unions
can and must play an important role
in building new, democratic institu-
tions. (That’s why the book was blurbed
by Leo Gerard, president of the United
Steelworkers Union.) Nor does
Alperovitz advance any specific explana-
tion of why union membership fell so
precipitously in the postwar era in the
United States; instead, he writes that it
fell for many reasons and offers readers
a list of respected sources on the topic
such as historian Nelson Lichtenstein.
Alperovitz’s point about unions is
entirely analytical: Labor unions in the
U.S. at one point in history were the
engine of a strong progressive politics
that both produced progressive poli-
cies and kept inequality in check. But
they have been so weakened that it is
exceedingly unlikely they can ever play
the same role again in American poli-
tics. This judgment is reinforced by the
observation that the rise of the labor
union as a critical institution in the
mid-twentieth century economy was
fostered by two massive crises not like-
ly to be repeated in our time: the
Depression and World War II.
It’s not a matter of whether one is for
organized labor or not. As Alperovitz
writes, “We need to do whatever we can
in the old way, to the extent feasible—in-
cluding trying to bolster labor wherever
possible.” (p. 114) The question is whether
labor unions as a whole could ever again
be a mechanism powerful enough to
fundamentally alter the long-term trajec-
tory of capitalism and the astonishing
trends towards wider and wider inequal-
ity over the past 40 years. Alperovitz’s
judgment is that they cannot.
The question of what progressive
advocates for economic justice can
and should do in light of these painful
realities is the subject of Alperovitz’s
book. Democratizing control of wealth
and ownership—in both small scale
and large scale ways—is the heart of
Alperovitz’s strategy. I urge Dollars &
Sense readers to examine the many
fruitful ideas Alperovitz offers.
Thad Williamson, Richmond, Va.
Debunking Cato
To the editors:
Your “Rewarding Work” piece in “The
Short Run” section (Sept/Oct 2013)
omitted the complete debunking of the
Cato Institute’s recent welfare report.
Cato’s report presumed that recipi-
ents concurrently receive assistance
from at least seven transitional assis-
tance programs. This is preposterous
and results in a complete distortion of
the aggregate total of benefits received.
The Center on Budget and Public
Priorities showed:
  MARCH/APRIL 2014  l  DOLLARS & sense  l  5
$.02
1. According to the Department of
Health and Human Services, for every
100 families in poverty, a mere 27 re-
ceive TANF cash assistance. In eight
states, fewer than 10 out of 100 fami-
lies in poverty received TANF.
2. In 2010, fewer than one in four indi-
viduals receiving TANF also received
Women, Infants, and Children (WIC)
food and nutrition assistance.
3. According to Cato’s own data, less
than 16% of TANF recipients received
housing assistance.
Cato neglects the fact that transi-
tional assistance programs are not
just utilized by unemployed fami-
lies. Many low-income working fami-
lies depend on them for survival. The
Agriculture Department estimates that
65% of all working-poor households
eligible for Supplemental Nutrition
Assistance Program (SNAP) benefits
received them in 2010. Census data
showed that Medicaid or Children’s
Health Insurance Program (CHIP) as-
sisted about 70% of children in work-
ing-poor families that did not receive
TANF. In 2011, 86% of low-income chil-
dren from working families received
health coverage through CHIP. More
than half of adults in households with
children receiving SNAP worked while
receiving assistance.
This evidence not only questions
the credibility of Cato’s premise, but
also accentuates the tragic failure of
our economy to provide viable jobs
and benefits for tens of millions of
people. Conspicuously absent is the
Cato Institute’s outrage about the hun-
dreds of billions of bailout dollars giv-
en to banks, insurance companies, and
corporations via taxpayer subsidies,
and obscene tax breaks for the
wealthy. Also absent is the discussion
of the forty-year stagnation of wages
for the vast majority of working people
in our moribund economic paradigm.
Bruce T. Boccardy,
Labor Representative,
Massachusetts Joint Labor
Management Committee
< Comment
Don’t Believe the “Job Loss” Hype
What to make of the CBO’s minimum-wage projections.
BY DEAN BAKER
M any supporters of an increase in
the minimum wage viewed job-
loss projections in a February report
from the Congressional Budget Office
(CBO) as a serious setback. The CBO put
their best guess of the jobs impact, from
raising the minimum-wage to $10.10, at
a minus 500,000. This provided fuel for
the claim that the minimum wage is yet
another “job killer,” along with the
Affordable Care Act, Dodd-Frank, and
Michelle Obama’s push for school kids
to exercise and eat healthy. A more seri-
ous assessment shows otherwise.
First, it is worth noting the rest of
the CBO analysis. The CBO agreed with
proponents of a higher minimum
wage that the overwhelming majority
of people benefiting would be adults,
not high school kids earning spending
money after school. They conclude
that just 12% would be teenagers.
In addition, the benefits of a higher
minimum wage go overwhelmingly to
people who badly need extra income.
The CBO calculated that 60% of the
benefits would go to households with
earnings of less than three times the
poverty level. The assessment also
showed that a higher minimum wage
would lift almost one million people
above the poverty line.
These are very important takeaways
from the CBO analysis, but there is no
doubt that the job-loss projection is still
front and center. In this respect, it is
important to note that the CBO did not
do any originally analysis. In other
words, the CBO did not attempt to do a
new study to determine the effects on
employment of raising the minimum
wage to $10.10 an hour. Rather they
came up with a number based on the
existing research on the topic.
Here, they essentially took the mid-
point. There have been a number of
6  l  dollars & sense  l  MARCH/APRIL 2014
solid studies done in recent years find-
ing no job loss. The CBO itself did not
rule out this possibility. However, there
have also been studies, most notably by
economists David Neumark and William
Wascher, finding that the minimum
wage does cost jobs. In this case, it ap-
pears that the CBO picked a number
between the findings of these two sets
of studies in putting out 500,000 as
their best guess for a job-loss figure.
At first blush, the prospect of losing
500,000 jobs sounds pretty bad, but
that is not quite what this number im-
plies. While there will undoubtedly be
According to
CBO projections,
workers will put in
roughly 3% fewer
hours on average,
but take home
almost 19% more
for each hour they
work, for a net gain
of more than 15%.
some employers that lay off workers or
go out of business because of this mini-
mum wage hike, that is not likely to be
the way most of this adjustment would
take place.
In the vast majority of cases, the re-
duction in jobs will occur because em-
ployers won’t hire a replacement for a
worker who leaves or will be somewhat
more cautious in hiring new workers in
response to an uptick in demand. This
can lead to 500,000 fewer jobs when
the impact is fully felt, but it doesn’t
$
mean that 500,000 people will be
thrown out of work.
Furthermore, low-wage jobs tend to
be high-turnover jobs. (A higher mini-
mum wage will reduce the rate of turn-
over, but these jobs will still have higher
turnover than more high-paying posi-
tions.) As a practical matter, having
500,000 fewer jobs means that it will
take people somewhat longer to find a
job either when they first enter the la-
bor force or after they leave another
job. This means that people will work
less on average.
We can take the CBO’s numbers to
get a ballpark estimate of this effect.
They calculated that 16 million workers
will be directly affected by the rise in
the minimum wage. This makes the
500,000 projection of job loss a bit
more than 3% of the affected work-
force. On the other hand, raising the
minimum wage from $7.26 to $10.10
implies an increase in the minimum
wage of more than 39.3%.
Assuming that the average benefi-
ciary sees an increase half this size (for
example, if their pay was already $9.00
an hour), then the average increase in
hourly pay would be about 18.7%. This
means that if we accept the CBO pro-
jections, workers will put in roughly 3%
fewer hours on average, but take home
18.7% more for each hour they work,
for a net gain of more than 15%.
That doesn’t sound like much to
complain about. D&S
D E A N B A K E R is co-director of the
Center for Economic and Policy Research
(CEPR) in Washington, D.C.
S O U R C E S : Congressional Budget Office, “The
Effects of a Minimum-Wage Increase on Employment
and Family Income,” February 2014 (cbo.gov); David
Neumark and William Wascher, “Minimum Wages and
Employment: A Review of Evidence from the New
Minimum Wage Research,” National Bureau of Economic
Research working paper, January 2007 (nber.org).
< Making Sense
TPP: Trumping Public Priorities
Obama’s Pacific deal would deepen the income divide.
BY ROGER BYBEE
“T hose at the top have never done
better,” President Obama ruefully
acknowledged in his January 28 State
of the Union speech. “But average
wages have barely budged. Inequality
has deepened.”
Yet, moments later, Obama heartily
endorsed the Trans-Pacific Partnership
(TPP), which as drafted directly reflects
the demands of “those at the top” and
would, if passed, severely intensify the
very inequality spotlighted by the presi-
dent. The TPP would provide transna-
tional corporations with easier access to
cheap labor in Pacific Rim nations and
give them new power to trump public-
interest protections—on labor, food
safety, drug prices, financial regulation,
domestic procurement laws, and a host
of other matters—established over the
last century by democratic govern-
ments. The nations currently negotiat-
ing the TPP, which taken together com-
prise nearly 40% of the world economy,
are: the United States, Australia, Brunei,
Canada, Chile, Japan, Malaysia, Mexico,
New Zealand, Peru, Singapore, and
Vietnam. Among them, Brunei, Malaysia,
Mexico, Singapore, and Vietnam are all
notorious violators of labor rights. The
TPP’s labor provisions are far too weak
to begin uplifting wages, conditions,
and rights for workers in these nations.
As with NAFTA, the TPP will benefit
U.S. companies relocating jobs to low-
wage, high-repression nations, argues
economist Mark Weisbrot, co-director
of the Center for Economic and Policy
Research (CEPR). This would also exert
strong downward pressures on the pay
of U.S. workers, “Most U.S. workers are
likely to lose out from the TPP,” Weisbrot
says. “This may come as no surprise af-
ter 20 years of NAFTA and an even-
longer period of trade policy designed
to put lower- and middle-class workers
Leaders of TPP member states at a November 14, 2010, summit included: Naoto Kan
(Japan), Nguyễn Minh Triết (Vietnam), Julia Gillard (Australia), Sebastián Piñera (Chile),
Lee Hsien Loong (Singapore), Barack Obama (United States), John Key (New Zealand),
Hassanal Bolkiah (Brunei), Alan García (Peru), and Muhyiddin Yassin (Malaysia).
Photo credit: Government of Chile, Creative Commons Attribution 2.0 Generic license.
in direct competition with low-paid thanks to Wikileaks. American participa-
workers in the developing world.” tion in the TPP negotiations has been
Obama has billed the TPP as a “trade limited to a tiny circle of just 600 top
agreement” that will create U.S. jobs. corporate executives. Numerous mem-
The pact, however, actually has little to bers of Congress have complained
do with reducing trade restrictions. about the secrecy surrounding the ne-
Tariffs are now a minimal factor for gotiations, charging that it exceeds
most global trade. Lori Wallach, director even that practiced by the Bush-
of Public Citizen’s Global Trade Watch, Cheney administration. The public’s
points out that only five of the TPP’s understanding of the massive stakes
twenty-nine chapters are about trade at involved in the TPP has been further
all. But the remaining provisions cover hampered by the failure of major media
such immensely important measures as to offer even minimal analysis. The
the creation of a kind of corporate su- major-network news shows, according
premacy over the democratically estab- to a new study by Media Matters, made
lished regulations enacted by member no mention at all of the TPP from
nations. If an existing law threats to di- August 2013 through January 2014.
minish profits, corporations in the TPP Despite remaining in the shadows,
nations would be entitled to bring their the TPP has met fierce opposition from
complaint to an international dispute both elected representatives and hun-
panel of anonymous corporate mem- dreds of labor, consumer, small-farmer,
bers, who could impose major financial health-reform, and other civic organiza-
penalties on the “offending” countries. tions. TPP’s only foreseeable path to
“The Trans-Pacific Partnership,” Wallach passage in the near future had been the
concludes, “is a Trojan horse for a host use of a “fast-track” procedure, under
of awful measures that have nothing to which NAFTA and subsequent interna-
do with trade and would never get tional agreements have been negotiat-
through Congress in the light of day.” ed. Instead of the normal process of
Some of the most controversial TPP deliberation and debate by Congress,
features have become public only the fast-track process (which requires
  MARCH/APRIL 2014  l  DOLLARS & sense  l  7
< Making Sense
separate congressional approval) sub-
stitutes minimal debate and permits no
amendments. Senate Majority Leader
Harry Reid, acutely aware of public re-
sentment against NAFTA’s 20-year lega-
cy of job loss and wage decline, has
firmly ruled out the fast-track route for
the TPP.
Influential Democratic senators like
Elizabeth Warren (D-MA) and Sherrod
Brown (D-OH) have already directed
their fire at the TPP, with Warren dem-
onstrating her seriousness by voting
against Obama’s nominee for U.S. Trade
Representative, former Citigroup man-
aging director Michael Froman.
Meanwhile, 150 House Democrats and
several dozen Republicans signed a
November letter opposing the fast-
track process.
“We’re seeing ‘trans-partisan’ opposi-
tion to the Partnership,” said Michael
Dolan, the International Brotherhood of
Teamsters (IBT) legislative representative
on trade issues. As with NAFTA, where
some conservative Pat Buchanan-style
nationalists saw a transnational corpo-
rate threat to U.S. sovereignty, some nor-
mally pro-corporate members of
Congress are adopting an oppositional
stance. The Republican opposition to the
TPP includes Tea Partiers Michele
Bachmann (R-MN) and Louie Gohmert
(R-TX) and over 20 others. According to
Arthur Stamoulis, executive director of
the Citizens Trade Campaign which is
leading opposition to the TPP, the stance
of these Republicans goes beyond their
seemingly reflexive opposition to any
Obama initiative.
While a number of Tea Party Unlike the NAFTA vote in 1993, where
Republicans voted in favor of the three
Obama-promoted free-trade agree-
ments in 2011, they are viewing the TPP
differently because of its magnitude and
due to pressure from the Republican
base. “Because of its massive size, the
TPP has captured a lot more attention
from the Right than the Korea pact ever
did,” Stamoulis says. “With Republicans’
base much more engaged on the TPP—
the Tea Party Nation and others oppos-
8  l  dollars & sense  l  MARCH/APRIL 2014
ing it—I expect to see a lot more
Republican opposition this time around,
and indeed, we already are seeing that.”
The visceral dislike of Obama by many
on the Right may add fuel to rightist op-
position to the TPP and the fast-track
procedure, Stamoulis concedes, but he
points out that opposition to corporate-
style globalization has been mounting
among Republican voters for some time.
“Polls showed that Republican voters’
opposition to free-trade agreements
existed back during the Bush administra-
tion as well,” he notes.
On the Democratic side, only a rela-
tive handful of remaining “free-traders”
(their ranks having been thinned in re-
The TPP would trump
public-interest
protections—on
labor, food safety,
financial regulation,
and a host of other
matters—established
over the last century
by democratic
governments.
cent elections that have unseated pro-
globalization Dems) like Rep. Ron Kind
(Wisc.), stand with Obama at this point.
almost half of House Democrats and
over 3/4 of Senate Republicans voted
for the measure, Democrats in both
Houses have become notably disen-
chanted with the results of “free trade”
and the resultant offshoring of jobs.
“Democratic opposition to job-killing
Free Trade Agreements has hardened in
recent years,” says CTC’s Stamoulis.
“Not only do more members of
Congress understand the disastrous
effects of pacts like NAFTA, but they
also see that two years into President
Obama’s biggest trade agreement
to date—the Korea Free Trade
Agreement—not only is our deficit with
South Korea up, but the promised
exports are actually down.” The
Democratic base, as reflected in polling
data, also seems more actively opposed
to any massive new free trade agree-
ment, based on the 20 years of job loss
and community devastation that they
see as products of NAFTA.
A wide array of mostly progressive
organizations, including 564 labor,
environmental, family farm, human
rights, and other groups, signed on to
a letter opposing the fast-track route
to passing the TPP. With this pressure
from the grassroots, “Democrats in
Congress are beginning to under-
stand not only the policy folly of TPP,
but the political folly associated with
it as well,” Stamoulis states.
With implacable opposition to the
TPP among both the president’s
strongest allies and most ardent ene-
mies, the TPP has little chance of pas-
sage before the November mid-term
elections, the Teamsters’ Dolan told
Dollars & Sense. But there is still a dan-
ger that Obama might seek to gain
passage of the Trans-Pacific
Partnership, using the fast-track pro-
cedure, in the “lame-duck” session
after the elections, when defeated
and retiring members of Congress are
no longer accountable to voters.
However, such a ploy would leave
Obama with a legacy of making little
headway for workers against rising in-
equality, while succeeding only in pro-
moting the TPP and other trade agree-
ments that will worsen America’s
glaring economic fault lines. D&S
R O G E R B Y B E E is a Milwaukee-based
writer on labor issues whose has contribut-
ed frequently to Dollars & Sense.
S O U R C E S : A complete list of sources is available
at dollarsandsense.org.
< Up Against the Wall Street Journal
Skew You!
WSJ Editors Upset that Obamacare Makes Workers Less Desperate
BY JOHN MILLER
T hey just couldn’t help themselves.
It wasn’t enough for the Wall Street
Journal editors that the Congressional
Budget Office (CBO) reported in
February that the Affordable Care Act
(ACA) was likely to reduce the size of
the U.S. workforce by the equivalent
of 2.5 million full-time workers in the
next decade.
No, the Journal editors just had to
add, “CBO doesn’t note, though we
will, that simply extending ‘free’ cover-
age skews job search decisions by
offering an in-kind bonus for unem-
ployment.”
I guess we should be grateful. It’s
not that often that the Journal edi-
tors lay bare their dedication to
maintaining the tremendous power
enjoyed by owners and employers
and the paucity of alternatives avail-
able to workers and job-seekers in
today’s labor market. The editors’
conception of freedom for workers
amounts to little more than nothing
left to lose—the right to seek jobs
under conditions dictated by em-
ployers and enforced by markets,
without public-policy interventions,
however modest, that might empow-
er job-seekers.
The ACA is a largely pro-business
type of reform. A conservative
(Heritage Foundation) designed poli-
cy, the ACA built reform on the exist-
ing private employer-provided
health insurance system, and pro-
tects the interests of all the big play-
ers in the industry (health-care pro-
viders, pharmaceutical companies,
and especially insurance companies).
So what is it, exactly, about the
ACA—and the CBO report—that pro-
voked the Wall Street Journal to lay
bare the power relations of the labor
market for all to see?
W $J
No less than the Congressional Budget
Office reported that the health law is caus
Americans to work less or not at all. CBO ing
says the economy will lose the equivalen
two million full-time workers by 2017 t of
and 2.5 million over the next decade.
CBO’s conclusion is that ObamaCare
will encourage people to supply less labo
ciding not to take a job or by working r by de-
fewer hours. CBO doesn’t note, though
that simply extending “free” coverage we will,
skews job search decisions by offering
bonus for unemployment. an in-kind
The White House seems to [think] that
the report is positive because “individu
will be empowered to make choices als
about their own lives and livelihoods”
the opportunity to pursue their dreams.” and “have
There you have it: the new American
of not working. dream
—“The Jobless Care Act: Congress’s
budget office says ObamaCare will incre
unemployment.” Review and Outlook, ase
The Wall Street Journal, Feb. 4, 2014
.
Inside the CBO Report
To begin with, what the CBO report, A decrease in the supply of labor is
“Labor Market Effects of the Affordable quite a different story than a decrease
Care Act,” didn’t say seemed to tick off in the demand for labor. A decrease in
the editors as much as the White the supply of labor says that workers
House’s insistence that the report was will choose to work fewer hours, not
good news. None of the CBO’s projec- that they will be unable to find work
tion of a smaller labor force comes because of Obamacare.
from a decrease in the demand for la- Why would workers choose to work
bor or the numbers of available fewer hours over the next decade?
jobs—a finding that surely would have Most fundamentally, fewer workers will
been a problem for workers and job- be stuck in their jobs because they are
seekers, and would have helped the afraid of losing their health insurance,
Journal editors build their case against as the White House emphasized. A New
the ACA. York Times editorial referred to this as
The CBO could not be clearer on just what it is: “freeing workers from the
this point. Its estimate of the decline in insurance trap.”
number of hours worked over the next The ACA’s subsidy for low-income
decade, in the words of the report, individuals to purchase private insurance
“stems almost entirely from a net de- is the most important reason for this
cline in the amount of labor that work- effect, according to CBO, followed by the
ers choose to supply, rather than from health-care law’s expansion of Medicaid.
a net drop in businesses’ demand for
labor.” The CBO calculates that the ex- Skewing in the Right Direction
pansion of Medicaid benefits and The CBO’s empirical estimates are, as
health-care subsidies for low-income they admit, “subject to substantial un-
households in the ACA will boost certainty.” But a reduction in the sup-
spending in the economy (net of high- ply of labor, whatever its exact size, will
er taxes) and, in turn, “boost demand surely alter labor-market outcomes.
for labor over the next few years.” For the WSJ editors, that amounts to a
  MARCH/APRIL 2014  l  DOLLARS & sense  l  9
< Up Against the Wall Street Journal
“skewing” of job-seekers’ decision mak-
ing that needs to opposed. But those
changes will empower workers, espe-
cially low-income workers.
The CBO’s findings show that the
ACA will reduce unemployment. The
equivalent of 2.5 million full-time
workers—counting both those who
are unemployed and those who are
employed but unable to find full-time
work—are looking for jobs. Due to
the ACA, the number of unemployed
and involuntarily part-time workers
will drop. And when full-time workers
are harder for employers to come by,
job-seekers should find their bargain-
ing power enhanced.
This should also drive up wages of
those who do have jobs. That’s a re-
sult that most any introductory eco-
nomics student would anticipate. A
decrease in the supply of labor re-
duces the equilibrium quantity of
labor (employment) and increases
the equilibrium price (the wage rate).
In addition, the ACA will reduce fed-
eral budget deficits. The report di-
rects the reader to a letter the CBO
sent to House Speaker Boehner esti-
mating that the likely effect of re-
pealing the ACA would be “a net in-
crease in the in federal budget
deficits of $109 billion over the 2013-
22 period.” The WSJ editors, who have
spilled a lot of ink railing against
budget deficits, never mention that
the ACA will reduce the deficit.
All told, the access to health care
afforded by Obamacare undoes the
necessity for job-seekers to take un-
desirable jobs to get health coverage
and for workers to stay in undesirable
jobs to keep it. The ACA also lowers
the unemployment rate, puts upward
pressure on wages, and reduces the
federal budget deficit.
That’s hardly the jobless catastro-
phe the editors predict. The ACA, how-
ever, will “skew” the balance of deci-
sion making in favor of job-seekers at
the expense of employers, just as the
Journal editors complain it will.
10  l  dollars & sense  l  MARCH/APRIL 2014
Coming in wake of over three decades
of ever-worsening inequality, in which
wages have stagnated and profits
boomed, while the economy has fal-
tered, a little skewing seems in order.
Universal Health Care and Power
It will take more than the ACA to turn
around the profound inequalities of
income and power that plague today’s
Why would workers
choose to work
fewer hours over the
next decade? Most
fundamentally, fewer
workers will be stuck
in their jobs because
they are afraid of
losing their health
insurance.
economy and that are enforced by the
free-market ideology espoused by the
WSJ editors and their ilk. Surely a single-
payer health-insurance system, or
“Medicare for all,” would have done
more to right the imbalance of power
that has crippled our economy and
concentrated income gains almost ex-
clusively among the most well-to-do.
While even genuinely universal
social programs cannot do it alone—
not without other equally fundamen-
tal changes, like bigger and stronger
labor unions or checks on finance and
globalization—they can do some real
good for most of us.
Truly universal health care would
tend to redistribute income and
power in society because it provides
all workers—not just low-income
workers—with the option of switch-
ing jobs without risking the loss of
health care. Workers with more op-
tions can push for higher wages.
Universal health-care coverage
would create a share of people’s in-
come that comes to them as mem-
bers of society, and is not propor-
tional to their market incomes or
dependent on having a job. That
contributes to greater income equal-
ity and economic security. And to
the extent that people have greater
economic security, their political as
well as their economic power tends
to grow.
Finally, a universal health-care pro-
gram that, unlike the ACA, operates
largely outside of the market would
help to show that problems can be
solved through shared responsibility.
In that way, healthcare as a right—a
service provided by all of us to all of
us—would also contribute to undoing
the notion, so prevalent for the last
few decades, that just about every-
thing should be “left to the market.”
If Obamacare turns out to be the
first step toward universal health care,
then perhaps it truly is a threat to the
powers-that-be and the free-market
ideologues. Imagine that not only
healthcare, but also things like educa-
tion, from daycare to college, were
provided universally—to all of us as a
right. That just might usher in an era
of economic security and well-being,
dramatically reducing the desperate
choices many face in today’s labor
market. Now that surely would render
the Journal editors apoplectic.
But I say—skew them. D&S
J O H N M I L L E R is a professor of eco-
nomics at Wheaton College and a mem-
ber of the Dollars & Sense collective.
S O U R C E S : Congressional Budget Office, The
Budget and Economic Outlook: 2014 to 2024,
Appendix B, “Updated Estimates of the Insurance
Coverage Provisions of the Affordable Care Act,” and
Appendix C: “Labor Market Effects of the Affordable
Care Act: Updated Estimates,” February 2014; CBO,
Letter to Honorable John Boehner, July 24, 2012;
Editorial Board, “Freeing Workers From the Insurance
Trap,” New York Times, Feb. 4, 2014.
Pot Economics
What’s the future of the American marijuana market?
By Dan Schneider

I N N O V E M B E R 2 0 1 2 , V OT E R S I N C O L O R A D O A N D WA S H I N GTO N S TAT E M A D E
historic decisions to legalize marijuana for recreational sale and use, flying in the face of anti-pot moralists, drug warriors,
and a century’s worth of prohibitionist policy. At the start of this year, these policies began to take effect, with pot shops
opening for business for the first time on this side of the Atlantic.
Once thought to be a mere pipe dream, legalization now seems like an inevitability; at the time of this writing, no fewer
than eleven states are considering some form of legislation to allow marijuana to be sold over the counter, and at least a dozen
others are considering decriminalization or medical-marijuana measures. Tired of federal foot-dragging, states as disparate as
Alaska, New Mexico, and Vermont are cautiously weighing the potential benefits of legalization, persuaded not only by
abstract arguments about individual liberty but also by hopes of pumping money into their economies. Meanwhile, advo-
cates have been quick to promote marijuana as just the medicine states need to fill their coffers, create new jobs, and cut costs
by keeping nonviolent drug offenders out of jail (see sidebar, “The Drug War: Wasting Lives and Dollars,” p. 12).
But what would the economic impact of widespread legalization be? There are dozens of factors to consider, particularly
on the revenue side of the equation: How many people will be consuming marijuana, and how much? What states stand to
benefit most from growing it? Will big business take over its production and sale, or will it remain in the hands of indepen-
dent growers and dealers? And how large, in dollar terms, might this whole sector end up?
The jury is still out on what the ultimate financial impact of legalization would be, but in the past few years a growing
body of research has explored the possible contours of a new marijuana economy. This, combined with some publicly avail-
able data and the wisdom of a few folks who have watched the legalization movement grow over the last 40 years, can give
us a good sense of how the plant might (or might not) live up to its proponents’ expectations.
››
It seems like high time for a little lesson in pot economics. ››
MARCH/APRIL 2014  l  DOLLARS & sense  l  11
 P ot Econom i cs
Out of the Shadows
Because marijuana is currently grown, distributed,
and sold almost entirely on the black market and is
used largely out of the public eye, assessing the
value of the national market for marijuana (includ-
ing imports and non-recreational uses, such as
hemp fiber) is tricky. The trade journal Medical
Marijuana Business Daily currently estimates that a
fully legalized cannabis market could be as large as
$46 billion per year, while more conservative
observers peg it at anywhere between $10 billion
and $40 billion.
There are about 7.6 million frequent marijuana
smokers in the United States, according to the
2012 National Survey on Drug Use and Health.
Nearly 23.9 million Americans use the drug semi-
regularly. Marijuana is sold widely on the black
market, and is readily available on street corners, in
bars and nightclubs, and in high-school hall-
ways (as 80% of students reported to the
National Institute on Drug Abuse
in 2012). Except for the rela-
tively small number
of people who
have
purchased medical marijuana through licensed dis-
pensaries, the vast majority of these users buy their
weed on this black market—either directly from
dealers or from friends with access to a dealer.
In a world where marijuana is legal to buy and
possess, this would not likely be the case for long.
Assuming that demand for the drug remains
relatively stable (see sidebar, “The Demand
Question”), a legal marketplace for marijuana will
likely replicate the current distribution system for
alcohol and be sold in stores with special permits.
Where exactly it could be sold would largely be a
matter for state and local regulators to decide, just
as it currently is with alcohol; municipalities might
allow lower-strength varieties to be sold in corner
stores (like beer and wine are in many states) or
coffee shops (à la Amsterdam), but it’s virtually cer-
tain that any store selling any quantity or type of
weed would need to get a special license.
Whatever the market’s size, the governments of
Colorado and Washington are hoping that taxing
the drug will help to bring in some badly needed
revenue. Washington placed a 25% excise tax on
marijuana with its new law, and Colorado voters
passed Proposition AA in November to approve a
15% excise tax and a 10% sales tax on recreational
marijuana. These measures are expected to raise
hundreds of millions of dollars in revenue for each

The Drug War: Wasting Lives and Dollars

A t the end of 2011, there were over seven million inmates, parolees, and probationers under supervision by the
U.S. corrections system—more than anywhere else on earth. Over 1.5 million of them were put into the system
for drug offenses, with marijuana the most common drug represented. That same year, 750,000 people were ar-
rested for marijuana-related crimes.
The federal government spends billions of dollars each year enforcing increasingly unpopular drug laws, including
$3.4 billion for marijuana alone in 2008, according to the conservative Cato Institute. Not to be outdone, the states
spend over $3.5 billion, to fail at eradicating marijuana growth, distribution, and especially use.
The result? The creation of millions of unnecessary “criminals,” the vast majority of whom are people of color.
Despite the fact that white and black people use marijuana at approximately the same rates, a black person living
in the United States is four times more likely to be arrested for simple marijuana possession than a white person. At
every stage after that, the criminal justice system is structured in such a way that people of color and low-income
people will face harsher penalties than their white or wealthy counterparts.
The human cost of marijuana prohibition—and the War on Drugs in general—is a critical element of drug poli-
cy reform, although outside the scope of this article. For some essential reading on the subject, consider Michelle
Alexander’s The New Jim Crow, Doug Fine’s Too High to Fail, or Jeffrey A. Miron’s Drug War Crimes: The Consequences
of Prohibition. Through their research and activism, these writers continue to reveal truths about the failures of pro-
hibition that numbers alone simply cannot.

12  l  dollars & sense  l  MARCH/APRIL 2014

state, including a projected $500 million for
Washington alone by 2015.
A study by the RAND Corporation’s Drug
Policy Research Center describes marijuana buyers
as a “Wal-Mart, not a Whole Foods” market, gen-
erally preferring the less expensive Mexican strains
to higher-quality bud from Northern California.
However, the market for domestic marijuana has
expanded in recent years. As NPR reported in
2011, commercial prices for marijuana in areas like
California have been falling for years, down to as
low as $2,500 per pound, as a crop of new suppli-
ers has sprouted up.
This brings up the issue of whether marijuana
will be allowed to move legally through interna-
tional trade channels, just as alcohol is today. If
marijuana is approved for importation, this could
certainly drive down its price in the United States,
just as Mexican imports already do. But Mexico
isn’t the only player in the game: this fall Uruguay
boldly announced that it would begin to allow the
use and sale of legal, regulated marijuana nation-
wide, at the astonishingly low price of $1 per gram
(compared to $15 or more per gram here). Tariffs
and added costs for packaging, shipping, and dis-
tribution would certainly bring the costs up on its
way to the United States, but if other countries fol-
low Uruguay’s example, U.S. producers may have
to lower prices to compete.
So while questions about who’s going to actually
buy this newly legal good are of interest to regula-
tors looking to collect taxes on marijuana to fund
state and local initiatives (both Colorado and
Washington have promised to spend millions of
the initial revenue on education), they are likely to
be affected by the rise of a legal supply of cannabis,
both at home and abroad. A supply that comes, of
course, from the farm.
Growth Market
Although it has been illegal to grow marijuana in
the United States for nearly a century, renegade
grow-ops have persisted in the face of draconian
crackdowns by local law enforcement and the fed-
eral Drug Enforcement Administration (DEA).
In 2012 alone, the DEA eradicated just under
four million plants (down from 6.7 million in
2011), over 92% of which came from outdoor
grow operations. Nevertheless, ineffective enforce-
ment policies and crafty concealment techniques
have allowed farmers to continually move their
product through back-channel distributors across
the country.
In order to flourish in the outdoors, the canna-
bis plant requires fertile soil that is slightly acidic,
daytime temperatures between 75 and 86 degrees
Fahrenheit, and at least twelve hours of sunlight per
day. There are numerous strains, which can be
grown in somewhat different climates, and for the
most part marijuana can be grown on a large scale
throughout most of the United States during the
summer months.
While property values, local water quality, and
the timeline of legalization in each state will ulti-
mately determine which states are able to take advan-
tage of this new cash crop, we may already have an
idea of who will be the biggest contender in the fight
to be to marijuana what Georgia is to peanuts.
A 2006 analysis of government eradication
efforts over the prior three years found that
marijuana would be one of the largest cash crops
in the United States if it were legal, and was
already “the top cash crop in twelve states, one
of the top three cash crops in 30 states, and one
of the top five cash crops in 39 states.”
In 2006, Jon Gettman, a former head of the
National Organization to Reform Marijuana Laws
(NORML) and an adjunct professor of public
administration at Shepard University in West
Virginia, published a paper estimating the scale of
American marijuana production. Through an
analysis of government eradication efforts over the
prior three years, Gettman found that marijuana
would be one of the largest cash crops in the
United States if it were legal, and was already “the
top cash crop in twelve states, one of the top three
cash crops in 30 states, and one of the top five
cash crops in 39 states.”
In addition, “five states (California, Tennessee,
Kentucky, Hawaii and Washington) had marijuana
crops worth over $1 billion,” with the national pot
crop worth more than our national soybean and
wheat crops combined. ››
MARCH/APRIL 2014  l  DOLLARS & sense  l  13
 P ot Econom i cs
Not all of the money to be made will come from
selling marijuana to consumers as a drug. While
only the female buds of the plant cannabis sativa
contain adequate levels of the chemical THC
(tetra-9-hydrocannibol) to cause a “high,” the rest
of the plant has a variety of applications that may
pique the interest of small and big business alike.
Hemp—as the non-intoxicating parts of the
cannabis plant are called—is used in over 25,000
products worldwide, according to a 2013 report
from the Congressional Research Service, and is
used frequently in products sold by companies like
The Body Shop and Whole Foods, which are
forced to import their hemp products due to U.S.
laws prohibiting the cultivation of any kind of can-
Marijuana use has not receded under
prohibition, just as alcohol use barely
receded during the 1920s. On the contrary,
the practice merely receded out of the public
eye, into private residences and illegal
speakeasies. As Will Rogers once said,
“Prohibition is better than no liquor at all.”
nabis. The same report estimated the current size
of the U.S. hemp market at about $500 million,
with a large potential to grow should its products
be more widely available for sale (both inside and
outside of the United States).
From the Corner to the Boardroom?
These mouth-watering figures have been and will
likely continue to be a part of the argument made
by politicians and business types in favor of mak-
ing marijuana legal. But it’s important to put them
in perspective, and consider who really stands to
gain. It’s not yet clear whether American pot grow-
ing and selling will, in the future, be managed by a
dispersed network of independent producers or fall
into the hands of large corporations.
Put simply, will smokers be buying from Mom
and Pop’s Pot Shop, or going down to the corner
store to buy a pack of Marlboro Greens?
14  l  dollars & sense  l  MARCH/APRIL 2014
In August 2013, a young entrepreneur named
Brian Laoruangroch made digital headlines when
a wacky commercial for his new company
Prohibition Brands premiered, featuring
Laoruangroch sporting a cowboy outfit and hokey
southern accent. In it, Laoruangroch touted what
he saw as an oncoming “green rush” in the mari-
juana industry as part of a pitch to raise “up to
$50 million through venture capital groups,
crowdfunding sites, and investors.”
Although most media outlets made light of the
crass humor and sexy cowgirls Laoruangroch used
in the commercial, it was interesting how the 2½
minute video put a face (in this case, a mustachioed
face) on the fast-growing realm of Big Marijuana—
that is, corporate production of legal marijuana.
When I interviewed Allen St. Pierre, the Executive
Director of NORML and a marijuana advocate for
several decades, he laughed at the mention of
Laoruangroch’s antics, but said that the emergence
of figures like him wasn’t surprising.
According to St. Pierre, the new generation of
pot entrepreneurs is more motivated by monetary
gains than their older, rogue counterparts, and
often come from much different backgrounds.
“These people have CVs not based on being the
toughest guy on the block, but from having gone
to Yale and Harvard,” he said.
Not that St. Pierre believes big business should
be shunned. In the past decade many legalization
advocates like NORML have been among the big-
gest proponents of a marriage between big business
and marijuana, seeing a so-called “free market”
approach as vital to marijuana’s successful transi-
tion from the black market.
“Do we gird against the idea of corporate
tobacco? Yeah, because that industry has been
shown to be really malevolent,” says St. Pierre. But
“NORML doesn’t think that corporations are evil,
or that capitalism is bad.”
There are other ominous signs of marijuana’s
oncoming corporatization on the horizon. Last
May, former Microsoft manager Jamen Shively
appeared side-by-side with former Mexican
President (and corporate executive) Vicente Fox
to promote the launch of his own weed com-
pany, Diego Pellicer. To Shively, Pellicer could
position itself early on to become the first
national, Starbucks-like brand associated with
marijuana, if it is able to get its financial ducks
in a row and avoid the ire of the DEA. Even the
weed magazine High Times has started its own
$100 million private equity fund in anticipation
of a coming windfall.
But just as the inaugural class of legal pot capi-
talists begins to rise, there are more than a few who
see big business interests as anathema to the spirit
of drug policy reform.
“My greatest apprehension is that profit, and
only profit, will become the main determining fac-
tor in how cannabis is distributed,” said Steve
DeAngelo, co-founder and executive director of
Oakland’s Harborside Health Center, the largest
medical marijuana dispensary in California.
DeAngelo says that while he understands that
the mainstreaming of marijuana sales will inevita-
bly lead some to seek wild profits, he fears for the
day when weed will be sold not by an informed
specialist but by an indifferent cashier at 7-Eleven
or Wal-Mart. To him, the not-for-profit model
developed by Harborside, which puts the needs of
his patients ahead of profit—in the form of free
patient services and charitable donations to the
community—would be much better.
At Harborside this includes not only providing
marijuana to those in need, but “wellness services”: a
library, a “grow your own” seminar, a holistic care
clinic, and a volunteer arrangement that allows
needy patients to receive a gram of medicine in
exchange for every hour put in. A system like this
could serve as a community-centric model for future
recreational sales. A profit-focused operation run
according to the Big Marijuana ethos may only be
interested in meeting its quarterly sales projections.
“If you have a non-profit environment, you’re
more likely to attract operators who are really
going to be dedicated to doing what’s best for
society, and not putting the bottom line first,” he
said. “Instead of being offered a variety [of ser-
vices] to benefit people, they’ll be moved in and
out as quickly as possible.”
(It should be noted that Harborside is not a
legally registered, tax-exempt non-profit—DeAn-
gelo merely operates “not for profit.” Due to mari-
juana’s current status under federal law, the IRS
will not allow medical marijuana dispensaries to
seek non-profit status.)
But St. Pierre and others argue that medi-
cal dispensary owners like DeAngelo are
merely businessmen themselves,
looking to protect

Prohibition’s End and the Demand Question ››

P rohibitionists have long held that marijuana legalization would cause rates of recreational use to skyrocket.
While the source of this claim is likely rooted more in fear than solid research, it’s worth examining in order to
better understand what the market for legal marijuana would look like if it became fully legal.
First, it’s important to remember that marijuana use has not receded under prohibition, just as alcohol use bare-
ly receded during the 1920s. On the contrary, the practice merely receded out of the public eye, into private resi-
dences and illegal speakeasies. As Will Rogers once said, “Prohibition is better than no liquor at all.”
After Prohibition was repealed in 1933, alcohol consumption did not rise as pro-temperance activists claimed,
but remained largely steady. In 1991 and 1999, Harvard economist Jeffrey Miron described in papers for the
National Bureau of Economic Research (NBER) how “prohibition had virtually no effect on alcohol consumption” nor
on its strongest correlate for heavy users, cirrhosis death rates.
While it’s impossible to predict in advance what the effects of legalization will be on marijuana-usage rates 20
years from now, many in the burgeoning marijuana industry believe that it will be approximately the same for mari-
juana as it was for alcohol. Some have held that legalization will lead to a brief increase in rates of usage, but as the
novelty wears off that brief spike will recede. In researching the efficacy of Colorado’s new cannabis tax, economists
at Colorado State University took it for granted that, with legalization, there will be a balancing convergence of
those “inclined to consume larger quantities because it is now legal” and “those who lose interest in marijuana now
that the ‘forbidden fruit’ aspect” is removed.

MARCH/APRIL 2014  l  DOLLARS & sense  l  15

 P ot Econom i cs
existing market share by badmouthing new com-
petition. One could hardly make the same claim
about Scott Greacen, executive director of the
Arcata, Calif.-based conservation group Friends
of Eel River. Situated on the coastline of the
notorious marijuana-farming Humboldt County,
Greacen’s organization has witnessed firsthand
some of the highs and lows for this new industry
as it’s blossomed from a small handful of
ex-hippies and cartel affiliates to a full-blown
source of regional livelihood.
“We see that there are big groups waiting in the
wings, ready to come in and start producing at
large scale,” Greacen said. “I think that’s a pretty
Those still skeptical of the march toward
legalization and regulation ought to
understand that the current early stage is the
best time to shape the industry’s future
character. Certainly not later, when entrenched
interests will be fighting tooth and nail to
protect their slices of the pie.
poor public-policy choice. Keeping it out of the
hands of the corporations is one of the things we
can do that makes sense.”
Of particular concern to Greacen is the environ-
mental impact that large corporate producers could
have, especially if met with lax, unspecific regula-
tions for growing ever-larger crops. Many grow
operations already make use of pesticides, rodenti-
cides, and other chemicals potentially harmful to
humans. With a $100 million dollar crop at stake,
a company like Prohibition Brands or Diego Pellicer
has a strong incentive to use such chemicals and cut
other corners in search of maximum profits, accord-
ing to Greacen.
But he stresses that not all is lost. Local govern-
ment initiatives in Humboldt and Mendocino
counties have proven promising to advocates for a
sustainable, independent producer-oriented pot
16  l  dollars & sense  l  MARCH/APRIL 2014
industry, with groups like the Emerald Growers
Association lending their support in the effort to
keep “homegrown” truly homegrown.
As to whether or not marijuana will ultimately
go the way of alcohol and tobacco with such an
enticing multibillion dollar carrot dangling on the
horizon, Greacen gives the only answer he can so
early in the game: “We’ll see.”
For the broader legalized market, the future
may come sooner than some might think, given
how much interest has been stoked by the ongoing
experiments in Colorado and Washington. Those
still skeptical of the march towards legalization and
regulation ought to understand that the current
early stage is the best time to shape the industry’s
future character. Certainly not later, when
entrenched interests will be fighting tooth and nail
to protect their slices of the pie.
So for anyone with an alternative view of what
the future landscape ought to look like—whether
informal, independent growers and sellers, non-
profit and community-oriented organizations, or
small businesses—the time is ripe to get ahead of
the would-be cannabis carpetbaggers. D&S
D A N S C H N EI D E R is a freelance journalist and a
member of the Dollars & Sense collective.
S o u r c e s : Marijuana Business Factbook 2013, Medical Marijuana
Business Daily (mmjbusinessdaily.com); Washington Office of
Financial Management, August 2012, (ofm.wa.gov); Michael Mont-
gomery, “Plummeting Marijuana Prices Create a Panic in California,”
National Public Radio (npr.org); Jon Gettman, Ph.D., “Marijuana
Production in the United States (2006),” Bulletin of Cannabis Reform,
December 2006 (drugscience.org); Renée Johnson, “Hemp as an
Agricultural Commodity,” Congressional Research Service, July 24,
2013 (fas.org/sgp/crs); Charles Brown and Phyllis Resnick, “The Fiscal
Impact of Amendment 64 on State Revenues,” Colorado Futures
Center, Colorado State University, April 24, 2013 (webcom.colostate.
edu); American Civil Liberties Union (ACLU), The War on Marijuana in
Black and White: Billions of Dollars Wasted on Racially Biased Arrests,
June 2013 (aclu.org).
Lake Country, Not Trash Country!
The struggle for environmental protection in New York State’s Finger Lakes region.

B y Pat r i c i a R o d r I g u e z

I
››
T SEEMED LIKE A TYPICAL MEETING OF CONCERNED
Active Citizens of Seneca County (CCSC), but on the evening of September 11, 2013,
Culture there was a lot to share among the twenty or so in attendance. Glen Silver and Karen
The 6,000-ton-a-day
Seneca Meadows
Rothfuss, two local residents who have been organizing resistance against landfill expan- landfill in Seneca
sions in the Finger Lakes region of upstate New York told fellow CCSC members about Falls, New York.
the previous night’s meeting of the Seneca County Board of Supervisors (BOS). Photo credit:
A month before, the board had passed two resolutions. The first requested a recon- Finger Lakes Zero
sideration of the sales and use tax exemptions provided by the Seneca County Waste Coalition
(flzw.org)
Industrial Development Agency to the local landfill company Seneca Meadows. The second, by a vote
of 11-0, rejected a railroad spur project that would bring garbage-by-rail to the Waterloo, N.Y., landfill.
Both Silver and Rothfuss had spoken out at the August meeting to challenge representatives of the land-
fill company who were pleading against the two resolutions. Seneca Meadows is owned by the Canadian
company Progressive Waste Solutions, which operates landfills both in Canada and in many southern
and northeastern U.S. states.
Located five hours away from big cities like New York and Toronto, a few hours from medium-sized cit-
ies like Rochester (to the northwest), and just an hour away from Ithaca, the Finger Lakes region contains
beautiful glacial lakes, national forests, and numerous wineries. Despite the region’s relatively stable income
from tourism, many of the rural townships in the Finger Lakes are desperately in need of economic invest-
ment and revenue. According to Department of Environmental Conservation data, the region including
the Finger Lakes (region 8) takes in the largest percentage (45%) of the total waste disposed throughout
the state. Besides the Seneca Meadows landfill in Seneca County, the town of Flint in neighboring Ontario
County hosts a landfill operated by Casella Waste Services. ››
MARCH/APRIL 2014  l  DOLLARS & sense  l  17
 T rash i ng th e F i ng e r L a k e s
The Railroad Spur and Other Concerns
CCSC folks certainly celebrated the two BOS reso-
lutions at their September 11 meeting, but at the
same time they understood that the unanimous
vote on the railroad spur line was simply one vic-
tory. They will need to keep fighting other attempts
to push through the rail extension, which would
involve the additional construction of two indus-
trial rail yards (four and eight parallel tracks respec-
tively) located at one of the busiest traffic cross-
roads in the area.
Seneca Meadows already brings in 6,000 tons
of garbage a day from New Jersey, Pennsylvania,
several New England states, and Canada. (In
2001, the landfill was permitted to increase its
capacity from 4,700 tons, according to CCSC
members.) Every year, more than 75,000
Jobs, tax revenue, and the company’s charitable
contributions are not minor issues for cash-
strapped, low-income communities.
Such considerations give the company a lot of
leverage to keep its operations going, and to
push for expansion.
18-wheeler trucks transport the trash into the
landfill, and will continue to do so at least until
2023, when the company’s dumping permit
expires. Over the past decade, 14 landfills in New
York State have reached capacity, according to the
2013 documentary Trashed: No Place for Waste.
Considering this trend, future requests from land-
fill companies for permit renovations and landfill
expansions are highly probable.
Seneca Meadows argues that the rail plan will
take hundreds of trash trucks off local roads and
transport waste and materials in more energy-
efficient and environmentally friendly ways, while
not increasing the amount of trash the landfill is
allowed to receive under its permit. Company exec-
utives also argue that the plan will bring jobs to the
community, and help continue low-cost electricity
and heat generation for local schools and homes
18  l  dollars & sense  l  MARCH/APRIL 2014
(from garbage-generated methane gas). Seneca
Meadows currently offers 150 local jobs, provides
tax revenue that keeps local residents’ taxes from
increasing, and makes contributions to area schools,
a local hospice, a food distribution campaign for
children in need, and environmental educational
workshops for the community. It also has created
the Seneca Meadows Wetlands Preserve, with trails
open to the public throughout the year. These are
not minor issues for cash-strapped, low-income
communities. Such considerations gives the com-
pany a lot of leverage to keep its operations going,
and push for expansion.
Concerned Citizens of Seneca County has raised
the question of why Seneca Meadows would want
to begin garbage by rail, if not to increase dumping
capacity. One of the group’s fears is that the rail will
enable the other trash company operating in the
area, Casella Waste, to bring increased trash to the
region as well. “With the rail,” they argue, “all
options are open.”
CCSC argues that there are better economic
development options than to turn the region into
“ground zero for trash”—and for water and air pol-
lution. For one, they argue that much of what goes
into the landfill can be sorted out for reuse, and
between 50-60% could be composted, thus pro-
viding more and better-paying jobs to the local
population, also reducing methane emissions—a
major contributor to global climate change.
Changing consumer habits, like reducing wasteful
packaging or the use of one-time use items, is also
part of the new zero-waste philosophy they want to
help instill. Furthermore, they argue, local govern-
ment should not be in the business of subsidizing
corporations; instead, officials at every level of gov-
ernment could push for product stewardship,
where the cost of disposing of used products is paid
by the manufacturer, not the communities.
Town, County, State, and Nation
The Seneca County Board of Supervisors is just
one of the many local and state institutions where
decisions are made about this type of project. The
layers of overlapping jurisdictions are complex.
Town, county, and state institutions are numer-
ous, and the company seems determined to push
their interests in one venue and then another,
inevitably requiring local activists to try to figure
out how to navigate myriad different institutions.
One of these venues is the Seneca Falls Town
Planning Board, which had approved a smaller
portion of the railroad plans in 2007 (before
CCSC was formed). Seneca County planning
units, particularly the Industrial Development
Agency, are also key.
In 2009, Seneca County applied for two grants
for stimulus funds to build permanent rail infra-
structure to the Seneca Meadows landfill—one
through the New York State Department of
Transportation (for $2.4 million dollars), the other,
for a portion of a federal Transportation Investment
Generating Economic Recovery (TIGER) grant
(for over $17 million dollars). Nothing came of the
rail expansion then, perhaps because the Finger
Lakes Zero Waste Coalition (FLZWC) and CCSC
sent several letters opposing the rail plan to the
governor and other state and local officials.
Local residents are certainly worried about local
government support for the renewed rail plan.
When landfill officials began pushing the railroad
expansion in town council meetings, residents got
active and raised concerns. Yet, the plans do not
seem to fade away, creating a war of attrition
between the landfill company, the local govern-
ment, and local businesses and residents. The lat-
est iteration of this conflict involves a complaint
filed December 2013 in Seneca County Court by
a local business seeking to annul the decision of
the Seneca Falls Town Board to approve the zon-
ing change from a commercial and agricultural
zone to a manufacturing zone. The August 6,
2013, approval of the change was made upon
request by Seneca Meadows, in order to let the
company begin soil excavations (to provide top-
layer covering of the garbage). The challenger,
William Lutz, president of the bottle company
Waterloo Containers, alleges that the Town Board
failed to follow legal procedures and environmen-
tal guidelines that require citizen input. He argues
that “an abbreviated, closely held review allowed
the zoning change to proceed unchallenged. We
are seeking to have the town conduct the proper
review with full citizen participation.”
So far, local activism has been able to keep con-
struction of the railroad spur at bay. Part of the
story behind the recent Board of Supervisors vote,
for example, is the pressure activists have brought
to bear on the different boards. “A lot of the work
behind the 11-0 vote was done behind the scenes,
contacting officials,” explains Glen Silver. “In the
past, the Seneca County Board of Supervisors had
pushed for the TIGER grant application [to bring
trash by train], and now three years later they have
largely gone in our direction [against the railroad
spur project].”
The Harm Done
Landfills and the transportation of garbage to these
landfills do not just create minor nuisances.
Though New York state has 18 landfills that are
operated by local governments and that handle
only refuse generated locally, the eight larger land-
fills in the state are operated privately, and take in
solid waste, as well as contaminated soil, incinera-
tor ash, sewage sludge, industrial and medical
waste, pieces of shredded cars, storm debris, and
other materials. The landfill companies in the
area allege that the collection of landfill
materials adheres to state regulations, that they use
state-of-the-art systems such as bottom plastic lin-
ers to contain seepage, and that many companies
have environmentally sound ways to generate elec-
tricity from methane gas collected in pipes that lie
beneath the waste. But both the companies and the
federal Environmental Protection Agency (EPA)
also acknowledge that some gas escapes the pipe
system and some seepage escapes liners. This means
emissions of hazardous gases known to cause can-
cer and other diseases and of toxic liquid “leachates”
that seep into the recreational waterways and lakes,
contaminating the local drinking water systems. A
big concern for the CCSC is that many residential
areas and schools are close to and downwind from
the landfill, which means that children and seniors
(some of the most vulnerable populations) are
exposed to the dangerous gases during the entire
year, 24 hours a day.
Other problems have also been raised by resi-
dents in Seneca County, like the company’s appli-
cation for a permit to operate a clay mine to dig
up soil for the landfill on the north side of
Waterloo. The mine would be about 45 feet deep
and located on portions of a 120-acre parcel of
farmland directly across the road from Waterloo
village residential neighborhoods, a middle/high
school, and three youth-league ball fields. CCSC
has had several state regulatory hearings on this
issue, which is still on the table for town officials
to decide, despite a stamp of approval from the
New York State Department of Environmental
Conservation (DEC). One of the nearly 60 letters
submitted against the mine project during the ››
MARCH/APRIL 2014  l  DOLLARS & sense  l  19
 Europ
T rash ieng
and
th th
e Fei ng
G lobal
e r L a kCersi s i s
public comment period reads: “Seneca Meadows
continues to try and convince us what a good
neighbor they are to the community ... But in the
greater community we recognize that these dona-
tions are only a thinly veiled enticement to pur-
chase compliance and support for their next proj-
ect.” At the same time, other residents (including
employees of Seneca Meadows), wrote letters of
support, one of which reads: “Seneca Meadows
has always operated within the best interests of its
neighbors, and always listens and responds to rea-
sonable concerns of the community.”
If past experiences with the consequences of
garbage by rail are any indication, there are serious
››
Members of
negative effects on communities all along the rail
Concerned Citizens of lines (not just near the landfill site). In 2010, resi-
Seneca County dents in Middle Village (Queens, N.Y.), began a
assemble on the front steady campaign of complaints about noise and
steps of the Waterloo,
N.Y. Town Hall on odor when a landfill on Staten Island was closed
August 16, 2011, to and local garbage began to be transported through
protest the Town’s their community by rail en route to Virginia.
proposed resolution to
repeal the Town’s More recently, local citizen groups have noted
mining law . The problems with the lack of disclosure of what comes
resolution was into the landfill, and from where. A recent news
ultimately defeated.
article in a Rochester newspaper discusses a lawsuit
Photo credit: being brought by Canadian local authorities against
Katherine Bourbeau WeCare Organics. The local authorities and resi-
dents of a town near Toronto had paid $6 million
over the span of a few years for their organic waste
20  l  dollars & sense  l  MARCH/APRIL 2014
to be turned into compost at a WeCare Organics
facility in Massachusetts. Instead, the lawsuit
alleges, the company dumped the waste into the
Seneca Meadows landfill. Incidentally, the WeCare
sister company in Massachusetts is also being sued
in federal court by City of Marlborough authori-
ties for “violating environmental laws and unleash-
ing a foul odor on neighbors.”
The Battle in Ontario County
Less than 15 miles from the Seneca County land-
fill, in neighboring Ontario County, the Finger
Lakes Zero Waste Coalition (FLZWC) is waging a
similar fight against a landfill, this one operated by
Casella Waste Services. Casella Waste is a Vermont-
based company that operates several landfills in the
northeast United States. The Ontario County
landfill has become the target of complaints about
odor and air pollution.
FLZWC, an all-volunteer organization dedi-
cated to promoting sustainable waste manage-
ment, filed a petition in December 2012 for the
EPA to intervene to stop excessive toxic emissions
from the Casella Waste landfill. According to the
petition, the excessive toxic pollution results from
underreporting in county and company emission
reports of toxic releases from materials such as
contaminated soil, industrial sludge, construction
and demolition debris, and incinerator ash used
as cover at the landfill. The same underreporting
is alleged for the landfill’s gas-to-energy program.
The petition was based on information gathered
by members of FLZWC coalition from docu-
ments obtained under the Freedom of Information
Act (FOIA). The petitioners requested that the
EPA enforce the controls necessary to adequately
destroy toxic emissions stemming from all of the
landfill operations. The petition is still in process,
as is a similar petition by the CCSC; to date, nei-
ther group has heard back from EPA officials. The
two groups are working together to challenge the
lack of regulations on landfill corporations in the
Finger Lakes.
Although Ontario County receives $2 million
per year under its long-term operating agreement
with Casella Waste Services (possibly more, since
the county gets paid extra if county officials approve
an excess over the limit of 100,000 tons a year
allowed under the agreement). Casella Waste, like
Seneca Meadows, has contributed to many local
government projects, including a local jail
expansion and a 911 telephone system, with an
additional $18 million promised if an expansion
permit is approved. There are, however, tremen-
dous costs for residents living near the landfill, in
terms of traffic, noise, contamination, smell, and
reduced property values. County officials have
adopted some input from concerned citizens, sub-
mitted in venues like public commentaries on a
ten-year Ontario County Solid Waste Management
Plan. Local officials, however, appear to be taking
cues from state officials, especially the Department
of Environmental Conservation (DEC) environ-
mental and health requirements.
For instance, at a January 2014 meeting of the
Ontario County Environmental Quality
Committee (EQC, a committee of the county’s
Board of Supervisors), its representatives favorably
assessed a state initiative to reduce waste exported
from New York to other states like New Jersey,
Pennsylvania, and Ohio. This is a budget-cutting
measure, since the export of waste requires ship-
ping-related spending by the state. But the imple-
mentation of these initiatives is still at a very early
stage: Ontario County committee members noted
that not enough data has yet been collected about
what and how much goes into the waste stream
from local municipalities. The EQC meeting
ended with the approval of a plan to ask each
municipality in the county to attempt its own mea-
surements. The committee also urged municipali-
ties to figure out how they could take part in a state
revenue-sharing plan to reduce waste going into
the solid-waste system, a plan that the administra-
tors emphasized had been approved by the DEC.
According to FLZWC activist Katherine Bennet
Roll, however, it is unclear that state funding would
be forthcoming, as there seems to be a constant
push from the state to create more room for trash.
In the meantime, the Board of Supervisors contin-
ues to consider an expansion of the Ontario County
landfill (to around 43 acres), even though the last
expansion was granted only in 2007-2008. Back
then, county officials approved a 49.9% increase in
the amount of trash the landfill could accept each
year (50% would have necessitated greater citizen
approval processes).
If the expansion is approved, Ontario County’s
landfill could add a total of another 11.8 million
cubic yards of trash (to the existing 11.5 million
cubic yards), a sum which would be equivalent to
seven times the volume of the Egypt’s Great
Pyramid of Giza, according to FLZWC. To com-
pound the problem, even if the companies leave at
the end of the contract in 2023, there is a potential
threat for hundreds of years, as the technique of
layering clay beneath the usual liner as a barrier to
toxic seepage has repeatedly proven flawed.
Combined, the two Finger Lakes area landfills pro-
duce over 47 million gallons of toxic liquid run-off
a year that pass through waste-water treatment
plants and end up in the nearby lakes. Meanwhile,
the landfills produce methane, some of which is
used for electricity or heat. The EPA estimates,
however, that the collection process only captures
If its expansion is approved, the landfill could
add a total of another 11.8 million cubic yards of
trash (to the existing 11.5 million cubic yards), a
sum which would be equivalent to seven times
the volume of Egypt’s Great Pyramid of Giza.
about 75% of the gas—the rest goes into the air as
pollution. As FLZWC member Katie Bennet Roll
explained in an op-ed in the Finger Lakes Times
(March 24, 2013), “Any expansion [of the land-
fills] will only increase the amount of pollutants in
the air we breathe every day.”
Citizens in Action
It should come as no surprise that concerned local
residents express very little trust in most state and
local officials. At a meeting during a “Landfill
Summit” held at Hobart and William Smith
College (Geneva, N.Y.) in April 2013, members of
FLZWC and CCSC had a long list of concerns
related to official accountability. For instance,
Ontario County administrators had failed to
implement a mandatory recycling law that took
effect in 1992 (Local Law # 6). State officials did
not create any disincentives for counties to export
their waste to the Finger Lakes landfills (like calling
attention to negative impacts on local communi-
ties). The DEC refused to impose sanctions on the
landfill companies for violating laws prohibiting
odor outside the landfill’s geographic footprint. In
essence, activists demanded accountability from
officials at all levels.
››
MARCH/APRIL 2014  l  DOLLARS & sense  l  21
 T rash i ng th e F i ng e r L a k e s
What is more of a (welcome) surprise is the
work being done by these local activist organiza-
tions, and how it may further the search for solu-
tions to the problems created by landfills and,
largely, by consumerism. As Glen Silver, president
of CCSC and vice president of FLZWC, explains,
“Neither the DEC nor anyone is there to protect
us; instead, the local community can and must
make changes itself, but only if awakened.”
Despite the recent victories, the groups recognize
the need for ongoing vigilance. Seneca Meadows
is currently sending mass mailings of glossy litera-
ture to all of the local residents, trying to con-
vince them of what a “valued partner, trusted
neighbor” they are. CCSC and FLZWC, in
response, have alerted local residents to write let-
ters to the editor and join in local fundraisers to
raise money to pay for upcoming court filings and
other legal challenges.
Activism is difficult and costly. Town meetings
are often called or rescheduled at the last minute,
making it hard for citizens to attend important
decision-making meetings. Citizens have to make
time to litigate in the courts (and to learn how).
They may pay out of their own pockets for litiga-
tion or for independent environmental studies that
allow them to challenge company claims. Despite
these obstacles, they fight for the community, and
results—such as the 2009 creation of the first-ever
“green citizen committees” for Seneca County and
neighboring Wayne County—are often promising.
The legacy they want to leave is the preservation of
their neighborhoods for future inhabitants, and
not for companies who profit from dumping urban
wastes on rural lands.
The Big Picture
At the national level, the EPA reports that the aver-
age American discards almost 4.5 pounds of gar-
bage every day. Accounting also for construction
and demolition waste, and non-hazardous indus-
trial waste, those figures expand tremendously: the
solid-waste industry manages nearly 545 million
tons of solid waste each year, equal to the weight of
2.3 million Boeing 747s.
According to the documentary film Trashed,
which portrays the global problem of landfills, the
world’s population and environment currently co-
exist with 200 billion plastic bottles, 58 billion
22  l  dollars & sense  l  MARCH/APRIL 2014
disposable cups, and many billions of plastic bags.
Municipal-level figures from the EPA note that
more than 30% of municipal solid waste is packag-
ing, and 40% of that waste is plastic.
Zero-waste can be a local development alterna-
tive to landfill and incinerator-based waste systems.
As the DEC has itself noted: “for every job required
to operate a landfill or municipal waste combustor,
ten jobs can be created to process recyclable mate-
rials and prepare them for market.” Many local
initiatives around zero waste have been incredibly
successful, such as San Francisco’s source separa-
tion and community compost program (which
produces organic material used in local agricul-
ture). Besides, the emphasis of zero-waste initia-
tives in general on reduction, reuse, recycling, and
renewable energy is extremely timely, considering
the alarming national-level waste figures.
Research on landfill location suggests that
low potential for citizen litigation and long-term
multi-leveled institutional openness to landfill
companies are key factors in future sitings.
Company officials operating in the Finger Lakes,
though, may have failed to do their homework
fully. Recently, local citizens celebrated the pre-
vention of a new landfill in Arcadia, Wayne
County, N.Y. Meanwhile, the coalitions and
groups of activists in the Finger Lakes will con-
tinue to press for greater regulation, environ-
mentally minded and just policies, greater pub-
lic accountability, and an end to the expansion
of landfills in the region. As Glen Silver notes,
“there is an exciting thing about community
action … there are amazing things that people
can do—many times beyond what they ever
thought possible—when they become commit-
ted to these issues.” D&S
PAT R I C I A R O D R I G U E Z is an associate profes-
sor of politics at Ithaca College (Ithaca, N.Y.).
S O U R C E S : Rulings of the Administrative Law Judge on Issues and
Party Status, Seneca Meadows, Inc. application for a Mined Land
Reclamation Permit, Application No. 8-4538-00094-00001, March 26,
2012 (dec.ny.gov); David Shaw, ‘Waterloo Container Sues Seneca Falls
Over Zoning Change for Rail-Spur Project’, Finger Lakes Times, Decem-
ber 15, 2013; Steve Orr, ‘Watchdog: Rochester Region King of the Hill
in Trash’, Democrat and Chronicle, November 11, 2013; Steve Orr,
‘Lawsuits Raise Stink over Firm’s Cross-border Composting Deal’,
Democrat and Chronicle, January 3, 2014; Concerned Citizens of
Seneca county (ccseneca.org); Finger Lakes Zero Waste Coalition (flzw.
org); Trashed: No Place for Waste website (trashedfilm.com).
 The gloating at Argentina’s supposed
demise was clear inthe cover of the
February 15-21, 2014, issue of The
Economist—featuring a forlorn Lionel
Messi, Argentina’s international soccer
star, in the country’s familiar blue-and-
white national team jersey.

Don’t Cry for Argentina—Not Yet!

The country’s recent policy moves do not mean its economic model is doomed.
But they may not be the best way forward.
B y M at í a s V e r n e n g o

T H E R E C E N T D E P R E C I AT I O N O F T H E A RG E N T I N E P E S O —
the currency lost around 20% of its value against the dollar between January 19 and 29—has been
described by the international financial press with thinly veiled glee, as if it represents the collapse of the
country’s economic model. That is, it has been used as an argument that the country’s economic recovery
(since it defaulted on its public debt in 2002) should not be taken as an example by other countries in dis-
tress, like Greece and other Southern European countries. The Economist (Feb. 15, 2014) suggests that the
recent crisis is one more step in Argentina’s supposed long secular decline. The culprit in this morality play
and the perils for other countries to avoid: “weak institutions, nativist politicians, lazy dependence on a few
assets and a persistent refusal to confront reality.”
In particular, the default, the country’s tough renegotiation with creditors, and (since 2003, during
the presidencies of Néstor Kirchner and Cristina Fernández de Kirchner) the determination to pursue
redistributive policies and fiscal stimulus have been seen with dismay by international finance—who
insisted that the Argentine heresy must inevitably be punished by ending in terrible disaster. This
kind of view implies that national economic policies should be aimed at pleasing international finan-
cial markets—in the words of the Financial Times, promoting “confidence in the country’s economic
management”—and that the recent devaluation is necessary for solving Argentina’s “unsustainable
economic imbalances.” ››
MARCH/APRIL 2014  l  DOLLARS & sense  l  23
 D on ’ T C ry for A rg e nt i na
Why Devaluation Now?
The problem with the conventional story about
the current Argentinean crisis is that, in all truth,
the external situation is by no means dire. The
current account (see glossary) is almost balanced,
with a relatively small deficit, and under normal
circumstances the country’s international reserves
are more than sufficient to cover its short-term
external obligations. In other words, the devalu-
ation is not a response to a balance of payments
crisis—where the country does not have the
means, from exports, other foreign earnings,
credit, or reserves, to pay its bills to the rest of
The problem with the conventional story
about the current Argentinean crisis is that,
in all truth, the external situation is by no
means dire. Argentina can still pay its
external obligations and the currency is not
really more overvalued than those of other
countries in the region.
the world. Nor is Argentina facing a currency
crisis per se: holders of pesos are not rushing to
cash them in for dollars as a result of the fear of
another default. Argentina can still pay its exter-
nal obligations and the currency is not really
more overvalued than those of other countries in
the region.
Rather, the government’s recent moves are
actually part of a deliberate policy decision to
accelerate the depreciation of the currency. The
gradual loosening of controls on the trading of
dollars, which was heavily regulated, was part of
the same policy decision, with the objective of let-
ting the official exchange rate move closer to the
black-market rate.
This all led up to the country’s renegotiation of
its debt with the Paris Club—a international
financial institution whose 19 permanent mem-
bers include the United States, most of western
Europe, Japan, and Russia—to regain access to
24  l  dollars & sense  l  MARCH/APRIL 2014
international financial markets. This, in fact, is
part of a strategy to please international financial
markets—making the markets more confident of
the country’s future trade surpluses and building
up reserves that would make Argentina a more
attractive borrower. The change in policy is aimed
at heading off the possibility of a balance of pay-
ments crisis in the future.
However, the devaluation and rapprochement
with international financial markets carries signifi-
cant risks—not only because the devaluation might
not be sufficient to improve the country’s access to
international credit and promote growth, but more
importantly because it might detonate the very cri-
sis that it was intended to prevent. If the govern-
ment is seen as unable to control a “run” on the
currency, the devaluation might get out of hand,
the country would eventually run out of reserves,
and a new default would be the result.
The Debate About Devaluation
There are two views of about the role of the deval-
uation in Argentina. One view, associated with
the New Developmentalist school, whose leading
figures include economists Luiz Carlos Bresser-
Pereira in Brazil and Roberto Frenkel in Argentina.
(See James M. Cypher, “Brazil’s ‘Big Push,’”
Dollars & Sense, March/April 2013.) The New
Developmentalist perspective emphasizes export-
oriented growth—perhaps with a greater role for
the state than in neoliberal views—on the basis of
a devalued currency, lower wages, and a relatively
stable macroeconomy. On this last point, it has a
predilection for “sound” fiscal policy; that is, run-
ning government surpluses in order to contain
excess demand that can cause inflation. In this
view, bringing down the country’s real exchange
rate was inevitable and necessary to promote
greater competitiveness and growth. The idea is
that depreciation makes foreign goods more
expensive in the domestic currency (reducing
imports) and domestic goods cheaper in dollars
(promoting higher exports). Bresser-Pereira has
argued that this devaluation is likely to be good
for Argentina. In his words:
[T]he peso regained the lost competitive equi-
librium; the government declared that the peso
had reached the desired level …. If this strat-
egy of keeping the exchange rate at the com-
petitive level is successful, profit expectations
 will rise, business enterprises will invest again,
the current account surplus will be restored,
and the Argentinian crisis will be over.
The alternative view, which seems more plau-
sible, is based on the old Structuralist school. The
Structuralists emphasized the structural con-
straints on economic growth and development, in
particular developing countries’ need for income
and wealth redistribution to promote domestic
demand and the need to overcome their subordi-
nate position in the world economy. They would
suggest that the devaluation was not inevitable
and is not particularly good. First, it will be infla-
tionary, since it will lead to higher prices of
imported goods, which includes intermediate and
capital goods needed for production, and might
lead to demands for higher nominal wages, once
workers’ purchasing power falls. Also, devaluation
might be contractionary, causing output to fall
since lower real wages will lead to a contraction of
demand. Further, devaluation tends to favor
exporters, and in the case of Argentina would
benefit the agribusiness sector, redistributing
income towards groups with a lower propensity to
spend, so also contributing to the contraction of
demand. (The reduced growth will hold the cur-
rent account reasonably close to balance, by the
way, as the reduction in overall domestic demand
will reduce demand for imports.)
In short, the Structuralists argue that the deval-
uation will worsen inflation, which has been rela-
tively high at around 30%, and that it will not
solve the external constraint—the limits on the
country’s sustainable deficits with the rest of the
world, given its borrowing capacity and reserves. In
this sense, the crisis, manufactured though it is, is
actually worse than most people understand, since
it will not solve any of the pressing problems in
Argentina: how to continue to grow without hit-
ting the external constraint, maintain relative price
stability, and reduce income inequality.
Headed Towards Disaster? Maybe Not.
The inevitability of a “tighter” monetary policy is a
given: Argentina’s central bank, like those of other
developing countries, has already raised interest
rates significantly. Higher domestic interest rates
will make the country more attractive to investors,
and so help it avoid additional capital flight and a
further fall in its international reserves. ››
Glossary of International Accounts
and Currency Terms
Currency depreciation (and devaluation)—Both of these
terms refer to a decline in a particular currency’s exchange rate
relative to another currency (e.g., a depreciation of the
Argentine peso means that a single peso now buys fewer dol-
lars than it used to). Devaluation refers especially to declines in
a country’s exchange rate resulting from deliberate policy
moves by that country’s government.
Currency crisis—A currency crisis is a situation in which many
holders of a country’s currency decide to sell it off (and buy
other assets instead) at the same time, leading to a dramatic
decline in the value of the currency. Such crises often follow
bubbles, during which international capital flows (especially
speculative short-term flows) push up a country’s exchange
rate dramatically.
Current account deficit—In a country’s current account bal-
ance, its exports, factor incomes from the rest of the world
(such as profits of its companies’ operations abroad), and inter-
national transfers received (like foreign aid) count in the “plus”
column. Its imports, factor payments to the rest of the world,
and international transfers paid count in the “minus” column.
The current account balance is the net of these two columns. A
current account deficit occurs when the current account bal-
ance is negative.
Balance of payments—A country’s balance of payments is
equal to the total payments a country receives from the rest of
the world minus the total payments it makes to the rest of the
world. Payments can be made using not only sources of funds
listed in the current account, but also from loans, existing re-
serves, etc. A balance of payments crisis occurs when a country
does not have the means to pay its international bills as they
come due (even by borrowing or spending reserves).
Import substitution—Import substitution happens when do-
mestic industries supply goods and services that a country
had previously imported. Many Latin American governments
pursued import-substitution industrialization (ISI) policies,
promoting the development of domestic manufacturing in-
dustries with the aim of reducing imports of manufactured
goods, through the 1970s. These policies were largely aban-
doned as neoliberal economic policies swept through the re-
gion in the 1980s.
MARCH/APRIL 2014  l  DOLLARS & sense  l  25
 D on ’ T C ry for A rg e nt i na other “peripheral” countries as well (Brazil,
Thailand, and Turkey, to name a few), will not
turn into a major crisis.
If the government, on top of the monetary
In addition, while the commodities boom—
tightening, adds fiscal austerity, the resulting eco-
the rapid rise in prices of agricultural, mineral,
nomic slowdown will surely be significant and a
and energy goods in the 2000s—is long over,
recession could even result. The government’s
commodity prices might not collapse. So com-
extension of transfer programs—with the imple-
modities exporters’ balance of payments will not
mentation of the Plan Progresar, which gives
worsen immediately. There will still be breathing
money to young students without jobs—might
room to solve the long-term problems associated
indicate the opposite inclination, for now. But
with excessive dependence on commodities
the crisis might force the government to slow
exports, and to pursue the difficult but necessary
down the economy and embrace fiscal austerity to
process of import substitution (that is, developing
avoid a more severe current account deficit. In
domestic industries to supply items that now have
this scenario, the contractionary effects of the
to be imported).
devaluation and fiscal austerity would lower the
country’s imports. If the country were to run out
The Way Out
of reserves anyway, then a significant collapse of
Argentina’s 2002 default and the economic growth
the economy and high inflation would certainly
that followed—which was possible not only
follow. The lack of reserves would lead to another
because of favorable external conditions, but also
default on the country’s external debt and an even
because of income redistribution and the expan-
larger devaluation, with the possibility of still
sion of domestic demand—showed the world a
higher inflation.
viable alternative to neoliberalism. The way to
A more benign scenario would be that the cen-
deal with the limits of this model, which are asso-
tral bank manages to control the depreciation of
ciated with the problem of avoiding balance of
the currency, and stabilize the real exchange rate,
payments crises, is not the depreciation of the
likely at a somewhat lower level. How much the
exchange rate, but industrial policy and the diver-
value of the peso declines, in real terms, will depend
sification of exports.
on the degree to which workers can win higher
In order to reduce the overall import depen-
wages (in nominal, not inflation-adjusted, terms),
dency of Argentina’s economy, the government
and how much inflation accelerates. My guess is
has to step up policies to spur domestic indus-
that some real depreciation will take place, and
try: government procurement from domestic
lower real wages will follow, which also tend to
producers, domestic-content requirements on
bring down domestic demand. In all likelihood,
international producers seeking access to the
however, this will not turn into a run on the cur-
country’s markets, subsidized credit for indus-
rency, that dreaded scenario in which everyone
trial development, and increased support for
fears uncontrolled depreciation and tries to trade
research and development. The government
out of their pesos.
should continue the bold initiatives that marked
There are good reasons to believe that the cur-
the last decade, by creating a new national
rent situation will not turn into a severe crisis.
development bank (like those it had from 1944
Lack of growth in advanced economies, especially
to 1993) and pursuing further regional eco-
in Europe but also in the United States, will mean
nomic integration. These policies, rather than
continued low interest rates in those countries.
seeking the confidence of international finan-
Even after the recent announcement of the “taper”
cial markets, should be the administration’s pri-
of quantitative easing by the U.S. Federal Reserve,
ority now. D&S
it is unlikely that interest rates will increase very
much (which means that they will not draw inter-
national capital away from developing econo- M AT Í A S V E R N E N G O is an associate professor
mies). That will likely maintain moderately of economics at the Bucknell University. He blogs at
benign conditions for developing countries to Naked Keynesianism (nakedkeynesianism.blogspot.
attract international capital flows. If this is cor- com) and at the D&S-curated blog Triple Crisis
rect, the depreciation, which has taken place in (triplecrisis.com).

26  l  dollars & sense  l  MARCH/APRIL 2014

< In Review
Unfriending Inflation
The Downfall of Money: German
Hyperinflation and the Desctruction of
the Middle Class, by Frederick Taylor.
Bloomsbury Press, 2013.
BY STEVEN PRESSMAN
I n an old Saturday Night Live skit, Dan
Ackroyd impersonated President
Jimmy Carter, who could not control
double-digit inflation, and so an-
nounced a new policy. “Inflation Is Your
Friend,” he chimed, because with infla-
tion everyone could smoke expensive
cigars and wear expensive suits. The
joke was that people would spend
more money for things, but not get
more (or better) things for their money.
The Downfall of Money, by British
historian and writer Frederick Taylor,
details how hyperinflation nearly de-
stroyed Germany in the early 1920s.
Parts of this story are well-known
thanks to John Maynard Keynes.
Keynes had been a British represen-
tative at the Versailles Peace Treaty fol-
lowing World War I. His angry critique of
the results of the treaty, The Economic
Consequences of the Peace, calculated
that Germany could not afford British
and French reparation demands. It
would lead, he predicted, to the impov-
erishment of Germany and rising hostil-
ity towards its European neighbors.
Unlike other European countries,
which pursued austerity to curb infla-
tionary pressures after the war, Germany
sought economic and social revival. Belt-
tightening would not accomplish this;
money creation could. The result was
inflation. In early 1919, it cost 8.9 marks
to get $1 (and buy U.S. goods). By the
end of 1920, it took 62 marks to obtain
$1. One year later, $1 cost 217 marks. By
July 1922, $1 cost 670 marks. Prices were
increasing by 50% a month.
Inflation did not hurt everyone
equally. Farmers sold food at high pric-
es in cities; businessmen repaid loans
with devalued money. The rich moved
their wealth abroad. The losers were the
middle classes (civil servants, teachers,
and small business owners). Many were
on fixed incomes (e.g., war pensions);
others, patriotically, lent their govern-
ment money to support the war effort
and were repaid in worthless marks.
According to Taylor, children who grew
up in decimated middle-class families
were the strongest supporters of right-
wing German politicians.
In January 1923, France and Belgium
occupied the Ruhr, the main industrial
area in Germany. Inflation then became
hyper-inflation. The price of $1 quickly
rose to 40,000 marks. A woman shop-
ping with a basket full of paper money
put it down for a second. The basket was
stolen; the paper money was left.
By April 1923, the German govern-
ment was furiously printing money in
order to prevent an economic collapse.
In July 1923, $1 equaled 1.1 million
marks; by the end of September, $1 got
109 million marks. Soon thereafter, $1
cost 6.7 trillion marks. This situation
could not last.
Germany returned to the gold stan-
dard in 1924. Inflation was stopped
cold, but unemployment soared.
Had Taylor ended there, he would
have been fine. He goes astray first by
drawing the wrong historical lessons.
Hyper-inflation did not lead to the rise
of Hitler. Hitler assumed power in 1933.
  MARCH/APRIL 2014  l  DOLLARS & sense  l  27
By then, inflation was long gone and
unemployment had soared from under
1 million in 1924 to over 5 million (30%).
Second, the problem was not too
much money but too few goods.
Production and job creation were thwart-
ed by austerity policies forced upon
Germany. Printing money was the
Weimar government’s desperate attempt
to generate employment. It did not work;
the forces allied against Germany were
too great. Keynes got this right.
Taylor then goes badly wrong
when drawing contemporary lessons
from his story. He condemns the high
debt levels in Europe today, fears that
quantitative easing (the purchase of
long-term government bonds by cen-
tral banks) will generate inflation, and
praises eurozone officials for control-
ling inflation in Greece and Spain. He
notes that the far right is again be-
coming popular in Europe.
But even after years of quantitative
easing by the Fed and other central
banks, inflation is nowhere to be seen in
the developed world. Europe currently
fears deflation, not inflation. The prob-
lem is depression-level unemploy-
ment—nearly 30% in Greece and Spain.
This is why right-wing militancy grows in
Europe, and why more government debt
and monetary expansion are necessary.
Ironically, Germany’s large trade sur-
plus, leading to high unemployment
and pressures for austerity elsewhere in
Europe, is causing the same suffering in
the eurozone’s periphery that Germany
was forced to endure during the late
1920s and early 1930s.
Hyperinflation, surely, is no
one’s friend; neither is mass unem-
ployment. D&S
S T E V E N P R E S S M A N is a
professor of economics and finance at
Monmouth University. The third edition
of his Fifty Major Economists was pub-
lished by Routledge late last year.
< Economy in Numbers

Dog Walking and College Teaching

The Rise of the American Gig Economy
BY GERALD FRIEDMAN

G rowing numbers of Americans no longer hold a regular “job” with a long-term connection to a particular business. Instead,
they work “gigs” where they are employed on a particular task or for a defined time, with little more connection to their
employer than a consumer has with a particular brand of chips. Borrowed from the music industry, the word “gig” has been
applied to all sorts of flexible employment (otherwise referred to as “contingent labor,” “temp labor,” or the “precariat”). Some
have praised the rise of the gig economy for freeing workers from the grip of employers’ “internal labor markets,” where career
advancement is tied to a particular business instead of competitive bidding between employers. Rather than being driven by
worker preferences, however, the rise of the gig economy comes from employers’ drive to lower costs, especially during busi-
ness downturns. Gig workers experience greater insecurity than workers in traditional jobs and suffer from lack of access to
established systems of social insurance. D&S
G E R A L D F R I E D M A N is a professor of economics at the University of Massachusetts-Amherst.
S O U R C E S : General Accounting Office (GAO), Contingent Workers: Incomes and Benefits Lag Behind Those of Rest of Workforce (gao.gov); Bureau of Labor Statistics
(BLS), Contingent and Alternative Employment Arrangements, February 2005 and February 2001 (bls.gov); Sharon Cohany, “Workers in Alternative Employment
Arrangements.” Monthly Labor Review (October, 31–46); U.S. Department of Education, National Center for Education Statistics, National Study of Postsecondary Faculty;
John Curtis, “Trends in Faculty Employment Status, 1975-2011” (aaup.org).

Special surveys by the Bureau of Labor

Figure 1: Distribution of the Labor Force by
Statistics in 1995, 2001, and 2005, and
Contract Type, 1999
by the General Accounting Office in
2.5%
1.7%
1999, yielded widely varying estimates
0.9%
0.6% of the scale of the gig economy. The GAO
Agency temps
6.3% estimated that as many as 30% of workers
4.8% Direct-hire temps were on some type of contingent labor
On-call workers and day laborers
contract, including some categories
of workers (self-employed and part-
Contract company workers
13.2% time workers) who are not counted as
Independent contractors contingent workers by the BLS. Using the
Self-employed workers
narrower BLS definition, 12% of workers
were on contingent contracts in 1999
70.1% Standard part-time workers (similar to the number estimated from
Standard full-time workers more recent surveys).

Figure 2: Share of Workers on Contingent

Contingent workers are employed Share of Workers with Alternative
Contracts, by Industry, 2005
throughout the economy, in all industries Contracting
and in virtually all occupations. Using the 30%

BLS definition, which includes independent 25%

contractors, temporary workers, on-call 20%
workers, and workers provided by contract 15%
firms, contingent workers made up over 11% 10%
of the labor force in 2005. Some contingent 5%
workers do low-wage work in agriculture,
0%
construction, manufacturing, retail trade,
Agri & related

Other services
Manufacturing
Construction

Information

Prof & bus

Trans &
Mining

Wholesale

Financial
Retail

hospitality
Educ & health

Public admin
Leisure &
utilities

services

and services; others are employed as highly

paid financial analysts, lawyers, accountants,
and physicians.

28  l  dollars & sense  l  MARCH/APRIL 2014

 $

Figure 3: Contingent Labor,

While many people may think of “day
College and University Faculty
laborers” in construction or office “temps”
75% when they think of contingent workers, few
70% occupations have seen as sharp an increase
in contingent labor as teaching in higher
65%
education. Adjunct and part-time professors
60% now account for the great majority of
55%
college faculty nationwide. Tenured and
tenure-track faculty now comprise less than
50%
a third of the teaching staff, and teach barely
45% half of all classes. Colleges and universities
hire adjunct faculty because they make it
40%
possible to more precisely match faculty
to the demand for classes, and because
75

89

93

95

99

01

03

05

07

09

11
19

19

19

19

19

20

20

20

20

20

20 adjuncts are paid substantially less.

Employers prefer contingent labor because

it is more “flexible.” Workers can be laid off Figure 4: Average Weekly Earnings,
at any time in response to a decline in sales.
Earnings of
Traditional vs.contingent
Contingentworkers and
Employment
Employers can also pay contingent workers workers under traditional contracts
less by not offering benefits. By treating many $900

contingent workers as independent contractors,

Average weekly earnings

employers avoid paying for government- $850

mandated benefits (the employer’s half of Social

$800
Security, unemployment insurance, workers’
compensation, etc.). They also usually exclude
$750
contingent workers from employer-provided
benefits such as health insurance and pensions. $700
Counting wages and benefits, contingent
workers are paid substantially less than workers $650
in traditional jobs and are left much more Contingent Traditional
vulnerable to illness or economic downturns.
Cash wages Government mandated benefits Employer-provided benefits
Note: Vertical axis begins at $650, to show detail.

Figure 5: New Jobs, Traditional vs. Contingent,

1995-2013
100% While a solid majority of workers is still employed
under traditional arrangements, most new
80% jobs since 2001 have been under contingent
arrangements. This is in sharp contrast to the
60% late 1990s, when unemployment rates were
low and employers had to offer workers more
40% desirable long-term contracts. With the economic
recession of the early 2000s, followed by the
20% Great Recession and the anemic recovery (2007 to
the present), however, employers have shunned
0% long-term employment contracts and workers
1995-2001 2001-2005 2005-2013 have had to settle.
Traditional Contingent

  MARCH/APRIL 2014  l  DOLLARS & sense  l  29

< Ask Dr. Dollar
Jobs vs. Environment?
Dear Dr. Dollar:
People working to protect the environment—especially to stop climate
change—are often told that environmental regulation destroys jobs. How
should we respond?
B Y A R T H U R M ACE WA N
T he argument that places environ-
mental protection in opposition to
jobs has little basis in reality. Yes,
sometimes people do lose their jobs as
a result of policies aimed at protecting
the environment. If the Keystone XL
pipeline is not built, some people will
not get jobs to construct the pipeline.
Limits on fishing and lumbering have
already put some people out of work.
These people cannot be ignored.
Yet, overall, to the extent that envi-
ronmental protection has an impact on
total employment, it is probably posi-
tive. The job-loss claims are usually
greatly exaggerated, and the new jobs
that result from regulations are largely
ignored. The evidence on job numbers
aside, however, the response to this
environment versus jobs argument is
contained in the question: Do we really
want to create jobs by engaging people
to do socially destructive things?
TransCanada, the company behind
the Keystone XL project, claims that
the pipeline would create 9,000 con-
struction jobs and an additional 7,000
in directly connected work—manufac-
turing pipes, pumps, etc. Other propo-
nents of the pipeline, apparently
counting on an unreasonably large
indirect (multiplier) impact, claim that
40,000 jobs would be created.
Yet the vast majority of these jobs
would be of short duration. An August
2013 report from the Natural Resource
Defense Council multiplied the number
of construction workers that would be
engaged in each leg of the pipeline’s
construction by the number of weeks
they would be employed—for example,
4,000 workers in the Montana leg for an
average of 19 weeks = 1,462 work-years;
30  l  dollars & sense  l  MARCH/APRIL 2014
$?
economic inequality, the people who
lose from regulations will usually fight
to get the jobs—which means fighting
—Anonymous, Boston, Mass. the regulations. There is no good rea-
son why these people should pay the
3,500 in Nebraska for an average of 19.5
price of environmental regulations. To
weeks = 1,013 work-years; and so on.
implement changes that are socially
The result: over 10,000 jobs, but only
about 4,000 work-years. After construc-
tion, there would be about 50 to 100
desirable, we need programs that as-
sure full-employment, with decent jobs
at decent wages. The policies that
workers needed to operate the pipeline.
would achieve these goals and thus
Aside from the pipeline, a late 1990s
combine environmental protection
Resources for the Future study exam-
with full-employment would include,
ined the job impact of increased regula-
for example, strong fiscal stimulus
tion in four heavily polluting indus-
when unemployment rises, extensive
tries—pulp and paper mills, plastics
job training programs, and a substantial
manufacturers, petroleum refiners, and
increase in the minimum wage.
iron and steel mills. Using detailed
Ultimately, on issues of environmen-
plant-level data, the study found on
tal destruction—climate change espe-
average a very slight (but not statistical-
cially—the number of jobs is not the
ly significant) positive employment im-
issue. Even if the socially destructive ac-
pact of the regulations, as new spend-
tions that destroy the environment were
ing to comply with regulations often
great job creators, we should not permit
required additional labor. Similarly, the
them. And we would not permit them if
EPA, in its report on “The Clean Air Act
everyone recognized the reality of cli-
and the Economy,” cites studies illustrat-
mate change and the environmentally
ing that the Act has created jobs
damaging impact of the Keystone XL
through industry spending on technol-
and many other activities—from the use
ogy to comply with the regulations.
of dangerous pesticides to dumping filth
The proponents of deregulation of
into our air and water. That’s why the
fossil-fuel production (e.g., the pipe-
people that make their profits off fossil
line and fracking) sometimes argue
fuels are so hell-bent on preventing peo-
that deregulation, by reducing the
ple from recognizing reality. D&S
cost of energy and thus reducing the
cost of virtually all economic activity, A R T H U R M A C E W A N is professor
would induce a general expansion of emeritus of economics at UMass-Boston
output and employment. This argu- and a Dollars & Sense Associate.
ment, however, would make sense
S O U R C E S : TransCanada, “Jobs & Economic Benefits”
only if there were no damage (no (keystone-xl.com); Natural Resources Defense Council,
costs) from our reliance on fossil fu- “Will Keystone XL Pipeline Create Many Construction
els—i.e., no climate change or other Jobs?” (livescience.com); R. D. Morgenstern, et al., “Jobs
environmental destruction. Those versus the Environment:,” Resources for the Future,
Discussion Paper 99-01, Revised June 2000; EPA, “The
very real costs would be borne by so-
Clean Air Act and the Economy” (epa.gov).
ciety, while the profits of the fossil-
fuel companies continued to rise. Questions about the economy?
Regardless of the overall impact on Ask Dr. Dollar!
employment, new regulations do often Submit questions by email (dollars@
result in some people losing jobs. As dollarsandsense.org) or U.S. mail
(c/o Dollars & Sense, One Milk Street,
long as we have a situation of high un-
Boston, MA 02109).
employment, job insecurity, and great
< 40th Anniversary Excerpt
$
1975
The Deficit That Swallowed Manhattan

KEEP
Big banks have cities over a barrel. Politicians moralize that city governments have to take “tough measures”
to balance budgets. Business groups blame “overpaid” public employees. The year is 1975. Check that—it’s
1975 and 2014. This 40th anniversary selection sounds themes we have been covering again in recent years:
the root causes of urban crisis (“Detroit and Deindustrialization,” Sept/Oct 2013), how high finance has fleeced
cities (“We Have Your City. Pay Up or Else!” May/June 2012), raids on public-sector pensions (“Making Labor MAKING
Pay,” Sept/Oct 2012; “The Pension-Busters’ Playbook,” Jan/Feb 2014), and worker resistance to union busting
and austerity (“What Wisconsin Means,” May/June 2011). The 1975 article asks “Who Will Pay?” Back then, it SENSE
was ordinary people who ended up paying. That might be the case again this time around. Big business and
finance are riding high, and there are only glimmers of opposition. But it’s not over yet. —Editors
D&S@40
Dollars & Sense, Summer 1975 Mayor Abe Beame’s well-publicized tions in federal aid to cities and limita-
trip to Washington in search of federal tions on welfare expenditures.
aid produced no money. But he was re- The business interests’ offensive is
warded with a series of stern statements encountering strong resistance. In
from President Ford, Vice President New York City, leaders of the 200,000-
Nelson Rockefeller, Treasury Secretary member Municipal Labor Committee
William Simon, and Federal Reserve are organizing a campaign against
Chairman Arthur Burns. They all sent the the First National City Bank which
Mayor home with the suggestion that he they accuse of being the city’s “No. 1
do what the bankers demand: take the enemy” because of its “destructive
“tough measures” necessary to balance role in fomenting and exploiting the
New York’s budget. financial crisis.”
In Beame’s angry words, the gov-
ernment leaders who turned down his
request for funds were responding “to
the financial interests who are using
cash as a weapon in an attempt to dic-
tate the social, political, and economic

C ould America’s richest city go

broke? The question may seem
absurd, but in mid-May [1975] bankers,
political leaders, and financial writers
were discussing it very seriously.
New York City is in the midst of its
worse financial crisis since the Great
Depression of the 1930s. Now, as then,
the only way out requires massive bor-
rowing from New York’s giant banks
and the wealthy investors they repre-
sent. Once again, the bankers are de-
manding a high price to come to the
city’s rescue.
A “Financial Community Liason
Group,” led by David Rockefeller of the
Chase Manhattan Bank and the heads
of Morgan Guaranty Trust and the First
National City Bank, is demanding that
the city bring its budget into balance
by reducing services, holding down
wages, and laying off city workers.
policies of our people. Joining with
New York State Governor Hugh Carey,
he warned that “New York and other
cities will have public and social policy
decided in bank board rooms.”
There is nothing wrong with bal-
anced budgets. The real issue is who
will make the sacrifices necessary to
balance them. Will working people
lose services or jobs, or will corpora-
tions pay higher taxes and banks get
smaller interest payments?
The banks’ demands on city govern-
ments are part of an overall strategy of
making poor and working people pay What’s ahead? The banks are unlikely
for the current economic crisis so that to force New York City into bankruptcy.
corporations can have the profits “nec- On the other hand, city workers and
essary” for investment. Local efforts to neighborhoods might respond to mas-
slash social programs and to under- sive budget cuts with an explosive re-
mine the power of municipal unions volt. As one aide to Mayor Beame said,
are complemented at the national lev- “The social fabric that holds the city to-
el by the Ford Administration’s reduc- gether could unravel in a minute.” D&S

  MARCH/APRIL 2014  l  DOLLARS & sense  l  31

 ,