Archive for March, 2009

Financing the Empire

Posted in Political Economy on March 31, 2009 by CjH

Does US Face G20 Mutiny?


I am travelling in Europe for three weeks to discuss the global financial crisis with government officials, politicians and labor leaders. What is most remarkable is how differently the financial problem is perceived over here. It’s like being in another economic universe, not just another continent.

The U.S. media are silent about the most important topic policy makers are discussing here (and I suspect in Asia too): how to protect their countries from three inter-related dynamics:

(1) the surplus dollars pouring into the rest of the world for yet further financial speculation and corporate takeovers;

(2) the fact that central banks are obliged to recycle these dollar inflows to buy U.S. Treasury bonds to finance the federal U.S. budget deficit; and most important (but most suppressed in the U.S. media,

(3) the military character of the U.S. payments deficit and the domestic federal budget deficit.

Strange as it may seem – and irrational as it would be in a more logical system of world diplomacy – the “dollar glut” is what finances America’s global military build-up. It forces foreign central banks to bear the costs of America’s expanding military empire – effective “taxation without representation.” Keeping international reserves in “dollars” means recycling their dollar inflows to buy U.S. Treasury bills – U.S. government debt issued largely to finance the military.

To date, countries have been as powerless to defend themselves against the fact that this compulsory financing of U.S. military spending is built into the global financial system. Neoliberal economists applaud this as “equilibrium,” as if it is part of economic nature and “free markets” rather than bare-knuckle diplomacy wielded with increasing aggressiveness by U.S. officials. The mass media chime in, pretending that recycling the dollar glut to finance U.S. military spending is “showing their faith in U.S. economic strength” by sending “their” dollars here to “invest.” It is as if a choice is involved, not financial and diplomatic compulsion to choose merely between “Yes” (from China, reluctantly), “Yes, please” (from Japan and the European Union) and “Yes, thank you” (Britain, Georgia and Australia).

It is not “foreign faith in the U.S. economy” that leads foreigners to “put their money here.” That’s a silly cartoon of a more sinister dynamic. The “foreigners” in question are not consumers buying U.S. exports, nor are they private-sector “investors” buying U.S. stocks and bonds. The largest and most important foreign entities putting “their money” here are central banks, and it is not “their money” at all. They are sending back the dollars that foreign exporters and other recipients turn over to their central banks for domestic currency.

When the U.S. payments deficit pumps dollars into foreign economies, these banks are being given little option except to buy U.S. Treasury bills and bonds – which the Treasury spends on financing an enormous, hostile military build-up to encircle the major dollar-recyclers – China, Japan and Arab OPEC oil producers. Yet these governments are forced to recycle dollar inflows in a way that funds U.S. military policies in which they have no say in formulating, and which threaten them more and more belligerently. That is why China and Russia took the lead in forming the Shanghai Cooperation Organization (SCO) a few years ago.

Here in Europe there is a clear awareness that the U.S. payments deficit is much larger than just the trade deficit. One need merely look at Table 5 of the U.S. balance-of-payments data compiled by the Bureau of Economic Analysis (BEA) and published by the Dept. of Commerce in its Survey of Current Business to see that the deficit does not stem merely from consumers buying more imports than the United States exports as the financial sector de-industrializes its economy. U.S. imports are now plunging as the economy shrinks and consumers are now finding themselves obliged to pay down the debts they have taken on.

Congress has told foreign investors in the largest dollar holder, China, not to buy anything except perhaps used-car dealerships and maybe more packaged mortgages and Fannie Mae stock – the equivalent of Japanese investors being steered into spending $1 billion for Rockefeller Center, on which they subsequently took a 100 per cent loss, and Saudi investment in Citigroup. That’s the kind of “international equilibrium” that U.S. officials love to see. “CNOOK go home” is the motto when it comes to serious attempts by foreign governments and their sovereign wealth funds (central bank departments trying to figure out what to do with their dollar glut) to make direct investments in American industry.

So we are left with the extent to which the U.S. payments deficit stems from military spending. The problem is not only the war in Iraq, now being extended to Afghanistan and Pakistan. It is the expensive build-up of U.S. military bases in Asian, European, post-Soviet and Third World countries. The Obama administration has promised to make the actual amount of this military spending more transparent. That presumably means publishing a revised set of balance of payments figures as well as domestic federal budget statistics.

The military overhead is much like a debt overhead, extracting revenue from the economy. In this case it is to pay the military-industrial complex, not merely Wall Street banks and other financial institutions. The domestic federal budget deficit does not stem only from “priming the pump” to give away enormous sums to create a new financial oligarchy. It contains an enormous and rapidly growing military component.

So Europeans and Asians see U.S. companies pumping more and more dollars into their economies. Not just to buy their exports in excess of providing them with goods and services in return; not just  to buy their companies and “commanding heights” of privatized public enterprises without giving them reciprocal rights to buy important U.S. companies (remember the U.S. turn-down of China’s attempt to buy into the U.S. oil distribution business);  not just to buy foreign stocks, bonds and real estate. The U.S. media somehow neglect to mention that the U.S. government is spending hundreds of billions of dollars abroad – not only in the Near East for direct combat, but to build enormous military bases to encircle the rest of the world, to install radar systems, guided missile systems and other forms of military coercion, including the “color revolutions” that have been funded – and are still being funded – all around the former Soviet Union.

Pallets of shrink-wrapped $100 bills adding up to tens of millions of the dollars at a time have become familiar “visuals” on some TV broadcasts, but the link is not made with U.S. military and diplomatic spending and foreign central-bank dollar holdings, which are reported simply as “wonderful faith in the U.S. economic recovery” and presumably the “monetary magic” being worked by Wall Street’s Tim Geithner at Treasury and Helicopter Ben Bernanke at the Federal Reserve.

Here’s the problem: The Coca Cola company recently tried to buy China’s largest fruit-juice producer and distributor. China already holds nearly $2 trillion in U.S. securities – way more than it needs or can use, inasmuch as the United States government refuses to let it buy meaningful U.S. companies. If the U.S. buyout would have been permitted to go through, this would have confronted China with a dilemma: Choice #1 would be to let the sale go through and accept payment in dollars, reinvesting them in what the U.S. Treasury tells it to do – U.S. Treasury bonds yielding about 1 per cent. China would take a capital loss on these when U.S. interest rates rise or when the dollar declines as the United States alone is pursuing expansionary Keynesian policies in an attempt to enable the U.S. economy to carry its debt overhead.

Choice #2 is not to recycle the dollar inflows. This would lead the renminbi to rise against the dollar, thereby eroding China’s export competitiveness in world markets. So China chose a third way, which brought U.S. protests. It turned the sale of its tangible company for merely “paper” U.S. dollars – which went with the “choice” to fund further U.S. military encirclement of the Shanghai Cooperative Agreement.  The only people who seem not to be drawing this connection are the American mass media, and hence public. I can assure you from personal experience, it is being drawn here in Europe. (Here’s a good diplomatic question to discuss: Which will be the first European country besides Russia to join the S.C.O.?)

Academic textbooks have nothing to say about how “equilibrium” in foreign capital movements – speculative as well as for direct investment – is infinite as far as the U.S. economy is concerned. The U.S. economy can create dollars freely, now that they no longer are convertible into gold or even into purchases of U.S. companies, inasmuch as America remains the world’s most protected economy. It alone is permitted to protect its agriculture by import quotas, having “grandfathered” these into world trade rules half a century ago. Congress refuses to let “sovereign wealth” funds invest in important U.S. sectors.

So we are confronted with the fact that the U.S. Treasury prefers foreign central banks to keep on funding its domestic budget deficit, which means financing the cost of America’s war in the Near East and encirclement of foreign countries with rings of military bases. The more “capital outflows” U.S. investors spend to buy up foreign economies –the most profitable sectors, where the new U.S. owners can extract the highest monopoly rents – the more funds end up in foreign central banks to support America’s global military build-up. No textbook on political theory or international relations has suggested axioms to explain how nations act in a way so adverse to their own political, military and economic interests. Yet this is just what has been happening for the past generation.

So the ultimate question turns out to be what countries can do to counter this financial attack. A Basque labor union asked me whether I thought that controlling speculative capital movements would ensure that the financial system would act in the public interest. Or is outright nationalization necessary to better develop the real economy?

It is not simply a problem of “regulation” or “control of speculative capital movements.” The question is how nations can act as real nations, in their own interest rather than being roped into serving whatever the  American government  decides is in America’s interest.

Any country trying to do what the United States has done for the past 150 years is accused of being “socialist” – and this from the most anti-socialist economy in the world, except when it calls bailouts for its banks “socialism for the rich,” a.k.a. financial oligarchy. This rhetorical inflation almost leaves no alternative but outright nationalization of credit as a basic public utility.

Of course, the word “nationalization” has become a synonym for bailing out the largest and most reckless banks from their bad loans, and bailing out hedge funds and non-bank counterparties for losses on “casino capitalism,” gambling on derivatives that AIG and other insurers or players on the losing side of these gambles are unable to pay.  Bailout in this form is not nationalization in the traditional sense of the term – bringing credit creation and other basic financial functions back into the public domain. It is the opposite. It prints new government bonds to turn over – along with self-regulatory power – to the financial sector, blocking the citizenry from taking back these functions.

Framing the issue as a choice between democracy and oligarchy turns the question into one of who will control the government doing the regulation and “nationalizing.” If it is done by a government whose central bank and major congressional committees dealing with finance are run by Wall Street, this will not help steer credit into productive uses. It will merely continue the Greenspan-Paulson-Geithner era of more and larger free lunches for their financial constituencies.

The financial oligarchy’s idea of “regulation” is to make sure that deregulators are installed in the key positions and given only a minimal skeleton staff and little funding. Despite Alan Greenspan’s announcement that he has come to see the light and realizes that self-regulation doesn’t work, the Treasury is still run by a Wall Street official and the Fed is run by a lobbyist for Wall Street. To lobbyists the real concern isn’t ideology as such – it’s naked self-interest for their clients. They may seek out well-meaning fools, especially prestigious figures from academia. But these are only front men, headed as they are by the followers of Milton Friedman at the University of Chicago. Such individuals are put in place as “gate-keepers” of the major academic journals to keep out ideas that do not well serve the financial lobbyists.

This pretence for excluding government from meaningful regulation is that finance is so technical that only someone from the financial “industry” is capable of regulating it. To add insult to injury, the additional counter-intuitive claim is made that a hallmark of democracy is to make the central bank “independent” of elected government. In reality, of course, that is just the opposite of democracy. Finance is the crux of the economic system. If it is not regulated democratically in the public interest, then it is “free” to be captured by special interests. So this becomes the oligarchic definition of “market freedom.”

The danger is that governments will let the financial sector determine how “regulation” will be applied. Special interests seek to make money from the economy, and the financial sector does this in an extractive way. That is its marketing plan. Finance today is acting in a way that de-industrializes economies, not builds them up. The “plan” is austerity for labor, industry and all sectors outside of finance, as in the IMF programs imposed on hapless Third World debtor countries. The experience of Iceland, Latvia and other “financialized” economies should be examined as object lessons, if only because they top the World Bank’s ranking of countries in terms of the “ease of doing business.”

The only meaningful regulation can come from outside the financial sector. Otherwise, countries will suffer what the Japanese call “descent from heaven”: regulators are selected from the ranks of bankers and their “useful idiots.” Upon retiring from government they return to the financial sector to receive lucrative jobs, “speaking engagements” and kindred paybacks. Knowing this, they regulate in favor of financial special interests, not that of the public at large.

The problem of speculative capital movements goes beyond drawing up a set of specific regulations. It concerns the scope of national government power. The International Monetary Fund’s Articles of Agreement prevent countries from restoring the “dual exchange rate” systems that many retained down through the 1950s and even into the ‘60s. It was widespread practice for countries to have one exchange rate for goods and services (sometimes various exchange rates for different import and export categories) and another for “capital movements.” Under American pressure, the IMF enforced the pretence that there is an “equilibrium” rate that just happens to be the same for goods and services as it is for capital movements. Governments that did not buy into this ideology were excluded from membership in the IMF and World Bank – or were overthrown.

The implication today is that the only way a nation can block capital movements is to withdraw from the IMF, the World Bank and the World Trade Organization (WTO). For the first time since the 1950s this looks like a real possibility, thanks to worldwide awareness of how the U.S. economy is glutting the global economy with surplus “paper” dollars – and U.S. intransigence at stopping its free ride. From the U.S. vantage point, this is nothing less than an attempt to curtail its international military program.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be at:

Economist Intelligence Unit: Manning the Barricades

Posted in Music, Arts, Culture, Subversion on March 28, 2009 by CjH

March 28th,

Here are EIU’s probabilities on how the economic crisis will unfold:

Scenario 1: Stimulus stabilizes system — 60% chance
Scenario 2: Stimulus fails, leading to depression — 30% chance
Scenario 3: Dollar collapse, social unrest, violent protest — 10% chance

If I was forced to guess, these would be my numbers:

Scenario 1: Stimulus stabilizes system — 10% chance
Scenario 2: Stimulus fails, leading to depression — 60% chance
Scenario 3: Dollar collapse, social unrest, violent protest — 30% chance

But I’m not so sure that these scenarios are valid. You definitely don’t need a dollar collapse to see social unrest and violent protest.

There’s going to be violence this Spring and Summer—at least in the form of false flag operations to “steal the thunder” from the real radicals and lone wolf operators who see this crisis as a once in a lifetime chance to kick the machine while it’s experiencing some difficulties.

There is definitely a groundswell of discontent out there, and it will be managed as it has always been managed in The Age of Fake Democracies, by state counter insurgency operations designed to associate clueless sign wavers with terrorism.

Of course, wild cards are a possibility. It wouldn’t take too many people—who have figured out that sign waving is an insulting farce—to carry out genuine warfare against the corporate state.

How will you know the difference between false flag operations and war?

False flag operations are symbolic. The main goal is to create fear and obedience to state authorities through the use of propaganda in the aftermath of the event. The driving propaganda, after the fact, is the main payload, not the event itself. While it is possible that imbeciles will target individual executives for assassination or use improvised explosives to create work for janitors in corporate lobbies, these types of attacks are likely to be acts of state because of their utility for propaganda purposes. Think about it: Who benefits from attacks like these? The stoned white Rastafarian, soy people with Bozo the Clown wigs and Fair Trade hacky sacks will get the blame. It’s all “the terrorists,” right?

War, on the other hand, targets critical infrastructure. Examples: Financial transaction clearing is shut down. Stock markets are shut down. Communications systems are damaged or destroyed. Energy distribution systems are damaged or destroyed.

While it’s possible that attacks of this nature could be false flag, it’s not likely because unmanageable, cascading effects could result.

So, as the situation continues to devolve, expect corporate states to try to short circuit street level activists with false flag operations and heavy follow on propaganda linking them with “the terrorists.”

While the chances of any groups or individuals carrying out substantive strikes against critical corporate state infrastructures are low, the likelihood does increase as the legitimacy of political and economic elites fades.

My guess is that all of this will wind up moving the elite’s plan along a couple of more notches, with the main focus placed on reducing the number of national currencies in use on the planet.

Source: Economist Intelligence Unit: Manning the Barricades (pdf):

How the Scam Works

Posted in Political Economy on March 28, 2009 by CjH

The Free Market, Financial Style


Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary  Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy.            

Why are the very worst offenders – Bank of America (now owner of the Countrywide crooks) and Citibank the largest buyers? As the worst abusers and packagers of CDOs, shouldn’t they be in the best position to see how worthless their junk mortgages are?
That turns out to be the key! Obviously, the government has failed to protect itself – deliberately, intentionally failed to do so – in order to let the banks pull off the following scam.            

Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.            

Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.            

The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.            

The free market at work, financial style.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached at

Why Suburbs May Become the Next Slums

Posted in The Sickness on March 27, 2009 by CjH

By David Villano

The financial meltdown has produced a vast patchwork of foreclosed and abandoned single-family homes across America, accelerating the decades-long migration of our nation’s poor from cities to the suburban fringe. In 2005, as rising property values reduced affordable-housing stock in inner-city neighborhoods, suburban poverty, in raw numbers, topped urban poverty for the first time.

The trend will continue. By 2025, predicts planning expert Arthur C. Nelson, America will face a market surplus of 22 million large-lot homes (a sixth of an acre or more), attracting millions of low-income residents deeper into suburbia where decay and social and geographic isolation will pose challenges few see coming.

“As a society, we have fundamentally failed to address our housing policy,” said Nelson, director of metropolitan research at the University of Utah. “Suburbia is overbuilt and yet we will keep on building there. Most policymakers don’t see the consequences, and those who do are denying reality.”

Nelson and others warn that suburbia’s least desirable neighborhoods – aging, middle-class tract-home developments far from city centers and mass transit lines — are America’s emerging slums, characterized by poverty, crime and other social ills. Treating those ills is complicated by the same qualities that once defined suburbia’s appeal — seclusion, homogeneity and low population density. “We built too much of the suburban dream, and now it’s coming back to haunt us,” Nelson said.

To be sure, the low-income drift to suburbia has less to do with bucolic appeal and more to do with economics. Over the past two decades, the gospel of urbanism has spread though the American mainstream, Nelson and others argue. The young, the affluent, the professional class and empty-nesters are reclaiming the urban living experience — dense, walkable, diverse, mixed-use neighborhoods in and around city centers — while the poor disperse outward in search of cheap rent. Low-income residents often subdivide suburban homes, sharing them with multiple families. Studies reveal that population densities in suburban neighborhoods increase two to four times when low-income families replace the middle-class, Nelson said.

Meanwhile, layoffs and other effects of the economic crisis are contributing to higher poverty levels in once-solidly middle-class communities.

Most experts believe the market-driven migration of the poor to suburbs and the affluent to urban zones — sometimes called “demographic inversion” — will continue for decades.

“Americans are disillusioned with sprawl, they’re tired of driving, they recognize the soullessness of suburban life, and yet we keep on adding more suburban communities,” said Christopher B. Leinberger, a land-use expert at the University of Michigan. He said consumer preference is reflected by Hollywood: “People identify with Sex and the City and Seinfeld. So why are we still building like Leave it to Beaver?”

Leinberger is an unabashed urbanist who preaches the gospel of dense, mixed-use communities like a missionary saving souls in the jungle. As a visiting fellow this year at the Brookings Institution in Washington, D.C., he walks to his office and to appointments around the city. He argues, with few dissenters, that suburbs are losing favor because they make little sense, forcing people into their cars, limiting social interaction and discouraging racial and socio-economic diversity. Enlightened planners across the country are promoting compact “24/7” urban centers were people live, work and play in close proximity. Virtually every major U.S. city is targeting once-gritty urban neighborhoods for revitalization and, inevitably, gentrification.

The displaced poor find value in the aging, outer-ring tract-home developments that once promised easy living far from the city’s hustle and bustle. And housing officials, resolved to breaking up pockets of concentrated poverty (where at least 40 percent of the families are living below the poverty line), are thrilled. The federal Section 8 housing program, which allows recipients to negotiate government-subsidized rentals anywhere, is grounded in the belief that a safe, stable neighborhood can help unbuckle the straps of poverty.

But the positive benefits of moving to a neighborhood of less poverty diminish as the number of poor relocating there increases, new research suggests. In other words, families are far less likely to pull themselves out of poverty when their exposure to other poor families reaches a kind of tipping point. George C. Galster, a professor of urban affairs at Wayne State University, has quantified this poverty threshold as roughly 15 to 20 percent of a neighborhood. If the poverty rate exceeds that, Galster said, “All hell breaks loose” in the form of crime, drop-out rates, teen pregnancies, drug use and, in turn, declining property values.

Galster’s working paper for the National Poverty Center, Consequences from the Redistribution of Urban Poverty During the 1990s: A Cautionary Tale, warns that polices to break up concentrated poverty may be backfiring. While the number of Americans living in the poorest neighborhoods has notably declined since 1990, by about 25 percent, poverty elsewhere has inched up. Galster worries that the rush to relocate the urban poor, through Section 8 and other poverty redistribution programs, has pushed many less-desirable suburban neighborhoods to this tipping point.

And when they tip, he added, neighborhoods tend to spiral deeper into poverty: Declining property values attract more poor residents, gradually displacing the middle-class families that provide stability, further depressing prices.

Miami real estate broker Adrian Salgado said he’s witnessing the spiral, even within newer tract-home development in the region’s southern and western fringes. With many areas overbuilt, and foreclosure rates high, Section 8 tenants and other low-income renters are finding deals too good to pass up. “I know everybody needs a place to live, but we’re creating a social disaster,” said Salgado, noting that many early middle-class buyers in these transition neighborhoods are desperate to sell but can’t.

Although national data is thin, local officials across the country are reporting an increase in violent crime, gang activity, drug use and other social breakdowns within suburban neighborhoods. In places like New York City, Atlanta and Chicago, urban crime rates are dropping while rising on the outskirts of town. Crime is also rising in the fast-growing sunbelt communities hit hard with foreclosures. Leinberger noted that in Lee County Fla., where nearly 25 percent of the homes stand empty, robberies were up nearly 50 percent last year.

Indeed, police in some cities are monitoring suburban foreclosures to identify neighborhoods at risk for increased crime, while others look at Section 8 relocations, arguing that a sudden rise in low-income rental densities is among their most reliable indicators of a coming crime spike.

Such tactics rankle some anti-poverty advocates, but a growing body of research is challenging suburban relocation as a remedy for poverty. Ed Goetz, a housing policy specialist at the University of Minnesota, said the suburban dream often fades for poor families because old support systems are severed, and access to programs and services — day care, after-school programs, job training, drug treatment and counseling — are greatly hampered by shear distance.

“The isolation can be both physical and emotional,” Goetz said. “The frequency of interaction with neighbors declines, social networks break down. We haven’t considered that carefully enough.” Goetz said studies show a surprising willingness among the suburban poor to return to urban, high-poverty neighborhoods where services are more accessible and mass transit more convenient.

But the suburban diaspora of America’s poor is unlikely to subside, most experts agree, posing complex challenges for policymakers. If anything, added Alan Berube, a housing expert at the Brookings Institution, suburban poverty will grow not just from in-migration of the poor but from within as the financial crisis “pushes middle-class families down the economic ladder.”

With that in mind, Galster recommends strict monitoring of suburban poverty rates to prevent neighborhoods from reaching the so-called tipping point. Such data would allow housing officials to push for laws requiring property owners in low-poverty neighborhoods to accept Section 8 tenants (the existing program is voluntary), something he recommends. Conversely, he argued, laws should prevent landlords from accepting low-income tenants when neighborhood poverty rates exceed designated levels. He also supports “inclusionary zoning” rules that mandate a small number of low-income housing units in new single-family developments.

But Nelson, whose research predicts the vast oversupply of large-lot homes in the coming decades — and the growing “suburbanization of poverty” — said much can be done today to reshape the residential landscape. Most of the homes he expects to exist in 2025 have yet to be built. He said planners can reduce that oversupply by crafting long-term growth policies that reflect a careful assessment of regional demands for all housing types over a generation or more. What they will find, he said, is a preference among all income groups for denser, mixed-use communities with access to mass transit.

Leinberger agreed, arguing that planners should acknowledge that the suburban experiment has failed. “I wouldn’t add another new road in American today,” he said. “The changing geography of poverty is another reminder that our housing policies today will be felt for years to come, and in ways nobody ever imagined.”

The Case Against Agricultural Biotechnology

Posted in Health, Food, Energy and Ecology on March 27, 2009 by CjH

The deployment of transgenic crops is occurring at a rapid pace, reaching about 44.5 million hectares in 2000. Although commercial cultivation is mostly confined to USA, Argentina, Canada, and China, biotechnology proponents argue that expansion of such crops to the Third World is essential to feed the poor in the Third World, reduce environmental degradation, and promote sustainable agriculture. Such promises do not match reality.

Biotechnology is a technology under corporate control, protected by patents and IPR, and thus contrary to farmers’ millenary traditions of saving and exchanging seeds.

Hunger is linked to poverty, lack of access to land, and maldistribution of food. Biotechnology exacerbates inequalities underlying the causes of hunger.

Transgenic crops pose a range of potential environmental risks that threaten the sustainability of small farming systems. The ecological effects of engineered crops are not limited to pest resistance and creation of new weeds and pollution of landraces. Transgenic crops can produce environmental toxins that move through the food chain, and also may end up in the soil and water affecting invertebrates, and probably ecological processes such as nutrient cycling. Moreover, large-scale landscape homogenisation with transgenic crops will exacerbate the ecological vulnerability already associated with monoculture agriculture (Altieri 2000a).

There is widespread consensus that yields have not increased with transgenic crops. In the case of Bt corn the economic advantages are not clear, given that the occurrence of insect pests is unpredictable.

Savings in insecticide use are minimal when examined on a per hectare basis, and insignificant when compared to savings derived from Integrated Pest Management strategies. Herbicide use is up, locking farmers to broad spectrum herbicides that narrow weed management options and condemn farmers to monoculture.

There are agroecological alternatives to biotechnology that result in technologies that are cheap, accessible, risk averting, productive in marginal environments, environment and health enhancing, and culturally and socially acceptable.

Policies must be put in place to promote the upscaling of successful agroecological interventions, that are already reaching about nine million small farmers at one-tenth the cost incurred by official international agricultural subventions.

It is urgent that international donors recognise the gravity of the problem, take a chance on new institutional arrangements led by NGOs and farmers’ organisations, and provide funding for a grassroots-based alternative agricultural development approach in the Third World.

Biotechnology companies often claim that genetically modified organisms (GMOs) – specifically genetically altered seeds – are essential scientific breakthroughs needed to feed the world and reduce poverty in developing countries. Such claims promoted by the biotech industry-created consortium, the ‘Council for Biotechnology Information’ with a $250 million budget, uses the issue of hunger in the developing world to justify GM crops without explaining how GM crops will actually mitigate hunger. Malthusian biotechnologists need first to explain why GM crops will feed hungry Indians when 36.6 million excess tons of grain stocks in ‘godowns’ (silos) of India will not. The world today produces more food per inhabitant than ever before. Enough food is available to provide 4.3 pounds for every person every day: 2.5 pounds of grain, beans, and nuts, about a pound of meat, milk, and eggs, and another of fruits and vegetables (Lapp et al.. 1998). Simply raising food output may be the last thing that is needed.

In 1999 enough grain was produced globally to feed a population of eight billion people (six billion inhabit the planet in 2000), had it been evenly distributed or not fed to animals. Seven out of ten pounds of grain are fed to animals in the USA. Countries such as Brazil, Paraguay, Thailand, and Indonesia devote thousands of acres of agricultural land to produce soybeans and manioc for export to feed cattle in Europe. By channelling one-third of the grain produced world-wide to needy people, hunger would cease instantly (Lapp et al.. 1998). Hunger is also compounded by globalisation, especially when developing countries embrace free trade policies (lowering tariffs and allowing goods from industrialised countries to flow in) advocated by international lending agencies. The experience of Haiti, one of the world’s poorest countries, is illuminating. In 1986 Haiti imported just 7,000 tons of rice, the majority consumed was grown in the island. After opening its economy to the world, cheaper rice immediately flooded in from the USA where the rice industry is subsidised. By 1996 Haiti imported 196,000 tons of foreign rice at the cost of US$100 million a year. Haitian rice production became negligible once dependence on foreign rice was complete, and the cost of rice rose, leaving large numbers of poor people at the whim of rising world grain prices. Hunger increased (Aristide 2000).

The real causes of hunger are poverty, inequality, and lack of access to food and land. Too many people are too poor (about two billion survive on less than a dollar a day) to buy the food that is available but often poorly distributed, or lack the land and resources to grow it themselves (Lapp et al.. 1998). Because the true root cause of hunger is inequality, any method of boosting food production that deepens inequality is bound to fail to reduce hunger.

By matching myth with reality this paper challenges the false promises made by the genetic engineering industry that it will move agriculture away from a dependence on chemical inputs, increase productivity, decrease input costs, help reduce environmental problems, and feed the hungry (Office of Technology Assessment 1992). By challenging the myths of biotechnology we can expose genetic engineering for what it really is: another ‘technological fix’ or ‘magic bullet’ aimed at circumventing the environmental problems of agriculture (which themselves are the outcome of an earlier round of technological fix) without questioning the flawed assumptions that gave rise to the problems in the first place (Hindmarsh 1991). Biotechnology develops single-gene solutions for problems that derive from ecologically unstable monoculture systems designed on industrial models of efficiency. Such a unilateral and reductionist approach was already proven ecologically unsound for pesticides, also promoted by the same biotech firms, with a reductionist approach using one chemical-one pest as opposed to the one gene-one pest approach now promoted by biotechnology.

Modern industrial agriculture, today epitomised by biotechnology, is founded on philosophical premises that are fundamentally flawed, and these premises are precisely the ones that need to be exposed and criticised in order to advance towards a truly sustainable agriculture. This is particularly relevant in the case of biotechnology, where the alliance of reductionist science and multinational monopolistic industry will take agriculture further down a misguided route, jointly perceiving agricultural problems as genetic deficiencies of organisms, and treating nature as a commodity while in the process making farmers more dependent on an agribusiness sector that increasingly concentrates power over the food system.

Will biotechnology benefit poor farmers?

Most biotechnological innovations available today bypass poor farmers: first because these farmers cannot afford the seeds that are protected by patents owned by biotechnology corporations, and second, because this modern technology is not adapted to the marginal environments where resource-poor farmers live. An estimated 850 million people live on land threatened by desertification. Another 500 million reside on terrain that is too steep to cultivate. Because of these and other limitations, about two billion people have been untouched by modern agricultural science. Moreover, most of the rural poor live in the tropics, a region that will be most vulnerable to the effects of global warming (Conway 1997).

Biotechnology researchers pledge to counter problems associated with food production in such marginal areas by developing GM crops with traits considered desirable for small farmers, such as enhanced competitiveness against weeds, and drought tolerance. However, agricultural biotechnology innovations (i.e. Bt crops and herbicide resistant crops) are profit-driven rather than need-driven. The real thrust of the genetic engineering industry is not to make agriculture more productive but to generate profits (Busch et al.. 1990). In the case of herbicide tolerance the goal is to win greater herbicide market-share for a proprietary product, and to boost seed sales at the cost of damaging the usefulness of a key pest management product (Bt) that is relied on as an alternative to insecticides.

Even if biotechnology contributes to increased harvests poverty will not necessarily decline. Many poor farmers in developing countries do not have access to cash, credit, technical assistance, or markets. The so-called Green Revolution of the 1950s and 1960s bypassed such farmers because planting the new high-yield crops, and maintaining them through the use of pesticides and fertilisers, was too costly for impoverished landowners. Data show that in both Asia and Latin America wealthy farmers with larger and better-endowed lands profited from the Green Revolution, whereas farmers with fewer resources often gained little (Lapp et al. 1998). The ‘Gene Revolution’ might only end up repeating the mistakes of its predecessor. Genetically modified seeds are under corporate control and patent protection, consequently they are very expensive. Since many developing countries still lack the institutional infrastructure and low-interest credit necessary to deliver these new seeds to poor farmers, biotechnology will only exacerbate marginalisation.

Moreover, poor farmers do not fit into the profitable marketing niche of private corporations, whose focus is on biotechnological innovations for the commercial-agricultural sectors of industrial and developing nations. The private sector often ignores important crops such as cassava, which is a staple for 500 million people world-wide. The few impoverished landowners who will have access to biotechnology will become dangerously dependent on the annual purchase of genetically modified seeds. These farmers will have to abide by onerous intellectual property agreements not to plant seeds yielded from a harvest of bioengineered plants. In the USA farmers adopting transgenic soybeans must sign an agreement with Monsanto. If they sow transgenic soybeans the next year, the penalty is about $3,000 per acre and, depending on the acreage, could cost farmers their farms, their livelihood. By controlling germplasm from seed to sale, and by forcing farmers to pay inflated prices for seed-chemical packages, companies are determined to extract the most profit from their investment (Krimsky and Wrubel 1996).

What about Golden Rice?

Scientists who support biotechnology and disagree with the assertion that most biotechnology research is profit- rather than need-driven, use the newly-developed but not yet commercialised Golden Rice to hide behind a rhetoric of humanitarianism. This experimental rice is rich in beta-carotene, an important nutrient for millions of children, especially in Asia, suffering from Vitamin A deficiency that can lead to blindness.

The suggestion that genetically altered rice is the proper way to address the condition of two million children at risk of Vitamin A deficiency-induced blindness reveals a tremendous naivet about the real causes of vitamin and micronutrient malnutrition. Vitamin A deficiency cannot really be characterised as a problem, but rather as a symptom. It warns us of broader inadequacies associated with both poverty, and with agricultural change form diverse cropping systems toward rice monoculture promoted by the Green Revolution. People do not exhibit Vitamin A deficiency because rice contains too little Vitamin A, or beta-carotene, but rather because their diet has been reduced to rice and almost nothing else. These people suffer from many other dietary illnesses that cannot be addressed by beta-carotene, but which could be addressed, together with Vitamin A deficiency, by a more varied diet. Golden Rice must be seen as a one-dimensional attempt to fix a problem created by the Green Revolution: the problem of diminished crop and dietary diversity. A magic-bullet solution, which places beta-carotene into rice while leaving poverty, poor diets, and extensive monoculture intact, is unlikely to make any durable contribution to well-being. When leafy plants are re-introduced into the diet of poor people they provide both needed beta-carotene and other missing vitamins and micro-nutrients, providing a meaningful addition to peasant nutrition and subsistence. There is an abundance of wild and cultivated green leafy vegetables rich in vitamins and nutrients within and on the periphery of paddy rice fields, most of which are eliminated when farmers adopt monocultures and associated herbicides (Greenland 1997).

Rice biotechnologists have no understanding of the deeply-rooted cultural traditions that determine food preferences among Asian people, especially the social and even religious significance of white rice. It is highly unlikely that the Golden Rice will replace white rice, which for millennia has played a variety of nutritional, culinary, and ceremonial roles. No doubt Golden Rice will clash with traditions associated with white rice, as green or blue French fries would clash with Western food preferences in the USA or Europe.

But even if Golden Rice made it into the bowls of poor Asians, there is no guarantee that it would benefit poor people who don’t eat fat-rich or oil-rich foods. Beta-carotene is fat-soluble and its uptake in the intestine depends upon fat or oil in the diet. People suffering protein-related malnutrition and lacking dietary fats and oils cannot store Vitamin A well in the liver, nor transport it to the different body tissues where the vitamin is needed. Moreover, given the low concentration of beta-carotene in the miracle rice (about 1.5 mg/gr of dry weight), people would have to eat more then one kilogram of rice per day to obtain a recommended daily allowance dose of Vitamin A.

Does biotechnology increase yields?

A major argument advanced by biotechnology proponents is that transgenic crops will significantly boost crop yields. Data from the USA do not support such claims. Yields have not increased with transgenic crops, rather, soybean yields tend to be lower (about six per cent less) when compared with conventional varieties, cotton yields have remained unchanged, and maize yields are higher only under sporadic conditions of high pest-pressure. No biotechnological breakthrough of resource-poor farmers has been recorded, and there is no GM crop on the horizon that is expected to outperform local varieties under the heterogeneous environmental conditions facing small farmers. Although data from the developing world is scarce, a US Department of Agriculture Economic Research Service report (USDA 1999) which analysed data collected in 1997 and 1998 for 12 and 18 USA region/crop combinations is very conclusive. The crops surveyed were Bt corn and cotton, and herbicide tolerant (HT) corn, cotton, and soybeans, and their non-engineered counterparts.

Some scientists and policy makers suggest that large investments through public-private partnerships can help developing countries acquire the indigenous scientific and institutional capacity to shape biotechnology to suit the needs and circumstances of small farmers. But once again, corporate intellectual property rights to genes and gene-cloning technology might play spoiler. For instance, in Brazil its national research institute (EMBRAPA) must negotiate licence agreements with nine different companies before a virus-resistant papaya developed with researchers at Cornell University can be released to poor farmers (Persley and Lantin 2000).

Environmental impacts of agricultural biotechnology

Biotechnology is being pursued in order to patch up problems (e.g. pesticide resistance, pollution, soil degradation, etc.) caused by previous agrochemical technologies promoted by the same companies now leading the biorevolution. Transgenic crops developed for pest control closely follow the paradigm of using a single control mechanism (a pesticide) that has proven to fail over and over again with insects, pathogens, and weeds (National Research Council 1996). The touted ‘one gene – one pest’ approach will also be easily overcome by pests that are continuously adapting to new situations and evolving detoxification mechanisms (Robinson 1996).

Agricultural systems developed with transgenic crops favour monocultures characterised by dangerously high levels of genetic homogeneity, leading to higher vulnerability of agricultural systems to biotic and abiotic stresses (Robinson 1996). By promoting monocultures it will also undermine ecological methods of farming, such as rotation and polycultures, thus exacerbating the problems of conventional agriculture (Altieri 2000a).

As the new bioengineered seeds replace and contaminate the old traditional varieties and their wild relatives, genetic erosion will accelerate in the Third World (Fowler and Mooney 1990). Thus the push for uniformity will not only destroy the diversity of genetic resources, but will also disrupt the biological complexity that underlies the sustainability of indigenous farming systems (Altieri 1996).

Impacts of herbicide resistant crops

Weed resistance

The continuous use of herbicides such as bromoxynil and glyphosate (also known as Roundup) which herbicide resistant crops tolerate can lead to problems (Goldberg 1992). It is well documented that when a single herbicide is used repeatedly on a crop, the chances of herbicide resistance developing in weed populations greatly increases (Holt et al. 1993). About 216 cases of pesticide resistance have now been reported in one or more herbicide chemical families (Holt and Le Baron 1990). Triazine herbicides have the most resistant weed species (about 60).

The problem is that given industry pressures to increase herbicide sales, acreages treated with these broad spectrum herbicides will expand, exacerbating the resistance problem. Although glyphosate is considered less prone to causing herbicide resistance in weeds, over time the increased use of the herbicide is bound to result in resistance.

Herbicides kill more than weeds

Companies affirm that bromoxynil and glyphosate, when properly applied, degrade rapidly in the soil, do not accumulate in groundwater, have no effects on non-target organisms, and leave no residue in foods. There is, however, evidence that bromoxynil causes birth defects in laboratory animals, is toxic to fish, and may cause cancer in humans (Goldberg 1992). Because bromoxynil is absorbed dermally, and because it causes birth defects in rodents, it is likely to pose hazards to farmers and farm workers. Similarly, glyphosate has been reported to be toxic to some non-target species in the soil: both to beneficial predators such as spiders, mites, carabid and coccinellid beetles, and to detritivores such as earthworms, as well as to aquatic organisms, including fish (Paoletti and Pimentel 1996). Questions about food safety also arise as this herbicide suffers little metabolic degradation in plants and is known to accumulate in fruits and tubers, and more than 37 million pounds of this herbicide are now used annually in the USA alone. Moreover, research documents that glyphosate seems to act in a similar fashion to antibiotics by altering soil biology in a yet unknown way and thus exerting effects such as :

Reducing the ability of soybeans and clover to fix nitrogen;

Rendering bean plants more vulnerable to disease;

Reducing the growth of beneficial soil-dwelling mycorrhizal fungi, which are key for helping plants extract phosphorous from the soil.

Most poor farmers rely on soil biological processes and organic matter for soil fertility, thus altering microbial populations with herbicides can make them more dependent on fertilisers, an expensive outcome.

Creation of ‘superweeds’ and contamination of landraces

Although there is some concern that transgenic crops themselves might become weeds, a major ecological risk is that large scale releases of transgenic crops may promote transfer of transgenes from crops to other plants, which then could become weeds but also unleash unpredictable ecological effects (Darmancy 1994). Transgenes that confer significant biological advantage may transform wild/weedy plants into new or worse weeds (Rissler and Mellon 1996). The biological process of concern here is introgression (hybridisation among distinct plant species), a major problem in biodiverse farming systems within centres of origin where the possibilities of a transgenic variety encounter with sexually compatible wild relatives is very high. Evidence indicates that such genetic exchanges among wild, weed and crop plants already occur.

The fact that interspecific hybridisation and introgression are common to species such as sunflower, maize, sorghum, oilseed rape, rice, wheat, and potatoes, provides a basis for expecting gene flow between transgenic crops and wild relatives to create new herbicide resistant weeds (Lutman 1999). Transgenic crops can also allow transgenes to escape into free-living populations of landraces. The invasion of transgenes into native varieties could provoke a host of negative effects such as shrinking the agricultural gene pool; clearly any threat to local varieties represents a threat to the food security of local farmers (Snow and Moran 1997).

Environmental risks of insect resistant crops (Bt crops)


According to the biotechnology industry, the promise of transgenic crops inserted with Bt genes is that they will replace synthetic insecticides now used to control insect pests. Most crops have a diversity of insect pests, and therefore insecticides will still have to be applied to control non-Lepidoptera pests, which are not susceptible to the Bt toxin expressed by the crop (Gould 1994). But biotechnology has a limited role in pest management, even for Lepidoptera. In the USA the economic advantages of growing transgenic corn are not assured because population densities of the European corn borer are unpredictable.

On the other hand, several Lepidoptera species have been reported developing resistance to Bt toxin in both field and laboratory tests, suggesting that major resistance problems are likely to develop in Bt crops which through the continuous expression of the toxin create a strong selection pressure (Tabashnik 1994). No serious entomologist questions whether resistance will develop or not. The question is how fast?

In order to delay the inevitable development of insects resistant to Bt crops, bioengineers are preparing resistance management plans, using patchworks of transgenics and non-transgenics (called refuges) to delay the evolution of resistance by providing susceptible insects for mating with resistant insects. Although refuges should cover at least 30 per cent of the crop area, Monsanto’s new plan calls for only 20 per cent refuges, even when insecticides are to be used. Moreover, the plan offers no details whether the refuges must be planted alongside the transgenic crops, or at some distance away, where studies suggest they would be less effective (Mallet and Porter 1992). In addition to refuges requiring the difficult goal of regional co-ordination between farmers, it is unrealistic to expect most small and medium sized farmers to devote up to 30-40 per cent of their crop area to refuges, especially if crops in these areas are to sustain heavy pest damage.

The farmers who face the greatest risk from the development of insect resistance to Bt are neighbouring organic farmers who grow corn and soybeans without agrochemicals. Once resistance appears in insect populations, organic farmers will not be able to use Bt in its microbial insecticide form to control Lepidoptera pests moving in from adjacent neighbouring transgenic fields; thus losing a valuable biorational tool for pest control.

Effects on non-target species

By keeping pest populations at extremely low levels, Bt crops could potentially starve natural enemies, as predators and parasitic wasps that feed on pests need a small amount of prey to survive in the agroecosystem. Among the natural enemies that live exclusively on insects which the transgenic crops are designed to kill (Lepidoptera), egg and larval parasitoids would be most affected because they are totally dependent on live hosts for development and survival, whereas some predators could theoretically thrive on dead or dying prey (Schuler et al. 1999).

Natural enemies could also be affected directly through inter-trophic level effects of the toxin. The potential of Bt toxins moving through arthropod food chains poses serious implications for natural biocontrol in agricultural fields. Recent evidence shows that the Bt toxin can affect beneficial insect predators that feed on insect pests present on Bt crops (Hilbeck et al.. 1999). Studies in Switzerland show that mean total mortality of predacious lacewing larvae (Chrysopidae) raised on Bt-fed prey was 62 per cent compared to 37 per cent when raised on Bt-free prey. These Bt-prey fed to Chrysopidae also exhibited prolonged development time throughout their immature life stage (Hilbeck et al.. 1999).

These findings are of concern to small farmers who rely for insect pest control on the rich complex of predators and parasites associated with their mixed cropping systems (Altieri 1994). Inter-trophic level effects of the Bt toxin raise serious concerns about the potential of the disruption of natural pest control. Polyphagous predators that move within and between mixed crops cultivars, will encounter Bt-containing non-target prey throughout the crop season (Hilbeck et al.. 1999). Disrupted biocontrol mechanisms may result in increased crop losses due to pests, or to the increased use of pesticides by farmers, with consequent health and environmental hazards.

It is also now known that windblown pollen from Bt crops found on natural vegetation surrounding transgenic fields can kill non-target insects. A Cornell study (Losey et al.. 1999) showed that corn pollen containing Bt toxin can drift several metres downwind and deposit itself on milkweed foliage with potentially deleterious effects on Monarch butterfly populations. These findings open a whole new dimension on the unexpected impacts of transgenic crops on non-target organisms which play key roles in the ecosystem, such as providing alternative food for natural enemies that depend on field margins for their continual existence in agroecosystems (Altieri 1994). But environmental effects are not limited to the interface of crops and insects. Bt toxins can be incorporated into the soil through leaf materials when farmers incorporate transgenic crop residues after harvest. Toxins may persist for 2-3 months, resisting degradation by binding to clay and humic acid soil particles while maintaining toxin activity (Palm et al.. 1996). Such active Bt toxins that end up and accumulate in the soil and water from transgenic leaf litter may have negative impacts on soil and aquatic invertebrates and nutrient cycling processes (Donnegan and Seidler 1999).

The fact that Bt retains its insecticidal properties, and is protected against microbial degradation by being bound to soil particles and persisting in various soils for at least 234 days, is of serious concern for poor farmers who cannot purchase expensive chemical fertilisers. These farmers instead rely on local residues, organic matter, and soil micro-organisms for soil fertility (key invertebrate, fungal, or bacterial species), which can be negatively affected by the soil-bound toxin (Saxena et al.. 1999).

More sustainable alternatives to biotechnology do exist

What is agroecology?

A growing number of farmers, NGOs, and sustainable agriculture advocates propose that instead of the biotechnology capital- and input-intensive approach, developing countries should favour an agroecological model that emphasises biodiversity, nutrient recycling, synergy among crops, animals, soils, and other biological components, as well as regeneration and conservation of resources (Altieri 1996).

Agroecological approaches rely on indigenous farming knowledge, and selected low-input modern technologies, to diversify production. The approach incorporates biological principles and local resources into the management of farming systems, thus providing for an environmentally sound and affordable way for smallholders to intensify production in marginal areas (Altieri et al. 2000b).

There are proven agroecological alternatives to biotechnology that result in technologies that are cheap, accessible, risk averting, productive in marginal environments, environment and health enhancing, and culturally and socially acceptable. A recent analysis of 208 agroecologically based projects and/or initiatives documented clear increases in food production over some 29 million hectares, with nearly 9 million households benefiting from increased food diversity and security. Promoted sustainable agriculture practices led to 50-100 per cent increases in per hectare food production (about 1.71 tonnes per year per household) in rain-fed areas, typical of small farmers living in marginal environments; that is an area of about 3.58 million hectares, cultivated by about 4.42 million farmers (Pretty and Hine 2000). Such yield enhancements are a true breakthrough for achieving food security among resource-poor farmers isolated from mainstream agricultural institutions (Uphoff and Altieri 1999). Some of the examples considered in this study include (Pretty 1995):

Brazil: 200,000 farmers using green manures/cover crops doubled maize and wheat yields;

Guatemala-Honduras: 45,000 farmers using the legume Mucuna as a cover for soil conservation systems tripled maize yields in hillsides;

Mexico: 100,000 small organic coffee producers increased production by half;

South-east Asia: 100,000 small rice farmers involved in IPM farmers’ schools substantially increased yields while eliminating pesticides;

Kenya: 200,000 farmers using legume-based agroforestry and organic inputs doubled maize yields.

These examples are but a small sample of the thousands of successful experiences of sustainable agriculture implemented at the local level. Data show that over time agroecological systems exhibit more stable levels of total production per unit area than high-input systems; produce economically favourable rates of return; provide a return to labour and other inputs sufficient for a livelihood acceptable to small farmers and their families; and ensure soil protection and conservation and enhance agrobiodiversity. More importantly, these experiences, which emphasise farmer-to-farmer research and grassroots extension approaches, represent countless demonstrations of talent, creativity, and scientific capability in rural communities. They point to the fact that human resource development is the cornerstone of any strategy aimed at increasing options for rural people and especially resource-poor farmers.


The ecological effects of engineered crops are not limited to pest resistance and creation of new weeds or virus strains. Transgenic crops can produce environmental toxins that move through the food chain, and also may end up in the soil and water affecting invertebrates and probably ecological processes such as nutrient cycling. Gene flow from transgenic crops to landraces can compromise the genetic integrity of centres of origin. Moreover, large-scale landscape homogenisation with transgenic crops will exacerbate the ecological vulnerability already associated with monoculture agriculture (Altieri 2000a). Unquestioned expansion of this technology into developing countries is not desirable. There is strength in the agricultural diversity of many of these countries, and it should not be inhibited or reduced by extensive monoculture, especially when the consequences of doing so results in serious social and environmental problems (Thrupp 1998).

It is through management of this biodiversity that small farmers located in marginal environments in the developing world can produce much of the needed food. The evidence is conclusive: new approaches and technologies spearheaded by farmers, local governments, and NGOs around the world are already making a sufficient contribution to food security at the household, national, and regional levels. A variety of agroecological and participatory approaches in many countries show very positive outcomes, even under adverse conditions. Potentials include: raising cereal yields from 50 to 200 per cent, increasing stability of production through diversification and soil/water management, improving diets and income with appropriate support and spread of these approaches, and contributing to national food security and to exports (Uphoff and Altieri 1999).

Whether the potential and spread of these thousands of local agroecological innovations is realised depends on investments, policies, and attitude changes on the part of researchers and policy makers. Major changes must be made in policies, institutions, and research and development to make sure that agroecological alternatives are adopted, made equitably and broadly accessible, and multiplied so that their full benefit for sustainable food security can be realised. Existing subsidies and policy incentives for conventional chemical approaches must be dismantled. Corporate control over the food system must also be challenged. It is urgent that governments and international public organisations encourage and support effective partnerships between NGOs, local universities, and farmer organisations in order to assist and empower poor farmers to achieve food security, income generation, and natural resource conservation.

Equitable market opportunities must also be developed emphasising fair trade and other mechanisms that link farmers and consumers more directly. The ultimate challenge is to increase investment and research in agroecology and scale up projects that have already proven successful to thousands of other farmers. If such initiatives are complemented with true land reform this holds the promise of productivity gains far outweighing the potential of agricultural biotechnology. While industry proponents will often forecast 15, 20, or even 30 per cent yield gains from biotechnology, smaller farms today produce from 200-1,000 per cent more per unit area than larger farms, world-wide (Rosset 1999). Land reforms that bring average land holdings down to their optimum (small) size from the inefficient, unproductive overly large units that characterise much of world agriculture today, could provide the basis for production increases beside which the much ballyhooed promise of biotechnology would pale in comparison. This will generate a meaningful impact on the income, food security, and environmental well-being of the world’s population, especially of the millions of poor farmers yet untouched by modern agricultural technology.

by Miguel A. Altieri

US: Food Problems Elude Private Inspectors

Posted in Health, Food, Energy and Ecology, Private Plunder on March 27, 2009 by CjH

When food industry giants like Kellogg want to ensure that American consumers are being protected from contaminated products, they rely on private inspectors like Eugene A. Hatfield. So last spring Mr. Hatfield headed to the Peanut Corporation of America plant in southwest Georgia to make sure its chopped nuts, paste and peanut butter were safe to use in things as diverse as granola bars and ice cream.

The peanut company, though, knew in advance that Mr. Hatfield was coming. He had less than a day to check the entire plant, which processed several million pounds of peanuts a month.

Mr. Hatfield, 66, an expert in fresh produce, was not aware that peanuts were readily susceptible to salmonella — which he was not required to test for anyway. And while Mr. Hatfield was inspecting the plant to reassure Kellogg and other food companies of its suitability as a supplier, the Peanut Corporation was paying for his efforts.

“The overall food safety level of this facility was considered to be: SUPERIOR,” he concluded in his March 27, 2008, report for his employer, the American Institute of Baking, which performs audits for major food companies. A copy of the audit was obtained by The New York Times.

Federal investigators later discovered that the dilapidated plant was ravaged by salmonella and had been shipping tainted peanuts and paste for at least nine months. But they were too late to prevent what has become one of the nation’s worst known outbreaks of food-borne disease in recent years, in which nine are believed to have died and an estimated 22,500 were sickened.

With government inspectors overwhelmed by the task of guarding the nation’s food supply, the job of monitoring food plants has in large part fallen to an army of private auditors like Mr. Hatfield. And the problems go well beyond peanuts.

An examination of the largest food poisoning outbreaks in recent years — in products as varied as spinach, pet food, and a children’s snack, Veggie Booty — show that auditors failed to detect problems at plants whose contaminated products later sickened consumers.

In one case involving hamburgers fed to schoolchildren, the Westland/Hallmark Meat Company in California passed 17 separate audits in 2007, records show. Then an undercover video made that year showed the plant’s workers using forklifts to force sickly cows into the slaughterhouse, which prompted a recall of 143 million pounds of beef in February 2008.

“The contributions of third-party audits to food safety is the same as the contribution of mail-order diploma mills to education,” said Mansour Samadpour, a Seattle consultant who has worked with companies nationwide to improve food safety.

Audits are not required by the government, but food companies are increasingly requiring suppliers to undergo them as a way to ensure safety and minimize liability. The rigor of audits varies widely and many companies choose the cheapest ones, which cost as little as $1,000, in contrast to the $8,000 the Food and Drug Administration spends to inspect a plant.

Typically, the private auditors inspect only manufacturing plants, not the suppliers that feed ingredients to those facilities. Nor do they commonly test the actual food products for pathogens, even though gleaming production lines can turn out poisoned fare.

As in the Georgia peanut case, auditors are also usually paid by the food plants they inspect, which some experts said could deter them from cracking down. Yet food companies often point to an auditor’s certificate as a seal of approval.

The baking institute, which is based in Manhattan, Kan., and is also known as AIB International, says it inspected more than 10,000 food production sites in 80 countries last year. James R. Munyon, its president and chief executive, said his group’s inspections were reliable and tough, no matter who pays for them, but he declined to elaborate on specific audits.

Kellogg officials declined to be interviewed for this article. The company has said it is reviewing its use of private audits, including those by the American Institute of Baking. Kellogg said it required the Peanut Corporation to provide it with annual audits of the Georgia facility. Kellogg has recalled more than a dozen products, including Keebler crackers and Famous Amos cookies.

The retail giant Costco, which had already limited the institute’s audits to bakery vendors, has now told suppliers to stop using the group altogether.

Both the food industry and federal officials say they are aware of the problems with third-party audits. Nonetheless, the F.D.A. has proposed expanding the role of private auditors to inspect the more than 200,000 foreign facilities that ship food to the United States. The agency has proposed a voluntary certification program that would toughen audit standards and alert federal authorities of problems — an idea that has met stiff resistance from the food industry.

Food safety advocates say that audits can play a useful role in improving sanitation and catching problems. But in case after case, the audits have failed to prevent major outbreaks.

In 2007, Keystone Food Products, the Easton, Pa., plant that makes Veggie Booty, received an “excellent” rating from the American Institute of Baking. But the audit did not extend to ingredient suppliers, including a New Jersey company whose imported spices from China were tainted with salmonella.

As many as 2,000 people in 19 states were sickened, according to federal estimates. The incident prompted the New York company that sells the snack, Robert’s American Gourmet, to add its own inspections and regularly test ingredients for contamination.

Even when audits do turn up problems, it is up to the discretion of food companies to fix them.

After Nebraska Beef was linked to an E. coli outbreak in 2006, officials from the United States Department of Agriculture found that the company had not carried out the recommendations of auditors who had identified numerous problems at the plant in the preceding months.

Nebraska Beef has disputed its culpability in the outbreak, which sickened at least 17 people. A company spokesman said Thursday that the problems identified in the audit had been corrected but could not provide documents to verify that claim.

Robert A. LaBudde, a food safety expert who has consulted with food companies for 30 years, said, “The only thing that matters is productivity.” He added that “you only get in trouble if someone in the media traces it back to you, and that’s rare, like a meteor strike.”

Dr. LaBudde said a sausage plant hired him five years ago to determine the species of bacillus plaguing its meat. But the owner then refused to complete the testing. “I called them ‘anthrax sausages,’ and said they could be killing older people in the state, and still they wouldn’t do it,” he said, declining to name the company.

There are more than 200 companies and numerous independent operators in private food inspection. Few have grown faster than the American Institute of Baking. In addition to the peanut factories, the organization’s 120 auditors handle clients who process meat, seafood, vegetables, spices, oils and dairy products.

The baking institute also sells educational services to food industry personnel; the Peanut Corporation of America said some of its employees attended the organization’s food safety training classes. Audits provide nearly half the income for the organization, according to tax filings and the organization’s Web site.

Mr. Munyon, the organization’s president, said its auditors were drawn from industry experts with vast experience in food safety. “AIB emphasizes the educational value of its inspection procedure to the management and employees of the facilities it provides services to,” he said.

Mr. Munyon acknowledged that auditors were allowed to solicit contracts from plants that they then audited, but said this posed no ethical issues because the auditors were on salary, not paid by commission. Mr. Hatfield first audited the Peanut Corporation plant in Georgia in 2007 after contacting the plant’s managers to solicit their business.

The American Institute of Baking’s dual role as an educator and inspector troubles some in the food industry, as does its expansion beyond baking audits. Before the salmonella outbreak, Costco had rebuffed repeated proposals by the organization to inspect all its food suppliers.

“The American Institute of Baking is bakery experts,” said R. Craig Wilson, the top food safety official at Costco. “But you stick them in a peanut butter plant or in a beef plant, they are stuffed.”

Costco, Kraft Foods and Darden Restaurants are among a group of food manufacturers and other companies that use detailed plans to prevent food safety hazards. They also supplement third-party audits with their own inspections and testing of ingredients and plant surfaces for microbes.

The American Institute of Baking was not alone in missing the trouble at the Peanut Corporation plant in Blakely, Ga. State inspectors also found only minor problems, while a federal team last month uncovered a number of alarming signs, as well as testing records from the company itself that showed salmonella in its products as far back as June 2007. Federal health officials say there are now 677 officially reported cases of salmonella poisoning in the outbreak, which reflects only about 3 percent of the total number of people sickened.

But the baking institute’s private audit of the peanut plant had particular heft in assuring food makers that the processed peanuts were safe. Plant workers, in interviews with The Times, also cited the audits’ findings when asked why they did not pursue their own concerns about the plant.

Another audit of the peanut plant, by the Michigan-based NSF Cook & Thurber, raises further questions about the usefulness of private audits. That audit found nearly two dozen problems that it characterized as “minor,” but it nonetheless gave the peanut plant an overall score of 91 out of 100.

NSF officials said that for their audits, this was a low score. But the company that paid for the audit, the insurance giant American International Group, then sold the peanut company insurance to cover the costs of recalling products, according to lawyers for the Peanut Corporation.

Mr. Hatfield, who audited the peanut plant for the American Institute of Baking, referred questions to the organization, which said he “is degreed in biology” and “trained to do the job.” In auditing the Blakely plant last March, Mr. Hatfield became concerned about his ability to check the plant thoroughly and asked for more than the one day allotted, according to people familiar with the audit. The Peanut Corporation agreed to pay for the additional time, but only in future audits, according to those people.

Mr. Hatfield checked to see that the plant had a system in place to test its products for contamination, but the audit indicated that he did not ask to see any test results for salmonella and therefore did not know that the plant had found the bacteria.

“I never thought that this bacteria would survive in the peanut butter type environment,” Mr. Hatfield wrote to a food safety expert on Jan. 20, after the deadly salmonella outbreak was made public, according to a copy of his e-mail message. “What the heck is going on??”

By Michael Moss and Andrew MartinNew York Times
March 5th, 2009



The Most Dangerous Person in the World?

Posted in The Sickness on March 27, 2009 by CjH

Toxic Agents


A significant majority of Americans, polls repeatedly tell us, list terrorism as one of their greatest fears. Like most of our media-inspired interests and worries, however, this one has little basis in reality.

In actual fact, unless you’re serving in a war zone, the most dangerous person you’re ever likely to encounter – by several orders of magnitude – is the one you see in the mirror every morning.

Not some shadowy arms dealer peddling second hand nukes. Not some dusky Jihadi with a song on his lips and a suicide belt around his middle. Not some mad scientist, bribed by the forces of evil to cook up a bio-bug capable of ending life as we know it.

Here are the hard facts.

The single greatest killer of Americans is the so-called “lifestyle disease”. Somewhere between half a million and a million of us get a short ride in a long hearse every year because of smoking, lousy diets, parking our bodies in front of the TV instead of operating them, and downing yet another six pack and / or tequila popper.

According to the US Department of Health and Human Services, between 310,000 and 580,000 of us will commit suicide by cigarette this year. Another 260,000 to 470,000 will go in the ground due to poor diet and sedentary lifestyle. And some 85,000 of us will drink to our own departure.

After the person in the mirror, the next most dangerous individual we’re ever likely to encounter is one in a white coat. Something like 200,000 of us will experience “cessation of life” due to medical errors – botched procedures, mis-prescribed drugs and “nosocomial infections”. (The really nasty ones you get from treatment in a hospital or healthcare service unit.)

The next most dangerous encounter the average American is likely to have is with a co-worker with an infection. Or a doorknob, stair railing or restaurant utensil touched by someone with the crud. “Microbial Agents” (read bugs like flu and pneumonia) will send 75,000 of us to meet the Reaper this year.

If we live through those social encounters, the next greatest danger is “Toxic Agents” – asbestos in our ceiling, lead in our pipes, the stuff we spray on our lawns or pour down our clogged drains. Annual body count from these handy consumer products is around 55,000.

After that, the most dangerous person in our lives is the one behind the wheel. About 42,000 of us will cash our chips in our rides this year. More than half will do so because we didn’t wear a seat belt. (Lest it wrinkle our suit.)

Some 31,000 of us will commit suicide by intention this year. (As opposed to not fastening our seat belts or smoking, by which we didn’t really mean to kill ourselves.)

About 30,000 of us will die due to our sexual behaviors, through which we’ll contract AIDS or Hepatitis C. Another 20,000 of us will pop off due to illicit drug use.

The next scariest person in our lives is someone we know who’s having a really bad day. Over 16,000 Americans will be murdered this year, most often by a relative or friend.

After that, it’s an overdose on “non-steroidal anti-inflammatories”, acetaminophen or aspirin. About 7,600 hundred a year, perhaps due to the aftermath of those tequila poppers.

Next most dangerous thing is going to work. About 5,500 of us will buy the farm due to “occupational trauma”.

If that’s scary enough to skip work, we might want to skip lunch, too. Next most dangerous thing is the food we eat. About 5,200 of us will hurl our lives away due to “foodborne agents”.

Another 4,000 of us will drown. A significant percentage will be fishermen found floating with a high blood alcohol content and an unzipped fly.

As the data clearly shows, the things that genuinely threaten us are the ones we are most likely to ignore or simply accept. (We’re statistically far more likely to be killed by a lightning strike than by an action of Al Qaeda, for example.) The ones that we’re scared witless of – and spend trillions of increasingly scarce dollars to avert in our boundless paranoia – are less likely to harm us than a bag of peanuts. (Deaths in America due to peanut allergies average 50 – 100 per year.)

Deaths of Americans due to terrorist activities, according to the US State Department, have averaged less than 15 per year since 2002. And all of those occurred abroad. The majority were in Saudi Arabia, Egypt and the Occupied Palestinian Territories. (Civilian deaths in Iraq and Afghanistan were not counted due to the fact those occurred in war zones.)

Executive Summary:

The things we fear most may be least likely to occur, which means the time, trauma and treasure we invest in them is a complete waste.

Security itself is an illusion. It is a perception that exists only between our ears. No army, insurance policy, hazmat team, video surveillance or explosive sniffer can protect us from our own immune system, a well-intentioned but clumsy surgeon, failing to look before crossing the street, an asteroid randomly hurtling through space or someone willing to die in order to do others harm.

In this sense, the only things that can truly make us more “secure” are not things. They are the courage to face whatever comes with dignity and intention, and the strong relationships that assure we will face the future together, and find comfort and meaning in doing so.

Imagine, then, what might happen if we simply quit listening to the scaremongers and those who profit from our paranoia. Imagine what the world could look like if we made a conscious choice to live out whatever time we have with courage, compassion, service and joy.

Terrorism is an act of the weak. But so is walking through the airport in our socks.

We can make better choices.

John Goekler uses imagination, agitation and applied complexity science to help organizations act with greater coherence, effectiveness and joy. He works primarily through Change Factors.