War: The Wrong Jobs Program

By Mark Engler
SolidarityEconomy.net via Foreign Policy in Focus

More than 40 years ago, long before anyone had ever heard of Barack Obama, before the collapse of Bear Stearns, and before contemporary debates about bailouts and debt ceilings, two authors, Paul Baran and Paul Sweezy, considered a tricky problem. In times of downturn, the government must spend to stimulate the economy. Yet getting the political establishment to agree on one particular program of spending seemed nearly impossible.

Baran and Sweezy phrased the conundrum as a question: "On what could the government spend enough to keep the system from sinking into the mire of stagnation?"

After assessing the political realities that steer America's power elite, they could find only one response. It was not what typically comes to mind when we think of economic stimulus or government-led job creation.

Their answer: "On arms, more arms, and ever more arms."

The authors did not approve of military spending as a strategy of economic development.

But, even at the very outset of the Cold War, they saw the deep hold that it had on decision-makers in Washington, DC.

We can see the continuing hold it has today. This fall, responding to high and persistent unemployment, President Obama called for a federal jobs act. Among its measures, the act proposed investment in schools and infrastructure. Conservative opponents responded with cries of derision. The critics charged that the plan "doubles down on a failed government stimulus strategy." It means "adding more money to the same broken system" they said. Finally, they insisted, “It comes to a point that you can’t keep borrowing in a futile attempt to stimulate the economy when the increased debt itself is weakening the economy.”

Obama's proposals were considered political non-starters, certain to be stonewalled by the Republican Congressional majority. But for all the right-wing insistence that government should end stimulus spending, cut federal budgets in order to reduce the deficit, and generally leave the market to its own devices, our country already has a massive spending program, and it enjoys strong bipartisan support. America's jobs program is its military—and the immense industry that provides the military with services and armaments.

Our country's existing jobs program goes by many names: The Permanent War Economy, Military Keynesianism, The Iron Triangle, Perpetual War. The real question it raises is not whether the government should spend. It is whether the government has been spending well.

Thanking the Russians for Making Capitalism Work

Scholars have long debated whether massive outlays on the armed forces can pull a country from a recession, or whether ongoing spending of this type is a drain on private enterprise. The views of two thinkers, an economist and an engineer, have come to define opposite poles in the discussion.

Michal Kalecki was a Polish economist, influenced by Marx, who saw Hitler's plunder of Europe from his post at the Oxford Institute of Statistics. Kalecki spent much of the 1930s studying capitalist business cycles and observing the way in which government spending could influence them. In doing so, he arrived at conclusions quite similar to his more-often-remembered contemporary, John Maynard Keynes. In fact, some argue that, based on priority of publication, Keynesianism should not be called Keynesianism, but “Kaleckianism.”

Following World War II, Kalecki sought to understand Nazi Germany's successful rise from the depths of the Great Depression to achieve full employment by the late 1930s. Theories popular at the time—and embraced by many U.S. Republicans of the era—held that military spending necessarily occurred at the expense of other sectors of the economy. The Wall Street Journal would later express this position, stating in 1980 that "'Defense spending…. is the worst kind of government outlay, since it eats up materials and other resources that otherwise could be used to produce consumer goods.''

Countering such ideas, Kalecki examined how military buildup could actually serve as a stimulus to other industry. Starting with his 1943 essay, “The Political Aspects of Full Employment,” he began to theorize what has become known as “Military Keynesianism.” Kalecki argued that private capital preferred military spending over other forms of government investment because it contributed to private profits without competing with business activity in more conventional economic markets.

This would prove an influential proposition. Baran and Sweezy, Harry Magdoff, and other Marxist writers from the 1960s on elaborated on Kalecki's ideas. Conventional economists had regarded war and militarism as aberrations, phenomena external to their models for how commerce should normally function. ("Peace reigns supreme in the realm of neoclassical economics," Magdoff noted in 1970.) But such assumptions did not square with a reality in which war was almost constant. The Marxists showed how vast arms spending, even during "peacetime," had become an essential state support for the economy. As one pair of writers working in this tradition wrote in 1972, "Without militarism the whole economy would return to a state of collapse from which it was rescued by the Second World War."

It was not just voices on the left stating this position. Business leaders themselves acknowledged the advantages of military buildup. In a speech given by Harvard economist Sumner Slichter to a convention of bankers in October 1949 (and cited more recently by authors John Bellamy Foster, Hannah Holleman, and Robert McChesney), the speaker contended that Cold War arms spending made severe depression "difficult to conceive." The prolonged conflict, Slichter said

increases the demand for goods, helps sustain a high level of employment, accelerates technological progress and thus helps the country to raise its standard of living…. So we may thank the Russians for helping make capitalism in the United States work better than ever.

Elevating Inefficiency to a National Purpose

Although Kalecki would influence many with his economic theories, a contrary view would come from an industrial engineer and longtime Columbia University professor. Seymour Melman was raised in the Bronx during the Great Depression. That downturn, he would later say, "made a deep impression on me then and to the present day because whole neighborhoods were clearly made impoverished. Unemployment was rampant, and almost any day if you walked out on the street you'd see, in one or another side street, the belongings of a family out on the sidewalk."

Melman put himself through college by working 15-hour overnight shifts in his uncle's knitting factory. He lived briefly on a kibbutz in Israel as a young man, and he also served two years in the military, getting a first-hand look at the workings an institution he would later criticize in detail. Initially interested in the social sciences, he ended up pursuing graduate studies in industrial engineering at Columbia, where he went on to teach for many decades.

Skilled at examining the industrial operations of different sectors of the economy, Melman became involved in the 1950s in analyzing a newly emerging realm: the Military-Industrial Complex. Subsequently, for more than 40 years, Melman would serve as an outspoken critic of massive public investment in the military, charging it with producing a growing weakness in America's civilian manufacturing capabilities. He would also become a leading proponent of "economic conversion," the idea that defense assets and infrastructure should be converted to more productive non-military uses.

In 2003, near the end of his long career, Melman wrote: "[A]t the start of the twenty-first century, every major aspect of American life is being shaped by our Permanent War Economy." Because he used language similar to that employed by analysts of Military Keynesianism, Melman might seem as if he were part of a similar school of thought. But, in fact, he considered himself staunchly opposed to their line of thinking. The theorists of Military Keynesianism examined how arms spending had been deeply integrated into the economy, providing a government support for business; Melman, in contrast, regarded military expenditures as a crippling drain on the country's economic health.

In a 1991 article in The Nation, he stood by his 1974 assessment of the "economic consequences of military state capitalism":

Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose…. Industrial productivity, the foundation of every nation's economic growth, is eroded by the relentlessly predatory effects of the military economy.

In his analysis, Melman emphasized both the opportunity costs of military spending and the manner in which defense industries take up "economic space," depleting the resources available to the rest of the economy. In 1995, he argued, "The Cold War has bled our civilian economy by preempting capital resources, taking the lion's share of top scientific talent as well as federal research and development funds, and appropriating government funds that would otherwise have been available for the development of our infrastructure."

In an interview from the same period, Melman noted that approximately 30 percent of the country's scientists and engineers worked for the military, directly or indirectly. "The loss to the civilian economy," he said, "is incalculable.”

In 2006, historian Thomas Woods, writing for the libertarian Ludwig von Mises Institute, penned a fascinating tribute to the late engineer. In Woods' view, "Melman’s normative conclusions"—that government should undertake a thorough-going program of economic conversion for the benefit of civilian society—"were altogether conventional and uninteresting, and far removed from libertarianism. But his positive analysis was anti-statist to the core, and provides us with an array of important and typically neglected costs of large military establishments."

As it turns out, both liberals critical of the arms industry and free market enthusiasts wary of big government could agree when Melman paraphrased sociologist C. Wright Mills' wary appraisal of conventional wisdom in Washington: "Military Keynesianism," Melman wrote, "has become the 'crackpot realism'… of the American economy."

The Glamour of Guns Over Butter

In the decades since their debate commenced, neither the intellectual kin of Kalecki nor members of Melman's "depletionist" school have decisively prevailed. Those who have reviewed the evidence point to some weaknesses in each approach. Economists such as David Gold suggest that Military Keynesians may have overestimated the overall stimulus provided by government spending on the military—especially as the American economy has grown ever larger. On the other side, analysts contend that the depletionists go too far in their assessment of how the military saps the private sector.

Yet, ultimately, the differences between Kalecki and Melman may be less important than the common ground they share. Marxist analysts of Military Keynesianism, after all, never argued that arms spending was a particularly productive use of public funds. Nor did they endorse it as a way to keep the capitalist economy afloat. They merely highlighted the political realities that make it the most acceptable form of government spending for monied elites, and to the way in which the strategy becomes entrenched once pursued.

This point has been acknowledged by observers across the political spectrum. Libertarian Robert Higgs points to a 1944 book, As We Go Marching by John T. Flynn, in which the author describes militarism as "the one great glamorous public-works project upon which a variety of elements in the community can be brought into agreement.” Flynn then warns, presciently, that, "Inevitably, having surrendered to militarism as an economic device, we will do what other countries have done: we will keep alive the fears of our people of the aggressive ambitions of other countries and we will ourselves embark upon imperialistic enterprises of our own."

Today's arms contractors are geniuses at spreading production facilities over a wide range of Congressional districts, and they are not hesitant to spend millions for lobbying and campaign contributions. As a result, they have deftly reinforced the loyalty that elected officials feel toward military spending projects in their home states. And they have locked the country into an economically tragic pattern of public spending. For while it is debatable whether the military crowds out more productive activity in the private sector, it is clear that it leaves far less room in government budgets for social programs.

The trade-off of "guns versus butter," now used as a textbook example in economics of an either-or choice that nations face, has been invoked by a wide range of lofty orators. Eisenhower famously remarked, "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed." Martin Luther King, Jr. added, "We hear all this talk about our ability to afford guns and butter, but we have come to see that this is a myth… [W]hen the guns of war become a national obsession, social needs inevitably suffer."

A "Badly Under-Resourced" Military?

Melman may have had intellectual disputes with economists such as Kalecki, but his true adversaries were not theorists. They were defense hawks who not only agreed with the proposition that the military was propping up the economy, but who advocated for tax dollars to be devoted to this very purpose. Such figures continue to exist today. They include Martin Feldstein, the former chief economic advisor to President Reagan who argued in a 2008 Wall Street Journal op-ed that the Pentagon should be a primary recipient of government stimulus funds.

Also among their number is the American Enterprise Institute's Frederick Kagan, who insists, "Defense spending has long been recognized as one of the single strongest stimulants to any economy." Kagan's view of Pentagon budgeting is extreme enough to exhibit a certain through-the-looking-glass quality. Despite the historic expansion of military spending in the new millennium, Kagan considers today's military "badly under-resourced for nearly two decades by both Democratic and Republican administrations." Therefore, he sees few worthier recipients of public aid. When the military, he writes, "is so severely strained and billions of dollars in stimulus money are being sloshed around, refusing to give some of that money to the best and bravest Americans who need it badly—to say nothing of demanding that their budget be cut—is just wrong."

Although the stimulus debate of 2008 and 2009 brought out some Military Keynesian arguments, the stakes have since been raised. In the wake of the debt ceiling compromise negotiated between President Obama and Congressional Republicans in August, the guns-versus-butter dilemma has become starker than ever.

Eisenhower may have always been right on a metaphorical level about arms merchants stealing bread from the hungry. Yet the trade-off has not always been so direct. In past years, politicians have often chosen both to fill Pentagon coffers and to support a measure of social spending, even if it meant sustaining budget deficits.

Current demands for austerity have changed that. The debt compromise not only mandated an initial round of budget cuts, it also charged a congressional “super committee” with finding between $1.2 trillion and $1.5 trillion in further reductions to the 10-year federal budget. If lawmakers do not meet this requirement by the end of November, the deal will "trigger" an automatic $1.2 trillion in cuts, half of which would come from "defense and security." To avoid these automatic cuts, hawks will be pushing hard to instead put social programs on the chopping block.

Given the Military Industrial Complex's canny instincts for self-preservation and the loopholes included in the compromise agreement, there is some doubt about how severe cuts at the Pentagon would actually be, even in a most extreme case. Nevertheless, the threat of a budget squeeze has been real enough to prompt an aggressive counter-offensive by arms lobbyists.

In mid-September the Aerospace Industries Association (AIA) launched the "Second to None" campaign, designed to "educate the public on [the] impact of indiscriminate budget cuts." According to AIA President and CEO Marion Blakey, the debt agreement "dangles a Sword of Damocles over our national security." Furthermore, he says, "the cuts to defense proposed in the ‘trigger’ deal are so draconian that it’s hard to believe they are even on the table."

Wary of openly embracing pork-barrel politics, politicians and their beneficiaries in the arms industry have traditionally avoided being too overt about touting the economic benefits of a given defense initiative. Hawks have usually been careful to put national security at the fore, and to keep the Keynesian implications of their endeavors in the background. But now, with public concern about unemployment at the center of national debate, arms merchants have increasingly made job creation one of their key selling points.

Loren Thompson, chief operating officer at the industry-funded Lexington Institute, has been a vocal spokesperson in this drive. Writing for Forbes, Thompson warned that "Defense Cuts Could Destroy A Million Jobs." He painted President Obama's jobs bill as especially counterproductive, since "the cuts mandated by the Budget Control Act to reduce deficits could grow bigger if the president’s jobs bill passes." As a result, Thompson writes, "the government could end up destroying many thousands of good [defense] jobs to create lots of not-so-good jobs in areas like construction. What kind of a tradeoff is that?"

Elsewhere Thompson asked, "Does Washington really believe that building a new bridge in Kentucky creates jobs, but a defense plant or military base there does not?"

The Economic Value of a School

In fact, there are good reasons to hold that allocating funds to build a bridge—or to open a hospital, or to staff a school—is a superior path to creating jobs than spending the same amount of money on arms. These reasons are based in morality and public interest, as well as in economics.

First, the moral argument. In the 1960s student activists at MIT were calling for an end to military research on campus, which was consuming an increasing portion of the university's attention. However, as Stuart Leslie relates in his book The Cold War and American Science, not all of their peers were convinced. One graduate student, dismissive of protests, told The New York Times: "What I’m designing may one day be used to kill millions of people. I don’t care. That’s not my responsibility. I’m given an interesting technological problem and I get enjoyment out of solving it.”

Needless to say, building a bridge or hiring an educator has less dubious moral implications than supporting such military research. Bridges and schools also create long-term economic value, something most defense procurements cannot claim. An educated child becomes a more productive member of society. A bridge becomes part of the country's infrastructure, facilitating further commerce. On the other hand, when we build bombs, the best we can hope for is that they are never used.

Melman argued, "whatever else you can do with a nuclear-powered submarine that is almost as long as two football fields… you can’t wear it, you can’t live in it, you can’t travel in it, and there’s nothing you can produce with it.” Author and attorney Ellen Brown elaborates on this point, explaining the many quirks and inefficiencies that distinguish military spending from other economic activity:

Military spending is the very essence of "built-in obsolescence": it turns out products that are designed to blow up. The military is not subject to ordinary market principles, but works on a "cost-plus" basis, with producers reimbursed for whatever they have spent plus a guaranteed profit. Gone are the usual competitive restraints that keep capitalist corporations "lean and mean."… Yet, legislators looking to slash wasteful "entitlements" persist in overlooking this obvious elephant in the room.

Adding to these considerations is what Melman dubbed the "overkill" problem. To a certain extent, one could argue that building up a military arsenal served the economy by protecting private property, deterring foreign invasion, and allowing the nation to conduct its business in peace. But this notion became more and more dubious as the United States amassed ever-greater military might. By the time the U.S. armed forces were able to destroy every possible enemy nation many times over, the continued investment of billions of dollars per year in new military technology ceased to have nearly as much value.

Also worth noting is the fact that our "overkill" investments have a uniquely risky downside: With an army of soldiers and an unmatched arsenal of armaments sitting around, politicians are inevitably tempted to think they should be put to use. And that is an economically costly proposition indeed.

Doing Right On Jobs

What is true for the economy generally is also true in the realm of employment: When it comes to jobs, not only would it be a great day for our kids if the schools got all the money they needed and the Air Force had to a hold bake sale to buy a bomber—this would be a great day for American workers, too.

The most compelling recent study on this point was produced in October 2009 by Robert Pollin and Heidi Garrett-Peltier of the University of Massachusetts, Amherst. Using data from the Department of Commerce, the authors looked at four areas of investment: education, the military, renewable power, and fossil-fuel energy.

"By a significant margin," Pollin writes in a Boston Review article describing the report's conclusions, "education is the most effective source of job creation among these alternatives—roughly 29 jobs per $1 million in spending." This included both direct employment (of teachers and other personnel), jobs created indirectly by investment in this sector (those, say, of suppliers selling photocopiers or paper to the schools), and "induced" jobs (in businesses supported when teachers spend their salaries on other good and services). "Clean-energy investments are second, with about seventeen jobs per $1 million of spending. The U.S. military creates about twelve jobs, while spending within the fossil-fuel sector creates about five jobs per $1 million."

There are several reasons why military spending ends up near the back of the pack. The inefficiency of the "cost-plus" system is one. Pointing to another, analyst William Hartung of the Center for International Policy explains, "more of the military dollar goes to capital, as opposed to labor, than do the expenditures in the other job categories." He cites the example of the F-35 Joint Strike Fighter. With the cost of materials and other overhead high, a mere 1.5  percent of the money spent on each aircraft goes toward labor costs for manufacturing and assembling planes in the F-35's main plant in Fort Worth, Texas.

A third issue is "leakage." Military spending that takes place outside of the country—say, in Iraq, Afghanistan, Libya, or one of the many U.S. bases abroad—has less economic benefit for the United States, since some of the stimulus created instead benefits foreign economies. Green technology, as a counter-example, produces more significant ripple effects at home.

Nevertheless, Pentagon boosters such as Loren Thompson are not persuaded. They argue that military-related jobs tend to pay more, and therefore workers in this industry have a greater impact on the rest of the economy. Yet this is not true compared to education, Pollin notes, where average pay is higher than in defense. Nor is it, in itself, an adequate reason to support a given sector. No doubt, public efforts to spur employment must be attentive to producing jobs that pay living wages. But this cannot be the only measure of value for public spending.

Melman offered a wider vision for doing right on jobs. The years following World War II—when America converted much of its war-making industrial might into civilian manufacturing capability—loomed large in his proposals for a demilitarized society. Through the end of his life in 2004, he pictured military laboratories becoming public hospitals, bases becoming industrial parks and green spaces, and arms factories being retrofitted to make farm machinery or communications satellites. His was the noble prophecy of swords beaten into ploughshares, re-imagined for an America in its industrial prime.

Yet even if we undertake nothing so ambitious as what Melman dreamed, we can be smarter about what we choose to support with our public funds, and what we decide to cut from our government's budgets. "Arms, more arms, and ever more arms" is no path to a just society. And it is no worthwhile strategy for creating jobs.

Mark Engler is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books). He can be reached via the website http://www.DemocracyUprising.com. Research assistance provided by Eric Augenbraun.

Japanese breakthrough will make wind power cheaper than nuclear

A surprising aerodynamic innovation in wind turbine design called the 'wind lens' could triple the output of a typical wind turbine, making it less costly than nuclear power.

By Karl Burkhart

MNN.com - Aug 29 2011

Snapshot from video

The International Clean Energy Analysis (ICEA) gateway estimates that the U.S. possess 2.2 million km2 of high wind potential (Class 3-7 winds) — about 850,000 square miles of land that could yield high levels of wind energy. This makes the U.S. something of a Saudi Arabia for wind energy, ranked third in the world for total wind energy potential.

Let's say we developed just 20 percent of those wind resources — 170,000 square miles (440,000 km2) or an area roughly 1/4 the size of Alaska — we could produce a whopping 8.7 billion megawatt hour's of electricity each year (based on a theoretical conversion of six 1.5 MW turbines per km2 and an average output of 25 percent. (1.5 MW x 365 days x 24 hrs x 25% = 3,285 MWh's).

Video explaining the new process

The United States uses about 26.6 billion MWh's, so at the above rate we could satisfy a full one-third of our total annual energy needs. (Of course this assumes the concurrent deployment of a nationwide Smart Grid that could store and disburse the variable sources of wind power as needed using a variety of technologies — gas or coal peaking, utility scale storage via batteries or fly-wheels, etc).

Now what if a breakthrough came along that potentially tripled the energy output of those turbines? You see where I'm going. We could in theory supply the TOTAL annual energy needs of the U.S. simply by exploiting 20 percent of our available wind resources. Well such a breakthrough has been made, and it's called the "wind lens."

Imagine: no more dirty coal power, no more mining deaths, no more nuclear disasters, no more polluted aquifers as a result of fracking. Our entire society powered by the quiet "woosh" of a wind turbine. Kyushu University's wind lens turbine is one example of the many innovations happening right now that could in the near future make this utopian vision a reality.

Yes, it's a heck of a lot of wind turbines (about 2,640,000) but the U.S. with its endless miles of prairie and agricultural land is one of the few nations that could actually deploy such a network of wind turbines without disrupting the current productivity of the land (Russia and China also come to mind). it would also be a win-win for states in the highest wind area — the Midwest — which has been hard hit by the recession. And think of the millions upon millions of jobs that would be created building a 21st century energy distribution system free of the shackles of ever-diminishing fossil fuel supplies.

It's also important to point out that growth in wind power capacity is perfectly symbiotic with projected growth in electric vehicles. EV battery packs can soak up wind power produced during the night, helping to equalize the curve of daytime energy demand. So the controversial investment currently being entertained by President Obama to pipe oil down from the Canadian Tar Sands would — in my utopian vision — be a moot point.

It is indeed a lofty vision, but the technology we need is now in our reach. And think of the benefits of having our power production fed by a resource that is both free and unlimited. One downside often cited by advocates of coal and gas power is that wind turbines require a lot more maintenence than a typical coal or gas power plant. But in a lagging economy this might just be wind power's biggest upside — it will create lots and lots of permanent jobs, sparking a new cycle of economic growth in America.

New Type of Rechargeable

Battery – Just Add Water

The mixing entropy battery could be used to build power plants at estuaries where fresh water rivers join the ocean (Image: NASA)

By Alan Brandon

SolidarityEconomy.net via Gizmag,com

May 5, 2011 - Scientists at Stanford have developed a battery that uses nanotechnology to create electricity from the difference in salt content between fresh water and sea water. The researchers hope to use the technology to create power plants where fresh-water rivers flow into the ocean. The new "mixing entropy" battery alternately immerses its electrodes in river water and sea water to produce the electrical power.

Making electricity from the difference in salinity (the amount of salt) in fresh water and sea water is not a new concept. We've previously covered salinity power technology, and Norway's Statkraft has built a working prototype power plant. But the Stanford team, led by associate professor of materials science and engineering Yi Cui, believes their method is more efficient, and can be built more cheaply.

Other fresh/salt water power plants work by releasing energy through osmosis (the passing of solvent molecules through a membrane). The Stanford team's approach harnesses entropic energy from the interaction of the fresh water and salt water with the battery's electrodes.

The mixing entropy battery works by exchanging the electrolyte (a liquid that contains ions or electrically charged particles – in this case water) between when the battery is charged and when it is discharged. The ions in water are sodium and chlorine, which are the elements of ordinary table salt. The saltier the water is, the more sodium and chlorine ions there are, and the more voltage that can be produced.

The battery is first filled with fresh water and charged. Then the fresh water is swapped out for salt water. Because salt water has 60 to 100 times more ions than fresh water, the electrical potential is increased and the battery can discharge at a higher voltage, providing more electricity.

After the battery is discharged, the salt water is drained and fresh water is added to begin the cycle again.

To enhance the efficiency of the battery, the positive electrode is made from nanoscale rods of manganese dioxide. The negative electrode is made of silver. The design of the nanorods provides about 100 times more surface area for interaction with the sodium ions compared to other materials, and allow the ions to move in and out of the electrode more easily. The Stanford team reports a 74 percent efficiency in converting the potential energy in the battery to electricity. Cui believes that with further development the battery could achieve up to 85 percent efficiency.

The Stanford team has calculated that with 50 cubic meters (more than 13,000 gallons) of fresh water per second, a power plant based on this technology could produce up to 100 megawatts of power. That is enough electricity to support about 100,000 households.

While salt water is plentiful in the ocean, the volume of fresh water required suggests that a good location for a mixing entropy battery power plant would be where a river flows into the ocean. Because river deltas and estuaries are sensitive environments, the Stanford team designed their battery to have minimal ecological impact. The system would detour some of a river's flow to produce power, before returning the water to the ocean. The discharge water would be a mix of river water and sea water, and released into an area where the two waters already meet.

In fact, the fresh water doesn't have to come from a river. Cui says that storm runoff, gray water, or even treated sewage water could potentially be used. As an added benefit, the mixing entropy process can be reversed to produce drinking water by removing salt from ocean water.

The Stanford scientists are currently working on modifications to get the battery ready for commercial production. For example, the silver electrode is very expensive, and they hope to develop a cheaper alternative. Because the mixing entropy battery is simple to make and produces energy efficiently, the team hopes that their technology can become a significant source of renewable energy in the future.

The team's results have been published in the American Chemical Society Nano Letters journal.

This time it's for real.

BY GIDEON RACHMAN

ForeignPolicy.com

JANUARY/FEBRUARY 2011

"We've Heard All This About American Decline Before."

This time it's different. It's certainly true that America has been through cycles of declinism in the past. Campaigning for the presidency in 1960, John F. Kennedy complained, "American strength relative to that of the Soviet Union has been slipping, and communism has been advancing steadily in every area of the world." Ezra Vogel's Japan as Number One was published in 1979, heralding a decade of steadily rising paranoia about Japanese manufacturing techniques and trade policies.

In the end, of course, the Soviet and Japanese threats to American supremacy proved chimerical. So Americans can be forgiven if they greet talk of a new challenge from China as just another case of the boy who cried wolf. But a frequently overlooked fact about that fable is that the boy was eventually proved right. The wolf did arrive -- and China is the wolf.

The Chinese challenge to the United States is more serious for both economic and demographic reasons. The Soviet Union collapsed because its economic system was highly inefficient, a fatal flaw that was disguised for a long time because the USSR never attempted to compete on world markets. China, by contrast, has proved its economic prowess on the global stage. Its economy has been growing at 9 to 10 percent a year, on average, for roughly three decades. It is now the world's leading exporter and its biggest manufacturer, and it is sitting on more than $2.5 trillion of foreign reserves. Chinese goods compete all over the world. This is no Soviet-style economic basket case.

Japan, of course, also experienced many years of rapid economic growth and is still an export powerhouse. But it was never a plausible candidate to be No. 1. The Japanese population is less than half that of the United States, which means that the average Japanese person would have to be more than twice as rich as the average American before Japan's economy surpassed America's. That was never going to happen. By contrast, China's population is more than four times that of the United States. The famous projection by Goldman Sachs that China's economy will be bigger than that of the United States by 2027 was made before the 2008 economic crash. At the current pace, China could be No. 1 well before then.

China's economic prowess is already allowing Beijing to challenge American influence all over the world. The Chinese are the preferred partners of many African governments and the biggest trading partner of other emerging powers, such as Brazil and South Africa. China is also stepping in to buy the bonds of financially strapped members of the eurozone, such as Greece and Portugal.

And China is only the largest part of a bigger story about the rise of new economic and political players. America's traditional allies in Europe -- Britain, France, Italy, even Germany -- are slipping down the economic ranks. New powers are on the rise: India, Brazil, Turkey. They each have their own foreign-policy preferences, which collectively constrain America's ability to shape the world. Think of how India and Brazil sided with China at the global climate-change talks. Or the votes by Turkey and Brazil against America at the United Nations on sanctions against Iran. That is just a taste of things to come.

Reuters/Brennan Linsley/Pool

"China Will Implode Sooner or Later."

Don't count on it. It is certainly true that when Americans are worrying about national decline, they tend to overlook the weaknesses of their scariest-looking rival. The flaws in the Soviet and Japanese systems became obvious only in retrospect. Those who are confident that American hegemony will be extended long into the future point to the potential liabilities of the Chinese system. In a recent interview with the Times of London, former U.S. President George W. Bush suggested that China's internal problems mean that its economy will be unlikely to rival America's in the foreseeable future. "Do I still think America will remain the sole superpower?" he asked. "I do."

But predictions of the imminent demise of the Chinese miracle have been a regular feature of Western analysis ever since it got rolling in the late 1970s. In 1989, the Communist Party seemed to be staggering after the Tiananmen Square massacre. In the 1990s, economy watchers regularly pointed to the parlous state of Chinese banks and state-owned enterprises. Yet the Chinese economy has kept growing, doubling in size roughly every seven years.

Of course, it would be absurd to pretend that China does not face major challenges. In the short term, there is plenty of evidence that a property bubble is building in big cities like Shanghai, and inflation is on the rise. Over the long term, China has alarming political and economic transitions to navigate. The Communist Party is unlikely to be able to maintain its monopoly on political power forever. And the country's traditional dependence on exports and an undervalued currency are coming under increasing criticism from the United States and other international actors demanding a "rebalancing" of China's export-driven economy. The country also faces major demographic and environmental challenges: The population is aging rapidly as a result of the one-child policy, and China is threatened by water shortages and pollution.

Yet even if you factor in considerable future economic and political turbulence, it would be a big mistake to assume that the Chinese challenge to U.S. power will simply disappear. Once countries get the hang of economic growth, it takes a great deal to throw them off course. The analogy to the rise of Germany from the mid-19th century onward is instructive. Germany went through two catastrophic military defeats, hyperinflation, the Great Depression, the collapse of democracy, and the destruction of its major cities and infrastructure by Allied bombs. And yet by the end of the 1950s, West Germany was once again one of the world's leading economies, albeit shorn of its imperial ambitions.

In a nuclear age, China is unlikely to get sucked into a world war, so it will not face turbulence and disorder on remotely the scale Germany did in the 20th century. And whatever economic and political difficulties it does experience will not be enough to stop the country's rise to great-power status. Sheer size and economic momentum mean that the Chinese juggernaut will keep rolling forward, no matter what obstacles lie in its path.

STR/AFP/Getty Images

"America Still Leads Across the Board."

For now. As things stand, America has the world's largest economy, the world's leading universities, and many of its biggest companies. The U.S. military is also incomparably more powerful than any rival. The United States spends almost as much on its military as the rest of the world put together. And let's also add in America's intangible assets. The country's combination of entrepreneurial flair and technological prowess has allowed it to lead the technological revolution. Talented immigrants still flock to U.S. shores. And now that Barack Obama is in the White House, the country's soft power has received a big boost. For all his troubles, polls show Obama is still the most charismatic leader in the world; Hu Jintao doesn't even come close. America also boasts the global allure of its creative industries (Hollywood and all that), its values, the increasing universality of the English language, and the attractiveness of the American Dream.

All true -- but all more vulnerable than you might think. American universities remain a formidable asset. But if the U.S. economy is not generating jobs, then those bright Asian graduate students who fill up the engineering and computer-science departments at Stanford University and MIT will return home in larger numbers. Fortune's latest ranking of the world's largest companies has only two American firms in the top 10 -- Walmart at No. 1 and ExxonMobil at No. 3. There are already three Chinese firms in the top 10: Sinopec, State Grid, and China National Petroleum. America's appeal might also diminish if the country is no longer so closely associated with opportunity, prosperity, and success. And though many foreigners are deeply attracted to the American Dream, there is also a deep well of anti-American sentiment in the world that al Qaeda and others have skillfully exploited, Obama or no Obama.

As for the U.S. military, the lesson of the Iraq and Afghan wars is that America's martial prowess is less useful than former Defense Secretary Donald Rumsfeld and others imagined. U.S. troops, planes, and missiles can overthrow a government on the other side of the world in weeks, but pacifying and stabilizing a conquered country is another matter. Years after apparent victory, America is still bogged down by an apparently endless insurgency in Afghanistan.

Not only are Americans losing their appetite for foreign adventures, but the U.S. military budget is clearly going to come under pressure in this new age of austerity. The present paralysis in Washington offers little hope that the United States will deal with its budgetary problems swiftly or efficiently. The U.S. government's continuing reliance on foreign lending makes the country vulnerable, as Secretary of State Hillary Clinton's humbling 2009 request to the Chinese to keep buying U.S. Treasury bills revealed. America is funding its military supremacy through deficit spending, meaning the war in Afghanistan is effectively being paid for with a Chinese credit card. Little wonder that Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, has identified the burgeoning national debt as the single largest threat to U.S. national security.

Meanwhile, China's spending on its military continues to grow rapidly. The country will soon announce the construction of its first aircraft carrier and is aiming to build five or six in total. Perhaps more seriously, China's development of new missile and anti-satellite technology threatens the command of the sea and skies on which the United States bases its Pacific supremacy. In a nuclear age, the U.S. and Chinese militaries are unlikely to clash. A common Chinese view is that the United States will instead eventually find it can no longer afford its military position in the Pacific. U.S. allies in the region -- Japan, South Korea, and increasingly India -- may partner more with Washington to try to counter rising Chinese power. But if the United States has to scale back its presence in the Pacific for budgetary reasons, its allies will start to accommodate themselves to a rising China. Beijing's influence will expand, and the Asia-Pacific region -- the emerging center of the global economy -- will become China's backyard.

China Photos/Getty Images 

"Globalization Is Bending the World the Way of the West."

Not really. One reason why the United States was relaxed about China's rise in the years after the end of the Cold War was the deeply ingrained belief that globalization was spreading Western values. Some even thought that globalization and Americanization were virtually synonymous.

Pundit Fareed Zakaria was prescient when he wrote that the "rise of the rest" (i.e., non-American powers) would be one of the major features of a "post-American world." But even Zakaria argued that this trend was essentially beneficial to the United States: "The power shift … is good for America, if approached properly. The world is going America's way. Countries are becoming more open, market-friendly, and democratic."

Both George W. Bush and Bill Clinton took a similar view that globalization and free trade would serve as a vehicle for the export of American values. In 1999, two years before China's accession to the World Trade Organization, Bush argued, "Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy.… Trade freely with China, and time is on our side."

There were two important misunderstandings buried in this theorizing. The first was that economic growth would inevitably -- and fairly swiftly -- lead to democratization. The second was that new democracies would inevitably be more friendly and helpful toward the United States. Neither assumption is working out.

In 1989, after the Tiananmen Square massacre, few Western analysts would have believed that 20 years later China would still be a one-party state -- and that its economy would also still be growing at phenomenal rates. The common (and comforting) Western assumption was that China would have to choose between political liberalization and economic failure. Surely a tightly controlled one-party state could not succeed in the era of cell phones and the World Wide Web? As Clinton put it during a visit to China in 1998, "In this global information age, when economic success is built on ideas, personal freedom is … essential to the greatness of any modern nation."

In fact, China managed to combine censorship and one-party rule with continuing economic success over the following decade. The confrontation between the Chinese government and Google in 2010 was instructive. Google, that icon of the digital era, threatened to withdraw from China in protest at censorship, but it eventually backed down in return for token concessions. It is now entirely conceivable that when China becomes the world's largest economy -- let us say in 2027 -- it will still be a one-party state run by the Communist Party.

And even if China does democratize, there is absolutely no guarantee that this will make life easier for the United States, let alone prolong America's global hegemony. The idea that democracies are liable to agree on the big global issues is now being undermined on a regular basis. India does not agree with the United States on climate change or the Doha round of trade talks. Brazil does not agree with the United States on how to handle Venezuela or Iran. A more democratic Turkey is today also a more Islamist Turkey, which is now refusing to take the American line on either Israel or Iran. In a similar vein, a more democratic China might also be a more prickly China, if the popularity of nationalist books and Internet sites in the Middle Kingdom is any guide.

ROBYN BECK/AFP/Getty Images

"Globalization Is Not a Zero-Sum Game."

Don't be too sure. Successive U.S. presidents, from the first Bush to Obama, have explicitly welcomed China's rise. Just before his first visit to China, Obama summarized the traditional approach when he said, "Power does not need to be a zero-sum game, and nations need not fear the success of another.… We welcome China's efforts to play a greater role on the world stage."

But whatever they say in formal speeches, America's leaders are clearly beginning to have their doubts, and rightly so. It is a central tenet of modern economics that trade is mutually beneficial for both partners, a win-win rather than a zero-sum. But that implies the rules of the game aren't rigged. Speaking before the 2010 World Economic Forum, Larry Summers, then Obama's chief economic advisor, remarked pointedly that the normal rules about the mutual benefits of trade do not necessarily apply when one trading partner is practicing mercantilist or protectionist policies. The U.S. government clearly thinks that China's undervaluation of its currency is a form of protectionism that has led to global economic imbalances and job losses in the United States. Leading economists, such as New York Times columnist Paul Krugman and the Peterson Institute's C. Fred Bergsten, have taken a similar line, arguing that tariffs or other retaliatory measures would be a legitimate response. So much for the win-win world.

And when it comes to the broader geopolitical picture, the world of the future looks even more like a zero-sum game, despite the gauzy rhetoric of globalization that comforted the last generation of American politicians. For the United States has been acting as if the mutual interests created by globalization have repealed one of the oldest laws of international politics: the notion that rising players eventually clash with established powers.

In fact, rivalry between a rising China and a weakened America is now apparent across a whole range of issues, from territorial disputes in Asia to human rights. It is mercifully unlikely that the United States and China would ever actually go to war, but that is because both sides have nuclear weapons, not because globalization has magically dissolved their differences.

At the G-20 summit in November, the U.S. drive to deal with "global economic imbalances" was essentially thwarted by China's obdurate refusal to change its currency policy. The 2009 climate-change talks in Copenhagen ended in disarray after another U.S.-China standoff. Growing Chinese economic and military clout clearly poses a long-term threat to American hegemony in the Pacific. The Chinese reluctantly agreed to a new package of U.N. sanctions on Iran, but the cost of securing Chinese agreement was a weak deal that is unlikely to derail the Iranian nuclear program. Both sides have taken part in the talks with North Korea, but a barely submerged rivalry prevents truly effective Sino-American cooperation. China does not like Kim Jong Il's regime, but it is also very wary of a reunified Korea on its borders, particularly if the new Korea still played host to U.S. troops. China is also competing fiercely for access to resources, in particular oil, which is driving up global prices.

American leaders are right to reject zero-sum logic in public. To do anything else would needlessly antagonize the Chinese. But that shouldn't obscure this unavoidable fact: As economic and political power moves from West to East, new international rivalries are inevitably emerging.

The United States still has formidable strengths. Its economy will eventually recover. Its military has a global presence and a technological edge that no other country can yet match. But America will never again experience the global dominance it enjoyed in the 17 years between the Soviet Union's collapse in 1991 and the financial crisis of 2008. Those days are over.

Photo; Trina Solar in China

China’s Trina Solar Launches $800 million

Expansion, as US SpectraWatt Sputters

Dec 28, 2010 - Reuters

Days after solar cell maker SpectraWatt notified New York authorities that it will shut down its seven-month-old factory and lay off 117 employees, China’s Trina Solar announced Monday that it will invest $800 million in new manufacturing plants over the next three years.

The move by Trina underscores just how difficult it has become for solar startups in the United States to compete against the massive investment being poured into Chinese photovoltaic module makers.

That’s particularly the case for startups making conventional silicon photovoltaic cells such as SpectraWatt, which was spun out of Intel in 2008 with an initial $50 million investment lead by the chip giant’s venture capital arm, Goldman Sachs and other investors.

In 2010, Chinese firms accounted for 72 percent of new photovoltaic manufacturing capacity worldwide, according to a survey by iSuppli, a California research firm. Seven of the top 10 module manufacturers are based in China.

As Chinese solar companies like Suntech Power Holdings and Yingli Green Energy have ramped up manufacturing — supported by generous subsidies from China’s government — they’ve cut prices and grabbed big shares of the U.S. and European markets.

Trina, for instance, established its U.S. headquarters in San Jose, Calif., last year and began signing deals, including one to supply utility Southern California Edison with 45 megawatts’ worth of solar panels. (In October, I stood on the roof of a 562,089-square-foot warehouse in Ontario, Calif., that was covered in Trina solar panels.)

In contrast, SpectraWatt’s entire manufacturing capacity is 60 megawatts. On Monday, Trina said it would ship 1,000 megawatts’ worth of photovoltaic cells by the end of the year, an 151 percent increase from shipments in 2009.

The company did not specify how much additional manufacturing capacity would result from the $800 million to be invested in a new plant complex called the Changzhou Trina PV Park.

(Photo: Todd Woody)

By Jeff St. John

Oct. 5, 2010 - Has Google struck geothermal gold in West Virginia? A new report shows that heat underground the state could provide 18,890 megawatts of power using today’s geothermal technology — more than the state’s entire power generation capacity of 16,350 megawatts, most of which comes from coal. Google, which has been investing in next-generation clean power technologies, funded the research.

The study from Southern Methodist University used data from thousands of oil, gas and water wells to update the sparse geothermal maps that previously existed for West Virginia. The new information has bumped up the state’s previous geothermal resource estimates by 75 percent, researchers say, making it potentially the largest single site for geothermal power east of the Mississippi. Researchers intend to present the results at the 2010 Geothermal Resources Council annual meeting in Sacramento, Calif. later this month.

Google hasn’t made clear just what it intends to do with this newfound geothermal resource. But Google’s philanthropic arm, Google.org, has invested more than $45 million in clean energy technologies, including advanced wind, solar thermal and enhanced geothermal systems. It’s working on several geothermal research projects with the Department of Energy (see here and here for examples), as well as a partnership with General Electric to research technology to capture energy from hot underground rock, as compared to today’s geothermal plants which rely on existing underground hot water reservoirs.

This “hot rock” technology could vastly expand the scope of geothermal power in the U.S. and around the world. Google.org has invested in AltaRock, a startup developing the technology though a flagship project in Northern California, but that project had to besuspended earlier this year after drilling gear snagged on underground rock formations.

Geothermal, unlike other renewable energy resources, can be easily used for 24/7 baseload power — that is, it doesn’t sag and surge with the sun and the wind, which is a problem with solar panels and wind turbines. Geothermal projects are on the rise, although venture capital and private equity investors haven’t yet shown much interest in the capital-intensive sector. Companies tackling geothermal power range from the startup Vancouver-based Magma Energy, which went public last year, to geothermal giants like Ormat Technologies.

Google also has an internal solar technology project, as well as an energy-trading subsidiary, Google Energy, which bought 114 MW of wind energy via a wind farm in Iowa owned by NextEra Energy Resources. Google is likely shopping for more clean power to provide its data centers’ vast energy needs and help it with its pledge to go carbon-neutral — could geothermal help with that?

Mondragon Diaries: Day One

Why Humanity Comes First at Work:

Learning About Bridges to 21st Century Socialism

By Carl Davidson

Keep On Keepin' On

“This is not paradise and we are not angels.”

--Mikal Lezamiz, Director of Cooperative Dissemination, MCC

After a short bus ride through the stone cobbled streets of Arrasate-Mondragon and up the winding roads of this humanly-scaled industrial town of Spain's Basque country in a sunny fall morning, taking in the birch and pine covered mountains, and the higher ones with magnificent stony peaks, I raised an eyebrow at the first part of Mikel's statement.

The area was breath-takingly beautiful, and if it wasn't paradise, it came close enough.

I'm with a group of 25 social activists on a study tour organized by the Praxis Peace Institute. Our focus is the Mondragon Cooperative Corporation, a 50-year-old network of nearly 120 factories and agencies, involving nearly 100,000 workers in one way or another, and centered in the the Basque Country but now spanning the globe. We're here to study the history of these unique worker-owned factories, how they work, why they have been successful, and how they might be expanded in various ways as instruments of social change. Georgia Kelly, the Praxis Peace Institute's Executive Director, is our cheerful and helpful group leader, but Mikel is our MCC host in charge of teaching us what he knows.

The MCC reception center is part way up on a slope of a much larger mountain, but it offers a magnificent view of the town and the dozens of industrial and commercial cooperatives in and around it in the valley below. After watching a short film on the current scope of MCC, we move to a lecture room for Mikel's talk. The signs on the wall say 'Mondragon: Humanity at Work: Finance-Industry-Retail-Knowledge', in Basque, Spanish and English.

“Humanity at Work,” Mikel starts off, reading the slogan. “This means we are the owners of our enterprises, and we are the participants in their management. Our humanity comes first. We want to have successful and profitable businesses and see them grow, but they are subordinate to us, not the other way around.”

The other part of the slogan--finance, industry, retail, knowledge--refers to the scope of the cooperatives. Of the 120 workplaces, 87 are industrial factories, making everything from kitchen appliances and housewares, to auto parts, computers, and machine tools. One of the coops is a large bank, Caja Laboral. One is a Mondragon University, with some 3600 students; seven others are research and development centers. One is retail the huge network of hundreds of Eroski supermarkets and convenience stores, four are agricultural, and six are social service agencies managing health care, pensions, and other insurance matters.

All are worker owned. All have the management selected by the workers and the coop governing boards. All have yearly assemblies were the workers set strategies, make or change policies, and elect their governing boards--one worker, one vote.

Mikel also introduces this by telling us a little about where we are. The Basques are among the oldest people in Europe, with a unique language, unrelated to any others. They have a strong sense of culture and solidarity, and an ongoing quest for autonomy, even independence, from Spain. The region is made up of four political divisions in Spain and two just across the Pyrenees in France, with three million Basque inhabitants three and another three million living abroad. They were a center of resistance to Franco's fascist regime, and have won a good deal of autonomy today in some of the districts.

After World War 2, the area was poor and devastated, and the Franco regime was in no mood to give it much help. But one who did rise to the challenge was Father Jose Maria Arizmendiarrieta, a priest who had fought Franco, ended up in prison, but managed to get released instead of executed. Father Arizmendi, as he is popularly called, was assigned by the church to the valley in the Basque containing the small town of Arrasate-Mondragon. He set to work trying to solve the massive war-created problems at hand. He began building a small technical school, and then a credit union where the region's peasants and workers pooled meager funds. After a few years, with just five of the best students of the school, he started a small factory making one product: a small paraffin-burning stove so people could cook and heat water. It was a good stove, and sold well.

Most important, he gave the project a set of ten carefully thought-out principles to serve as guidelines for the current and any future endeavors:

1. Open Admission, meaning no worker is to discriminated against because of nationality, gender, political party or religion and such.

2. Democratic organization, meaning one worker, one vote.

3. Sovereignty of labor

4. Instrumental and subordinate nature of capital

5. Participatory Management

6. Wage Solidarity

7. Cooperation between Coops

8. Social Transformation

9. Universality

10. Education

How each of these are implemented, and with what success, will be spelled out in this series of diaries-- at least I'll give it a good shot. But following this introduction and a barrage of questions--Mikel answered a good many--he  soon had us all get back on the bus. The best way to learn was to see for ourselves. So he took us off to FAGOR, the relatively large industrial coop that had grown for the first tiny shop that built that first small paraffin stove.

FAGOR today is several connected coops with about 6000 workers overall, both here in the Assante-Mondragon area and in China. All the employees in the Basque areas are worker-owners; those elsewhere are in varying stages of becoming so.

As we got off the bus, we are at a large modern structure that could easily enclose several football fields. We were given headsets so we could hear our young woman guide over the din of the assembly lines. Once inside, we saw a very modern and computer-assisted assembly line that was putting together household washing machines, from beginning to end. It wasn't completely automated; workers were required at many points, especially at those checking quality.

This quality was a hallmark of MCC products generally. They compete by selling very high quality goods at reasonable prices and good service. They have very few supervisors. I didn't see a single one covering the whole process of making the washing machines, and later some convection ovens, from one end of the line to the other. Self-supervision was thus a competitive advantage. Not having a lot of supervisors to pay meant lower prices.

Before the crisis hit two years ago, 15 percent of FAGOR's workers were temporary 'trial period' new hires, meaning they couldn't become worker-owners for six moths to a year. All these were laid off due to the fall in demand, but all the regular worker-owners remained on the job or were shifted to other related coops.

At the moment, the workers were on two shifts. 'One group starts at 6am and ends at 2pm,” our guide explained. “The other goes from 2pm until 10pm. There are breaks every two hours, after which each worker can take a different position on their section of the line, The workers decide this rotation among themselves. It helps with safety and spreads skill sets around.”

We noticed that some of the components were in boxes shipped from other countries, and asked Mikel about it. “Our policy for purchasing is set by three things—quality, price and service. If an outside firm does better, we use them.” He picked up a wiring harness from a box. “Here is a good example. We used to have this made by one of our student-run coops. They had two products, this wiring set and another computer component. The quality and service was good, but the price was poor. This piece, made in Turkey was just as good, the Turkish firm had good service, but at a much lower price. Our students only worked a four hour day, and paid themselves 550 Euros a month, but the Turkish workers put in 60 hours at 200 Euros. In that situation, we encouraged the students to shift to improving the product where they were better, and to design new products.

Some in our group groaned at the concept, but others felt that, given a market economy, it was the best way to handle the problem—although raising the conditions of the Turkish workers would be a good idea, even if beyond the reach of MCC at the moment.

One thing that stood out of the Fagor line was a concern for both safety and quality. 100 percent of the machines were tested on the line for safe operation, and another 3% tested again at random just before final packaging. There were numerous station stops where workers kept daily records of any accidents—a green smiley face sticker was a good day, a red frowny face was a problem day. I only saw one red face on a chart on the entire line.

FAGOR is producing 850,000 units a year, shipped mainly throughout Europe. Their pressure cookers are very popular in U.S. department stores.

After a delicious and leisurely lunch, Mikel gave us another talk, stressing two topics—the spread of MCC to other countries, and its ongoing and often difficult efforts to transform their factories in areas outside of the Basque country into full worker-owned cooperatives.

Of the 100,000 people who work for MCC, of the 39,000 in the Basque Country, some 99 percent are worker-owners. Of the 40,000-to-50,000 recently brought into MCC in the rest of Spain, Portugal and parts of France, many are in various stages of becoming worker-owners, although some are discouraged by the low or negative earnings in the last two crisis years. The remaining 17 percent in countries like China and Brazil still remain wage labor in firms owned by MCC. MCC, however, is still trying to find ways to deal with local laws and customs in these countries to make a full transformation.

This discussion ran into overtime, so the last part of day one, a visit to an Eroski supermarket, was limited to 30 minutes. This one, a full-sized supermarket, was an excellent facility, owned both by all the workers and many consumers as well. Think of it as a high quality worker-owned Walmart combined with a Whole Foods with much lower prices, and you'll get a reasonably good idea on what one is like. But all I can vouch for at this point is that the fair trade 70 percent chocolate bars come very close to being a small piece of paradise.

Mondragon Diaries: Day Two

It Starts with a School…

Knowledge and the Path to Workers Power

By Carl Davidson

Keep On Keepin' On

This bright and sunny morning in the Basque Country mountain air again begins with our bus slowly winding up the mountain slopes. But this time it's a short ride. We stop at ALECOP, a unique worker-student cooperative that is at once part of Mondragon's production units and its educational system. Think of it as a small worker-owned community college, but with technology shops that actually produce items for sale in industrial markets, and you won't be far off.

Once we get settled in a classroom, our MCC mentor, Mikel Lezamiz, introduces us to a young 30-something worker-technician who is going to explain ALECOP to us, and a good deal more.

“First of all, we are a mixed cooperative,” he states. “This means we are made up of both worker-owners and students. There are 59 worker members and about 300 student members. Some of our students also work in other coops part-time, but our students are mainly working as part of their studies, and to earn a little money to support themselves as students.”

He goes into some history, reminding us that MCC started back in the 1940s, with the polytechnical school started by Father Arizmendi, the innovative priest who envisioned MCC, as his very first effort to help the war-torn Basque workers find a path out of the devastation of World War 2. The first school's students helped form the first factory, but the school also continued, and over the decades, it evolved into what is now ALECOP, several more coop high schools, and what is now Mondragon University.

“To democratize the power, we have to share the knowledge,” interjected Mikel, summarizing Arizmendi's theories. “Thus continual study throughout life must not only be for the rich, but also for the workers.”

What kind of jobs do the ALECOP students have? Our young guide shows us a list: R & D assistant, storekeeper, publisher, process technician, electronic assembler and several others

What kind of products do they make? “Most important, we design educational tools, to help in teaching electricity, electronics, automation, telecommunications and other subjects needed in high schools and in factory training. But we are also a nonprofit. We make money, but our hope is mainly to cover our expenses. He goes on to describe a list of 'competencies' that they hope to instill in the students, so they can go to work in FAGOR or other MCC factories with a good degree of skill.

It all becomes much clearer once he takes the 25 of us out into the shop area. As someone who taught computer repair to inner city youth and ex-offenders by recycling old computers, I step away from the group and examine some of the teaching stations. They are large panels with, for example, critical automotive parts on one side, connected with various testers and gauges. I examine the back side and find the motherboards and circuitry connecting them all. A student who wanted to become an auto mechanic, for example, could test and work through the key components of dozens of vehicles on the front side, while the programming embedded in the back side would give him or her the proper positive or negative training responses. Very cool, I thought. Even cooler was the fact that the students not only used these machines for their own learning, they also made the circuit boards and wrote the software to make these instructional learning tools in quantity, ready to be sold and used anywhere.

After ALECOOP, our bus makes a quick stop at Mondragon University's top-line coffee bar. We're in a hurry, so Mikel gets busy: How many with milk? How many black espresso? He turns in the bulk order, and with our caffeine fixes, we're back on the road in 20 minutes.

The late morning session is at Mondragon Assembly, a mind blowing and thought bending state-of-the art high-tech and high-design worker cooperative competing on a world scale. Its products are the software and hardware of room-sized automatic assembly machines making solar photovoltaics and many varieties of electronic components for robotics.

“It's rather easy to design a machine that can make a switch or solar cell every 1.8 seconds,” explains a young coop member. “But it's very hard to make the same switch or cell in 1.2 seconds. Yet that is what our clients are demanding of us, and it changes every six months, with higher and faster standards. We either do very well, and make lots of money for the cooperative, or we fail and we lose a lot.

“But this is what we want to be doing,” he adds. “We don't have too many workers in this coop in the 40 to 55 age range. We're all younger. Some say we try to make up in attitude and spirit what we lack in experience!” This brings a round of laughter, but we all know exactly what he means. He goes on to describe the global market for these advanced means of production, with China leading the way in many of them.

“We can't just produce for the Basque Country, or even Spain and Europe. We have clients everywhere, and we are setting up factories everywhere—Germany, Mexico and China, too.” While owned by MCC, none of these abroad are yet full worker-owned coops. But neither are they sweatshops; they are very advanced production units with skilled workers. Still, it is a contradiction, and MCC's aim is to eventually convert them all to cooperatives. But they have to move in accordance with the host country's laws and customs on the matter. Or simply make the decision to abandon proposed startup projects in that region to other regular capitalist firms.

How are his clients spread around? “Right now, we have 85 here in Spain, 30 in Mexico, 25 in France, 6 in China and 20 in Germany. For this kind of equipment, you don't get a large number of orders. Maybe ten a year. But each one is worth millions, but only if we are successful! But keep in mind that for every two jobs we create globally on the outside, we also create one new job here inside MCC.”

As we left, many in our group were debating the pros and cons of global economic justice. I shared their concerns, but I also saw something else. Here was the beginnings of some of the most advanced productive forces in the world, the means of both economies of abundance and the means of clean and safe renewable energies and far lighter ecological footprints. In any dynamic socialism of the 21^st century, these young people and their creative efforts would be invaluable. I would want to shape their boundaries, but I would not want to stifle them or just send them off to work for the neoliberal globalists. We needed them with us.

As is the custom in this part of the world, our main meal was a long mid-day 'lunch', really a dinner. We were driven higher up into the mountains on a winding road to an immense building that looked like a blockhouse or small fortress of stone. When was it built?, someone asked. We checked the carvings, and translated. Around 1400 to 1500, before the time of Columbus. But now it was updated into long stone-walled dining rooms, with a conference center on the upper floors. Needless to say, lunch was exquisite and Basque cuisine deserves its reputation.

In our last session for the afternoon, Mikel gives us all a detailed technical talk about cooperative structures, how they can vary, and especially, how they are financed and governed.

“People are the core, not the capital. This is the main point,” he starts off. “If capital has the power, then labor is simply its tool. But if labor has the power, then capital is subordinate. It becomes our tool.”

This is part of Father Arizmendi's ten principles, which he presented yesterday. “Labor is sovereign' is one of them. “This means one worker, one vote—whether you have more money or less or anything else, it doesn't matter. You have an equal voice and the access to knowledge and transparent information.

“One journalist once said back in the 1970s that Father Arizmendi had created a progressive economic movement that was anchored in an educational institutions. When Arizmendi heard it, he said, 'No, its just the reverse. We are creating an educational movement for social change, but with anchors in economic institutions.”

It's the whole of humanity that matters most.

Mondragon Diaries: Day Three

Visions of the Future, Ties to the Past:

Tools for Shaping the Organizations

of the Next Generations

By Carl Davidson

Keep On Keepin' On

This morning our bus again takes us far up the winding mountain road to the 15^th Century blockhouse fortress now transformed into a conference center. I've since found out it's called Otalora, after an old noble family who owned the whole area reaching back 600 years. In those days, in was an armed way station on a trade route between the center of Spain and the sea, and the Otalora family extracted heavy taxes on the traffic going both ways.

This led to wars among the noble families over these spoils, and at one point the tall armed tower on one end of the building was destroyed by a rival. In the years that followed, to bring a degree of stability, all the the armed towers are lopped off on other castles in the area. This imagery brought smiles to the faces of the women in our group, who caught the symbolic significance immediately, even if the men took a moment or two to catch up with the laughter.

In any case, Otalora is now owned by Caja Laboral, the worker-owned credit union of the Mondragon Cooperative Corporation, which operates on the scale of a major bank with outlets across the country, in addition to serving as a source of finance to all the MCC coops, who dominate its governing council. The other voice on the council is a bloc of representatives from the Caja Laboral staff workers themselves. A few farmers use the land for dairy cows and sheep, but otherwise, the whole area looks like a well-tended national park.

After the Otalora story, our more serious topic this morning is the wider range of the cooperative movement, both in the Basque Country and Spain. Mikel introduces Lorea Soldevilla, a young worker-owner from KONFEKOOP, the Basque Cooperative Confederation. MCC is part of this, but it turns out that there are many more cooperatives in the region that are not from MCC. From the group's acronym, I also learn that the Basque language does not use the letter 'C.'

There are currently 755 cooperatives in the Basque Country, she explains, and only 80 of them are the worker-owned MCC coops. There are a total of 537,000 members of all the coops, but only 54,919 are worker members, and 37,860 of these are the MCC worker-owners.

Where did these other nearly 500,000 come from? Lorea brings up a spreadsheet on a screen to show us that there all all kinds of cooperatives and members. Eroski, the supermarket chain, for instance, has consumer members as well as worker members, and there are other consumer coops. There are also producer coops, such a diary farmers, where the farm owners are members, but not necessarily the farm workers. There are also marketing coops, transport coops of independent truckers, cooperative schools, food coops and housing coops.

At the center of Konfekoop's work as a confederation is the concept of 'inter-cooperation,' the idea that coops should help each other. 'Inter-Coop', as it's called, has several organized components. ELKAR-LAN helps people with the legal and organizational consulting needed to form new coops. Elkar-Ikertigia is a volunteer policy and research center. PromoKoop helps find new markets and helps coops enter new markets. Oinarri helps to link coops to the wider social economy.

But there is another vital function as well. MCC is nonpartisan; it's not tied to any political party, and the same is true of many of the others. Still, they need to influence and work with the Basque and Spanish governments, especially on matters of law and regulations that can help or hinder them. Konfekoop enables them to do this, both as a lobbying arm and by directly having its people serve on government bodies and study groups. It's a way of working with favorable politicians of all parties without directly being members of any of them. The Basque government, for its part, is largely favorable to MCC and the other coops, since they have helped to bring a higher-than-average degree of prosperity to the region.

We all gave Lorea a round of applause for expanding our horizons. It was now time for our caffeine break, and we all headed downstairs to a room in the old castle that was now a coffee bar. There were three workers getting us expressos and cafe con leches, so I asked, 'Are you guys worker-owners of this fancy Caja Cabral enterprise too?' I asked. “Of course,” was the answer, as if it was the most natural thing in the world.

As we returned for the next round, I heard a few groans about the title: 'The Corporate Management Model.' Some gritted their teeth for a technical lecture; a few said, “can't they find a better word than 'corporate'?” “Give it a chance,” I replied. “'Corporation' doesn't always translate with the same meaning we put on it.”

Mikel introduced Jose Luis Lafuente, whose title, accordingly, was 'Director of Corporate Management Model.' Jose started of by explaining that their model was developed over decades, going back to Father Arizmendi's Ten Principles, but in a 1990s update, was also deeply rooted in the TQM outlook, or Total Quality Management. Again a few eyes were rolled, because a version of TQM was used against U.S trade unions back in those days, and a few around the table remembered it.

But as Jose continued expanding of MCC's approach, which put the core values of worker ownership and democracy at the center of an ever-widening set of values and organizational principles, the mood in the room began to change. He then took each component, and in a wonderful set of inter-linked graphic images, he unfolded a number of powerful tools that could be adapted to any progressive organization to build its strength, grow its size and achieve its goals.

He posted 'people in cooperation' as the first starting circle, then went on to connect that concept to the necessity of participatory organization, wage solidarity, social transformation and many others. By the time he was done, everyone was wide-eyed. “So what do you think?” he asked. “I love it,” I blurted out. “But I'm going to adapt it to building my socialist and other political organizations.” He laughed, but in the front of my mind was the conclusion that I had a powerful, modernized framework to update and supplement Lenin's 'What Is To Be Done' and an number of other classics on organization.

It was time for lunch, and all the tables were buzzing with excitement over the presentation. Jose set across from me, but he immediately asked about other matters. “We made an agreement with the US Steelworkers about a year ago to form some worker coops in the U.S. How's it going?” “From what I know,” I replied, “they want to proceed with caution, finding a few profitable firms to buy up and then transform into coops. Plus a lot of their members had bad experiences in the past with Employee Stock Ownership Plans or ESOPs, and they have an educational task show how the MCC model is not at all the same as ESOPs. He countered that it was often easier to form a worker coop as a new startup, but he understood my points. He went on to speak highly of GAMESA, the Spanish wind turbine outfit that had opened up three new plants in Pennsylvania in cooperation with the USW. GAMESA got along fairly well with MCC, even though it wasn't a coop, but simply a high-road green capitalist firm.

After lunch, we boarded our bus and headed back down the mountainside to the town of Assarte-Mondragon. We were next visiting IKERLAN, one of MCC's thirteen Research and Development cooperatives. It was the first and the largest, and had a number of research lines. It included 209 full-time research scientists as worker-owners, and another 54 trainees. “Effective Innovation at the service of our company clients” was how Maria, our presenter, summed up their mission. She went on to describe energy saving power stations, micro-needles for bio-tech medicine, new computer components for smart electrical grids, touch screen control panels for home automation, and so on. “Less energy, with lighter materials at lower costs” is a common thread, she added.

Again I was impressed by seeing the advanced productive forces, created by high design, that would be critical to solving problems like the climate change crisis. One of our team, however, asked an interesting question: “Does serving your clients mean working on nuclear weapons or other military instruments?” No, she said firmly, we turn these down. “Is that written down somewhere?” She wasn't sure, but added that with their values, “We would simply not think of doing things like that.”

The comment served as a transition to the last part of our day, a 40-minute bus ride even higher into the mountains. We were headed to a Franciscan monastery with a new secular institution, BAKETIK, the Basque Peace Center of Aranzazu, far above the small town of Onati. The ride itself was a joy, with forest broken up by high mountain meadows with dairy cattle and, once you got higher, the sheep the Basques are known for raising. The cathedral at the top was a powerful piece of modern architecture, one you had to walk down through cut stone to enter.

The peace center itself had taken on a tough task. There were hundreds of undocumented refugee children, mainly from bloody civil conflicts in Africa, who had would up on the streets of Spain, homeless. Many were brought here, and paired with volunteer 'big brothers' and 'big sisters' to help them regain trust and their own physical and mental health. It took patience, but it served the children well.

On the way back we stopped for an hour in Onati, known for good chocolate stores. It was true, as I picked up a large bar of truffle-flavored 80% cacao dark for only 2 Euros. But as I strolled through the town square at evening, I noticed something of far greater value. The town's working-class families were sitting in the town square, drinking beer and coffee, engaged in conversation. Children had the run of the streets, playing games and riding bikes—and there wasn't a bevy of police cars to be seen. It was a place of community and solidarity, where people still enjoyed the simple company of one another and the smaller pleasures of life.

Mondragon Diaries: Day Four

Worker Coops, Worker Banks, Worker Skills:

Mondragon’s ‘Second Degree’ Coops

Help Weather Today’s Crises

By Carl Davidson

Keep On Keepin' On

Most new small businesses fail. That's a fact, whether they are in the Basque Country or in the U.S. Or anywhere else. Yet the Mondragon Coops, which all started as small worker-owned businesses, have hardly ever failed. Why? The key is in Father Jose Maria Arizmendi's original founding conception of cooperatives as the interlocking of school, factory and credit union.

This was the thought I was rolling over in my mind as our bus again climbed the slopes on the Arrasate-Mondragon valley, this morning with grey skies and a light drizzle. We were headed for an administrative office of Caja Laboral, the worker-owned banking network of the MCC Coops. The ride wasn't far, and we were soon whisked into a small auditorium. Our mentor, Mikel, introduced the staff member who would introduce us to the world of banking, and Mondragon's modification of one corner of that reality.

Some people might question why workers for social change would want to be involved with banks at all. But certain kinds of credit and finance are important components of any society—capitalist, socialist or somewhere in between. Father's Arizmendi's conclusion that two of the many reasons cooperative movements failed in the past was the lack of reliable credit and the lack of innovation and new ideas. Hence the reason he started with a school, but was soon to add a small credit union formed from the small deposits of his parishioners and their neighbors. To start a factory, you had to borrow some money, and borrowing the money of people close to you at low cost was the best way to go.

By 1959, the small credit union had grown and transformed into Caja Laboral. Today it is one of the major banks in Spain, with assets of 21 billion euros and 1.5 billion in equity. It has 18.6 billion in customer deposits, offset by 16.4 billion in credit loans. It has 1,2 million clients, only 120 of which are the MCC coops. It has 2000 people working for it, who are worker-owners. Actually, the bank is owned 55% by the MCC coops and 45% by the staff workers. But the rule they have adopted is that the factory coops pick eight of the board members, while the staff workers elect four. Since Caja Laboral, is a coop of coops, it is what MCC calls a 'second degree' coop. Other second degree coops are their schools, medical clinics and insurance agencies.

“We are rated the best bank in Spain in customer satisfaction,” says our presenter, Angel Maria Garcia Olabarrianter. “One reason is that we are worker-owners ourselves, and not socially distant from them. We work closely with our clients. We are prudent and conservative.

Mikel gave a wry laugh from the back of the room, and interjected: “Except for the Lehman Brothers fiasco....” It turns out Caja Laboral had taken a hit of 160 million euros it had tied up in Lehman Brothers securities when the Wall Street investment bank collapsed at the beginning of the financial crisis two years back. Not only had MCC's bank had been hurt, every bank and government in Europe felt the pain, and some were still struggling.

“Yes,” said our presenter. “But we followed our rule of transparency. You and everyone else knew it the same day, and we announced it to the press the next morning.”

This opened up a discussion among all of us on the proper role of banking and credit unions, including cooperative ones. It's not a subject progressive activists are all that familiar with, but we had it anyway. First it was clear that Caja Laboral's big sin in the Lehman Brothers case was believing in the validity of the AAA ratings of its securities, set by U.S. Government agencies, which turned out to be a sham. Second, it was also clear from the numbers presented that Caja Laboral was really something on the order of a strong and relatively cash-rich savings and loan operation and consumer services bank. Its managers didn't get rich, but had incomes within the same narrow and modest salary spread as all MCC coop members. Its profits were plowed back in to building new coops. It was not in the same league as the giant Wall Street speculators in derivatives, with their billion dollar bonuses, who were trying to gain wealth not by creating new wealth, but by pure gambling with other people's money.

Most of us concluded that Caja Laboral was a sound and necessary part of MCC and its growth, but the arguments continued out the door and on the bus ride further up the mountainside to our next talk at the Otalora conference center.

Here we had a new topic, the training of governing boards of the coops. It did no good to elect workers to coop governing boards, and then just let them sink or swim. A skills transfer and training program was in order.

Our presenter was Juan Ignacio Aitpunea. He was a well-seasoned and tough-minded older Basque worker with strong cooperative values in his heart.

“We use a Basque word, ORDEZKARI, for our program,” he started off. “It means 'representative,' because that's the task of the boards, to represent the workers. Our boards are elected to four-year terms, but we stagger them. Every two years, only 50% change, but with 120 coops, that means we have about 1000 new board members to train every two years.

“We do it in steps. In the first six months, we get the new people to do self-evaluations, to find out their competencies, or the lack of them, so we know what to stress over the next year or so.

What were the skills needed? “First,” Juan continued, “you have to know the basics, the laws on cooperatives and the functions of coop leaders. Second, you need common skills—teamwork, how to communicate, how to lead, how to make timely decisions. Third, you have to know how to design and work through a followup plan." All this was crucial because the govern board not only shaped policy, it hired and fired managers. Worker-owner, by their nature, cannot be fired. Over 50 years, there was only one case, where a small group got caught embezzling.

Juan went into more detail on this, but our crew had other questions: how were people nominated, and what was involved in running?

First, if there are two vacancies, there must be at least three candidates, he explained. Any worker could volunteer to run, but he or she had to get signatures of 10% of the workforce. Next, the workplace's social council, which serves some of the functions of a trade union, could suggest a candidate. Finally the old board could name one new candidate itself. But an initial vote was taken so each of the final minimum of three candidates to get a 50% minimum, then the vote was held to determine the final two.

“We need this to make sure board members have a wide respect throughout the workplace,” Juan added. “This is especially important in hard times, like now, when hard decisions often have to made." This meant firing the temp workers or cutting salaries to deal with the downturns. "Leading is not just about friendship, or making friends. This is not mainly a place for that. But it is a great school where you can learn what it means to be responsible. You may also make a few new friends. In fact, in tough times, that's when you can make the best and truest friends.”

Juan also stressed the need for diversity and the need to bring forward younger leaders. “When you get old like me, you get too used to having your own way. A time comes when you need to let new people in, but still find other ways to make a contribution.”

Our last stop of the day was Mondragon University. It was formed as a second degree coop by joining the engineering school, the business studies program, and the humanities and pedagogy teaching coop. It currently has about 3600 full time students. Tuition is about five thousand euros a year, considered moderate for a European university. Most of the students are from middle-income families in the area or from the workers in the coops.

Fred Freundlich was our faculty presenter, an American who had been in the coop movement in the U.S. In the 1980s, but had lived in the Basque County for a good number of years. He gave frank and critical answers to our questions.

I raised my hand, and asked: “Suppose I'm a young worker in one of the local industrial coops, and I decide I want to become part of the management. How does MU help me? Do they?”

The short answer was 'Yes.' But Fred added that management usually required a college degree, and you didn't necessarily need to get it from MU. If you had a good resume and vita from elsewhere, you'd still be considered. On the other hand, if your coop saw that you were eager to gain new skills, they would give you a good deal of support, including financial, and going through MU for your degree would be a plus.”

Others raised the general question of activism among youth. “Frankly, Basque youth aren't all that active inside the coops. They're into third world global justice issues, environmentalism in general, and Basque nationalism. About the coop managers, I'd say a strong minority, maybe 30 percent, have solid cooperative values at heart, another minority pays lip service to them, and the rest are somewhere in between. We clearly need a new surge of activism to spread cooperativism beyond the factories, but my guess is only about 30 percent of the workers today are activists on the matter. You really need to talk more with Mikel, who's really a leader on this topic”

Mikel went up front and drew us a wave-like graph, showing an initial surge in the early MCC decades, then a leveling off, then a dip at the beginning of the crisis, and now a small upward turn.

“This is the beginning of a rich discussion, how we need to redefine and reinvent ourselves for the 21^st century? But the bus is waiting to take us to dinner in San Sebastian. We can return to it tomorrow.”

Mondragon Diaries: Day Five

Need, Trust, Realism and Well-Chosen Allies:

Mondragon and the Transition to a Third Wave Future

“The world has not been given to us simply to contemplate it, but to transform it. And this transformation is accomplished not only with our manual work, but first with ideas and action plans.”

--Father Jose Maria Arizmendiarrieta, founder of the Mondragon Coops

By Carl Davidson

Keep On, Keepin' On

Today the Mondragon valley is misty and grey, with small clouds drifting close to the valley floor between the mountain peaks. It's somewhat otherworldly, I think to myself on the bus ride up the slopes, almost like a scene from “the Lord of the Rings.”

Today is also our last day, and we're full of mixed feelings. Melancholy that our week-long seminar is coming to a close and that the new friends we've made will scatter. But there's also excitement that we'll soon be back home and able to share it all with our communities.

Our first stop is another component allied with Mongragon University called SAIOLAN. It's an incubator project for helping to launch new coops and high-tech businesses.

We're greeted in a classroom by a young woman from Mexico, Isabel Uriberen Tesia,  who is also our presenter. She wastes no time bringing up her powerpoint on the screen and getting into the topic.

“Our aim is generating employment, creating new jobs,” she says. “our purpose is to do this by developing new business projects and training new entrepreneurs.”

A few years back, as the economic crisis was developing, nearly 60 percent of the students graduating in the Basque Country were having a hard time finding employment. The government, the MCC coops and other businesses, as well as the students themselves, all turned to SAIOLAN to help launch new enterprises that could put young people to work.

“There are five levels in the training of entrepreneurs,”  Isabel explained. “First is motivation. Second is finding opportunities. Third is defining a suitable project for the student, in tune with his or her interests and ideas. Once you get past these three, the next two, planning the startup and launching what you have developed, also involves finding resources, such as grants and loans, that can get the new businesses operating.”

What kind of businesses were being started? One involved processing plants for cleaning waste water in a new and better way, another was called 'micro-manufacturing,' producing very small components accurately, quite a few were new software products. One from FAGOR, the large home appliance worker-cooperative, involved finding new uses for stainless steel, including exterior products, like one-piece transit stop structures.

Some of our group were concerned that many of the new startups were simply new businesses rather than also coops. This was 80 percent, or 138 out of 172 new small enterprises over the last few years, with 2281 new employees. SAIOLAN didn't seem worried. “It's their choice,” was the explanation. “Some of them will later transform into coops, and in any case, it's good to create new employment for our entire Basque community, not just the minority in cooperatives.”

We got deeper into the subject in our next session. It was further up the mountainside at Otlalora, and we had as our resource person, Jesus Herrasti,  one of the senior MCC leaders, the head of the “Innovation Group', who had been with Mondragon for 48 years.

After laying out some of the basic features of innovation—infrastructure, science, technology, strategic planning—Herrasti made it much more real by talking about a fundamental conflict facing all manufacturing businesses, not just MCC. “Take FAGOR, our home appliance manufacturing coop. It's a mature business. We can continue to compete by making some additional improvements in quality, or cutting our profit margins. But in the end, it's going to be very hard to compete with similar products produced in Asia. We should keep at it as long as we can operate in the black and our worker-owners can maintain their standards, but where, really, is our new growth potential?

He named three broad areas—renewable energy, health and eldercare, and information technology. It got even more interesting to me as he became more specific about new product lines—fuel cells, wind turbines, photovoltaics, embedded software, wireless, ambient intelligence, and bioprocessing in supercomputers. He was presenting the shift from second wave manufacturing to the high-design and high-touch products of a third wave future in a knowledge economy, and he had 200 people working full time on coming up with new ideas and plans.

I asked a question. “Have you had any inquiries from those countries trying to define a new 21^st century socialism, in whatever way, such as Venezuela, Cuba, China, Vietnam or even South Africa, on how they might use Mondragon's ideas and services? Do you think you have something to offer here?”

“Yes and No,” was the cautious answer. “We get queries from all of them. We've been to China and other places, and there is some genuine interest, to a point. But since spreading knowledge and worker's power at the workplace also often runs against the clinging to control by bureaucrats, socialist or otherwise, the interest often comes to a dead end. But it's not always the case, and we keep working on doing what we can.”

He went on to discuss the problems of cultural differences. “We Basques are often risk-adverse when it comes to business, unlike Americans. We often avoid risks when we shouldn't. On another hand, when we talk with Mexican workers about taking over and owning the firms we start there for themselves, and where they elected the leadership, they simply don't believe us. They want to know where 'the trick' is hidden, since businesses, in their culture,  are always owned by bosses, never by workers. There is no trust, at least trust with us, that it can be otherwise.”

So what are the basic things need to start worker-cooperatives in our countries, asked one of our group?

“First the workers themselves must FEEL THE NEED. Without that, it's hard to get anywhere. Second there must be a culture of TRUST, since you are sharing money, sharing risks, and supporting new leaders. Third, is to BE REALISTIC. You need successes, especially in the beginning. Too many early mistakes, and you are finished. Finally, you need friends and collaborators--but pick them carefully!”

This had us inspired and buzzing all through lunch, another amazing sampling of Basque cuisine. I had steamed artichokes with a delicious sauce and braised pork, finished off with dark strong coffee and ice cream with slivers of dark chocolate.

The afternoon session featured a presentation of one of the students in MUNDUKIDE, a small overseas assistance program with the people of Mozambique, Brazil, Cuba and a few other countries. One discussion was largely about microloans, which weren't working very well, and another about road-building, which was rather successful.

Our final session was with Fred Freundlich, the American professor, who was a veteran of the movements against plant closings in the U.S. A few decades back, who now was a faculty member at Mondragon University. Since he understood both our realities and those at MCC, he could handle any outstanding questions.

There were a lot of them. The first was how much was MCC's success a result of factors unique to the Basque Country. “It's somewhat important, but not decisive,” Fred answered. “One very important factor was it started at just the right time. If it had started 10 years earlier, conditions may have been too harsh. But the first coops were launched at a time when people really needed a lot of things, and finally had a little savings to spend. Many businesses grew in this period. If it started 10 years later, MCC may have had much stronger competition, and may not have gotten off the ground so well.”

I asked what was the response of the socialist and communist groups in the Basque County and Spain to MCC? “Mixed and confused,” was the answer. Some thought it utopian. Others dismissed it as a diversion, as making workers into capitalists. "But they still keep sending delegations for visits, and going away impressed," Fred noted. The Basque left was also fragmented over violence, when ETA, the Basque armed resistance group, assassinated a former leader of one of the MCC coops who was also a socialist official.

After a thoughtful pause, Fred made a point that applied to the U.S. Left as well. “There's two trends in the left,” he explained. “Those who think long and hard about business and what to do with it. And those who mainly like to discuss left ideas.” The implication was that the two trends most often didn't overlap, even if it was wise to do so, both tactically and strategically.

Mikel brought the session to and end by asking us all for our new ideas and projects on how we might implement what we had learned. There were all sorts of plans in the works on the part of our group, from networking food coops, to producing new green products, to making a new film about Mondragon for a U.S audience. We had clearly all had our imaginations fired up by the experience. Mikel gave us each a certificate for completing a 40-hour study seminar, which was a lovely touch. But the truth was that most of us would need no reminder hanging on our walls. What we had learned here had changed us, in some ways deeply, and we would be looking at people and projects in new ways for some time to come.

[Carl Davidson is a national co-chair of the Committees of Correspondence for Democracy and Socialism, a national board member of Solidarity Economy Network, and a local Beaver County, PA member of Steelworkers Associates. If you like this article, make use of the PayPal button on Keep On Keepin' On. Davidson is also available to speak on the topic. Contact him at carld717@gmail.com For more info on these tours, go to http://praxispeace.org]

Calculating the true cost of

living in a country built on oil

By Mark Engler

TomDispatch.com

August 13, 2010  |  

This might be an opportune time to make a disclosure: I am a BP shareholder. Admittedly, I’ve never attended the company’s annual meeting, and if I did, I would have very little weight to throw around.

I own two shares of BP stock. I received my stake in the company as a Christmas gift in 1989, when I was 14 years old. The previous June, I had taken a "summer enrichment" course in the Des Moines public schools, designed as an introduction to the world of business. The teacher gave each of us in the class a modest hypothetical budget to invest in the stock market.

Earnest young capitalists, we made our picks and then followed the quotes in the morning paper. I invested heavily in Amoco and finished the summer feeling that my portfolio had done quite well. As a result, my younger brother decided that I should receive a real piece of the enterprise that was once John D. Rockefeller's Standard Oil. He conspired with my mom to get me an Amoco share for the holidays.

I’ve watched the oil industry as an interested party ever since. In 1998, my Amoco stock split, turning my one share into two. Then, a few months later, the company was acquired by BP. This "oil mega-merger," as the BBC called it, gave me a stake in yet another energy titan. It also allowed the combined corporation to shed 6,000 jobs, prompting its new chief executive, Sir John Browne of BP, to confidently assure the press that "he hoped the merger will increase pre-tax profits of the two partners by 'at least' two billion dollars by the end of 2000."

The merger proved profitable indeed. Over time, the price of my stock nearly doubled. I received dividends every three months, usually of around 60 cents per share. And by the mid-2000s, BP was making some $20 billion per year in profits. The numbers looked good.

Of course, these are not the only numbers to consider. In fact, in the wake of BP's disaster in the Gulf of Mexico, they don’t seem like the right numbers at all. It’s time for a different accounting: What has that catastrophic spill cost our society? What price do we pay for our dependence on oil? How do we measure these things?

Costs of Business

When I first began receiving Amoco’s annual reports, they featured photos that celebrated robust industrial capabilities, like multicolored sunsets behind fields of horsehead oil pumps in Texas. These days, there's still some of that, but the reports tend to have more shots of solar panels, white windmills, and smiling school children (our future). Someone looking at the annual review the company sent me in 2001, for instance, might have been fooled by the photos of lush, palm-heavy landscapes in Indonesia, California, and Trinidad into thinking that it was a mailing from Conservation International.

Such changes in public relations were born of tragedy. Back in 1989, not three months before my summer business class, the Exxon Valdez collided with the Bligh reef in Alaska's Prince William Sound, breaching its hull. Even according to conservative estimates, it spilled more than 10 million gallons of oil and contaminated more than 1,200 miles of ecologically sensitive coastline. For years afterwards, we saw Exxon deal with the fallout of the catastrophe.

However many thousands of boats and booms the company deployed, it only managed to recover about 8% of the oil released. The rest evaporated, coated beaches, or sank to the bottom of the sea. The Exxon Valdez Oil Spill Trustee Council estimates that 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs were killed by the spill. Two decades later, some 16,000 gallons of leftover oil still poison wildlife in the Prince William Sound.

The cost to the planet was steep. The cost to Exxon could have been severe as well. While the company claims that it spent $2.1 billion on its clean-up efforts, it might have had to pay many times that in fines and lawsuit settlements. The government initially threatened $5 billion in criminal penalties, and in 1994 a federal jury ordered the company to pay $5.2 billion in punitive damages to Alaskans who had filed a class-action lawsuit. For a time, things at Exxon looked grim.

Although these were the worries of a rival corporation, Amoco investors did get a taste of what Exxon was experiencing. In 1990, after a dozen years of litigation, a federal judge in Chicago ordered my company to pay $132 million in damages to the French government and other parties.  They had all been harmed 12 years earlier when the Amoco Cadiz ran aground off the coast of Brittany, releasing 68 million gallons of oil. At the time, it was the largest tanker spill ever. It killed millions of sea urchins and mollusks, thousands of tons of oysters, and almost 20,000 birds.

In terms of the overall business, however, the judgment was only a blip on Amoco's radar screen. In the end, Exxon never made any $10 billion payout for its disaster either. The first Bush administration allowed the company to plead guilty to a small number of charges and settled for penalties and fines of around $1 billion. The judge who ultimately approved the settlement had earlier worried that the amount was too low: "I'm afraid these fines send the wrong message," he said, "and suggest that spills are a cost of business that can be absorbed."

It was a prescient concern, especially given the resolution of the class-action suit. In that arena, Exxon's lawyers proved patient and skilled. They held up the case in court for years until, in 2008, nearly two decades after the spill, the Supreme Court ruled that damages paid by the company would be limited to an exceptionally absorbable $507.5 million.

Emerging Unscathed

In the months during which the well under BP's Deepwater Horizon freely spewed crude into the Gulf of Mexico, it released 4.9 million barrels of oil, or 205.8 million gallons, according to a government panel tasked with measuring the spill. Depending on what estimates you use for the earlier disaster, this amounts to roughly 20 times as much oil as the Exxon Valdez released. In negotiations with the Obama administration, BP agreed to put $20 billion into a fund for cleanup. It has also indicated that it will pay "all legitimate claims" related to the disaster.

Despite such vows, how much of the final cost BP will actually end up paying is unclear. Spill-related damages and lost economic activity could amount to tens of billions of dollars more than what BP is currently setting aside. An Oxford Economics study predicts that costs to the tourism industry alone could exceed $22 billion. Damage to the natural environment, much of it potentially unseen, is almost impossible to quantify.

In the case of the Valdez spill, according to the Associated Press, "the state priced each seagull at $167, eagles at $22,000, harbor seals at $700, and killer whales at $300,000." Such an effort could be replicated for the Gulf. Yet a price tag of $167 per seagull seems tragically inadequate as a means of accounting for a destroyed population of birds, and it doesn’t begin to account for species that may seem less significant to us, but could be crucial to the ecosystem.

Now-deposed BP executive Tony Hayward repeatedly vowed to Gulf residents that the company would "make this right." Likewise, in 1989, after the Valdez ran aground, Don Cornett, Exxon's top official in Alaska, told locals dependent on the ruined fishing industry, "We will do whatever it takes to keep you whole. We do business straight." Of course, that was before Exxon went on to pursue years of dogged litigation to limit its liability.

Once the public furor dies down, as already seems to be happening, BP will have financial incentive to do the same. Though the price of my stock took a hit, plummeting from around $60 per share in early April -- before anyone had heard of the Deepwater Horizon -- to a low of $27 per share in late June, it has already rallied to above $40 as of this writing. Some analysts are betting that BP, like Exxon, will contain the cost of its spill, and then continue about its business in much the same manner it did before. As analyst Antonia Juhasz argues with regard to the Valdez disaster, "Exxon emerged virtually unscathed from the incident and is, today, the most profitable corporation the world has ever known."

What We Do Not Pay at the Pump

Aspects of this situation are reminiscent of the aftermath of another recent “spill.” They recall the way in which bailout banks like Goldman Sachs and JPMorgan Chase relied on billions of dollars in public funding to stay afloat after causing a global economic near-collapse, then turned around the next year to report massive profits and once again award exorbitant bonuses to their well-heeled employees. In each case, there is something deeply unsatisfying about how the market handles the destructive behavior of powerful economic actors.

It is not a new idea to suggest that the true costs inherent in many economic pursuits have been unfairly socialized. Nor does this notion apply only in moments of crisis. Economists give the name "externalities" to costs associated with a business that are not reflected on the balance sheet of that enterprise or in the prices of its products, but rather are borne by society at large. For example, if a factory can dump its waste in a local river and is never fined, it has successfully externalized the cost of waste disposal, which the public pays for in the form of polluted water and its consequences.

Oil has many externalities, and the BP disaster has been only the most recent trigger -- "the reminder we didn't need," as Carter Dougherty at BNet put it -- for refreshed awareness that the gas we buy is far more expensive to our country than what any of us pay at the pump.

In August 1987, the New York Times published an editorial with the bold title, "The Real Cost of Gas: $5 a Gallon." Given that, at the time, you could commonly fill up for 99 cents per gallon, and that even the energy crises of the 1970s did not push gas prices above $1.50 per gallon, $5-a-gallon gas was pretty much unimaginable. Yet the Times editorial stated that, "in light of the administration's willingness to risk lives and dollars in the defense of oil from the Persian Gulf… the real cost of oil should include the cost of the military forces protecting supplies." It argued for an energy policy that accounted for Pentagon expenditures.

Two Gulf wars later, an array of reports from both liberal and conservative sources suggest that $5 per gallon is anything but an outlandish estimate for the true cost of gas. It could, in fact, be far too low.

Taking military spending into account would only be a start toward reckoning with what we really pay for oil. But since the military takes up a massive part of our national budget, it would be a good start.

Anita Dancs, an economist with the Center for Popular Economics, notes that "energy security, according to national security documents, is a vital national interest and has been incorporated into military objectives and strategies for more than half a century." After breaking down the overall military budget and evaluating specific missions, she concludes that "we will pay $90 billion this year to secure oil. If spending on the Iraq War is included, the total rises to $166 billion." That would already add 56 cents to every gallon of gas we buy.

The late Milton Copulos was a veteran of the Heritage Foundation, an advisor to both President Ronald Reagan’s White House and the CIA, as well as the head of the right-wing National Defense Council Foundation. He was particularly concerned with dependence on foreign oil, and he highlighted how oil imports were both an economic boon to unsavory governments abroad and a missed opportunity for domestic investment. In 2006, Copulos argued that, if you add to oil-related defense spending such factors as the economic impact of periodic oil supply disruptions and the opportunity costs of money spent on oil imports that might have been used elsewhere in the economy, the "hidden" costs of the U.S. dependence on petroleum would total up to $825 billion per year.

"To put the figure in further perspective," he wrote, "it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil." At today's rates, that would hike the price at the pump to approximately $11 per gallon, or more than $250 to fill the tank of a typical SUV.

Gushing Subsidies

Military spending is just one type of public subsidy that benefits the oil industry and keeps the price at gas stations artificially low. When I made my adolescent wager on Amoco, I was not aware that the company also profited from massive tax breaks and other non-military forms of support. Yet these go a long way toward making the enterprise a safe bet for investors. Copulos factored some of them into his $11 per gallon calculation; others would drive the price still higher.

In early July, The New York Times reported: "With federal officials now considering a new tax on petroleum production to pay for [the BP oil spill] cleanup, the industry is fighting the measure… But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process."  Senator Robert Menendez (D-NJ) added, “The flow of revenues to oil companies is like the gusher at the bottom of the Gulf of Mexico: heavy and constant. There is no reason for these corporations to shortchange the American taxpayer.”

The Times story notes that BP was, for instance, able to write off 70% of what it was paying in rent for the Deepwater Horizon rig that caught fire, "a deduction of more than $225,000 a day since the lease began." Amazingly, BP is also claiming a $9.9 billion tax credit for its response to its oil spill in the Gulf of Mexico.

Not only does our government allow energy companies to avoid taxes in myriad ways, the variety of public supports for the oil industry outside the tax code are almost too numerous to list. A 1995 report by the Union of Concerned Scientists mentioned several, including these: the government invests in substantial energy research that directly benefits the oil industry; it spends millions to maintain a Strategic Petroleum Reserve, designed to help stabilize the oil supply; and it maintains a massive highway system that facilitates gas-intensive auto travel, only part of which is paid for by taxes on motorists.

Then, of course, there is the environmental price we pay, most notably in the form of global warming. As Ezra Klein wrote recently in Newsweek, some experts argue that carbon emissions from cars could be offset at the cost of about 65 cents per gallon (money that would presumably be invested in activities like reforestation). Others believe the cost would be much steeper -- perhaps steep enough to turn oil industry profits into losses.

Andrew Simms of the British New Economics Foundation calculated that, if you were to combine BP's exploration, extraction, and production activities with those involved in the sale of its products, you would end up with 1,458 million tons of CO2-equivalent entering the atmosphere per year. Pricing the cost of carbon emissions at $35 per ton, he puts the bill for climate-change damages at $51 billion. Since BP reported a mere $19 billion in profits in 2006, the year Simms was reviewing, he argues that it would have been "$31 billion in the red," or effectively bankrupt, if it had to cover the climate-change bill.

There's more, too. Consider that car exhaust and oil industry pollution mean an increase in smog and asthma, burdening our health-care system. Then count in the damage caused by massive oil spills we seldom hear about in places like Nigeria, Ecuador, or China, as well as the economic cost of traffic congestion and excess auto accidents made possible by subsidized car travel (costs which the willfully contrarian Freakonomics blog contends may be even more expensive than global warming). The final tally is staggering. High-end estimates of the true costs of the gas we use come to over $15 per gallon. Taxpayers subsidize significant parts of this sum without even knowing it.

That Which Makes Life Worthwhile

To the extent that energy corporations are made to spend more to do business in the future -- forced, for example, to pay for mandatory safety measures, pricier insurance policies, or taxes from which they were previously exempt -- some of the costs of oil could be "internalized." If enough costs were accounted for, some companies, no longer confident that their efforts would be profitable, might begin to reconsider exploiting harder-to-extract reserves of fossil fuels. A recent article in the British Guardian offered this scenario: "If the billions of dollars of annual subsidies and the many tax breaks the industry gets were withdrawn, and the cost of protecting oil companies in developing countries were added, then most of the world's oil would almost certainly be left in the ground."

Unfortunately, this is surely an overstatement. If the exploits of oil companies were made more costly, these companies would simply raise their prices and pass along the costs to consumers. And we would pay them because we are unwilling to give up the speed and convenience of driving, or the luxury of airline travel. We would pay them because we are unwilling to reduce our consumption of foods shipped to our grocery stores from far away, or diminish our energy consumption in many other ways. We would pay them in order to maintain at least a facsimile of our previous lives.

Or would we?

While it is too much to say that "most of the world's oil" would be abandoned, some might be. In 2008, when gas prices soared above $4 per gallon, Americans did behave differently. As the New York Times reported, we drove 10 billion fewer miles per month than the year before; surprising numbers of SUV owners traded in their vehicles for smaller, more efficient cars; and daily oil consumption was lowered by 900,000 barrels. Investors began to reconsider how "realistic" the costs of developing alternative energies might be and to fund them more seriously. In other words, Americans responded to the market.

This was a hopeful sign. At the same time, reacting to the market's cues will not be enough to sort out our relationship to oil and the oil business. We must also reckon with the market's limits. Appreciating the full magnitude of the Deepwater Horizon crisis requires us to recognize that the market is inherently unable to account for many of the things we hold most precious. Robert F. Kennedy pointed to this problem in one of his most powerful speeches, explaining that the gross national product measures everything “except that which makes life worthwhile."

Some things cannot be -- or should not be -- left to business spreadsheets. Calculating the cost of a destroyed ecosystem in the Gulf of Mexico or along the coast of Alaska means putting a price tag on things that are not meant to be priced. If you accept that a harbor seal's life is indeed worth $700, and a killer whale's $300,000, pretty soon you must accept that your own life has a price tag on it as well.

Yet taking the limits of economic calculus seriously has implications. It means that we cannot trust the market to solve its own problems -- to self-regulate and self-correct. It means that we need democratic action to place controls on corporate behavior. It means that some things must be considered not merely expensive but sacred, and defended against forces blind to their true value.

Those who believe that the price of my BP stock will recover in the next year might be wrong. Even if the stock bottoms out, however, that won’t restore a shattered Gulf, nor will it change a system that prizes easy consumption and deferred responsibility. We can only correct for the catastrophe oil has wrought by living according to a different measure.

Mark Engler is a senior analyst with Foreign Policy In Focus, a TomDispatch regular, and the author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books). He can be reached via the website Democracy Uprising. Research assistance provided by Tim LaRocco and Arthur Phillips. To listen to a TomCast audio interview with Engler click here or, to download it to your iPod, here.

Airless Maglev High-Speed Train

By Andrew Nusca

Aug. 9, 2010

High-speed rail just got a whole lot faster.

China is reportedly developing a high-speed train that will travel at 1,000 kilometers per hour, or approx. 621 miles per hour, through Maglev lines in airless tubes underground.

Researchers at the National Power Traction Laboratory of Southwest Jiaotong University reportedly toldBeijing-based Legal Evening News that they were working on a prototype “vactrain” with an average speed of 500 to 600 kilometers per hour (approx. 311 to 373 miles per hour.)

The researchers say the technology could be in use within a decade. In the meantime, a smaller model train may be introduced in two or three years, they said.

The technology at the heart of the train is Maglev, short for magnetic levitation, technology. A concept that’s been around for more than 100 years, Maglev tech entails the suspension of a train via powerful magnets to remove the friction present at the rails of conventional trains.

The catch with maglev technology is that there’s still friction from the air rushing past the train as it hurtles down the tracks. To date, the fastest Maglev train managed about 361 miles per hour — not much faster than a conventional high-speed train.

But an airless tube — a vacuum — would remove that air drag, allowing for impressive speeds. (The trains themselves will contain pressurized air, just like an airplane.) A cheaper alternative to removing the air completely is to depressurize it, the researchers say.

Inventor and ET3 CEO Daryl Oster holds the U.S. patent for Evacuated Tube Transport, or ETT, technology. As you might expect, Oster has reportedly been working with Chinese researchers Shen Zhiyun, Zhang Yaoping and Wang Jiasu at the university on the concept.

The researchers say the train is cost-competitive with a traditional high-speed train because it has a smaller tunnel and requires less boring.

Here’s a rather rosy video about an existing maglev system in China, via the eagle-eyed folks at AltTransport:

The best use of such train technology? Transoceanic travel. One proposal by Channel Tunnel pioneer Frank Davidson and engineer Yoshihiro Kyonati entailed floating a tube above the ocean floor, anchored with cables.

Call it the Concorde 2.0: live in New York, work in London. Or travel from New York to Los Angeles in 45 minutes, according to Oster’s calculations.

A 2007 Worcester Polytechnic Institute report (.pdf) elaborates:

The Vactrain outweighs the current modes of transport in several ways, making it a ground-breaking idea. It has a clear edge over present airplanes, trains and automobiles as it causes no pollution and does not operate with gas or petroleum. Thus, while the present transportation would soon be in a sticky situation with the energy crises which the world is facing with dwindling resources of petroleum and gas, the Vactrain would emerge victorious. Moreover, the Vactrain is unaffected by any extremes in weather conditions. It has low maintenance costs as it employs the high-lifetime maglev technology, which also minimized wear due to friction. Additionally, it has low operation costs and 25% energy consumption when compared to aircrafts. Due to all these factors, the Vactrain triumphs over the current means not just in the future but even in present situations making it highly superior.

The Chinese aren’t the only ones working on a vactrain, by the way: according to the report, both the U.S. and Switzerland are developing similar technology.

Illustrations: ET3