Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Drunken Capitalism At Work?

by das monde Mon May 7th, 2007 at 06:41:44 AM EST

Most of us here at ET are capitalism skeptics, obviously.  Discussion of neo-anarchist, social oriented or Veblenian alternatives is almost escalating. At minimum, we see shortcomings of capitalism workings (like forced obsclence) - can't they be corrected?

One of the views is that unrestricted capitalism works all fine while it can be afforded - there is plenty space and resources to utilize, there are still new nations to enter the markets, any kind of growth can continue uninterrupted. Yes, capitalism is supposed to solve scarcity of resources as well - but is it not creating the scarcity problem itself, unneccesarily and at a stupendous pace?

The implication of this view that "funny" things must happen when limits of growth or resources are about to be met. I consider here a couple of examples showing perhaps that the funny times are very near. Here I give one sad example below thw fold, and two examples of other kind in comments. I know, I make the connection with greedy profit seeking by "energetic" individuals in growing economies very easily, but... These consequences are within the nature of greed-admiring enterprising culture, are they not?

The sad example is reminiscent of the story of poisonous pet food from China. But this one can break your heart for real... You may heard this on the news, but I did not notice a discussion here. Anyway, here is a story of our globalization:

From China to Panama, a Trail of Poisoned Medicine

The kidneys fail first. Then the central nervous system begins to misfire. Paralysis spreads, making breathing difficult, then often impossible without assistance. In the end, most victims die.

Many of them are children, poisoned at the hands of their unsuspecting parents.

The syrupy poison, diethylene glycol, is an indispensable part of the modern world, an industrial solvent and prime ingredient in some antifreeze.

It is also a killer. And the deaths, if not intentional, are often no accident.

Over the years, the poison has been loaded into all varieties of medicine -- cough syrup, fever medication, injectable drugs -- a result of counterfeiters who profit by substituting the sweet-tasting solvent for a safe, more expensive syrup, usually glycerin, commonly used in drugs, food, toothpaste and other products.

Toxic syrup has figured in at least eight mass poisonings around the world in the past two decades. Researchers estimate that thousands have died. In many cases, the precise origin of the poison has never been determined. But records and interviews show that in three of the last four cases it was made in China, a major source of counterfeit drugs.

Panama is the most recent victim. Last year, government officials there unwittingly mixed diethylene glycol into 260,000 bottles of cold medicine -- with devastating results. Families have reported 365 deaths from the poison, 100 of which have been confirmed so far. With the onset of the rainy season, investigators are racing to exhume as many potential victims as possible before bodies decompose even more.

It is a long story. You should read it full, if NY Times keeps it available. I cannot copy and paste it all here - if only for a little respect for copyright issues. Just a couple of snippets, far from every bit I would like to share:
Mr. Wang spent years as a tailor in the manufacturing towns of the Yangtze Delta, in eastern China. But he did not want to remain a common craftsman, villagers say. He set his sights on trading chemicals, a business rooted in the many small chemical plants that have sprouted in the region.

"He didn't know what he was doing," Mr. Wang's older brother, Wang Guoping, said in an interview. "He didn't understand chemicals."

But he did understand how to cheat the system.

Wang Guiping, 41, realized he could earn extra money by substituting cheaper, industrial-grade syrup -- not approved for human consumption -- for pharmaceutical grade syrup. To trick pharmaceutical buyers, he forged his licenses and laboratory analysis reports, records show.

Mr. Wang later told investigators that he figured no harm would come from the substitution, because he initially tested a small quantity. He did it with the expertise of a former tailor.

He swallowed some of it. When nothing happened, he shipped it.

One company that used the syrup beginning in early 2005 was Qiqihar No. 2 Pharmaceutical, about 1,000 miles away in Heilongjiang Province in the northeast. A buyer for the factory had seen a posting for Mr. Wang's syrup on an industry Web site.

After a while, Mr. Wang set out to find an even cheaper substitute syrup so he could increase his profit even more, according to a Chinese investigator. In a chemical book he found what he was looking for: another odorless syrup -- diethylene glycol. At the time, it sold for 6,000 to 7,000 yuan a ton, or about $725 to $845, while pharmaceutical-grade syrup cost 15,000 yuan, or about $1,815, according to the investigator.

Mr. Wang did not taste-test this second batch of syrup before shipping it to Qiqihar Pharmaceutical, the government investigator said, adding, "He knew it was dangerous, but he didn't know that it could kill."

They say, no Chinese laws had been broken... their safety regulations lag far behind their growing scope as low-cost supplier...

Early last September, doctors at Panama City's big public hospital began to notice patients exhibiting unusual symptoms.

They initially appeared to have Guillain-Barré syndrome, a relatively rare neurological disorder that first shows up as a weakness or tingling sensation in the legs. That weakness often intensifies, spreading upward to the arms and chest, sometimes causing total paralysis and an inability to breathe.

The new patients had paralysis, but it did not spread upward. They also quickly lost their ability to urinate, a condition not associated with Guillain-Barré. Even more unusual was the number of cases. In a full year, doctors might see eight cases of Guillain-Barré, yet they saw that many in just two weeks.

Doctors sought help from an infectious disease specialist, Néstor Sosa, an intense, driven doctor who competes in triathlons and high-level chess.

Dr. Sosa's medical specialty had a long, rich history in Panama, once known as one of the world's unhealthiest places. In one year in the late 1800s, a lethal mix of yellow fever and malaria killed nearly 1 in every 10 residents of Panama City. Only after the United States managed to overcome those mosquito-borne diseases was it able to build the Panama Canal without the devastation that undermined an earlier attempt by the French.

The suspected Guillain-Barré cases worried Dr. Sosa. "It was something really extraordinary, something that was obviously reaching epidemic dimensions in our hospital," he said.

With the death rate from the mystery illness near 50 percent, Dr. Sosa alerted the hospital management, which asked him to set up and run a task force to handle the situation. The assignment, a daunting around-the-clock dash to catch a killer, was one he eagerly embraced.

Several years earlier, Dr. Sosa had watched as other doctors identified the cause of another epidemic, later identified as hantavirus, a pathogen spread by infected rodents.

"I took care of patients but I somehow felt I did not do enough," he said. The next time, he vowed, would be different.

Dr. Sosa set up a 24-hour "war room" in the hospital, where doctors could compare notes and theories as they scoured medical records for clues.

As a precaution, the patients with the mystery illness were segregated and placed in a large empty room awaiting renovation. Health care workers wore masks, heightening fears in the hospital and the community.

"That spread a lot of panic," said Dr. Jorge Motta, a cardiologist who runs the Gorgas Memorial Institute, a widely respected medical research center in Panama. "That is always a terrifying thought, that you will be the epicenter of a new infectious disease, and especially a new infectious disease that kills with a high rate of death, like this."

Meanwhile, patients kept coming, and hospital personnel could barely keep up.

"I ended up giving C.P.R.," Dr. Sosa said. "I haven't given C.P.R. since I was a resident, but there were so many crises going on."

Frightened hospital patients had to watch others around them die for reasons no one understood, fearing that they might be next.

How do you discover the poisonous reason? Do you get a Nobel prize for that?

On second thoughts, I moved this "starter" example from the diary text to this comment:

What to say when one of the most prominent conservative thinkers, a leader of the modern American conservative movement, a propagator of implementing libertarian economy policies, recognizes a big shortcoming of the free market? Here is what William Buckley, a founder of National Review, wrote very recetently:

Affording the Dream
The trouble with tuition.

There is one very undreamy constituent of the American dream, and that is the high cost of college education. The marketplace rule is that competition reduces prices. Well, the marketplace rule is hogwash when it comes to higher education. The explanations for this are multifarious. 1) More Americans, especially in the two decades after the war, decided to attend college, making for great rises in demand. 2) Choice colleges are hotly competed for, giving them a relative immunity to market pressures. 3) Ever since the fifties, teachers have been demanding a living wage. 4) College perquisites increased; academic offerings for students with exotic interests are understandable, but some college administrators think themselves delinquent if they do not offer a course in jujitsu.

OMG - the American dream is spotty, free market is a hogwash, and teachers want to live! Only lefties would have think of that!

Eventually, Buckley goes down to real economic phenomena - exploiding education costs due to relaxed "affordability" of education by means of scholarships, various loans and mortgages. The picture reminds the real estate bubble very much, and there are practical connections:

Colleges that extend scholarships or give out loans are traditionally influenced by the factor of family wealth -- and why not? But introduce apparently extraneous factors, and then see what happens. We have had a huge real-estate boom in many parts of the country, so that a middle-income family with a house that has doubled in value might find itself excluded from college aid on the grounds that the parents' assets place them at an affluent level. But in the real world, the rise in the "value" of a house is a most awfully impalpable thing. You cannot profitably sell the house in Greenwich, Connecticut, intending to finance college tuition, unless you are prepared to move to South Dakota. Increases in the value of houses in prime real-estate markets do only two things for the owner: increase his property taxes and increase his heirs' estate taxes.
We can notice even more concessions on the free markets here... Admittedly, there is a "socialist" affordability element floating around, but it is being implementing strictly by market principles of demand and supply, right?

Buckley ends his column with an appraise of common sense, a support of devoting resources to teaching. And why not?! Couldn't the libertarian philosophy make this conclusion hmmm... somewhat faster?

If free market works so inefficiently in education, what is there to say about health care, for example?

by das monde on Mon May 7th, 2007 at 06:58:54 AM EST
I don't follow how that makes the free market hogwash.  We can only build more capacity so quickly.  (It, honestly, worries me when I think of how quickly some of the structures at my school were being built when I was a student.)  That's a fact of life in the construction sector, whether private or public.  And lest we forget that the only education level at which America does quite well in international comparisons is in higher education -- where the free market is allowed to play a role.

Unlike that dismal and monopolistic excuse of a K-12 system we have.

Nor, having read up on what professors (and teachers in general) earn in America, -- profs in America and Canada earn more than their counterparts in other countries, if I remember correctly (double and triple, respectively, what they earn in Britain) -- do I think educators are in any danger of starving.  They live on more than I do, but you don't see me banging on about either getting more money or being incapable of doing my job.  (My boss would tell me to go fuck myself, and rightly so, if I said that, as I suspect would be the case for almost everyone here.)

Where we get this myth about teacher salaries, I don't know, because teachers and professors earn solid, middle-class and upper-middle-class (respectively) salaries with a lot more security than most middle-class workers in the private sector.  They damned sure earn more than cops and firefighters where I live, yet you don't see the cops running around screaming, "Give us more money or, well, that serial killer's just going to get away."  No, because the public would lose its collective mind with anger, and the cops would wind up getting fired.

But somehow teachers and (even more so) administrators, the Axis of Evil in American K-12 education, get a pass when they demand more money ("...or, well, Little Johnny's just not going to learn his algebra").

Utter incompetence, or, at best (to quote Matt Taibbi), emboldened stupidity.  Recently I read that in Jupiter, FL (where I grew up), schools are spending millions every year on construction of new buildings to provide for new students who don't exist.  The schools are already operating at only 50-75% capacity.  (Write your own "You might be a socialist..." joke in Jeff Foxworthy format here.)  This is what these idiots spend my money on?

No, thanks.  It's the absence of the market that has ruined us on education.  Throw the whole thing out.  Stop letting these bureaucrats rape our kids and our treasuries.  Give'em all vouchers -- forward, march.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon May 7th, 2007 at 11:07:05 PM EST
[ Parent ]
Drew, Drew, Drew...  there is so much right-wing propaganda contained in this comment that I barely know where to start.

First off, no where I've lived has K-12 teachers who earn more than police or firemen, although you're correct that it is one of the few careers left that has some stability and benefits.

But more importantly, most of the education "crisis" is manufactured.  There ARE problems, big ones, but they're certainly not what the right has been screaming about for years and their "solutions" -- and by that I mean testing and vouchers -- are designed to funnel public funds into private hands while breaking the government system.  They do more harm than good.

The biggest problem with the school systems are that they're on the front lines of a country with no safety net.  This is why you get contradictory things that are all basically true -- that teachers, staff, and maintenance are all underfunded while money is also being spent hand over fist on schools.  

Schools have gotten worse over the past 30 years while increasing spending.  Why?  Because the right has packed the school boards and implemented all kinds of "fixes."  Because the right has dismantled the safety net and left the schools to be the nurses, police, and social workers.  The lack of a "market" has nothing to do with it.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Tue May 8th, 2007 at 12:34:38 AM EST
[ Parent ]
But that what Mr Buckley sees - hogwash, waste of resources, perhaps pure teachers... I think his (intentional or not) parallel to thereal estate market is correct - financial measures to meet "affordability" demand go to bubbling explosion of prices.

Somewhat ignorantly, I do not really follow teacher's salaries. But I get the impression that administrators indeed feel themselves increasingly important. Is this not an instance of the increasing love towards management roles, ubiquitous throughout the markets?

The other point is that bureaucrasy is not a monopoly of government - any entity with overflow of money and vague responsibility distribution can behave in "utter incompetence". After all, emboldened stupidity is part of the nature of free market. That's how it works - stupids get broke, really smarts get very well. That is perfectly acceptable in most buisinesses. But in education... don't we need everyone to be well educated enough to make appropriate conclusions and critically follow the media? The voucher paradise of "No Child Left Behind" is an utter failure - best schools indeed get only better, worse schools get more terrible. It makes sense within the market paradigm - but the unfortunate circumstance is that a portion of kids had to go to bad schools - and the marketized system leaves them badly behind.

Similarly, in high education the "best" universities are amply awarded, while lesser ones must feel pain. American Universities are indeed made better by the market system - with the (most) universities in the rest of the world being suckers. You know, universities in countries like Finland or Netherlands are not bad, even pretty good actually - but if you want something really "best" than yeah, you go to America.

Absence of markets is typical in most education systems of the world - and it does not ruin the school education. Only more globalized market of high education has clear market winners.

by das monde on Tue May 8th, 2007 at 12:42:11 AM EST
[ Parent ]
And here is one more suggestion to the question: What else could go wrong with unrestricted capitalism? From Malaysia:
Rally likely to be sustained

LOCAL commodities - crude palm oil (CPO), tin, timber, rubber and steel - maintained their solid upward trend in the first quarter.  

Thanks to strong fundamentals and continued global market demand, star-performer tin hit an all-time high to trade above US$14,000 per tonne while the country's top commodity, CPO, posted an eight-year high above the RM2,000 per tonne level.  

[Tin] on the Kuala Lumpur Tin Market ended trading last Friday at US$14,350 per tonne, up from US$13,500 a week earlier.  

A trader said there was fear over the disruption in global supply following Indonesia's move to tighten tin export regulations and clamp illegal tin mining. This is mostly in the Bangka-Belitung province, which accounted for almost half of the republic's refined tin exports.

[Tin] was trading at the US$12,000 per tonne range before surging to between US$13,500 and US$14,000 in late February.

[CPO] is forecast to touch RM2,200 per tonne in the second half of this year and subsequently hit RM2,400 to RM2,500 per tonne by year-end.

A dealer with a foreign-based brokerage said: "CPO is a very hot commodity with prices likely to register significant jumps in the nearby months."

He said growing demand for CPO globally was mostly for biodiesel production, the trans-fatty acid regulations in the US as well as traditional export markets like China and India.

[Meanwhile,] prices of timber, namely logs, plywood and sawn timber, remained buoyant in the first quarter.  

"We expect robust demand in the second quarter, given steady demand from Japan and increasing orders from China and India," said a timber trader.

He expects the rise in timber prices to be sustainable in view of the tight supply. This year, timber prices are expected to trade between US$300 and US$520 per cubic metre (cu m).

Log prices for meranti increased to US$300 per cu m from less than US$200 two years ago.  

Plywood prices have also jumped to as high as US$500 per cu m from about US$300 in 2004 while sawn timber has reached US$400 per cu m level from about US$300 in 2004.

Who needs wood?..

Market fundamentals, of course. The demand growth can only be sustainable for now - think of China or India alone. The supply... may be approaching rest fast. Prices jump up every time Indonesian government tries to tighten some illegal "production"...

by das monde on Mon May 7th, 2007 at 07:12:56 AM EST
Examples.  Silicon can be made into two things.
A solar cell which provides power or
A cell phone chip which produces brain altering microwave emissions.


A person might buy an array of solar cells once in his lifetime whereas last year's cell phone is just so "not cool".  Not to mention the extra revenue in different "plans".

Oh, and which two countries are exempt from limits on emissions of CO2?

by Lasthorseman on Mon May 7th, 2007 at 06:21:30 PM EST

Go to: [ European Tribune Homepage : Top of page : Top of comments ]