Wednesday, April 03, 2024

Of Life and Lithium: Why the “White Gold” Rush Won’t Save The Planet


 
 MARCH 29, 2024
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Image by omid roshan.

With his perfect tan and slicked-back hair, California Governor Gavin Newsom stood at a podium at Sacramento’s Cal Expo in late September 2020 and announced an executive order requiring all new passenger vehicles sold in the state to be zero-emissions by 2035. With the global Covid pandemic then at its height, Newsom was struggling to inject a bit of hope into the future, emphasizing that his order would prove a crucial step in the fight against climate change while serving as a major boon to the state’s economy. Later approved by the California Air Resources Board, his order is now being reviewed by the Environmental Protection Agency. For his part, President Biden has moved to tighten regulations on tailpipe exhaust, a not-so-subtle way of pushing car manufacturers to go electric.

As Newsom said shortly before signing his order on the hood of a bright red electric Ford Mustang Mach-E:

“Our cars shouldn’t make wildfires worse and create more days filled with smoky air. Cars shouldn’t melt glaciers or raise sea levels threatening our cherished beaches and coastlines… This is the next big global industry, and California wants to dominate it. And that’s in detoxifying and decarbonizing our transportation fleets… And so today, California is making a big, bold move in that direction.”

One stereotype about Californians is true: we do drive a lot, which also means we buy a lot of new cars. California is, in fact, the top seller of new vehicles in the U.S., with more than 1.78 million cars and trucks rolling off its lots in 2023. In total, significantly more than 14 million vehicles are registered in the state, nearly the same number as in Florida and Texas combined. So Newsom is undoubtedly right that ridding our roads of combustion engines will significantly reduce the state’s climate toll. After all, California’s transportation sector alone is responsible for more than 40% of its greenhouse gas emissions.

On the surface, Newsom’s executive order appears all too necessary, indeed vital, if the use of fossil fuels is to one day be eliminated and climate change mitigated. California is also home to more than 50 electric vehicle manufacturers, and car companies that don’t get on board will soon find themselves “on the wrong side of history,” as Newsom warned. “And they’ll have to recover economically, not just recover in terms of being able to look their kids and grandkids in the eyes.”

Underpinning the governor’s ambitious goal of an all-electric future is another reality. While we may change the kinds of cars we drive, we won’t change our lifestyles to fit a climate-challenged future. Millions upon millions of new zero-emission vehicles will be required and to create them, we’ll need staggering amounts of resources that are still lodged below the earth’s crust. On average, a single battery in a small electric car today contains eight kilograms (17.5 pounds) of lithium, or “white gold.” To put that in perspective, if Californians continue to purchase vehicles at the same pace as in 2023, the amount of lithium required will exceed 113 million kilograms (249 million pounds) annually going forward.

That’s a mountain of lithium and an awful lot of mining will need to be done to make the governor’s plan a reality. And mind you, those figures are lowball estimates — a Tesla Model S battery needs 62.6 kilograms of lithium, for instance — and they don’t address the additional mining electric vehicles will demand to produce considerable amounts of cobalt (14 kilograms), manganese (20 kilograms), and copper (upwards of 80 kilograms) per car. Newsom is correct: ridding California’s sprawling freeways of gas-guzzlers is a necessity and will also be highly profitable, especially for the extraction industry. Nevertheless, it will come with significant cultural and environmental costs that must be accounted for.

A Lithium Bonanza

It’s a scorching hot afternoon in the middle of August and I’m heading west on State Route 293 through Humboldt County in northern Nevada. I’m just a few miles south of where the Thacker Pass lithium mine operation has broken ground. The terrain, managed by the Bureau of Land Management (BLM), part of the Department of the Interior, is sparse and vast. The sky is cloudless, the soil bone-dry. I pass a coyote scampering through the sagebrush. In the distance, the Montana Mountains rise above the flats, casting a long shadow. While dramatically serene, this landscape, located in the middle of the McDermitt Caldera, along with its almost boundless lithium deposits, holds a hauntingly shameful history.

On September 12, 1865, American soldiers carried out a massacre of the Numu (Northern Paiute) near Thacker Pass. Natives call the area “Peehee mu’huh,” or “rotten moon,” to honor the victims. As the story goes, Indigenous Numu were being hunted by the 1st Nevada Cavalry and decided to hide out near Thacker Pass. Dozens of them, including women and children, were eventually found and slaughtered.

An article in the September 30, 1865 edition of The Owyhee Avalanche detailed the carnage. “A charge was ordered and each officer and man went for scalps, and fought the scattering devils over several miles of ground for three hours, in which time all were killed that could be found.” In all, 31 bodies were located, but “more must have been kill[ed] and died from their wounds, as a strict search was not made and the extent of the battlefield so great.”

Today, descendants of the massacre victims are still fighting to designate Thacker Pass and the surrounding area as a memorial site in the National Register of Historic Places. By doing so, they hope the bulldozers will be forced to shut off their engines and lithium mining will cease. In 2021, federal judge Miranda Du rejected their plea, noting that the evidence they presented was “too speculative” to stop the company, Lithium Americas, from prospecting there. In the years since then, the protesters have encountered significant setbacks but have refused to quit.

“All the people here on the reservation were not consulted when this mine was approved,” says Dorece Sam, a descendant of Ox Sam, one of only three survivors of the bloody 1865 massacre at Thacker Pass. Along with six others, he’s currently being sued by Lithium Nevada Corp. (a subsidiary of Lithium Americas) for protesting the mine. “Myself as an Ox Sam descendant, it means a lot to me to know and watch… as the grounds become more and more desecrated. It’s hard to see and hard to watch.”

Lithium Americas pitched its plan to the BLM in 2019 and broke ground at Thacker Pass in March 2023. Native tribes and environmental groups have argued in various court proceedings that the BLM rushed its environmental review without properly consulting the tribes in the approval process. The Ninth Circuit Court of Appeals shot down their best-chance lawsuit in July.

In a previous 2023 ruling, a lower court stated that the BLM had indeed violated federal law by approving the mine since Lithium Americas hadn’t demonstrated its rights to the 1,300 acres it would, in the future, bury in waste rock from its mining. Despite that acknowledgment, presiding Judge Du failed to revoke the company’s permits.

“Our hearts are heavy hearing the decision that Judge Du did not revoke the permits for the Thacker Pass Lithium Mine. Indigenous people’s sacred sites should not be at the expense of the climate crisis the U.S. faces. Destroying Peehee Mu’huh is like cultural genocide,” said the People of Red Mountain, Indigenous Land and Culture protectors, following Du’s decision.

The “Right” to Mine

While the courts ruled in favor of the Bureau of Land Management’s audit, few are disputing that the Thacker project will have a deleterious impact on the region. For one thing, when the mine is up and running, it will need an exorbitant amount of groundwater for its operations. An estimated 1.7 billion gallons sucked from the Quinn River Valley, an already overburdened aquifer, will have to be pumped into the mine annually. Opponents of the project also note that chemicals used in the lithium extraction process could leach into groundwater supplies, polluting nearby creeks, home to the already threatened Lahontan cutthroat trout. The Thacker basin is also a vibrant wildlife corridor for pronghorn antelope, mule deer, and home to the single largest sage-grouse population in Nevada.

In total, the Thacker Pass mine, the largest known lithium deposit in this country, could one day eat up more than 17,000 acres of public lands, more than half the size of San Francisco. It’s set to be the largest lithium mine in the country, churning out as many as 40,000 metric tons annually, enough to power 800,000 electric vehicles. Inevitably, Thacker will make Lithium Americas’ shareholders very rich, bringing them an estimated nearly $4 billion once all the recoverable lithium is extracted. However, that projection, from 2021, was based on the price of lithium when it sold for an average of $12,600 per ton. By 2023, a ton of lithium was selling for around $46,000.

Promising that the mine will power its all-electric-vehicle future, General Motors now holds exclusive rights to the lithium the mine will extract and has invested $650 million in it. President Biden’s Department of Energy is also all in, loaning $2.26 billion to Lithium Americas to jump-start the project.

The Thacker Pass lithium mine is but one of many examples of the way once venerable Native lands have been and continue to be exploited. The 1872 Mining Act and the Dawes Act of 1887 have long permitted the federal government to stake claims to tribal lands without their consent.

“The Mining Law allows United States citizens and firms to explore for minerals and establish rights to federal lands without authorization from any government agency. This provision, known as self-initiation or free access, is the cornerstone of the Mining Law,” reads a report on that law by Lawrence University economics professor David Gerard. “If a site contains a deposit that can be profitably marketed, claimants enjoy the ‘right to mine,’ regardless of any alternative use, potential use, or non-use value of the land.”

The Dawes Act went even further, allowing the federal government to divide tribal lands into smaller parcels that could be sold off to individual buyers, part of a sinister scheme to delegitimize Native sovereignty on lands that had been stolen from them in the first place.

“It served the larger purpose because the larger purpose was twofold: to make us more like white people or destroy us and get large amounts of land out of Native control and into the hands of individual, non-Native citizens,” says Kelli Mosteller, director of the Citizen Potawatomi Nation Cultural Heritage Center. “The Dawes Act solidified once again the distrust that has settled in about dealing with the government. Every time the government comes in and asks for something, there is always that ulterior motive.”

The mine at Thacker Pass, which will end up slicing a gash in the earth a mile wide and 2.3 miles long, is just the latest example of an ugly legacy of ravaging former Native lands for profit.

“Are we still in a situation where the rich get rich and the tribes get poorer because they don’t get a dime off of the mining that happens within their original lands? That’s hard to swallow,” says Arlan Melendez, chair of the Reno-Sparks Indian Colony.

Going Back to California

A significant underground lithium deposit has also been discovered near the south end of  California’s dilapidated and toxic Salton Sea, once a playground for Hollywood’s elite. While it’s not nearly as large as the one at Thacker Pass, estimates put the extractable deposits of lithium at upwards of 18 million metric tons, enough to eventually fill 380 million electric vehicle batteries.

Of course, digging out all that smoldering “white gold” will come at a cost there, too, not just economically but environmentally. What those effects will be, exactly, has yet to be revealed. Even so, Governor Newsom made his way to the Imperial Valley and the Salton Sea, a region he hopes might be transformed into a hub for electric battery production and that he’s smugly branded “Lithium Valley.”

“California is poised to become the world’s largest source of batteries, and it couldn’t come at a more crucial moment in our efforts to move away from fossil fuels,” said Newsom. “The future happens here first — and Lithium Valley is fast-tracking the world’s clean energy future.”

How clean that future will be remains to be seen. Here’s one thing to consider, though: no matter how this all turns out, Newsom’s electrified vision of the future doesn’t mean fewer vehicles on the road or a reduction in America’s energy consumption. The California governor isn’t about to challenge the tenets of global capitalism that, with a significant helping hand from global warming, are already driving us toward the brink of ecological collapse. In all too many ways, at least as now planned, more mining, even of lithium, will mean not a new world but an all-too-grim continuation of the status quo. The key difference is that this time around, it will come with a “green” stamp of approval.

In other words, despite the horrors of climate change, the present approach to fixing it, whether by mining for lithium in the Salton Sea or dredging up the spirits of Thacker Pass, is deeply problematic. As long as every single thing on this planet remains a commodity to be exploited for profit, whether labor or natural resources, humanity will remain in crisis. As we proceed down this violent and bumpy road ahead, we may (or may not) save our imperiled climate, but one thing is certain: our little planet will be left in ruins while the wealthy speed off in their Teslas.

This piece first appeared on TomDispatch.

JOSHUA FRANK is the managing editor of CounterPunch. He is the author of the new book, Atomic Days: The Untold Story of the Most Toxic Place in America, published by Haymarket Books. He can be reached at joshua@counterpunch.org. You can troll him on Twitter @joshua__frank.

Profits Are Still Rising, Why Is the Fed Worried About Wage Growth?


 
 APRIL 1, 2024

I was more than a bit surprised to see the profit data this morning. I really did believe that the profit surge during the pandemic was a one-off, associated with supply-chain issues.

We can argue about how much of this increase was a predictable story, where profits rise due to shortages, and how much was about companies exploiting market power to jack up prices, but the fact that profit shares increased is not disputable. In any case, it was reasonable to expect that profits would return to their pre-pandemic shares after supply chains returned to normal.

That doesn’t look like what is happening, as shown below.

Source: BEA and author’s calculations, see text.

 

The profit share of corporate income rose to 26.8 percent in the fourth quarter from 26.3 percent in the third quarter. That is down only 0.5 percentage points from its pandemic peak of 27.3 percent in the second quarter of 2021 and well above the 24.3 percent average for 2019.[1]

This rise in profit shares really should have the Fed rethinking its inflation-fighting strategy. It is certainly true that the 6.0 percent rate of wage growth at the end of 2021 and start of 2022 was inconsistent with the Fed’s 2.0 percent inflation target. However, the current rate of roughly 4.0 percent is obviously consistent with the Fed’s target, if it is allowing companies to increase their profit share. This implies that we should actually want to see a somewhat more rapid pace of wage growth, unless we think profit shares need to be increasing indefinitely.

There are a couple of important qualifications here. First, we saw extraordinary productivity growth in 2023. Clearly corporations were the main beneficiaries of this growth. If this uptick was an aberration and we revert to something closer to the pre-pandemic growth rate, then profit shares may not continue to rise with a 4.0 percent pace of wage growth and could even edge back somewhat.

The other big qualification is that there is a large and unusual discrepancy between GDP measured on the income side and GDP measured on the output side. In principle these sums should be identical, but in a $28 trillion economy, they never come out exactly the same.

In recent decades, the income side has generally been about 0.5 percentage points higher than the output side. In the fourth quarter, the income side was 2.0 percentage points lower. We usually assume that the true figure lies somewhere between the two measures.

This would imply that the true sum of wages and profits is 1.0 to 2.0 percentage points higher than what is now reported. If that gap ends up being disproportionately wages or profits it could change the picture somewhat, but even if the full 2.0 percentage points all ended up being wage income it would not change the fact that the profit share is still far above its pre-pandemic level.

The upshot is that it really is time for the Fed to declare “Mission Accomplished” and take its foot off the brake. If profit shares are rising, there is no reason for it to be trying to slow wage growth.

Notes.

[1] These figures take Line 8 (net operating surplus) from NIPA Table 1.14, minus Line 11 (Federal Reserve Bank profits) from Table 6.16D divided by Line 8 plus Line 4 (labor compensation) from Table 1.14.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

 

Is There an Answer to Inflation?





Inflation is a scourge on those cursed with living under the capitalist order. It especially punishes those least able to weather the pain of constantly falling behind rising prices and expanding debt.

Inflation harms nearly all working people whose income growth trails the rise in prices, including those with union contracts that bridge periods of rapid price increases.

Small businesses suffer because of their inability to match supplier increases with price hikes of their own. Also, they are more likely to be locked into a cycle of incurring greater and greater debt and ever-higher interest rates.

The pain of inflation is intensified by the customary antidote prescribed by mainstream economists: interest-rate hikes designed to slow economic activity and force pricing restraint. While some decry the harshness of government anti-inflation policies, they can offer no other solution under capitalism. Erdoğan, President of Türkiye, recently experimented with defying anti-inflation orthodoxy with disastrous results.

Higher interest rates add higher interest charges that banks attach to already bloated prices through credit-card usage, mortgages, student debt, and other private borrowing.

In the post-war period, we have known one period of extended, intractable inflation, and that came after a long period of government military-related spending and an unanticipated economic shock — the oil crisis — in the 1970s. As I wrote in 2021:

The enormous costs of the US’s long, costly Asian war produced great debt and pressure on the gold-backed US dollar. The imperialist alliance with Israel brought a disruptive, unprecedented boycott on the part of the oil-producing nations resisting Israel’s occupation of Arab territories. Intense competition between the dominant US economy and the resurgent Euro-Asian economies was shrinking profit margins.

I thought there were common features with that earlier period and the emergence of high inflation in 2021:

The pandemic, like the oil crisis, has shocked the global economy. The US economy and subordinate economies have been running on the fumes of fiat money and central bank stimulation, exposing remedies that are losing their effectiveness. Despite the lack of even phantom existential threats, the US has conjured costly foreign adventures and an extraordinarily wasteful and large military budget and “security” spending, crowding out social spending and amplifying national indebtedness. Commodity scarcity generates rising prices. And both slow growth and inflation are now reappearing and promise to continue.

This was not a popular view in 2021.

And it is not popular today, though wars in Ukraine and Gaza are adding even more limitless demand for weapons and more inflationary pressure.

In 2021, economists, government officials, and pundits scoffed at inflation, assuring us that inflation would subside as soon as income support from the pandemic was exhausted and damaged and broken supply chains were repaired. In sharp contrast, I pointed out:

Despite the admonitions of the central bankers and financial gurus, inflation seldom self-corrects. It rarely runs its course. Instead, inflation tends to gather momentum because all the economic actors attempt to catch up and get ahead of it…  And it is important to recognize that this profit-taking has and will continue to fuel inflation. Once again, the commanding heights of the US economy– the monopoly corporations– are using the excuse of catching-up to profit-up.

With Wall Street and its minions still clinging to the illusion that inflation was going away and that there was no need for the braking effect of high interest rates, the January and February inflation reports came as a shock. The media likes to jump from one measure of inflation to another to promote the best perception of inflationary trends. Thus, from report to report, they may feature the CPI or the core CPI, or the PCE, computed on a month-to-month or annualized basis, depending on which shows the most optimistic results. But manipulation and wishful thinking cannot hide the bare facts: December to January month-to-month CPI rose .6% and January to February month-to-month CPI by .4%, alarmingly high increases after three straight months of month-to-month decline. Inflation is still with us.

Conformation for the relationship between higher prices and profit-taking comes from an unexpected source. Conservative economist Greg Ip writes of the Big Profits, High Prices: There Is a Link: “Since the end of 2019, prices are up 17%, outpacing both labor and nonlabor costs. The result: Profits grew by 41%. If profits had grown at the same, slower rate as costs, that would have translated to a cumulative price increase of only 12.5%, and an average annual inflation rate roughly 1 percentage point lower.”

So, the monopoly corporations effectively robbed the consumer and small businesses of 1% more of the price of goods and services in each of the last four years, on top of their usual rate of exploitation. During this period, profits reached a rate unseen in the twenty-first century.

In this election year, is anyone in either of the two major parties addressing the pain of inflation and its cause located in the insatiable thirst for profit on the part of monopoly capital? The monopoly corporations impose a unilateral 1% tariff on all goods and services for four years in a row with no outcry from the mainstream press? This is what the pundits mean by “our democracy”?

The Biden administration answers that, despite inflation, we are doing better. The economy is doing fine.

Consider the facts:

● The New York Federal Reserve reports that “serious” credit-card delinquencies have risen from 4.01% to 6.36% in the year through the fourth quarter of 2023, an increase of more than 50% in one year and indicative of “increased financial stress.” For many workers, the credit card is the mechanism used to address income shortfalls, but with interest on credit debt rising from pre-pandemic 14.9% to 21.5%, the average of the last quarter of 2023, credit cards are exacting a harsh toll. Credit-card usage now constitutes a vicious trap and not an answer.

● Mortgage and auto-loan delinquencies are also on the rise.

● Fox News reports: ”A record-breaking number of Americans are making emergency withdrawals from their 401(k) retirement plans in order to cover a financial hardship amid the ongoing inflation crisis, according to new data from Vanguard Group… Nearly 3.6% of workers participating in employer-sponsored 401(k) plans made a so-called “hardship” withdrawal in 2023, according to Vanguard, which tracks about 5 million accounts. That marks a major increase from the 2.8% rate recorded in 2022 and the pre-pandemic average of about 2%. It marks the highest level since Vanguard began tracking the data in 2004.”

● The Wall Street Journal explains: “Inflation experienced by the poorest fifth of society was 1.6% higher than for the richest fifth from March 2020 to June 2023…”

● Also: “Pandemic savings have run down. The Federal Reserve concluded at the end of last year that ‘excess’ savings accumulated during the pandemic have been run down, and depending on the method used have either run out altogether or are close to it. Low-income consumers spent their excess-cash cushion earlier, according to other studies, which helps explain why they are struggling more with debt.”

● Consumers are pulling back on purchases. January’s revised 1.1% drop in retail sales has alarmed economists. While February’s numbers increased, they fell below consensus predictions.

● Burger chain McDonald’s, a bellwether for middle- and lower-strata discretionary spending, reports more customers are turning to grocery purchases and dining at home to save money.

● In a January 2024 Pew poll, 31% of respondents say that US economic conditions are “poor” and 41% say that they are “only fair.”

These facts present a formidable case that inflation is continuing and doing great harm to US citizens, especially the working class. Sadly, there is no — and likely will be no — political answer to this scourge expressed in the forthcoming elections. To properly address inflation without advocating the painful remedies now in place would require a critical challenge to the economic system that frequently spawns inflation. That system is capitalism and neither mainstream political party will dare make that challenge.

The US working class needs organizations — unions, political parties — that will actually fight against inflation or risk another lost decade of economic stagnation and declining living standards.

  • Image credit: CBC News

  • Greg Godels writes on current events, political economy, and the Communist movement from a Marxist-Leninist perspective. Read other articles by Greg, or visit Greg's website.