Tappan Zee Bridge's Awkward Location Explained

"The Tappan Zee crosses one of the widest points on the Hudson — the bridge is more than three miles long. And if you go just a few miles south, the river gets much narrower...Why did they build the Tappan Zee where they did, rather than building it a few miles south?

"It turns out, the bridge was part of a much larger project: The New York State Thruway, one of the first modern highway systems.  There was an alternate proposal for a bridge at a narrower spot nearby. The proposal was put forward by top engineers at the Port Authority of New York and New Jersey.  But that proposal was killed by New York governor Thomas E. Dewey...

"The Port Authority — the body that proposed putting the bridge further south — had a monopoly over all bridges built in a 25-mile radius around the Statue of Liberty.  If the bridge had been built just a bit south of its current location — that is, if it had been built across a narrower stretch of the river — it would have been in the territory that belonged to the Port Authority.  As a result, the Port Authority — not the State of New York — would have gotten the revenue from tolls on the bridge. And Dewey needed that toll revenue to fund the rest of the Thruway." -- David Kestenbaum, A Big Bridge in the Wrong Place, NPR

Tappan Zee Bridge's Awkward Location Explained

The Port of Paulsboro

EXECUTIVE SUMMARY

In a push to adapt and reposition itself in a global 21^st century economy, the South Jersey Port Corporation and the Gloucester County Improvement Authority are re-outfitting a closed industrial site to create a multimodal port in Southern New Jersey.  This report analyzes existing conditions at the port site and explores how infrastructure improvements contribute to the port’s productive advantage.

Because of contamination at an old oil storage and distribution facility, BP cheaply leased their property to the Borough of Paulsboro as the site to develop a marine port facility.  Benefiting from a strategic location along the Delaware River, the port inherits centuries of accumulated infrastructure surrounding it.  An existing marine channel backbones the site, while Shortline and Class 1 railroads and an interstate highway connect the marine terminal to the American hinterland.

Investments in infrastructure that support freight movement will facilitate port operations and further promote commerce in the region.  Major stimulus begins with remediation of industrial land and the construction of the new marine terminal, but additional improvements enhance the Port of Paulsboro’s connectivity.   Track expansions in Paulsboro and in the region add to the rail network’s reach.  A new Freight as a Good Neighbor access road allows trucks to avoid residential neighborhoods when connecting from the port to the interstate highway.  And the Missing Moves Project seeks to alleviate bottleneck congestion along the regional truck corridor.

With a large tract of land, Paulsboro also offers customizable co-location opportunities that allow for value-added distribution or manufacturing on site.  This becomes especially important since the port is positioned to handle specialty cargo.  Combined with unique multimodal access, this flexibility gives the port a competitive edge in handling and processing heavy steel plates for offshore wind turbines.  Reaping the benefits of these productive advantages, the port expects to create 2,500 jobs, while the offshore wind industry will employ an additional 2,000 workers.  In total, employment multipliers predict the port to support 20,000 direct and indirect jobs.

Other redeveloped brownfield sites at Keystone Industrial Port Complex in Bucks County and the less-than-effective iPort12 distribution center in Carteret further emphasize the requisite formula for developing a new port – it all depends on improving existing freight networks.  Successful brownfield redevelopment projects leverage cheap land with extensive infrastructure networks to create hubs where port functions and value-added industrial services support one another.  Cohabitation provides a productive advantage that attracts new industrial activity and creates jobs.  Following this proven development model, the Port of Paulsboro capitalizes on its inherent advantages as it revives an old industrial hub in South Jersey.

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The Port of Paulsboro

The Drying of Yemen's Agricultural Economy

Shibam, Yemen
Photo: Yemen Profile, BBC

“No famine has ever taken place in the history of the world in a functioning democracy.” 

—  Amartya Sen, Nobel Prize Winning Economist

“[Yemen's] environmental disaster was born in the 1970s when the oil/construction boom exploded in the Persian Gulf, and some two million to three million unskilled Yemeni men left their villages to build Saudi Arabia. “As a result,” said [Abdul Rahman al-Eryani, Yemen’s former minister of water and environment], “the countryside was depopulated of manpower.” Women resorted to cutting trees for fuel and the terraces eroded because of lack of maintenance. That led to widespread erosion of hillsides and the massive silting of the wadis — seasonal riverbeds — whose rich soil used to support three crops a year, including Yemen’s famed coffee. The silting up of the wadis crushed the coffee business and led Yemenis to grow other cash crops that needed less fertile soil. The best was qat, the narcotic leaf to which this country is addicted. But qat requires a lot of water, and that led to overdrafting of groundwater.

“...Qat drank all the water, and the easy oil money seduced the rural manpower into leaving for unskilled jobs. But now that most of the Yemeni workers have been sent home from Saudi Arabia, they are finding a country running out of water, with few jobs, and a broken public school system that teaches more religion than science. As a result, what Yemen needs most — an educated class not tied to an increasingly water-deprived agriculture — it cannot get, not without much better leadership and a new political consensus.”

— Thomas Friedman, NYTimes

The Drying of Yemen's Agricultural Economy

Iranian Presidential Elections

Mahmoud Ahmadinejad (left) and Hooshang Amirahmadi (right)

My graduate school advisor and professor of Urban Economics is running for President in Iran.  A revered political and international development consultant to leaders in Washington and in London, Professor Hooshang Amirahmadi always contended that a Western approach to governance could quickly turn around the fortunes of Iran and speedily increase its development.  Below is the economic platform Professor Amirahmadi presents to Iran.

Of all the issues Iranians confront in deciding their next president, the economy is the most imperative. With a high inflation rate, widespread unemployment, sluggish growth, low productivity, plummeting national currency, plunging industrial production, declining income, widening income gap, and growing poverty, hardly anyone in the country is immune from the dismal state of the economy. This is unfortunate since Iran is actually a wealthy country with vast natural resources, a highly-educated workforce, arable land, diverse climates, access to the strategic waterways, and many other favorable attributes.

The economic problems and the mismatch between Iran’s economic achievements and its rich resources are largely rooted in mismanagement and economic sanctions. These and other underlying causes are removable and thus the economic problems entirely solvable if the upcoming presidential election was to produce the right executive leadership. The next president must understand Iran’s economic predicament and its causes, comprehend the world economy, and be able to put an economic development plan for the nation and implement it using a skillful team of economists and international advisors.

As President of Iran, I will turn Iran’s economic plight around by formulating an economic plan based on three principles: economic productivity, export-led industrialization, and labor-market globalization. I will also immediately remove sanctions and mismanagement by resolving the nuclear dispute, normalizing relations with the West, resolving factional infighting and appointing a highly competent economic and international advisory team. These steps will help in opening the global economy to Iran and in establishing a stable economic policy, thus creating a climate of permanency and certainty for productive investments.

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Iranian Presidential Elections

Economic Growth

The Importance of Broadband Expansion on Economic Growth

In the US, "for every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year...A 7 percentage point boost in national broadband adoption could lead to $662 million in annual healthcare savings, and $6.4 billion in annual mileage savings...[In Michigan] just one percentage point increase in broadband penetration could create or save approximately 12,388 jobs statewide." -- Broadband’s Economic Impact in Michigan, InfrastructureUSA, also see Technology Infrastructure

The Importance of Economic Growth in Indian Politics

In India, if a minister oversees rapid growth within his state, "each extra percentage point of growth raises the chances of [a candidate from that minister's party] winning a seat in the national parliament by 5-6 percentage points." -- The Capitalist Manifesto: How to Get India Moving Again

Economic Growth

Venezuelan President Chavez Pronounced Dead: Initial Knee-Jerk Reaction

While I have not yet done my full due-diligence and fully read up on the situation, here is my initial thoughts on the passing of Venezuelan President Hugo Chavez:

It will be interesting to see how the political situation in Venezuela shakes out.  Already the Vice President booted US Diplomats from the Bolivarian nation.  Might this be a sign of another power grab stranglehold?  Or is it an honest attempt at avoiding foreign tampering?  I remain skeptical and err towards a fight for power.

Venezuelan President Hugo Chavez
Source: Washington Times

Originally Chavez took control via coup and then spent a decade and a half shooting down political opposition.  After his death, there will surely be a mystery as the question of what happens next unravels.  A new set of democratic elections would surely be best, but it is likely that someone else from within the inner circle will try to fill the power vacuum -- someone less charismatic than Chavez who will likely not have the same support of the people that the socialist leader had.  A new power grab will probably lead to unrest and uncertain times in Venezuela.  My guess is that it will take a handful of years and a few bad leaders before the country can right the ship after the past decade plus under Chavez.  Think of Egypt -- it's hard to reestablish political cohesion after strongman politics disappears instantly.  Expect the same in Venezuela, where public support for socialism is polar split, the economy constantly flirts with runaway inflation, and the high-stakes game of oil is too lucrative to ignore.

Venezuelan President Chavez Pronounced Dead: Initial Knee-Jerk Reaction

Wise Colombian Investment

Colombia spearheads the list of second tier emerging markets (also known as CIVITS nations – Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa).  Colombia's strong and steady growth has made it very attractive for some time now.  As an emerging market, the South American nation inherently has structural problems, but its active responsiveness to certain economic hurdles is a solid indicator of the country's ability to sustain positive strides. The World Bank notes “The efficiency and productivity of Colombia's urban system will be a key determinant in the ability of the country to transition from a middle income to a higher-income economy.”  While success is always is the details, the example presented below shows how Colombia is laying the foundation for ambitious and much needed urban planning projects, mixing in the physical, the social and the institutional needs of the country.

Colombian coal mines and port locations
Note: Distances may not be large,
but transportation is hindered by obstructive
mountains and poor rail/road infrastructure 
Source: Inter-American Coal

Problem: “In Colombia, physical distances are exacerbated by economic distances. Costs for freight transport on domestic roads from Bogotá to the Atlantic are about $94 per ton, while international maritime transport to the United States is about $75 per ton. Moving products from Bogotá to Barranquilla costs $88 per ton, and Bogotá to Buenaventura $54 per ton. Shipping goods from Cartagena or Buenaventura to Rotterdam or Shanghai is about $60 per ton—that is, less than the transport costs from Bogotá to the ports for the Atlantic and slightly higher for the Pacific. Logistic costs are also high…Lowering transport costs will catalyze growth and improve overall efficiency across the system of cities in Colombia. The Colombia Urbanization Review identified two possible ways to reduce costs: improvements to intermodality and investments in specific corridors that will face high congestion as soon as 2020.” – Planning, Connecting & Financing Cities Now: Priorities for City Leaders

Project Description: The objective of the program is to
support the strengthening of the Government of
Colombia’s policy framework on productive and
sustainable cities.

Colombia Planned Highway  Investment
(beyond scope of World Bank Loan)
Source: Tunnel Talk

Response: A $150M World Bank loan "to support the strengthening of the Government of Colombia's policy framework on productive and sustainable cities."  The World Bank's “Programmatic Productive and Sustainable Cities Development Policy Loan (DPL) Program will support a comprehensive set of policy and regulatory reforms that aim to: (i) improve access to basic water and sanitation and urban transport services, and mitigate vulnerability to natural disasters for the urban poor; (ii) promote the provision of affordable and safe low-income housing solutions; (iii) strengthen the ability of sub-national entities to coordinate and finance the structuring and implementation of regional and metropolitan development initiatives; and (iv) improve the productivity of the system of cities through improved connectivity within the network of cities and between cities and ports to external markets. These reforms are vital to support the system of cities in Colombia, in which cities are able to grow to their highest potential, and be engines for sustainable growth in the country.” – Productive and Sustainable Cities Development Policy Loan

For more details, see Tunnel Talk's article on Colombia Highway RFPs, the World Bank's Program Information Document, Colombia Urbanization Review or Planning, Connecting & Financing Cities Now: Priorities for City Leaders (pg 92).

Wise Colombian Investment

Technology Infrastructure

“A 2009 World Bank study found that raising mobile-phone penetration in a developing country by ten percentage points increased GDP growth by 0.8% a year.” – The Economist, Telecommunications in Brazil,8/11/2012

Every publication about technology’s effect on the developing world always reminds me of my first exposure living in Latin America.  While living on an island off the shore of Costa Rica, I spent time with a subsistence fisherman who used a cellphone to work his way out of poverty.  Outfitted with the technology of a cellphone, the fisherman could check market prices of fish in the capital city and break the tradition of get ripped off by wholesalers at the local pier.

World Bank, 2010

The spread of cheap technology is extremely encouraging in how it revolutionizes economic development.  While new technologies and gadgets have changed Western economies, their affects are strongly felt in low and middle income countries even more so.  In a 2010 study, the World Bank found that for every 10 percent increase in broadband access, developing economies accelerated growth by 1.38 percent (for comparison, total US growth hovers at 1.7 percent).

Capitalizing on this trend, Campus Tecnológico in Guatemala created an urban enclave of telecommunications facilitated businesses and start-ups.  As part of a three phased public/private development collaboration, Campus Tech aims to change the Central American technology industry by investing in young entrepreneurs and providing them with broadband infrastructure and local database centers.  Campus Tech has already facilitated 28 start-ups and has subscription backlogs for the first phase of its wired office-complex.  “In Guatemala,” reads a NYTimes article on Campus Tech, “many entrepreneurs have been focusing on the union of technology and social policy, creating things like affordable water filters, or a program for distributing health information to cellphones.”  

Technology infrastructure and their facilitators like Campus Tech truly have the power to drastically stimulate economies and alter life in developing countries.

Technology Infrastructure

The Ambassador

This political documentary tops my list of films to watch.  Danish director Mads Brügger "attempts an even more complex and daring stunt by purchasing a Liberian diplomatic title and infiltrating one of the most dangerous places on Earth -- the Central African Republic (CAR) -- as an ersatz Ambassador. His purpose? To expose the illegal blood diamond trade -- and the corrupt world of CAR officials, bogus businessmen and shady European and Asian diplomats that it benefits." -- The Huffington Post

The Ambassador

What the US Needs: A Return Cold War America

Neil Armstrong, 1969

Talking about the Olympics, a friend noted the US was beating China in the medal count. "In China they give athletes military positions so they can officially hold jobs while still competing as amateurs.  But we still beat ‘em" This conversation reminded me of Cold War rhetoric and how times have changed. In the Cold War, Americans never complained about how the USSR gave special treatment to their citizens. When the Soviets sent a man to space, the US made it a national priority to send a man to the moon. We used all our resources to ensure that the United States of America stayed the most competitive power on the planet.

Now, with China climbing the rankings and growing into the world's second largest economy, the US confronts this opponent with a passive mindset.  Outcries call for China to stop manipulating their currency and complaints rain about their below market value, state-backed loans.  The US “diplomatically” pleads with China to stop the practices that led the Red State to a golden age.  Responses to China’s growing power are passive at best.  What ever happened to America’s Cold War mentality of taking all steps necessary to out-compete rivals?

US (blue) vs China (red)

Confronted by China's cheap currency, unfounded inflation fears cause US inaction and leave Americans stuck with 8% unemployment (four years into the economic crisis and the US still has below-target inflation!). Instead of worrying about China's decisions to subsidize infrastructure investments with low interest loans, Congress weakly passes base-boned stop-gap transportation bills and continues to obstruct the formation of our own infrastructure banks (a novel proposal to leverage public/private partnerships and spur investment).  While cheap Chinese labor strips America of manufacturing jobs, proud Americans focus attention on strengthening high-end service professions and skilled labor.  But cutting teachers’ pay and decreasing education spending undermine any movement towards these lofty ideals.  This is not the America that worked to ensure its superiority against a Communist foe.

Instead of outcompeting China, America fights a losing battle against itself from within. The US fails to address aging infrastructure. The Fed sits idle, indecisively postponing important action.  Our country needs to rethink its misdirected complaints about China.  America needs to abandon its passive mentality and actively invest in a prosperous future.

What the US Needs: A Return Cold War America

India's Persisting Caste System

In a fascinating explanation of why the caste systems persists in India, Kaivan Munshi of Brown University explores how generations-old social networks perpetuate an 'unbreakable' class hierarchy:

"In the stylized world described by introductory economics textbooks, the market provides insurance and credit for people to invest and make purchases. Workers find jobs instantaneously and are paid a wage in line with their ability. The real world, especially a developing economy, does not function in this way. Market insurance is unavailable to a large section of the population. Bank credit is also unavailable without collateral, either because banks cannot observe whether borrowers are creditworthy or because they will refuse to repay their loans even when they can. Finally, many individuals do not get the jobs they deserve, either because they don’t have the money to invest in costly education or because potential employers have no way of knowing how able they really are and so will be reluctant to hire them.

"In such an economy, social networks will often emerge in response to market failures. Members of a tight-knit social group, living in the same neighborhood or sharing kinship ties, are well aware of the creditworthiness and the ability of each other. Members of such groups can also be sanctioned for reneging on their commitments. This allows social groups to form informal ‘mutual insurance arrangements’ and to provide loans to their members. Employed workers can also help capable unemployed members of their group find a job by providing referrals. Social networks thus work in parallel with the market economy, supporting the economic activity of their members in many different ways.

"In India, individuals continue to marry almost exclusively within their (sub) caste or jati. [Less than five percent of the respondents in all the surveys I have conducted, in rural and in urban India, marry outside their caste.] Given the segregation along caste lines that continues to characterize the Indian village, most social interactions also occur within the caste. The jati is thus the natural social unit around which networks would crystallize in India. Indeed, rural insurance arrangements and urban job networks have long been organized around the jati. It is this relatively unexplored feature of the caste system – the ability of the caste to provide major forms of economic support to its members – that I believe has much to do with its persistence in modern Indian society."

To read Munshi's full article or others about India's unique economic and social structure, please visit the new blog site Ideas for India for More Evidence Based Policy.

India's Persisting Caste System

Infrastructure Demands of an Urban World

McKinsey Global Institute today published a report on worldwide urban growth.  Urban World: Cities and the Rise of the Consuming Class provides data that scream for huge investments in emerging markets' urban infrastructure.  The McKinsey report is so consistent with the city-building work at Gale International, that, like a sales pitch, it reaffirms our convictions of expanding middle classes and global urban needs.  Here are some excerpts from the report:

• Cities that fail to meet the aspirations of the millions who are migrating in search of better opportunities run the risk of congestion, pollution, and insufficient public services becoming barriers to growth.

• To deliver the benefits of economies of scale while minimizing the hazards of rapid growth, cities need to have professional planning and coordination, capable and accountable governance, and sustainable and responsible fiscal management.

• If cities manage their capacity building well, there is a large opportunity not only for the world's investors but also to build more productive capacity that is less costly and more efficient in environmental terms for decades to come.  Importantly, the urban planning and infrastructure investment choices made today will determine how well cities are prepared for sustained growth after the expansive urbanization wave passes.  After most people have already moved to urban regions, cities will need to find new sources of productivity gains and economic growth.  Urban centers that have built well-functioning and efficient environments for businesses and individuals will be in a better position to attract skilled works and grow more productive businesses.

• Cities will need annual physical capital investment to more than double from nearly $10 trillion today to more than $20 trillion by 2025.  Urban centers in emerging economies will make most of this investment.

• McKinsey research in India suggests that it can be 30 to 50 percent less expensive for large cities to deliver basic services including water, housing, and education than it is in more sparsely populated rural areas.

• Emerging market cities will account for close to half (47 percent) of expected global GDP growth between 2010 and 2025.

• In China, for instance, spending on dining out starts to take off at annual incomes of around $3,000 per household and, by about $9,000, is on a firm and steep upward trajectory.  Spending on transport and communications starts increasing strongly as incomes reach around $6,000 per annum...Travel for leisure and retail banking services for deposits start climbing once per capita income reaches $18,000 per annum.

• By 2025, cities will need to construct floor space equivalent to 85 percent of all of today's urban residential and commercial building stock...The urban building boom will require cumulative investment, including for replacement buildings, of nearly $80 trillion.

• The investment needed to expand port capacity to 2025 exceeds $200 billion by our reckoning, with 85 percent of it taking place in emerging markets.

Infrastructure Demands of an Urban World

Job Quality, Growth, and Emerging Markets

The International Labor Organization (ILO) suggests that by “maintaining aggregate demand via wage policies as well as by more direct public investment initiatives, and improved access to finance for small firms can have immediate short-term impacts on investment and employment while also improving long-term growth prospects.”  Over the past decade, the middle income, emerging economies, like BRIC nations (Brazil, Russia, India, and China), demonstrated that strong labor markets, favorable business conditions, and increased aggregate demand lead to high national growth rates.  Following the ILO’s model for growth stimulation (or by acting as the reference base for the model), experiences in Brazil and in Russia demonstrate how improved job quality correlate with GDP growth.

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Job Quality, Growth, and Emerging Markets

Eco-Industrial Parks

Eco-Industrial Parks (EIPs) cluster manufacturing plants in a single location where the by-products of one facility contribute to the inputs of other onsite facilities.  Seeking to create circular economies that recycle waste and encourage the sharing and integration of resources and infrastructure, EIPs facilitate “cleaner production within companies and design of both primary and by-product chains among companies.”  By promoting closed systems manufacturing, these parks encourage the local consumption of goods and recycling of by-product waste.  Incorporating a systems approach to these processes, EIPs can revolutionize sustainable industrial development.

Traditional industrial parks capitalize on the economic benefits of clustering.  The clustering of related business activity leads firms to gain additional productive advantages through increased specialization (in terms of human capital and physical infrastructure) and through efficient infrastructure networks.  Industrial parks typically concentrate like-businesses and companies around a common economic sector to capture these efficiencies. 

Instead of concentrating businesses based on a single industry, EIPs take clustering one step further – they create closed “waste-to-feed” resource systems.  EIPs assemble groups of companies based on waste production and inputs.  Planners and management teams organize eco-industrial parks by first identifying the by-products of large anchor tenants.  “If a major by-product supply stream will be an attractor to companies that can use it,” observes Ernest Lowe in an EIP case study, “then [EIPs] use that in recruitment.”   Planners and management teams embark down a successive chain of recruiting businesses that use the anchor tenants’ by-products as inputs and subsequently search for others who could utilize the next set of industrial by-products.  EIPs thus foster the development of closed resource systems and the perpetuation of circular economies.

At Hemaraj Eastern Seaboard Industrial Estates (HESIE) , an EIP located along the Gulf of Thailand, an automotive cluster sustains a 420-factory circular economy.  Anchored by Thailand’s automotive production lines, excess scrap metal is sold to parts manufacturers, to electronics companies, and to building-material factories within the industrial complex.  Plastics firms and agrochemical businesses reuse by-product gases produced at an electrical generation plant and at the automotive factories.  Co-generation heat capture powers additional energy throughout the industrial park.  

Similarly, the Industrial Symbiosis park in Kalundborg, Denmark houses 20 integrated firms.  Centered on a coal-fired power plant, excess heat from cooling water is directed to local fish farms and excess steam routed to the biotech facilities for enzyme production.  Both the fish farms and the pharmaceutical companies produce agricultural fertilizers as bi-products for pig feed in the nearby farms, which then feed Kalundborg’s residents.  Ash from the power plant is also used by the local cement company.  And a plasterboard manufacture utilizes the power plant’s sulfur dioxide and gypsum bi-products.

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Eco-Industrial Parks

UN Security Council

On Thursday morning, I sat in on the UN Security Council session on nuclear nonproliferation and disarmament.  The session served a follow up to last month’s nonproliferation talks in Seoul and opened with an address from the Secretary-General Ban Ki Moon.  Delegates from the fifteen member states read long-winded speeches, reiterating their countries’ stances on Japan’s Fukushima reactor accident and nuclear power plant safety, regional disarmament and nuclear free zones, fissile material trafficking, and North Korea condemnation.  Beyond the defense of national ambitions and broad generalizations (like China saying, “We support peace and stability”), only Germany pushed for a new treaty – a fissile missile cut-off treaty to leverage the progress from the US/Russia Strategic Arms Reduction Treaty (New START) and take a proactive next step in weapons disarmament (the US later purposefully singled out an  “unnamed” country for blocking the efforts to progress with the cut-off treaty).

During the session, Colombia proudly encouraged others to follow the example of Latin America’s regional nuclear free zone.  Morocco denounced the political infighting stalling disarmament progress.  India articulated a desire for a permanent seat on the nuclear material import/export committee.  China suggested that dialogue is the only way to resolve all the world’s problems and to promote peace on the Korean Peninsula.  Russia announced a pilot program aimed at decreasing the trafficking of radioactive substances and extended the need for increased safety at nuclear power plants. 

Most interesting were the small countries, who voiced no fear in arguing more pointed themes at the round table.  Togo passionately pushed for international support for developing countries to obtain, monitor, and use nuclear material for medical and energy purposes.  Azerbaijan expressed fears of “outdated Soviet Era reactors” in neighboring Armenia’s power plants.  Pakistan then defended its own construction of two new nuclear power plants and said that it would not accept “unrealistic” strategies for disarmament.  Guatemala condemned the Security Council’s heavyweights for “watering down” and “distilling documents” after reaching collaborative verbal agreements in Seoul.  Strangely missing from the entire day’s discussion was any mention of India’s long-range missile test launch the previous night.  There were no objections about the Indian Agni 5 missile from Pakistan and no qualifying nor acknowledging messages from India, China, the US, or anyone.  The Asian arms race remained an elephant in the room.

UN Security Council Delegates Filing Out.
Photography during the session was prohibited.

Throughout the entire Security Council meeting, while delegates read their pre-written political speeches, there was no official open discussion.  However, busy staff members flowed freely in and out of whispering conversations to members on all sides of the round table’s open room.  Translators' voices channeled calm British accents into the earpiece radios given to everyone in the Council's chambers.  Publicly, political band-standing served as an opportunity to get statements on official record.  In reality, the Security Council meeting acted mainly as an excuse for powerful politicians to network in the same room at the same time, much like any professional conference.  While displaying a façade of transparency, all substantive discussion and negotiation happened “behind closed doors” in staff/aid side conversations.  At the meeting’s close, the Council read a joint statement drafted during the session.  With broad strokes, the statement reaffirmed past resolutions from previous summits.  Neither the drafting nor the contents of the statement had been publically discussed on the open floor. 

UN Security Council

Economic Success in Germany's Mittelstand

Economic Success in Germany's Mittelstand

Case Study: Water Infrastructure in Karachi, Pakistan

Karachi's Drainage Systems Map
(Click to Enlarge)

Karachi, Pakistan suffers from many problems: economic, social, infrastructural.  In anticipation of exponential population growth in the coming years, that Asian Development Bank funded the Karachi Mega Cities Preparation Project.  The project seeks to identify the structural problems hindering economic growth of the city.  This case study will explore reoccurring infrastructural problems highlighted by the Asian Development Bank that pertain to water and sanitation systems.

Water Service

Supply

The Karachi Water & Sanitation Board (KWSB) is a government agency that receives funding to provide water services to Karachi.  Due to its close proximity to the coast, Karachi’s groundwater is mostly saline and not potable.  Therefore, the city draws its water mainly from two surface water sources: the Indus River and the Hub Dam.  The Indus River is over 100 km away from the city’s center, while the Hub Dam is only 35 km away.  KWSB pumps a total of 540 million gallons of water per day to the city.  Of this, only 350 million gallons of water is treated daily at the Hub Dam.  Treatment consists of clarification, filtration and chlorination.  The remaining 190 million gallons of untreated water flow directly from the Indus River to pipelines connected to domestic residences.  Not surprisingly, untreated water is not differentiated for industrial or commercial use.  An existing project (in the works as of 2005 when officials drafted the original Karachi Mega Cities Preparation Project) plans to expand the Indus River’s extraction capabilities by an additional 100 million gallons per day.  Once completed, the shortfall of treatment capacity will have astoundingly reached close to 300 million gallons of untreated drinking water pumped to the city each day. 

Distribution

In large parts of the city, water access is only intermittent.  KWSB provides neighborhoods with water on a “rotating basis,” which, according to their optimistic claims, means supplying water to all areas for at least 2-6 hours each day.  The Karachi Mega Cities Preparation Project report suggests KWSB’s estimates are over-exaggerated; services often operate only 2-3 times a week.

The unreliability of the network stems from the combination of variable water pressure and “unaccounted-for-water” leakage.  The lack of constant pumping to all pipes connected to the water grid and the existence of poorly attached “informal” connections interrupt the water flows and effect water pressure.  The Asian Development Bank concludes that “intermittent flow and variable pressure in the system [] allows the ingress into the supply system of faecal contaminated groundwater and surface water.”  Tellingly, the World Health Organization found that over 75 percent of water samples coming from Karachi are substandard. 

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Case Study: Water Infrastructure in Karachi, Pakistan

Russia's New Middle Class

Click to Enlarge

The middle class is the biggest driver of economic growth.  Promoting this class is the most surefire way of lifting vast groups of people from poverty.  Emerging markets (as well as many developing nations) are starting to experience economic expansion driven largely by the middle class.  

The Economist recently published the above graphic to show Russia's re-entrance onto the world stage (while at the same time arguing contrarily against Putin's power).  I imagine other BRIC countries have similar stats to those listed above.

Russia's New Middle Class

The Island President Deposed

Film maker Jon Shenk crafted an extremely moving 6 minute documentary about Mohamed Nasheed, the now ex-president of the Maldives (Nasheed was forced out of office by gunpoint on Tuesday).  The short film walks through Nasheed's rise from political prisoner to first democratically elected leader of the Maldives.  As a vulnerable enclave of islands, Shenk follows the president's push to make the islands the first carbon neutral country in the world.  His fight against international business pressures leads up to this week's unrest.  To visually experience Nasheed's rise and fall, watch the short film above or read Shenk's written chronicle of the Maldives president.

The Island President Deposed

Slash and Burn

While Europe insists on deep austerity measures to reduce public debt and budget deficits, Greece falls further and further into a vicious cycle of inescapable debt.  Athens announced a new bill to cut another 15,000 government jobs this week.  The jobless rate in Greece is already 19%.  Creating an underclass of permanently unemployed will not encourage job growth.  The country’s main source of public revenue generation, value-add tax revenues, are dropping 18%.  With such drastic cuts in public expenditures, Greek GDP will fall by at least an estimated 3% this year.  Instead of spurring growth, tax revenues are declining while the amounts that Greece owes creditors continue to rise.  Since austerity measures were officially announced on May 1^st, 2010, Greece finds its debt ratio steadily increasing from 138.8% of GDP to 159.1% over the past year.

Country's Debt as Percentage of GDP
(Click to Enlarge)

The sad truth is that deeply cutting austerity measures will leave Greece even more indebted than it already is. The nation's economy is contracting while its loan payments grow in size.  The false hopes of reducing public debt by shifting the Greek economy toward the public sector become even further undermined by provisions in the new European Bank deal that require the country's private firms to cut salaries by 20%.  Modest amounts of stimulus money can’t help alone in the face of inescapable destruction.  If you think about the situation rationally, would cutting someone's income in exchange for one year’s mortgage payment really help pay off a loan for a house in the long run?  

The market based arguments that austerity would encourage investment fail to hold-up.  Investors did not move their money to Greece after the last round of austerity measures.  Instead, credit ratings institutes further demoted the Greek bonds in junk status.  Greek and European Bank Technocrats predicted privatization to bring in €9.3B. Unfortunately, Greece could only conjure just half of of the predicted amount, €4.7B, far short of what would be needed to compensate from drastic cuts in the public sector.  

Budget deficits will not fall by cutting salaries and further reducing revenue generation for the government.  With leaders showing no signs to stop implementing slash and burn economics, Greece's economy will continue to decline as the country threatens to drag down other fragile nations, the European Union, and the entire world economy.

Slash and Burn