Magical Thinking on Fertilizer and Climate Change

Originally published at Inter Press Service.

By Timothy A. Wise

CAMBRIDGE, Nov 9 2021 (IPS) – As world leaders wrap up the UN Climate Summit in Glasgow, new scientific research shows that there is still a great deal of magical thinking about the contribution of fertilizer to global warming.

Philanthropist Bill Gates fed the retreat from science in his book How to Avoid a Climate Disaster earlier this year. “To me fertilizer is magical,” he confesses, nitrogen fertilizer in particular. Under a photo of a beaming Gates in a Yara fertilizer distribution warehouse in Tanzania, he explains that “to grow crops, you want tons of nitrogen – way more than you would ever find in a natural setting [sic]…. But nitrogen makes climate change much worse.”

That last part, at least, is true, and new research suggests that the climate impacts of excessive use of nitrogen fertilizers is much worse than previously estimated. Researchers estimate that the N-fertilizer supply chain is contributing more than six times the greenhouse gases (GHGs) produced by the entire commercial aviation sector.

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Another False Start in Africa Sold with Green Revolution Myths

By Timothy A. Wise and Jomo Kwame Sundaram

Cross-posted at Inter Press Service. 

Since the Alliance for a Green Revolution in Africa (AGRA) was launched in 2006, yields have barely risen, while rural poverty remains endemic, and would have increased more if not for out-migration.

AGRA was started, with funding from the Bill and Melinda Gates Foundation and the Rockefeller Foundation, to double yields and incomes for 30 million smallholder farm households while halving food insecurity by 2020.

There are no signs of significant productivity and income boosts from promoted commercial seeds and agrochemicals in AGRA’s 13 focus countries. Meanwhile, the number of undernourished in these nations increased by 30%!

When will we ever learn?
What went wrong? The continuing Indian farmer protests, despite the COVID-19 resurgence, highlight the problematic legacy of its Green Revolution (GR) in frustrating progress to sustainable food security.

Many studies have already punctured some myths of India’s GR. Looking back, its flaws and their dire consequences should have warned policymakers of the likely disappointing results of the GR in Africa.

Hagiographic accounts of the GR cite ‘high‐yielding’ and ‘fast-growing’ dwarf wheat and rice spreading through Asia, particularly India, saving lives, modernising agriculture, and ‘freeing’ labour for better off-farm employment.

Many recent historical studies challenge key claims of this supposed success, including allegedly widespread yield improvements and even the number of lives actually saved by increased food production.

Environmental degradation and other public health threats due to the toxic chemicals used are now widely recognized. Meanwhile, water management has become increasingly challenging and unreliable due to global warming and other factors.

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Libor Rigging Redux

Part 1 of a two-part article from the March/April 2021 issue of Dollars & Sense.  We will post Part 2 later this week.

By John Summa

 

Economics textbooks teach you that the London Interbank Offered Rate (known by the acronym “Libor”) is the rate at which big global banks make uncollateralized loans to each other. (An uncollateralized loan is backed solely by the perceived credit-worthiness of the borrower.) For years, Libor was considered a fair and efficient market rate of interest, reflecting money market supply and demand conditions, which gave it legitimacy as a benchmark. It is referenced by a wide range of financial products, including mortgages, student loans, and consumer loans, as well as structured financial products such as mortgage-backed securities and collateralized debt obligations (CDOs). However, in the wake of revelations that surfaced beginning in 2012 that became known as the “Libor rigging scandal,” the world learned that banks were unfairly setting the Libor benchmark at levels that were more profitable for them.

 

The manipulation of a benchmark interest rate is so abstract that, even if we recognize it as fraudulent behavior, it is hard for members of the general public to understand who was victimized and how much harm was done to them. Was it just the playboys of high finance picking each other’s pockets, or the pockets of their well-to-do clients? Or were they teaming up to pick ours, meaning the bank accounts of average working people? While none of these scenarios are mutually exclusive, my research reveals another dimension of the scandal—that banks may also have been stiffing homeowners by charging inflated Libor rates on their adjustable-rate mortgage loans.

 

The United Kingdom’s Serious Fraud Office (SFO, analogous to the United States’ Federal Bureau of Investigation), spent seven years looking into suspicions that a number of big banks were colluding to manipulate Libor for their own benefit. The investigation, which ended in November 2019, led to some mid-level traders who were employed by the banks being sent to jail. But it was disappointing to many observers of the scandal that the SFO did not take any further action with the case. When the investigation closed, we lost the opportunity to learn more about exactly what was afoot and how it was done.

 

One important underreported dimension to the Libor story, which never became part of the SFO’s investigation, is the link between Libor and adjustable-rate mortgage (ARM) loans, many recklessly made to often vulnerable and exploited borrowers in the U.S. mortgage market. The evidence that I amassed as an economic consultant to a Vermont-based independent litigator attempting to bring a class action lawsuit against Bank of America and Wells Fargo was damning enough to cause the banks’ lawyers to agree to discuss a potential settlement offer. Due to technical issues with the class action lawsuit, the case did not move forward. So the data and statistical results never ended up being fully presented in court. However, the Libor research suggests that manipulations designed to raise rates on adjustable-rate mortgages may have unfairly transferred billions of dollars from mortgage borrowers to banks, as well to other related parties involved in facilitating such transactions.

 

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Libor Rigging Redux, Part 2: Was There a Third Dimension to Libor Rigging?

Part 2 of a two-part article from the March/April 2021 issue of Dollars & Sense .  Find Part 1 here. 

By John Summa

 

Was There a Third Dimension to Libor Rigging That Authorities Missed?

One question that remains unanswered and got little press attention in the reporting of the Libor bank scandal involves reported patterns of unjustified upward movement of the U.S. Libor rate at the end of each month, prior to the subprime mortgage loan crisis that began to roil markets in mid-to-late 2007. Remember, Libor is the benchmark for a whole host of interest rates that affect consumers, especially mortgages. Testimony by traders during investigations and news reports revealed that Libor manipulation could have dated back to as far as 1991. For example, did banks try to profit from setting Libor rates higher ahead of the resetting of adjustable-rate mortgage (ARM) loans using month-end Libor rates. Such rate adjustments would have produced more interest income on a whale-size book of Libor-indexed ARM loans (see figure below) that all banks had a stake in, along with other Libor-indexed loans and consumer credit products. In other words, did banks act as a “pack” given their common stake in mortgage-loan resets at the end of each month? And, if so, was this kind of collusion anything new?

 

Figure 1: Initial ARM Resets, 2001–2016 Number of loans with initial interest-rate resets occurring each year

Surging ARM first resets can be seen beginning in 2003 and peaking in 2007. In 2004–2007 an estimated total of at least $1 trillion dollars in loans went through their first resets. First resets typically occur after two years of a fixed-rate period have been applied to the loan. A new rate is then calculated based on a reference rate, such as U.S. dollar six-month Libor. Did banks nudge rates higher to extract more interest income from the estimated $1 trillion of adjustable-rate loans as they reset?

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Failing Africa’s Farmers, Starving the Continent

By Timothy A. Wise

This article was originally published at Inter Press Service News Agency.

African organizations are demanding answers after a recent report found that Alliance for a Green Revolution in Africa (AGRA) strategies have failed spectacularly to meet its goals of increasing productivity and incomes for millions of small-scale farming households by 2020 while reducing food insecurity on the continent.

The theme for the tenth annual African Green Revolution Forum, a virtual week-long event hosted by Rwanda that opens September 8, is “Feed the Cities, Grow the Continent.”

Based on the findings of a recent report on the host, AGRA, a more appropriate theme would be “Failing Africa’s Farmers, Starving the Continent.” The report, “False Promises: The Alliance for a Green Revolution in Africa,” found that the 14-year, billion-dollar AGRA initiative has failed spectacularly to meet its self-proclaimed objectives.

My background research, which contributed to the report, showed that yields have risen slowly, poverty remains endemic, and there has been an alarming 31% increase in the number of undernourished people in AGRA’s 13 focus countries.

After AGRA offered no substantive responses to the findings from the July 10 report, three African organizations are issuing a public letter to AGRA demanding it release internal documents on its impacts.

They demand that AGRA provide “evidence to refute the study’s findings that AGRA and the larger Green Revolution project are failing to meet its goals of doubling yields and incomes for 30 million small-scale farming households by 2020 while reducing food insecurity by half.”

As Zambian researcher Mutinta Nketani told the German outlet DW, when an organization like AGRA “fails to achieve the goals it had set itself, all alarm bells should go off — not only amid civil society, but also amid AGRA itself as well as its donors.”

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Government Under Finance: There Is No Easy Exit

Prabhat Patnaik reflects on the COVID-19 shock that has worsened the crisis triggered by globalized finance. Only two possibilities emerge: restructure capitalism by controlling finance, or let the tendencies towards very coercive forms of fascism grow.

August 2, 2020 Produced by Lynn Fries / GPEnewsdocs

TRANSCRIPT

LYNN FRIES: Hello and welcome. I’m Lynn Fries, producer of Global Political Economy for GPEnewsdocs. This is a report on a conversation with Prabhat Patnaik on why capitalism is going to be finding it very difficult to come to terms with a post COVID-19 world.

Prabhat Patnaik is professor emeritus of economics at Jawaharlal Nehru University in New Delhi. An eminent and prolific economist, Patnaik’s published work includes books like The Value of Money, and Accumulation and Stability Under Capitalism. In a forthcoming book titled, Capital and Imperialism, to be released in February, co-authors Prabhat Patnaik & Utsa Patnaik will publish their comprehensive survey of capitalism’s colonialist roots and uncertain future.

We go now to our conversation with Professor Prabhat Patnaik.

Prabhat, What I want to get at in this conversation is why the working population is being pushed into acute distress, unemployment and insecurity. You’ve long argued that capitalism throughout the era of globalization under neoliberalism has been characterized by a conflict between the interests of finance and working people. And with COVID-19 this is intensifying. So we’re going to talk about that and let’s start with one of the main pillars of neoliberal policy – the withdrawal of the state from demand management.

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Essential—and Expendable—Mexican Labor (Part 2)

On both sides of the border, Mexican workers are now essential—to U.S. corporations.
By Mateo Crossa and James M. Cypher (guest post)

This article is in the July/August issue of Dollars & Sense.

Drafted to Serve: Mexican Workers under the Defense Production Act

In March, the nationwide cries for more medical equipment evoked calls from Washington, D.C. to essentially conscript medical supply firms under the Defense Production Act. This Act was implemented in 1950 to force and enable the private sector to prioritize production and delivery of strategic supplies in a time of national emergency. The president then demurred, while stating that such a policy would amount to “nationalizing our businesses,” then suggested that applying the act would be similar to steps taken in Venezuela under President Hugo Chávez (1999–2013).

According to President Trump, running out of crucial medical supplies during an unprecedented pandemic was not a sufficient reason to invoke the production authority of the state—failing market forces all along the medical supply chain could not be tampered with lest the United States slip into Venezuelan-style economic paralysis.

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Africa’s Farmers: Key to Solving Malnutrition

By Timothy A. Wise

The United Nations issued its annual hunger report July 13, ringing alarm bells the world over as governments gird for a coming COVID-19-induced food crisis. For the fifth straight year, undernourishment – or chronic hunger – increased in 2019 to 690 million worldwide, up 60 million since 2014. And that was for 2019, before COVID-19. Experts say as many as 130 million more could be driven into hunger as a result of the virus. Some 2 billion people worldwide already experienced some regular form of food insecurity in 2019. These are sobering numbers, especially with the pandemic sure to make things much worse for the poor.

In this year’s report, the U.N. went on to estimate that 3 billion people in the world cannot afford nutritious and healthy diets. The fruits, vegetables, and other plant-based foods recommended by health experts are often out of reach for lower income people.

The U.N.’s focus on nutritious and affordable diets is welcome given the prevalence of diet-related disease and micronutrient deficiencies in the developing world. But the U.N. missed a key opportunity by focusing only on making nutritious food more affordable, ignoring the reality that the biggest segment of the hungry is farmers. What they most need is crop diversity, which improves their diet diversity. A new report from a broad coalition of non-governmental organizations highlights how policymakers are actively undermining that diversity with programs such as the billion-dollar Alliance for a Green Revolution in Africa (AGRA).

Essential—and Expendable—Mexican Labor (Part 1)

On both sides of the border, Mexican workers are now essential—to U.S. corporations.
By Mateo Crossa and James M. Cypher (guest post)

This article is in the July/August issue of Dollars & Sense.

Lear Corporation—one of the world’s largest auto parts manufacturers—rose to position 148 on Fortune magazine’s famous list of the 500 largest firms in 2018. It operates with roughly 148,000 workers spread across 261 locations. Its largest presence is in Mexico, where approximately 40,000 low-paid workers make seats and labor-intensive electronic wiring systems to be used, primarily, by the U.S. auto giants in auto-assembly plants on both sides of the border. The largest share of these workers slog away in three huge Lear plants located in the notoriously dangerous border town of Ciudad Juárez in Mexico.

On April 10, 2020 a worker named Rigoberto Tafoya Maqueda died from Covid-19, which had swept in from the north. He had been diagnosed in Lear’s clinic with a mild allergy and was forced to continue working without a face mask, gloves, or hand sanitizer. A short time later, he went to the government’s Social Security hospital, on foot, where he died. Four days later, according to Lear, 13 more workers at the plant had died—but the workers’ labor union claimed that the actual number of work-related deaths from the pandemic was 30. Lear claimed it was not responsible in the least, while offering hollow condolences to surviving family members.

As of late May, no investigation of the workplace had been conducted and no legal charges of negligence had been raised against Lear or any of the other 320 maquiladoras—also known as maquilas, or more recently, by outraged workers, as “makilladoras”—that employ approximately 230,000 in Juárez where workers have been sickened. By early May, 104 of these workers had perished, by early June the estimated number of worker deaths was above 200. In all of Mexico, this city, with the largest concentration of low-wage assembly plants, had the highest incidence of pandemic deaths—a mortality rate 2.5 times the national average.

Failing Africa’s Farmers

New report shows Africa’s Green Revolution is “failing on its own terms.” 

By Timothy Wise

Republished from the Institute for Agriculture & Trade Policy blog.

Fourteen years ago, the Bill and Melinda Gates and Rockefeller foundations launched the Alliance for a Green Revolution in Africa (AGRA) with the goal of bringing Africa its own Green Revolution in agricultural productivity. Armed with high-yield commercial seeds, fertilizers and pesticides, AGRA eventually set the goal to double productivity and incomes by 2020 for 30 million small-scale farming households while reducing food insecurity by half in 20 countries.

According to a new report from a broad-based civil society alliance, based partly on my new background paper, AGRA is “failing on its own terms.” There has been no productivity surge. Many climate-resilient, nutritious crops have been displaced by the expansion in supported crops such as maize. Even where maize production has increased, incomes and food security have scarcely improved for AGRA’s supposed beneficiaries, small-scale farming households. The number of undernourished in AGRA’s 13 focus countries has increased 30% during the organization’s well-funded Green Revolution campaign.

“The results of the study are devastating for AGRA and the prophets of the Green Revolution,” says Jan Urhahn, agricultural expert at the Rosa Luxemburg Stiftung, which funded the research and on July 10 published “False Promises: The Alliance for a Green Revolution in Africa (AGRA).”