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Friday, September 02, 2005

from 2000

I wrote this article in 2000. On my computer, it looks like an edited draft from a mag or newspaper, but I don't remember publishing it anywhere. Here it is.

Deeper issues lurk behind the populist rhetoric.
Roger Gathman is a freelance writer based in Austin.

There are issues in this issue-less campaign, but who wants to talk about them?
Roger Gathman is a freelance writer based in Austin.

When Al Gore launched his official campaign on a Mississippi Steamboat, the media dutifully cited Mark Twain. But the locus classicus for the events that have shaped the Mississippi River valley, and by implication the place of the Federal Government in the national economy, might better be sought in William Faulkner’s Wild Palms, a novel set in ‘the great flood year, 1927.’

As John M. Barry showed in Rising Tide: The Great Mississippi Flood and How it Changed America, the consequences of the flood were manifold and national. For instance, by directing flood relief, Calvin Coolidge’s Secretary of Commerce, Herbert Hoover, gained enough notice that was able to ride it to nomination at the Republican convention in 1928, even though Coolidge himself, appraising Hoover, said to friends, "That man has offered me unsolicited advice for six years, all of it bad."

What did Hoover exactly do? It wasn’t simply the relief effort. It was Hoover’s organization of support for the Jadwin Plan, which legalized the largest extension of Federal authority into the sphere of what had previously been left to states and localities since the Civil War. The plan put the Federal Government in charge of maintaining control of the Mississippi. More crucially, the Federal Government also assumed responsibility for financing the levee system, while the states and localities supplied pitched in merely token matching funds. Thus began the great hyrdo-engineering projects which began with flood control and soon evolved into a whole system of river control projects to promote the agricultural and industrial use of the river. That initial assumption of responsibility, and the outlay of Federal revenues it entailed ("the greatest expenditure the government has undertaken except in the World War,’ the New York Times said) (1) soon operated as a precedent for other interventions, as Coolidge probably suspected it would.

All of which contravened, on the deepest level, the conservative principal enunciated by Walter Bagehot in the nineteenth century: "... nothing can be more surely established by a larger experience than that a Government which interferes with trade injures trade." The question, even then, was what counted as interference. Bagehot himself, skeptical of all varieties of utopian theory, knew he was dealing in ideal terms here; the very idea of a "natural economy," to which the classical economists referred, encompasses the whole system of exchanges, upon which the government, if it functions at all, must impinge to some degree. But Hoover’s advocacy of the Jadwin plan established a prototype for the scale and kind of economic interference sanctioned thereafter by twentieth century conservatives: if the state, of whatever level or branch, intervened, it should intervene to give some advantage to the owning class. Conservative economists Louis Galambos and Joseph Pratt have labeled the interlocking structures which bound together businesses and the Federal Government the “Corporate Commonwealth”, seeing it as the specifically different mode of capitalism practiced in twentieth century America. The Mississippi flood plan is a perfect instance of the Corporate Commonwealth in action. The Jadwin plan, while extending Federal protection to the life and property of all who lived in the Mississippi flood plan, practically advanced the interests of the large scale farmers of Mississippi’s Delta country, who no longer had to depend on their own resources for flood control. Theoretically, this should also have advanced tenant farmers, and small scale farmer. Actually, the advantage gained by larger farmers ate up the small advantage reaped by the sharecropper, since advantage has an unequal effect on large and small enterprises, tending to give larger ones a competitive advantage. In addition, the change in the economic environment aggravated the rooted racism of the culture. The Federal government’s interventions, on the local level, gave a distinct preference to whites - so that it isn’t surprising that in the immediate period following the flood relief plan, black immigration from the Delta region increased.

In the thirties, the New Deal, while not negating the government’s tilt towards the owning class, balanced it with interventions that favored the working class, such as labor laws, minimum wage laws, social security, and the commencement of a vast regulatory structure which would, in the post-World War II period, grow ever more active in governing corporate behavior.

A default was thus set in place to which the two dominant factions in America responded. Liberals allowed a number of policies that favored the wealthiest, while Conservatives conceded the limited legitimacy of social security and other forms of redistributing wealth downward. Not that practical concession entailed rhetorical recognition - the two sides would unload, during elections, their obsolete battery of slogans and promises, without ever seriously intending to dismantle or radically change the infrastructure that both sides had, through compromise and self-interest, created. This is why, weirdly enough, the great engineering projects of this century - from the dams to the highway system - were rarely contraverted enough to be issues in elections. They were, instead, relegated to the status of the “non-partisan.”

Galambos and Pratt confine themselves to the dynamic between the Federal Government and the oligopolies. The essence of the system, however, was realized on the state and local level. It is on this level, in fact, that the system transmorgified as the New Deal and Great Society programs began to fall apart. Bill Adler, in his recent book, Mollie’s Job, gives a good account of the realization of this mechanism on a grassroots level. The state of Mississippi in the thirties began a program named BAWI, Balance Agriculture with Industry. Under BAWI, a local community can raise money from a bond issue to purchase plant for the private sector. In Adler’s book, Simpson County used this authority to build a plant for a Universal Industries, a ballast making company. Under the terms of the law, the county leased the corporation the building, on very reasonable terms. In this particular case, the lease eventually lead to sale, but in other cases Mississippi counties have retained the costs and duties of ownership for actually housing the plants of national and multi-national corporations, which is by far the most radical form of rent control in the country. Ironically, the State of Mississippi touted its program to industries in the North by pointing to conditions favorable to "free enterprise" in the state, code words to imply that union activity was impeded to the constitutional limit by state law. Mississippi’s example soon inspired other programs throughout the South. From the South, it spread nationwide, developing into an unorganized but distinct national market as localities try to lure private businesses with ‘incentives" which include tax exemptions or rebates, relaxation of environmental regulations, and other ‘sweeteners." If a private financial entity made the loans and deals that state and local governments make, they would no doubt condition them on terms which hedged the loaning institution's risk. This, however, is often not the case in the flea market of local and state incentives, where the immediate goal, couched in terms of employment, eclipses discussion of its future costs. It is a practice that is so common that when Honda, in a recent new release, bragged that, for locating a factory in Alabama, it negotiated with the Governor’s office to come up with “incentives worth more than $158 million ... [including] $102.7 million to get the site ready for construction and to train workers, and another $55.6 million in tax breaks,” no one even questioned the deal. After all, as is noted in the same release, Alabama is handing out even bigger plums: “Mercedes-Benz received commitments of $253 million for its plant, which employs about 1,700 following an expansion last year.” (a) The Alabama government essentially subsidized Honda and Mercedes Benz. The justification is that this will generate employment, which will generate income tax and other tax revenue, so that the state will more than make up for the money. But this justification tacitly concedes the State’s function in creating wealth inequality, by taking from the workers to pay for the owners. This is formally close to a protection racket - in a same way that a gang earns its money by protecting small businesses from the violence it would otherwise inflict, the corporation earns its tax deferments and subsidies by employing people who generate its profits. The company is subsidized, in other words, for being a company, just as the gang subsidizes itself for being a gang.

Originally, progressives saw, in this system, a cheap way to secure employment for areas that were often racked by poverty. The question of whether other infrastructural investments would be more profitable was, most of the time, not even bruited. After all, unemployment had a tangible cost to the taxpayer, as the unemployed depended on the state for a variety of sustaining services. Of course, by raising bonds, or putting together tax incentives, the corporations were still costing the taxpayer, but in theory there would be a net economic benefit to the community which would counterbalance that cost.

In the eighties, the bi-polar nature of government intervention gave way to interventions that increasingly favored one side: the side of ownership. While the socialization of business costs such as are effected under BAWI and like minded programs grew, the willingness of governments to continue social services came to an end. The end was not uniform, and especially with regard to environmental, health and safety regulatory structures, the cuts were never completely devastating. What should interest us, however, is how, within the mode of what continued to be acceptable government intervention, the price of plant, pollution control, training and a host of other costs were increasingly assumed by mostly middle income or low income taxpayers. This is a story which goes beyond talking about the formal advantages accrued to the wealthiest by tax cuts, the most often looked to cause of increasing income inequality, to the positive disbursement of government revenue - the cost, in tax dollars, going towards shore up the source of income for the wealthiest one percentile of Americans. Inequality of wealth is often regarded statically, as a fact about the American political economy, instead of as a dynamic property of that economy, one which sets up a positive feedback. In other words, it produces the conditions for ever greater income inequality. The most extreme and colorful example of this is the state that has been most effected by the changes upon the Mississippi wrought by that floodplan way back in 1928: Louisiana.


If you look at the map of Louisiana’s coast published in the 1999 International Petroleum Encyclopedia, it is graphically obvious that Louisiana is one of the most important sources of petroleum and natural gas in the nation. The map is dense with pink lines radiating out all along the coast to offshore Gulf wells, as well as wells in the wetlands. The pink lines represent pipe, and the pipes radiate in to refining plants. 70 percent of the oil and 90 percent of the gas from U.S. coastal water comes from the Louisiana Coastal zone.

Resource extraction is not the only thing Louisiana has going for it. According to the US Fish and Wildlife Service, Louisiana contains about 40 percent of the coastal marshes in the coterminous United States. The bayous contributed 28 percent to the total volume of U.S. fisheries in the eighties, although that percentage has been going down.

It is, then, a state peculiarly rich in natural resources, which makes the contrast with its human impoverishment all the more startling. Katherine Isaac, of the Citizens for Tax Justice, an advocacy group, sums it up this way:

“The state ranks: last in the nation in workplace health and safety and in high school graduation rates; 49th for the gap between rich and poor; 49th in poverty (with 25 percent of residents considered poor); 47th in surface water discharges, heart disease and adult illiteracy; 46th in hazardous waste generation and teen pregnancy; and 45th in long-term unemployment, unemployment duration and health coverage.”

What is wrong with the human economy is tied up with what is increasingly wrong with the environment.

Take, for instance, the fish.

Lately, ominously, there is a “Kill Zone” which forms, every year, off the coast. It has doubled in size, to around 7,000 square miles, since the Midwest floods of 1993. Journalist Colin Woodard, in his book Ocean’s End, describes the process that makes for “hypoxia,” or an abnormal diminishment of oxygen content from the water. Nutrients, mainly nitrogen fertilizers, are drained into the Mississippi from farms in the Midwest. Download by the Mississippi into the Gulf, they cause an explosion of algae growth. That in itself doesn’t sap the oxygen. It is the decay of algae, produced by bacteria, which completes the cycle of strangulation. Woodard compares the process to wrapping Saran Wrap around a piece of the Gulf about the size of New Jersey - the animals in the affected area flee or die or both - Woodard reports that in 1996, for example, the zone drove as much as half a million fish into shore, where they could be scooped up by the residents in hand nets, or found, dead on the shore, by seagulls and eaten, or simply rot.

If the origins of the Kill Zone can be located a thousand miles up the Mississippi river, the massive dumping of toxic waste is becoming a Louisiana specialty. Last year, attention was focused on “Cancer Alley,” the stretch of land between Baton Rouge and New Orleans that is home to some 120 petro-chemical plants. The attention wasn’t focused so much on the effect of these plants on the local residents as on the feud between the Governor of the State, Mike Foster, and the Environmental Law Clinic at Tulane University. As Oliver Houck, its founder, says, “we have a different attitude towards the environment down here and it's all bad. The environment is the enemy.” When ELC successfully discouraged the building of a PVC plant in Convent, Louisiana - claiming that the plans for the plant didn’t meet existing EPA standards - the Governor and the state’s Chamber of Commerce went to the State Supreme Court, which obligingly interpreted a state constitutional provision, Rule XX, as disallowing student practitioners from representing any individual, unless the income of the potential client is low enough to meet a rigid standard of indigency set by the Louisiana State Supreme Court and any organization which could not demonstrate that the incomes of 51 percent of its members meet the same standard of indigency.
Even Cancer Alley is eclipsed, however, by an even bigger problem. Louisiana is, quite simply, falling into the sea. Since 1930, it is conservatively estimated that the state has lost 1, 200,000 acres since 1930 - an area about the size of Rhode Island. And the loss is continuing, at a rate of about 25 square miles a year.

An natural occurrence of this magnitude has, of course, many causes, and all of the causes have adherents. A geologist, Sherwood "Woody" Gagliano, claims that the land sits on huge mud fault “blocks,” and that the faults are coming apart and sliding the land into the sea. A more common view is that the flood plan which has blocked the Mississippi with a system of levees has inadvertently ceased the flow of renewing sediment with which the Mississippi originally built the Delta. Ivor van Heerden from the Louisiana Geological Survey, claims that the birdfoot Delta is falling apart because the Corps of Engineers, in accordance with a Congressional Act passed in 1954, must rig the River so that it passes through Baton Rouge and New Orleans on its way to the Gulf. The Congressional mandate has been followed so far, but nobody has yet figured out how to do geology by fiat. The river doesn’t like being rigged. In particular, since the 1927 flood channeled out a deeper passage to the sea through one of the river’s tributaries, the Atchafalaya, the River, most geologists think, has been trying to shift its bed. That shift would leave Baton Rouge and New Orleans on a finger of the sea (which is what the River below the Atchafalaya would become), while the Mississippi would empty into the Gulf at Morgan City, about 140 miles west of New Orleans. In recent years, mysteriously, a Delta has been forming at the mouth of the Atchafalaya, evidence, perhaps, that the Mississippi won’t be forever tamed. So far, the Corps of Engineers has kept the Mississippi flowing on its way past New Orleans with the Old River Control Structure, which seals off the flow between the Mississippi and the Atchafalaya. The dam, built in 1963, is officially designed to handle a maximum flow of 3,030,000 cubic feet per second. As Barry has pointed out, however, by some accounts that figure was equaled by the 1927 flood. If, as some climatologists claim, we are in currently in a regime of “extreme weather,” there’s a strong possibility that that much flow could happen in another flood.

'The system at its bleakest is at work in Louisiana. Here we can see how all three legs of the government work to distribute income upward by socializing corporate cost and shifting its burden to the working class. The executive and legislative powers exempt the petroleum and gas industries from regulations forcing them to dispose of waste, thus leaving dumps to be cleaned up, latter, at taxpayer expense. The taxpayer also pays for wetland restoration, which is needed partly because of channels that have been dredged to oil wells on the coast - channels which the oil well owners can deduce in an accounting maneuver known as 'expensing" before they figure their gross revenue. In this way, unprofitable wells and operations can be hedged in a portfolio against profitable ones, making the wetlands the passive victim of one more tasty tax scheme. When the oil and gas is carried in to refineries and plants, another group of state incentives kick in, making it the tax and regulatory situation advantageous for "dirty" industries to build their plants in obscure hamlets between Baton Rouge and New Orleans. The inhabitants of these hamlets are the most disposable members of the Louisiana, and indeed, the American, commonwealth - poor rural blacks. The companies are entrusted with the real, practical power to regulate themselves, which they use to dispose of pollution as they see fit. At this point, we reach the furthest extend to which the executive and legislative branches intervene in the economy - an abdication of their responsibilities to protect in any way the well-being and liberties of their poorest citizens. Still, those citizens could have recourse to the courts. Now it is the turn of the judicial branch to kick in. Laws and rules hem in the ability of the effected residences and small business to sue by, for instance, forbidding agencies which commonly represent the poor to operate in environmental class action suits. And if, nevertheless, a suit is levied by some stubborn citizen, there are liability caps in the offing which would preserve the cost - benefit calculations of the corporations. Why, for instance, not dump the heavy metals and pay out $15,000 in a penalty? On the one side, the happy citizen can purchase a coffin and a fairly decent funeral service with that amount of money, and on the other side, the company can continue to diffuse its waste products, to the greater glory of its balance sheet. According to the EPA, this is exactly what is happening. In 1995 alone, some 57 million pounds of wastes were released in East Baton Rouge Parish. By stymying attempts, either legislatively or by judicial penalty, to stem the flow of waste, the incentive to pollute less, and to produce less wastefully, is deadened.

To trace all the lines and movements of the mechanism is to question the bounty government is so quick to shower upon corporations. But the necessary preliminary is, of course, to expose the mechanism, and this is where the two party system comes in. By battling on the high rhetorical plain of laissez faire vs. the welfare state, they divert attention from the realities of the system, and the tacit consensus which makes both parties collude at socializing business costs. This is the hope held out by Nader's campaign: that consumerism, with its accountant's ethic, and the Green's environmentalism, which coalesces around sustainable economics, might actually address the issues which traditionally invigorate populist movements: the abuse of power and the entrenchment of inequality."

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