Letter from Delhi, Part 1

Air Pollution as Environmental Injustice

This is part 1 of a two-part series from UMass-Amherst professor of economics and regular Triple Crisis contributor James K. Boyce. This part focuses on disparate exposure to air pollution in Dehli. Part 2, to be posted next week, focuses on solutions to the problem.

James K. Boyce

Arriving in Delhi in January, at the height of the winter pollution season, you notice the air as soon as you step off the plane. A pungent smell with hints of burning rubber and diesel fumes assaults the nose and stings the eyes. On the highway into the city center, a digital screen shining through the smog displays the current level for suspended particulate matter. You don’t need to understand what the number means to know it’s bad.

Delhi has extensive parks, broad avenues, beautiful buildings (like the tomb of Mughal emperor Humayan, shown below), and a vibrant culture. But casting a pall – quite literally – over it all is the worst air pollution of any major city in the world.

Humayan's tomb

Humayan’s Tomb

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Mapping Environmental Injustice

Race, class and industrial air pollution

Klara Zwickl, Michael Ash, and James K. Boyce

America’s corporate polluters are not color-blind. Nor are they oblivious to distinctions of class. Studies of environmental inequality have shown that minorities and low-income communities often bear disproportionate pollution burdens (for overviews, see Ringquist 2005 and  Mohai et al. 2006). In other words, rather than being an impersonal “externality” randomly distributed across the population, the distribution of pollution mirrors the distribution of power and wealth.

These disparities result from decisions by firms to site hazardous facilities in the most vulnerable communities and from decisions by government regulators to put lower priority on environmental enforcement in these communities. To some extent, the disparities may also reflect demographic changes as pollution leads affluent people to move out, neighborhood property values to fall, and poorer households to move in. But even after controlling for income differences, racial and ethnic minorities typically face higher pollution burdens, a finding that implies that disparities are a result of differences in political power as well as purchasing power (Boyce 2007).

But the US is a big country, and it is not homogenous. Electoral politics, social movements, industrial structure, residential segregation, and even laws and regulations differ greatly across the regions. The extent and pattern of environmental inequalities may vary, too.

In a recent study (Zwickl et al. 2014), we examine regional variations to tackle two key questions. First, is minority status or income more important in explaining environmental disparities? Second, is higher income equally protective for whites and minorities in affecting pollution exposure?

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Is All Growth Good? The Case of China

Sara Hsu

Since the seventies, with the assertion by Gunnar Myrdal that economic development should prioritize equality, economists have increasingly come to believe that not all types of growth are wholly “good.” Growth that ignores human well-being and equality are viewed as problematic.  Certainly growth that results in severe environmental destruction, as in the case of China over the past twenty years, cannot be classified as good, either, despite the country’s much-lauded successes during this period.

Real-world views of growth depicted in the mainstream media do not fall in line, however, with the economic development literature. The focus on China’s growth in the news has distracted from a more balanced view of the looming inequality problems or polluting production methods in the world’s most populous nation.  As China’s growth has slowed, headlines have read, “China’s Economic Growth at Stake,” “China’s Economic Growth Slows,” and “China’s Second Quarter Growth Slows.”

Even when inequality and pollution problems are described, they are considered separate from the growth process—as “side effects” of growth rather than issues that detract from the extent of growth itself. Headlines read, “China Blocks Access to Air Pollution Data,” “China Declares War on Pollution,” or “China’s Wealth Disparity Erupts in Protest.” It could, however, be argued that such destructive types of growth both take away from “good” growth and dampen positive growth in the long-run, so we should read about growth and its associated externalities within the same context. This is clearest in the case of pollution, where natural resources are destroyed and rendered unusable to future generations.

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Pollution Inequality and Income Inequality

James K. Boyce

This interview with regular Triple Crisis contributor James K. Boyce (Political Economy Research Institute, University of Massachusetts-Amherst) appeared originally at The Real News Network. Prof. Boyce describes the findings from his recent study showing that, in the United States, inequality in exposure to air pollution is even more unequal than inequality in income. The study, issued by the Institute for New Economic Thinking, was co-authored by Boyce with Klara Zwickl and Michael Ash.

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Is Rising Income Inequality Inevitable?

C.P. Chandrasekhar and Jayati Ghosh

Rising inequality is now a concern on everyone’s minds, even amongst the rich. Unequal societies are actually more unpleasant and dangerous for everyone, not just for those deprived by the system. High and rising inequality can be dysfunctional for the economy: for example, many now argue that growing inequality and the suppression of wage incomes combined with the effects of financial deregulation to generate the Global Financial Crisis of 2008, and that the subsequent poor performance of most economies is related to the slow and limited recovery of labour incomes. Policy makers seem to recognise that addressing inequalities is important not only for justice and social cohesion, but also for continued material progress.

This may partly explain the recent proliferation of academic studies on global and national inequalities, as well as the numerous reports on the subject that have come from UN organisations and other multilateral organisations. The huge media attention devoted to one academic study—Thomas Piketty’s Capital in the 21st Century—is a sign of the times. The spotlight that is shone on the rising share of incomes of the rich and the substantial empirical data that have been brought to bear on establishing this are indeed welcome. But that book, like many other recent analyses of inequality, tends to ascribe some sort of inevitability to the process, as the result of the working of some inexorable economic forces. Piketty, for example, argues that there is a general tendency for wealth and income inequalities to increase because the rate of return on capital tends to exceed the rate of growth of the economy. There are various analytical concerns with this formulation, which relies on assumptions of full employment over the process of economic expansion and returns to factors like capital being determined by their marginal productivity (itself a problematic concept that is also impossible to measure).

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What Happened to the Recovery, Part II

Gerald Friedman, Guest Blogger

This is the second part of a two-part series on the reasons for the sluggish U.S. economic “recovery” since the Great Recession, by Gerald Friedman, professor of economics at the University of Massachusetts and author of Microeconomics: Individual Choice in Communities. This post, from Friedman’s “Economy in Numbers” column in Dollars & Sense magazine, focuses on the failings of various government policy responses to the crisis.

Government Policy and Why the Recovery Has Been So Slow

The recovery from the Great Recession has been so slow because government policy has not addressed the underlying problem: the weakness of demand that restrained growth before the recession and that ultimately brought on a crisis. Focused on the dramatic events of fall 2008, including the collapse of Lehman Brothers, policymakers approached the Great Recession as a financial crisis and sought to minimize the effects of the meltdown on the real economy, mainly by providing liquidity to the banking sector. While monetary policy has focused on protecting the financial system, including protecting financial firms from the consequences of their own actions, government has done less to address the real causes of economic malaise: declining domestic investment and the lack of effective demand. Monetary policy has been unable to spark recovery because low interest rates have not been enough to encourage businesses and consumers to invest. Instead, we need a much more robust fiscal policy to stimulate a stronger recovery.

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What Happened to the Recovery? Part I

Gerald Friedman, Guest Blogger

This is the first part of a two-part series on the reasons for the sluggish U.S. economic “recovery” since the Great Recession, by Gerald Friedman, professor of economics at the University of Massachusetts and author of Microeconomics: Individual Choice in Communities. Originally published in Dollars & Sense, this post focuses on the basic shape of the recovery—wage stagnation, increased profits, and growing inequality. The second part will focus on the reasons for the persistent weakness in demand and economic growth, and the failings of various government policy responses.

Weak Employment, Stagnant Wages, and Booming Profits

The 2007-2010 recession was the longest and deepest since World War II. The subsequent recovery has been the weakest in the postwar period. While total employment has finally returned to its pre-recession level, millions remain out of work and annual output (GDP) is almost a trillion dollars below the economy’s “full-employment” capacity. This column explains how high levels of unemployment have held down wages, contributing to soaring corporate profits and a remarkable run-up in the stock market.

There was a sharp fall in output (GDP) at the onset of the Great Recession, down to 8% below what the economy could produce if labor and other resources were employed at normal levels (“full employment” capacity). Since the recovery began, output has grown at barely above the rate of growth in capacity, leaving the “output gap” at more than 6% of the economy’s potential—or nearly $1 trillion per year.

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Why UK Workers Took to the Streets and Need to Do It Again

John Weeks, Guest Blogger

On 11 June in reply to The Guardian asking her about the “good news” that UK total output was back to where it had been before the Great Recession hit in 2008, the secretary of the Trades Union Congress Frances O’Grady responded, “The news that the economy is returning to its pre-crash size will be of cold comfort to the millions of workers who are still thousands of pounds a year worse off compared to five years ago.”

Is that right or is it just a union leader refusing to accept the economy is on the mend under the wise policies of the Coalition Chancellor? Official statistics leave no doubt. There are two charts below with pay measured as the percentage difference compared to the beginning of 2010 (on the left) and the unemployment rate in percent of the labour force on the right.

The top diagram is labelled “how they should look.” I could also describe it as the “standard scenario” presented in economics textbooks and the business pages of magazines and newspapers. Unemployment declines (from well over 8% of the civilian labour force to about 6.5%) and by definition the labour market “tightens.” As a result of fewer unemployed workers for business to pick and choose among, weekly pay rises—the shortage stimulates a rise in wages.

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