America needs a new New Deal

Since Roosevelt’s era, infrastructure, manufacturing and the viability of our ecosystem have declined dramatically.

Paul Rosenberg

Because the US government, media and political class spent the past year obsessing over the deficit and ignoring unemployment, the economic situation has grown significantly worse – along with the framework of background political assumptions.

Perhaps the renewed election focus on jobs will provide some temporary relief, though it’s unlikely to be more than cosmetic. But given the establishment’s relentless focus on deficits, perhaps a counter-intuitive response is best: To view all our problems in terms of deficits.

In part one of this essay, I looked at our fiscal deficits: Short- mid- and long-term federal deficits, as well as state and local deficits.

I now turn to some other equally if not more important deficits – ones that cannot be so readily re-negotiated, re-structured or otherwise fiddled with. In this part, I describe two physical deficits: the infrastructure deficit and the ecosystem deficit.

Rooted as they are in physical laws, they need to be taken far more seriously. Beyond that are three structural/functional deficits: the sustainability deficit, the time/jobs deficit and the equality deficit; two cognitive deficits: the critical thinking deficit and the imagination deficit; and one political deficit: the democracy deficit.

All of these deficits are vitally important for us to consider, because we ignore them at the peril of destroying civilisation as we know it.

The infrastructure deficit

“The physcial accomplishments of the New Deal have served as the core of the US education, health, recreation, transportation, justice and civic admistration facilities for decades.”
 Robert D Leighninger, Jr, author

All across the US, it’s still possible to find bridges, roads, dams, airports, levees, playgrounds, swimming pools, schools, colleges, libraries, courthouses, city halls, auditoriums, post offices – all manner of different forms of public infrastructure which were built by formerly unemployed government workers under the New Deal during the Great Recession. According to Long-Range Public Investment: The Forgotten Legacy of the New Deal by Robert D Leighninger Jr, the Civilian Conservation Corps alone, for example, built 46,854 bridges, 3,116 fire lookout towers, 197 large dams, and planted over 3 billion trees, plus a great deal more.

Throughout the Great Depression, the government put unemployed people to work, creating an enormous web of public infrastructure that not only helped us win World War II in the following decade, but that helped lay the foundations for decades of post-War prosperity.

According to the publisher, the University of South Carolina Press, “Leighninger concludes that the physical accomplishments of the New Deal have served as the core of the US education, health, recreation, transportation, justice, and civic administration facilities for decades.”

That is what the American people and their government are capable of, even in the most dire of times, economically. But half a century later, under Republican icon Ronald Reagan, we had clearly lost our way. “Government isn’t the solution” he told us, “government is the problem”.

Implicit in this claim was the absurd notion that infrastructure – the physical foundation of civilisation – is a problem. And yet, that’s exactly how we’ve been acting, with decades of underinvestment in infrastructure.

Reagan Republicans alone can’t be blamed. But infrastructure spending peaked under liberal Democrats in the early 60s, and the alarm was raised during Regan’s second term – only to continue being ignored while conditions have worsened ever since. In February 1988, the National Council on Public Works Improvement released a report, “Fragile Foundations: A Report on America’s Public Works”, a “Final Report to the President and Congress.”

Its latest comprehensive data came from 1985. It showed that infrastructure spending peaked in the early 1960s as a percentage of the economy. It remained relatively stable until 1968, and declined significantly through 1978, when a modest, but hopeful bounce-back began, lasting only until 1981, after which a new low was reached.

Capital investments in infrastructure fell from 2.5 per cent of GNP in 1963 to slightly more than one per cent from 1982 to 1985. Total spending in 1984 – including operations and maintenance as well as capital spending – was 2.5 per cent of GNP, the same as capital spending alone in 1963, And 1982, 1983 and 1985 were only modestly higher – around 2.6 per cent.

Eight categories were evaluated on the report, with letter grades ranging from a single B on water resources through two C- grades on mass transit and solid waste, and a solitary D on hazardous waste. In this last category, the report warned, “Nation has forfeited much of its opportunity to reduce waste before it is produced. Waste control legislation promotes ’end of pipe’ rather than source reduction solutions … A massive backlog of poisons and needed cleanup projects faces the nation.”

Just over twenty years later, in 2009, the reporting (taken over by the American Society of Civil Engineers in 1998) was far more detailed and sophisticated, while the situation was far worse.

Out of fifteen categories, the highest grade was a solitary C in solid waste, while there were five D- grades: Roads, levees, inland waterways, wastewater, and drinking water. There were straight Ds in aviation, dams, hazardous waster, schools, transit, along with two C- grades in rail and public parks and recreation, one C in bridges, and one D in energy. The overall letter grade was D, but the overall number grade was even more sobering: With a total five-year need $2.2 trillion, the shortfall projected was more than 50 per cent – $1.18 trillion, clearly a failing grade.

In March of this year, Shayne Henry and Samuel Sherraden of the New America Foundation estimated the annual cost of the infrastructure deficit at more than $195 billion per year. (None of this considered America’s IT infrastructure, where the US trails far behind countries like South Korea, resulting in productivity losses due to slow connection speeds which probably run into tens of billions of dollars.)

“It’s a bipartisan myopia, as shown by President Obama’s efforts to promote ’free trade’ agreements as a ’jobs program’, despite decades of evidence to the contrary.”

Of course, the problem is not just public infrastructure – it involves America’s entire physically productive base. Americans well know that their manufacturing base has eroded dramatically over the past 30 years. This past decade, the erosion in manufacturing jobs was particularly intense, but was masked, in part, by the housing construction boom. When that collapsed, the earlier erosion in manufacturing became more obvious, but politicians still seem incapable of connecting the dots.

It’s a bipartisan myopia, as shown by President Obama’s effort to promote “free trade” agreements as a “jobs program”, despite decades of evidence to the contrary – particularly when it comes to manufacturing.

The mechanisms driving this trend are diverse, according to Eileen Appelbaum, senior economist at the Center for Economic and Policy Research. But the bottom line is that they revolve around changes in the rules governing corporate finance and the workings of the financial sector, rules that began changing dramatically during the 1980s, with the rise of corporate raiders under the banner of “shareholder value”.

This lead to vastly increased pressure for higher quarterly profits, which inevitably meant less reinvestment in manufacturing capacity, as well as research and development aimed at the next generation of manufacturing. Other changes – such as the rise of private equity funds and their purchases of publicly-traded companies – only exacerbated this trend.

“Regular banks are just not lending to manufacturing companies”, Appelbaum said. There is still far more money to be made gaming derivative markets. Underinvestment in American manufacturing is one of the hidden costs of not reforming the financial sector that brought the world economy to its knees.

“These are not market forces driving it”, Appelbaum said, referring to how regulations structure the market. “If we could clearly spell out what it is that causes these things, then we could change it.”

The ecosystem deficit

“Humans have changed the ecosystems more rapidly and extensively than in any comparable period of time in human history.”

 UN-sponsored Millenium Ecosystem Assessment Report (MA)

Although harder to measure – or even define – the ecosystem deficit is even more devastating than infrastructure deficit. In fact, most people probably don’t even realise it exists. But without the economic services the ecosystem provides, not only would civilisation collapse, life itself would be impossible. Yet, the quality of ecosystem services has arguably declined as precipitously as our infrastructure has. And America’s ecosystem deficit cannot be understood outside of a global perspective.

The most comprehensive framework for assessment of the decline in such services is the UN-sponsored Millenium Ecosystem Assessment Report (MA), the result of a world-wide effort involving more than 1,300 experts from 95 countries working from 2001 to 2005.

Ecosystem services are broken down into four categories: Provisioning services, like supplying food, water and fiber; regulatory services, that control climate, water flow and quality, air quality, pests and disease; cultural services, that supply recreational, aesthetic and spiritual/religious benefits; and supporting services, such as photosynthesis, soil formation and nutrient cycling.

The MA found that 15 of 24 ecosystem services it studied were being degraded or used unsustainably. These include fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests. It found that “humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history” and that harmful impacts could accelerate over the next 50 years.

Two of the most troubling consequences will be the increased risks of nonlinear changes, and the increased burdens on the poor.

A relatively well-known example of such nonlinear change is the way that many fisheries have suddenly crashed in a manner that’s statistically much more severe than a stock market crash. Other examples include rapid disease emergence, abrupt changes in water quality, the creation of “dead zones” in coastal waters, and shifts in regional climate – such as those experienced in Australia over the past decade, and quite possibly the drought currently affecting Texas.

Not only do the costs of lost ecosystem services fall most heavily on the poor, those losses contribute to “growing inequities and disparities across groups of people, and are sometimes the principal factor causing poverty and social conflict.”

What’s more, costs are often shifted to the future, meaning that poor people not even born yet are being asked to pay the price of policies that most benefit and are most shaped by the wealthiest among us today.

Tragically, this even applies to well-meaning policies that are simply too narrowly conceived. The report warns, “Many ecosystem services have been degraded as a consequence of actions taken to increase the supply of other services, such as food. These trade-offs often shift the costs of degradation from one group of people to another or defer costs to future generations.” This points toward at least five further deficits we’ll consider later: Those of sustainability, equality, critical thinking, imagination and democracy.

The MA also found that there are significant differences in outcome, depending on the policies we adopt, and it sketched out the likely consequences of four different policy scenarios.

We are not helpless to change course. Yet, as things stand, we have only begun to develop the understanding that will be necessary to make those changes. The threat of global climate change is just one example of a degrading ecosystem services; albeit a very major one.

Despite the fact that it is very well understood, there is enormous political, economic and ideological resistance to even begin taking action. The consequences of multiple such failures which is what we should expect, if coordinated actions are not taken are bound to be significantly worse than simply added up the consequences of each failure separately. At the very minimum, we need for the concept of ecosystem deficits to become as commonplace as the concept of financial deficits.

Problems must be named before they can be organised around and solved. A key problem driving the ecosystem deficit is that the services ecosystems provide are largely decoupled from our economic system.

“There’s no marketplace on some of those services. We regard them as free, simply because there’s no market,” Stanford biologist Harold A Mooney, one of the lead authors of MA, told me when I interviewed him. As a result, he said, “You could cut down the whole forest,” without paying for the regulatory services lost.

How important is that single example? Consider just one aspect: “About 4.6 billion people depend for all or some of their water on supplies from forest systems,” the MA notes, but 25 countries have effectively lost all their forests, while another 29 have lost 90 per cent of them.

Pricing nature

Putting a price on ecosystem services – and ecosystems as a whole – is one way to begin to comprehend the problem, and begin to suggests strategies that can lead to solutions that don’t just create new problems in place of old.

There are a number of ways to do this. One is compare the value of relatively intact ecosystems and compare them to the uses they have been replaced by. Results are then expressed on a on a per-acre or per-hectare basis. While the market values of the new uses may register an economic increase, the total value of services produced are often substantially lower. One way that ecosystem deficits can be measured is by intensive investigation of the total value of ecosystem services for a particular kind of ecosystem, which is then compared to the value of that same land producing a commercial product – plus whatever other services it provides. Results are expressed on a per-acre or hectare basis.

One chart in the MA summary report provided four different examples, all of which showed a dramatic decline in the value per hecatre: Intact wetland in Canada declined in value from $5800 to $2250 when converted to intensive farming; sustainable forrestry valued at $3500 in Cameroon declined in value to $2000 when shifted to small-scale farming; intact mangroves declined in value from $1000 to $200 when shifted to shrimp farming; and traditional forest use in Cambodia declined from $1350 to $150 when switched to unsustainable timber harvest.

This doesn’t mean that none of the developed uses should have been pursued. But it does mean there are significant trade-offs that need to be considered. Some shot-term needs should be met by incurring long-term debts, and that’s as true of ecosystems as it is of federal budgets. But such choices need to be made wisely, and on the basis of adequate information. Taking all ecosystem services into account, it may be just as sensible to convert one acre as it is to keep ten.

But a purely market-based analysis would entirely miss the wider and more long-term costs that would lead to such a balanced approach.

Another way to approach the value of ecosystem services is by pricing the externalised costs of specific activities that involve the destruction of ecosystem services – such as the costs that air pollution represent to the regulatory services of providing clean, breathable air and the cultural services of providing aesthetic enjoyment. The ports of Los Angeles and Long Beach, which I can see from window, produce an enormous amount of air pollution – though far less than they did just five years ago.

Throughout the long process of fighting for systemic improvements, it emerged that externalised costs of these two ports – primarily from diesel exhaust, most of which was transportation-related – exceeded the value of their annual budgets. The lion’s share of such costs represented premature deaths, which we not just limited to the immediate vicinity of the ports, but were distributed across the air basin, with particular intensity along transportation corridors.

In 2010, the California Air Resources Board estimated that particulate matter pollution in California was responsible for about 9,200 premature deaths per year – almost double the number of deaths from homicide. Nationally a low estimate is 80,000. In rapidly-industrialising China a few years ago, the figure was estimated at 750,000.

Not all such deaths result from pollution, particulate matter has natural sources as well. But simply bringing California’s air into compliance with the Clean Air Act would save around 2,700 lives a year – even without strengthening those standards, which the latest science supports doing. This equates to a cost of roughly $16.2 billion a year, using the figure of $6 million for the statistical value of a human life – a figure supported by dozens of studies.

Coal mining provides another similar example. A 2009 scientific study by Michael Hendryx and Melissa Ahern found that the externalised costs of coal mining in Appalachia, solely due to premature death vastly exceeded the $8 billion economic contribution of coal mining.

In contrast, the costs ranged from $18.5 to $84.5 billion, with a point estimate of $50 billion.

“The environmental damages that are done by mountaintop mining, the destruction of streams, the destruction of forests that would sequester a lot of carbon and produce oxygen – they have tremendous economic value,” Hendryx told me.

But these ecosystem services were beyond the scope of his study, which focused solely on the costs of premature death – the dominant loss in the clean air regulatory service. “The costs that we estimated from mortality are really very conservative,” he said, “as they don’t include those tremendous environmental costs that are associated with the practice as well.”

Progress is being made on pricing nature, as reflected in another international scientific effort, The Economics of Ecosystems and Biodiversity (TEEB). In April 2010, University of Wyoming economist Edward Barbier – who serves on TEEB’s advisory board – told me there have been “two major contributions that have occurred” in building our understanding of the economic value of ecosystems.

“One is a comprehensive actually study, the Millennium Assessment, the other is a growing number of studies by economists and ecologists, highlighting the value of ecosystem services. So what TEEB has tried to do is pull these two things together.”

Tremendous strides have been made in understanding, at least within the scientific community. But progress in addressing the ecosystem deficit is in turn held back by our global and national political systems – the result of other, deeper deficits that we will continue to explore.

In our next installment, we look at three structural/functional deficits: The sustainability deficit, the time/jobs deficit and the equality deficit, all more difficult to grasp, but intimately involved in keeping us from realising our potential, from the personal to the planetary level.

Paul Rosenberg is the senior editor of Random Lengths News, a bi-weekly alternative community newsletter.

You can follow Paul on Twitter: @PaulHRosenberg

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.