Wall Street's Best Investment: 10 Deregulatory Steps to Financial Meltdown
Cleaning Up the Mess: New Rules for Financial Regulation
Closing the Regulatory Gap: Derivatives and the Hedge Fund Industry
Foreclosed: The Failure to Regulate Abusive Lending Practices
Behind the Lines
Irene Fernandez is finally free.
In 1995, the prominent Malaysian human rights activist released a report on the abuse of migrant workers in Malaysia, detailing patterns of torture, malnutrition and horrendous working conditions. [See “A Call for Justice for Malaysian Migrant Workers: An interview with Irene Fernandez,” Multinational Monitor, Dec. 1996.] The embarrassed Malaysian government at first admitted that 46 people had died in migrant worker detention centers, but then in 1996 it arrested Fernandez and charged her with “maliciously publishing false news.” After the longest trial in the country’s history, Fernandez was found guilty in 2003 and sentenced to a year in prison. She immediately appealed.
In November 2008, Fernandez was acquitted.
“I believed I was right all the time. I believed I spoke the truth. What I didn’t believe was the judicial system,” said Fernandez in an interview moments after her acquittal. “Thirteen years is a very long time.”
Her acquittal was based not on the merits of the case, but due to missing court notes and evidence that made proceeding with the appeal impossible. In court, the prosecutor stated the appeal would not be opposed due to “recently discovered systemic errors.”
During the initial trial, the government deported many of the witnesses Fernandez was depending on to testify on her behalf. After being released on bail in 2003, the government confiscated her passport and barred her from running for public office. The offices of her not-for-profit organization, Tenaganita, were bugged and raided twice by government officers.
“Justice is not done because of my acquittal,” Fernandez said. “Justice can only be done when remedies are made to what I stood for, to the contents of the memorandum, to freedom of expression being upheld in this country, when human rights defenders are protected. Only when all those things are done, then there’s meaning to the acquittal.”
Biofuel’s Hidden Hot Air
Faced with the prospect of data showing biofuels aren’t as carbon-friendly as they claim, the biotechnology industry is moving to stifle the release of an Environmental Protection Agency (EPA) analysis, according to the Union of Concerned Scientists (UCS). The biotech industry says there is concern about the EPA’s methodology; the UCS says the industry is just impeding scientific integrity.
The 2007 Energy Bill required the EPA to measure global warming emissions from renewable fuels based on their entire lifecycle, which includes cultivation, fuel production, vehicle exhaust and, most controversially, indirect land use change — carbon emissions from the clearing of forests to plant crops for biofuel production.
“There is no doubt that greenhouse gas emissions caused by land use change are substantial, and that those associated with renewable fuel production can easily make the difference between reducing or increasing greenhouse gas emissions relative to gasoline,” states a November letter to the EPA from a coalition of environmental groups and UCS.
An October letter to the EPA from the Biotechnology Industry Organization (BIO) urged that “a published estimate of potential indirect emissions from EPA at this time would be premature and ill-advised” and may lead to less investment in biofuels. BIO wants the EPA to release its methodology for public comment first, without including the results of the analysis.
The analysis is “applying several new theoretical standards for measuring greenhouse gas emissions that have never been applied in a regulatory setting to any other industry before,” says Paul Winters, director of communications for BIO. “It’s vital that the EPA gets this correct.”
The UCS, too, wants the information to be available for public comment, but wants the results released as well. “Preliminary estimates published [in 2008] by other people said that corn ethanol and biodiesel had enormous emissions from this indirect affect and they really won’t qualify as low-carbon fuels once this is considered,” says Jeremy Martin, a UCS senior scientist. “I think you could infer from [the biotech industry’s] fear of these numbers even being published that they’re convinced the analysis will say something like that.”
“However, today the issue is really one of scientific integrity and not an issue of indirect land use. We’ll get to indirect land use once we can see the analysis,” Martin says.
Walmart may tout that it allows its customers to “live better,” but it still doesn’t let its employees live better through unionization and higher wages. In October, just two months after eight employees at a Walmart store in Gatineau, Quebec, became the only Walmart employees in North America to be covered by a union contract, the big box retailer shut down the Tire and Lube Express where they worked.
“It was predictable that they would try to close the store down,” says Eric Bull, deputy press secretary for the watchdog group Wal-Mart Watch. “They’ve closed every North American store that has unionized. It shows what Walmart is willing to do to keep their workers from receiving better wages.”
The Tire and Lube Express was an extension of the main Walmart store, and the closing did not affect the store as a whole. The contract was imposed by a labor arbitrator and raised wages about 35 percent.
“Our wages were competitive prior to the collective agreement. And this collective agreement makes the situation unworkable,” Yanick Deschênes, a director of Walmart in Quebec, said in October.
However, the Canadian union movement is still gaining ground, and the Gatineau store was a victory, regardless of the outcome, Bull says. In December, more than 100 workers at a Walmart in Weyburn, Saskatchewan, officially signed their union cards, giving them the right to collective bargaining. Two weeks later, workers at a store in Quebec followed suit.
“They’re not going to be able to keep closing down full stores,” Bull says. “And if they do, it’s going to hurt their business in Canada.”
Nearly 20 percent of women in the United States have no health insurance. This may be due in part to the prohibitively high rates private insurance companies charge them, simply because of their gender. A September 2008 study by the National Women’s Law Center (NWLC) found that in all but 12 states, insurance companies are permitted to charge women higher premiums than men — sometimes up to 48 percent more.
“We know that women on average earn less than men to begin with, that they’re more likely to face challenges paying for their healthcare, and because they are facing higher premiums it can ultimately be harder for them to find affordable coverage,” says Lisa Codispoti, senior counsel for NWLC and co-author of the report.
Under an industry practice known as gender rating, a 25-year-old woman may be charged between 6 percent and 45 percent more than her male peers, the study found. A 40-year-old woman may be charged between 4 percent and 48 percent more than a male of the same age. The tide turns a bit when customers reach 55. Premiums for a 55-year-old woman may be 22 percent less to 37 percent more than men.
“Men and women utilize health care services differently and, therefore, are charged different health insurance premiums when they purchase coverage on their own,” says Ethan Slavin, spokesperson for Aetna, one of the nationwide insurance providers included in the report. “As young adults, women use more health care services than men.”
The NWLC report also found that 11 states had no plans that came with maternity coverage. In these states, women had to pay extra for the option of maternity coverage, and even this coverage was sparse. In the first two months, the coverage may only cover about $2,000, Codispoti says. The average, uncomplicated birth costs on average $7,000. Thirteen states only offered limited maternity coverage.
The study also found private insurance companies in nine states are allowed to reject applicants who are survivors of domestic violence. “You’re basically victimizing women once again,” Codispoti says. “You shouldn’t be penalized for going to seek medical care because you’ve been a victim of a crime. It’s unfathomable in this day and age that that is still possible.”
Slavin says Aetna does not inquire about domestic abuse on its applications and would not “charge higher rates or deny coverage based on any domestic abuse information we might receive.” He could not speak for other companies in the industry.
Big Box Bubble Bursts
The big box retail bubble has burst. Across the country, an increasing number of big box stores and shopping centers are sitting empty and abandoned — more than 7,000 store closures were announced by 42 major chain retailers between 2006 and 2008. This wave of store closures is a result of nearly two decades of overbuilding, according to a September 2008 report by the Institute for Local Self-Reliance (ILSR). These shuttered stores can have profound affects on the surrounding community, dragging down surrounding property values and discouraging new investments.
“These retailers are destructive when they come in, but when they go vacant and become a commercial blight, they pull down surrounding property values and make it harder for other businesses nearby to survive,” says Stacy Mitchell, senior researcher for ILSR and author of the book Big-Box Swindle. “They ultimately deter new investment by creating an unappealing situation and impression of a community that might not otherwise be accurate.”
While the current economic recession was the immediate catalyst for many of the store closings, Mitchell says, the underlying problem is construction of excessive retail capacity. During the last two decades, rather than building new retail in growing communities with unmet demand, developers looked to build newer and bigger outlets to “cannibalize” sales from existing stores and shopping centers.
Over the last 15 years, the square footage of retail store space in the United States has doubled, according to ILSR. Per capita spending lagged behind, rising only 14 percent during that same time. This expansion of retail space was “way out of proportion to growth and demand,” Mitchell says. “We have so overbuilt retail over the last 15 or 20 years that we have far more retail store space than we actually need or can support with our spending.”
Big box and chain retail stores that fueled this retail bubble were hit hard when it burst. Linens ’n Things closed 177 stores in 2008. Starbucks closed 600 outlets. Foot Locker closed 140.
— Jennifer Wedekind