Category Archives: The Economy

A Frenchman Turns Economics Upside Down

Thomas-PikettyBy Peter Galuszka

Call it “The Anti-Baconomics.”

Thomas Piketty, a French economist, is turning conventional, conservative economic thinking on its head. Goodbye to the idea that all boats rise in capitalism. What we are seeing instead is a dangerous concentration of  21st century wealth in the hands of an ever-smaller elite.

This is Piketty’s message in his book “Capital in the Twenty-First Century” (a 700-pager on my reading list) that caught Europe by storm last year and is now a best-seller in this country.

Unlike convention wisdom, the thesis from this thinker from the Paris School of Economics is that Marx was wrong about capitalism self-destructing but so is Nobel Prize winner Simon Kuznets who posited a few decades ago that the inequality gap inevitably grows smaller with economic growth. Just the opposite, it turns out.

“One of the great divisive forces at work today,” Pinketty has said, “is what I call meritocratic extremism. This is the conflict between billionaires, whose income comes from property and assets, such as a Saudi prince, and super-managers. Neither of these categories makes or produces anything but their wealth, which is really a super-wealth that has broken away from the everyday reality of the market, which determines how most ordinary people live.”

This is why, perhaps, middle class families struggle to see declining disposable income while others who do not produce wealth but slice it and dice, like hedge fund managers or managers of huge corporations, are safe with their unsinkable portfolios. It is the same in just about any country, capitalist or no, from the U.S., to Spain, to China, to India to Russia.

If this continue continues unabated, as it probably will, you will see increasing social unrest as the 21st century wears on.

It seems interesting that Piketty who is in this 40s, came up of this relatively free from the residual Marxist thinking, or Keynesian for that matter, that did lurk in the background of many college economics intro courses. The Frenchman seems to be viewing things through a new prism of what has actually been happening over the past five decades when the middle class dream started evaporating and hard work, sacrifice and productivity simply no longer mattered.

If you read one of the books published a few years back by a prominent blogger here, you get the same-old Reaganomics of trickle down topped with a sauce of the Protestant worth ethic masquerading as agnosticism.

What’s the upshot of Piketty? It seems to be taxes, taxes and more taxes. In other words, it is time to start considering redistributing wealth from the elite back to their societies. The question seems to be “Why not? The elite didn’t really earn it anyway.”

Read meat for conservatives. The right-wing media has launched an anti-Piketty counterattack which is healthy and predictable. But he has a few things going for him. Given his youth, he represents the fresh views of up-and-coming thought leaders. And their thoughts are hardly the conventional all-boats-rise sophistry. Watch as the debate becomes stronger.

The Perils of Gas Fracking

By Peter Galuszka

More media accounts are showing up now that 84,000 acres of lands south and east of Fredericksburg have been leased for possible hydraulic fracturing drilling for natural gas.

This Sunday’s Richmond Times-Dispatch published a map showing the leased area covering big swaths of land from the Fort A.P. Hill military area east across the Rappahanock River on  into the historic Northern Neck. These are some of the loveliest parts of the Old Dominion, featuring  sloping valleys, rich bottom lands and meandering creeks and rivers that are filled with wildlife, not to mention farms and homes.

The newspaper quoted Mike Ward, executive director of the Virginia Petroleum Council proclaiming fracking as being safe and that the construction activity to place wells only takes a few months. “It’s like a construction site,” Ward said. “As it’s being done, there is going to be truck traffic. There’s going to be noise. There’s going to be some dust in the air. There’s going to be mud around the area. But that’s short-lived.”

Really? To be a better idea, I started surfing YouTube to see what the local impact of constructing fracking wells is really like. I happened upon several films from rural Harrison County, W.Va., an area where I lived as a child from 1962 to 1969.

The videos show an area in western Harrison County near the college town of Salem in landscape surrounded by rolling hills and dairy farms. There has been coal mining in the area and natural gas has been around for decades, but fracking wells are something new.

The videos depict an ongoing nightmare for neighbors who have found their quiet, bucolic existence interrupted 24/7 by the roaring of diesel generators, huge floodlights, and many, many trucks. One woman says that the well site across her road starts up around 4 a.m. and she can’t get back to sleep so she’s constantly tired when she goes to work.

Water and construction trucks, many 18-wheelers, are a big problem. They sideswipe cars on rural, two-lane roads or block traffic for a half an hour after they get stuck trying to turn around. The heavy trucks crumble pavement on country roads. Some local ones have had to be repaved four times since drill site preparation began a couple of years ago when the fracking craze began.

It seems likely that areas near Fredericksburg and on the Northern Neck and Middle Peninsula will taste some of the same problems if fracking begins. The Taylorsville Basin in the area may hold 1 trillion cubic feet of gas.

Further questions abound about the company that’s putting together leases for the area. It is an obscure company called Shore Exploration & Production Co. with offices in Dallas and Bowling Green. The plan, company officials have said, is to put buy up gas leases and then flip them to a drilling company.

The company insists it won’t use a “watery” method of fracking but can’t seem to explain its supposed substitute which is to use some form of nitrogen. In West Virginia, wells can need up to five million gallons of water that must be trucked in. Does this mean that trucks carrying nitrogen will come in instead?

Answers seem to be as fleeting as the Shore company which has two full-time employees and has no annual report or website. It has never drilled a well itself, just exploratory ones. One official told a newspaper that having an annual report and website “would provide information to competitors.”

That statement alone should give tremendous pause. What happens if you live in the country of the Northern Neck and a gas well emerges next door? What happens if your life is disrupted by 24-hour diesel generators, lights and dozens of heavy trucks? What happens if the “flow-back” ponds that contain waste, including radioactive material and methane from the drilling area below, breach?

Eastern Virginia is not used to such challenges. As a former resident of West Virginia where such challenges are common, I know well what this kind of set-up can mean, especially in Virginia that has some gas wells in its southwestern tip but has little experience with fracking.

April Is The Cruelest Month

deepwaterBy Peter Galuszka

April is the cruelest month, especially for brutal energy disasters.

This Sunday is the fourth anniversary of the Deepwater Horizon offshore drilling blowout that killed 11 and caused one of the country’s worst environmental disasters. April 5 was the fourth anniversary of the Upper Big Branch coal mine explosion in West Virginia that killed 29.

What lessons have been learned from both? Not a hell of a lot. In both cases, badly needed, tougher regulations to prevent such messes from happening again go languishing while politicians – including Virginia’s Democratic Governor Terry McAuliffe – say move on fast for more exploitation of energy resources including in Virginia’s sensitive offshore waters.

Take Deepwater Horizon. The rig linked to British Petroleum in the Gulf of Mexico was tapping reserves 5,000 feet down. When the rig hit a rough patch, the blowback exploded upwards, racking the surface part with explosion and fires. Down below, a blowout protector was supposed to swing into action, chop into the pipe and shut down any flow. That didn’t happen and oil flowed freely at the bottom until July 15 generating one of the biggest oil spills ever.

Four years later, what has been done? According to experts S. Elizabeth Birnbaum, and Jacqueline Savitz, not enough. In December 2011, the National Academy of Engineering reported that Deepwater’s blowout preventer had never been designed or tested for the conditions that occurred and that other rigs may have the same problem.

Sixteen months later, nothing has been done in terms of new regulations – not even proposed one. It sounds as if that socialist-minded, regulation maniac Barack Obama is actually off the job. Meanwhile, McAuliffe changed his mind about the risks of offshore drilling and has jumped on board the Republican bandwagon led by former Gov. Robert F. McDonnell to expose Virginians to similar dangers.

McAuliffe’s turnaround came last year during the gubernatorial campaign. According to the Washington Post: “Terry has learned more about offshore drilling from experts in Virginia,” said McAuliffe spokesman Josh Schwerin. “He thinks that because of technological progress we can now do it in a responsible fashion.”

Say what? Maybe he should take a trip to Brazil and Norway that have more advanced blow-out preventers and policies. By the way, Democrat Mark Warner, running for re-election for U.S. Senate, is for offshore drilling as well.

If you really want to see evidence of the lack of regulation, check out Upper Big Branch owned by the former, Richmond-based Massey Energy.

The firm was notorious for its anti-regulation, anti-labor union policies led by its in-your-face chief executive Don Blankenship. Four reports say that Massey’s lax safety standards allowed the disaster to happen, including letting badly maintained equipment be used and not taking measures to keep highly explosive coal dust from building up. A flame caused by a ball of flaming methane touched off the dust leading to an underground blast that covered seven miles underground. In the process, 29 miners were either blown apart of asphyxiated in the worst coal mine disaster in 40 years.

Every mine event has led to some kind of regulatory reform such as the one at Farmington, W.Va. that killed 78 in 1968 and the Buffalo Creek W.Va. coal sludge pond breach and flood that killed 125 in 1972.

Post-Upper Big Branch reforms have been proposed, notably the Robert C. Byrd bill that would protect whistleblowers, hold boards of directors responsible for knowing and doing nothing about safety threats and giving the feds subpoena power which, incredibly, they do not now have in the case of mine safety. The Department of Agriculture can subpoena records in the case of possible milk or meat price-fixing, but the Mine Safety and Health Administration cannot in the case of human miners.

The Byrd bill is all but dead mostly because of the Republican controlled House of Representatives where the majority leader is none-other than business toady Eric Cantor of Henrico County.

And if you want to understand just how little miners’ lives are regarded, compare the media coverage of Deepwater Horizon versus Upper Big Branch. I guess you could say that in the media’s eyes, the life of an offshore rig worker is worth 2.6 times that of a coal miner.  Six months after Deepwater, there were at least six books about the disaster. Four years after Upper Big Branch there is one book about it and it happens to be mine.

So, this Sunday, I propose a toast to the dead oil rig workers and coal miners. Let’s not allow their souls to stay on our consciences. Let’s have anti-regulation reign in the name of free market economic policies and profits! It doesn’t matter if you are a Republican or a Democrat. Salute!

Fracking the Mother of Presidents

fracking rigBy Peter Galuszka

Controversial hydraulic fracking appears to becoming a distinct possibility in areas south and east of Fredericksburg on land that is famed for its bucolic and watery splendors along with being the birthplaces of such historical figures as George Washington, James Monroe and Robert E. Lee.

After several years of exploring and buying up 84,000 acres worth of leases from Carolina to Westmoreland Counties, a Dallas-based company that uses a post office box as its headquarters address participated in the first-ever public discussion of what its plans may be.

According to the Free-Lance Star, the meeting was put together by King George County Supervisor Rudy Brabo to air concerns and hear plans of Shore Exploration and Production Co., which is based in Dallas and has offices in Bowling Green. Its headquarters address is registered with the State Corporation Commission as P.O. Box 38101 in Dallas.

About 100 people attended the meeting April 14, but judging from the newspaper’s account, not many questions were answered. Participants repeatedly asked Shore CEO Ed DeJarnette what his plans were regarding fracking and who would be responsible for damages if something went wrong.

DeJarnette responded that his firm is merely buying up leases and is looking to sell them to other gas drillers and operators. The state’s Department of Mines, Minerals and Energy issues permits one at a time and is responsible for enforcing them, he said.

Hydraulic fracking and horizontal drilling have touched off a revolution in the American energy industry in recent years, particularly in the Marcellus Shale gas formations that stretch in the Appalachians from New York State to southwest Virginia. The methods have also been used to reach rich shale oil deposits in North Dakota and other western states.

Fracking has been used as a drilling process for years according to media accounts and authors such as Gregory Zuckerman whose recent book “The Frackers” covers the process’s increasingly widespread use in the past several years.

Among concerns are that the toxic chemicals mixed with water and then pumped hundreds of feet underground could eventually ruin groundwater serving streams and wells. Other concerns are that the inevitable “flowback” in drilling will require surface ponds to handle toxic waste. In places such as Pennsylvania and West Virginia where fracking is permitted, quiet country areas are badly disturbed by the roar of diesel generators at drilling sites and from trucks that are constantly delivering drilling supplies. Methane can leak from drilling rigs, further complicating global warming issues, and flash fires can be problems. Fracking can also consume great amounts of water which often has to be trucked in.

On the plus side, holders of mineral leases can receive great sums in royalties and various taxes and other payments can boost local tax coffers. Natural gas is cleaner and less deadly source of energy than coal, plays a big role in electricity power generation in the Mid-Atlantic.

At the King George meeting, DeJarnette told the audience that he preferred using nitrogen as an element in fracking rather than water, but there were few details in the newspaper story.

While providing scarce details on who would actually handle the drilling, how it would be done and who would be responsible for damages, DeJarnette repeatedly emphasized the monetary benefits and jobs fracking would bring.

If it proceeds, fracking in the Taylorsville Basin would likely be confined to Virginia, which is more business-friendly than Maryland where the basin also extends. The field stretches across the Potomac River into Charles, St. Mary’s, Calvert and Anne Arundel Counties but Maryland has a moratorium on fracking until it can be studied further.

DeJarnette says he wants drilling to start by late this year or in 2015. Major oil firms explored the Northern Neck area and found some evidence of oil and gas deposits there in the 1980s.

Protests Pick Up Against Bay LNG Exports

cove point By Peter Galuszka

Protests are picking up against plans to convert a liquefied natural gas shipping facility on Maryland’s western shore of the Chesapeake Bay at Cove Point so  it can both export as well as import the product. The proposed, $3.8 billion project is owned by Richmond-based Dominion Resources.

Four protestors were arrested today for blocking the entrance to the Allegany County Courthouse in Cumberland, Md.  according to the Chesapeake Climate Action Network which has officials in suburban Washington and Richmond.

They are trying to raise concerns that the Dominion project will increase the likelihood of using controversial hydraulic fracturing for gas exports at Cove Point and lead to more greenhouse gas emissions.

The Chesapeake network is just one of a number of activist groups that are drawing attention to fracking for natural gas. The method, which yields more product from hard-to-reach geological formations, involves the use of powerful chemicals. Other worries are that wells leak and are prone to fire. According to the network’s Kelly Trout, leakage throughout the LNG conversion cycles at Cove Point and at its shipping destinations could case as much or more greenhouse gas emissions as coal.

The Cove Point issue of interest to me because I have visited written about the facility and am familiar with coal mining and burning which fracked gas is displacing. Just a few years ago, green groups correctly protested what was going on in the Appalachian coalfields with highly destructive mountaintop removal and mine deaths. There is no question that coal is a major and negative factor for the lives of its workers and the environment in general. It is the single largest contributor to greenhouse gas emissions in this country.

Coal, however, is slipping in importance precisely because of the rise of fracked gas. Although gas prices have been rising recently partly because of harsh winter weather, the surprising crash in gas prices four years ago caught the energy industry off guard. A decade ago, coal had supplied half of the electricity generated in this country and that number has slipped to 35 percent.

Cheap gas has presented the U.S. with another unexpected benefit – rising energy independence. This is why Dominion is so eager to convert an aging LNG import facility in Maryland built in the mid-1970s into an export facility. It has long-term contracts already for exported LNG with Japanese and Indian utilities. Dominion bought the Cove Point facility about 12 years ago after a checkered history in which it  had been through several owners. Cove Point is one of about 20 facilities that are being proposed for LNG exports.

Cheap gas is likewise a curse and brings new uncertainty. Its economic benefits have meant that it is no longer worthwhile to invest billions in carbon capture technologies that might have allowed safer and less-polluting use of coal. Gas is also pushing back the urgency for expanding non-fossil and renewable energy sources such as wind and solar.

I’m of two minds on gas and LNG. On the one hand, gas beats coal hands down. It doesn’t kill as many workers, doesn’t destroy mountains and produces half of the carbon dioxide as coal.

Yet as time goes on, there’s more reason to be suspicious about fracking. There’s no certainty that the toxic chemicals used in the process will not hurt ground water. Natural gas wells do tend to leak and fires, fatalities are not uncommon. Pipelines blow up. Fracking has also been used with great success to tap previously inaccessible oil and shale oil in places like North Dakota. But that raises yet another problem: the use of unsuitable and unsafe railroad tanks cars to haul great quantities of it.

Ms. Trout provided me with material compiled by her group raising questions about leakage and Cove Point. Their research says that with a relatively low leakage point of 1.4 percent, taken over the entire LNG shipment cycle, enough methane would be released into the atmosphere that makes it about 80 percent as bad a carbon dioxide from other sources such as coal.

Cove Point would receive natural gas via pipeline from fracked gaslands in Pennsylvania and possibly Maryland or from pipelines running from Louisiana. At the Bay facility, it would be processed, cooled to minus 265 degrees Celsius, but in huge Thermos-style tanks aboard ship which would travel halfway around the world. In Asia, the LNG would be warmed back into gas, processed and used for fuel. This, she says, presents plenty of opportunities for leaking.

It very well could be. I have no data supporting or refuting the points. Meanwhile, the protests grow stronger and the arguments become more complicated.

Why Are Virginians Such Weather Whoosies?

norilskBy Peter Galuszka

The other day I tried to book a lunch date with the Blogger in Chief but was informed that inclement weather was looming on the Old Dominion and he might be hibernating for a few days.

Imagine my surprise this morning when I awoke to find a few inches of snow and some light sleet pelting around. Sure enough, the state seems to have shut down. This begs another question. Why are Virginians such weather whoosies?

Millions of people around the world live and work in much harsher conditions. I spent six years reporting from Moscow in the 1980s and 1990s and had plenty of bone-chilling experiences. There was that ultra-cold day in Novosibirsk just before Thanksgiving when the temperature was about minus 30. But if you want to consider the granddaddy of them all, go to Norilsk in Siberia, the northern-most city of more than 100,000 in the world.

khodorkovsyI went to Norilsk in January 1996 for a BusinessWeek cover story on the crop of rising oligarchs who were cashing in on post-Communist privatization. One was Mikhail Khodorkovsky, a geek-turned-billionaire who, ironically, was just recently released by President Vladimir Putin after spending a decade in prison. It was a pre-Sochi Olympics gesture to make nice. I had interviewed Khodorkovsky many times and found him a meek and thoughtful man.

Another oligarch was Vladimir Potanin who was cornering the market on Russia’s vast reserves of precious metals. It was thanks to Potanin that I got to go to Norilsk. He was involved in a rough proxy battle to take over Norilsk’s rich array of smelters insofar as Russia was capable of having real proxy fights back in the 1990s.

Vladimir-PotaninSo, with Potanin’s invitation, Alexei, a Russian photographer, and I jetted off to Norilsk, a horrible, treeless snow-swept waste. It has a particularly horrible history.

Founded at the end of the 1920s, Norilsk became a center of Stalin’s GULAG system which in this case exploited rich reserves of nickel, cobalt, copper, platinum, palladium and coal. The only way in or out if by air or by rail and road to a specially built port on a river that flows into the Arctic Ocean.

Norilsk is covered with snow for up to 270 days a year and has snow storms lasting a total of about 120 days. In January and February, the average lows are about minus 23. Record lows are about minus 63.

Political prisoners built up a huge metals mining and metallurgical apparatus from the 1930s until the 1950s. More than 16,000 died and many fatalities occurred during World War II when food was short.

When we arrived at the airport, we were met by one of Potanin’s black limousines that hustled us across a snowy tundra road whose outlines only the driver could see. Our hotel was a shamble of brickwork and amenities were similar to what many reporters are finding today in Sochi albeit no stray dogs. They’d be dead. Tracked bulldozers worked 24/7 keeping snow from piling up.

Rogov and I had trouble finding food. The hotel kitchen was closed and we slogged down the streets until we pounded on the door of a closed restaurant and convinced them to give us something to eat. Continue reading

West Virginia’s Lessons on Fracking

water in W.Va. By Peter Galuszka

Tap water is now drinkable for most of the 300,000 residents in the environs of  Charleston, the capital of Virginia’s sister state to the west, but the mess has ample warnings for future problems notably fracking for natural gas.

The national newspapers are filled with interesting pieces this morning about the problems of now-bankrupt Freedom Industries where 7,500 gallons of a chemical used to treat coal spilled 1.5 miles upstream from a municipal water system intake, making water unusable in Charleston and nine surrounding counties for about a week.

The affected area would be about the size of Chesterfield or Henrico counties individually or more than the entire city of Richmond. Imagine the business losses from the inability to wash dishes in restaurants, wash cars, or even make toilet trips in state office buildings. Think of the unknown health impacts.  Incredibly, that’s what happened in Charleston, the epicenter of the anti-regulation “War on Coal” propagandists.

The takeover warning for Virginia is that it could happen here and did back in the 1970s when Allied Chemical tried to sidestep pollution regulations by setting up a dummy company in a converted gas station in Hopewell to make the highly toxic pesticide chemical Kepone.

One cause for future concern here, as well as in West Virginia, is what happens when hydraulic fracturing for natural gas comes. Fracking, which involves using high pressure water with special chemicals to help break up before-unreachable pockets of natural gas has really taken off in recent years.

Combined with newer horizontal drilling methods, fracking has yielded a cornucopia of natural gas with a huge impact. It is utterly changing the dynamics of the U.S. energy picture and positioning the country to become an exporter of both gas and oil for the first time in decades.

Fracked gas has its pluses. It emits half the carbon dioxide of coal and has nowhere near the death toll for employees. It doesn’t destroy entire mountains. But it can increase the chances of fire, pipeline leaks, rail accidents and threaten water supplies depending on the types of chemicals used in the process.

The West Virginia case provides chilling inadequacies with regulation. The tanks at Freedom Industries were inspected for air emissions but not for leaks, even though they were built in the 1940s and 1950s. Ownership wound around a polyglot of corporations.

Within one week of the spill and facing hundreds of millions of dollars in lawsuits, Freedom promptly went bankrupt to protect itself against claims. That means that victims of the spill are doubly screwed. They have to eat the losses from the disaster and now they will find it much harder to get legal compensation.

More chilling is the fact that West Virginia’s legislative and regulatory climate will make it harder to know what’s in gas fracking chemicals when companies move south from Pennsylvania to exploit Marcellus Formation shale that covers most of the state.

The New York Times notes that in West Virginia, state regulators can issue regulations but they can’t be enforced until the lobbyist-heavy legislature approves. A law last year would have required that companies disclose the types of chemicals they use for fracking but under pressure from oil equipment giant Halliburton, lawmakers decided to make them confidential.

The same aura of confidentiality in favor of industry pervades Virginia which prides itself on being “business friendly. Much of what the State Corporation Commission does when it deals with firms or handles electricity rates is immune from the Freedom of Information Act. When former Gov. Robert F. McDonnell set up committees to study uranium mining and the nuclear industry in general, they were likewise immune from the FOIA. A lawyer working for former Attorney General Kenneth Cuccinelli was rebuked by a judge for advocating for energy companies in a lawsuit over natural gas rights.

Fracking could come to Virginia although it isn’t certain when or how much. The state already has more than 7,500 older gas wells near the Southwestern coal fields that do not use fracking.

A sliver of frackable Marcellus formation skirts the West Virginia border west of  Interstate 81 in mountainous regions unused to energy extraction. Rockingham County has already blocked a special land use permit sought by an energy firm. Washington area drinking water officials are seeking limits of fracking in the nearby George Washington National Forest at the headwaters of the Potomac River and other municipal water sources.

Another possibility is the so-called Taylorsville Basin which runs from west of Annapolis to east of Fredericksburg and Richmond and Petersburg in areas better known for crab pots and pine forests. It isn’t known how much gas is actually there, but a Dallas firm, Shore Exploration and Production Corp. is looking.

I don’t know offhand what rules Virginia actually has in place to reveal the chemicals companies use for fracking, but it is obviously something to watch. One example not to follow is that of the Mountain State.

Journalism’s Death Is Greatly Exaggerated

rachel_maddowBy Peter Galuszka

“Investigative reporting, R.I.P. In-depth reporting is dead. If not dead, it’s comatose. Reeling from declining revenue and eroding profit margins, print media enterprises continue to lay off staff and shrink column inches.”

Err, maybe not. James A. Bacon Jr., meet Rachel Maddow.

The quote comes from advertised “sponsorships” in which an outside entity can help fund reporting and writing on this blog. It’s a morphed form of traditional journalism and there’s nothing wrong with it, provided the funding source is made clear.

But what might be jumping the gun is the sweeping characterization that in-depth reporting is dead. That is precisely the point of Maddow’s monthly column in The Washington Post.

She notes that it was local traffic reporters and others who broke the story about Chris Christie’s finagling with toll booths to punish a political opponent. She shows evidence of other aggressive reporting in Connecticut and in South Carolina, where an intrepid reporter got up early one morning, drive 200 miles to the Atlanta airport and caught then disappeared Gov. Mark Sanford disembarking from an overseas flight to see his Latin American mistress when he had claimed he was hiking the Appalachian Trail.

Closer to home, it was the Post, which has seen more than 400 newsrooms layoffs over the past years, that broke GiftGate, the worst political scandal in Virginia in recent memory. The rest of the state press popped good stories, including the Richmond Times-Dispatch that has been somewhat reinvigorated despite nearly 10 years of corporate cheerleading and limp coverage under publisher Tom Silvestri. The departure of the disastrous former editor Glenn Proctor, Silvestri’s brainchild, helped a lot as did the sale of the paper by dysfunctional Media General to Warren Buffett.

To be sure, there are sad departures. The Hook, a Charlottesville alternative, did a great job reporting the forced and temporary ouster of University of Virginia President Teresa Sullivan, but it has folded.

Funding, indeed, remains a huge problem, even at Bacon’s Rebellion where we all write pretty much for free. One solution, Maddow notes, happened in a tiny Arkansas town that found it was located over a decaying ExxonMobil fuel pipeline. The community raised funds to help hire more reporters to break through the news.

She suggests: “Whatever your partisan affiliation, or lack thereof, subscribe to your local paper today. It’s an act of civic virtue.”

Hear! Hear!

Where the Poor Are

ram wise countyBy Peter Galuszka

With expanding Medicaid about to become a major issue with the incoming Terry McAuliffe administration, it is curious to see exactly where the poor people in Virginia live. An intriguing New York Times interactive graph provides clues and allows one to draw some rather disturbing conclusions.

The single worst pocket of poverty of 76.7% appears to be in an inner city part of Hampton. Trailing not far behind are inner city parts of Norfolk (67.8%) and Portsmouth (64.9%).

Much-touted RVA is a hotbed for low-income people as defined by individuals making less than $11,945 a year or a family of four making $23,283 a year. Despite all the hoopla you read about Richmond becoming an artsy draw for white, educated millennials, the capital, at least its downtown and east end, is as poor as church mice.

An east end section near Fairfield Avenue is 67.% poor. Manchester south of downtown has rates of 35% and farther south it is 50.7%.

Zip over the mostly white Short Pump area where the fancy stores are in Henrico and poverty is about 2 percent. I tried to look up where Jim Bacon lives but the chart said it was a “low population area” and rates weren’t available. My area in southwestern Chesterfield is about 3 percent.

A cursory scan around the state did not show any poverty rates anywhere close to those of the inner cities of Tidewater or Richmond –certainly not in Northern Virginia although Winchester seemed a little sketchy.

In more rural areas, Halifax County in the dying tobacco and textile belt was high but the surrounding area was low. An area near Lynchburg showed 50 percent levels.

Another curiosity was that once you get to the Southwest, you can see the black hand of coal. The Virginia coalfields are generally just west of U.S. 19. Giles County to the east of it has poverty rates of about 13 %. But cross to the western counties and watch it double (Buchanan 23%; Dickenson, 21.3% and Wise, 25.6%).

What do these counties have in common? A dying coal industry and even dying is a misnomer. One would think that these areas would be swimming in money thanks to black diamonds. Anything but. They’ve been stripped and raped with the wealth flowing elsewhere. This is something to keep in mind when you hear about “The War on Coal.” Turns out the “War on People Living Near Coal Mines” has been going on since the late 19th century.

The Times chart is a wonderful reality check. It should have huge applications as expanding Medicaid is considered. The lesson seems to be that extreme poverty is concentrated in neglected inner city neighborhoods and abused rural areas.

If (God forbid!) poor people start flocking to emergency rooms once they get Medicaid, those emergency rooms are likely to be in large, downtown teaching hospitals like the Virginia Commonwealth University Health Systems and Sentara Norfolk General Hospital. They won’t be in rich, white suburban areas for the simple reason that public transit is lacking. In rural areas, the poor may well have to find rides to take them dozens of miles to find care.

(Hat tip to Scott Elmquist) 

The Zany, Crazy Cold War Days Return

“Give me back the Berlin wall b52
give me Stalin and St Paul
I’ve seen the future, brother:
it is murder.Leonard Cohen

 By Peter Galuszka

The other night I watched Dr. Strangelove, one of my favorite movies. Then I read the headlines.

China is cracking down on U.S. journalists, especially those representing The New York Times and Bloomberg, by threatening their visa renewals if they keep reporting about the corrupt ties between Communist party officials and business.

President  Barack Obama orders two unarmed B-52s to fly smack down the middle of a “no fly” zone recently declared by China as a diplomatic move against Japan and Taiwan over some rocky islands.

Meanwhile, back in Russia, my old stomping grounds, President Vladimir Putin is celebrating Ukraine’s decision to stick with Mother Russia in an economic union that should help keep alive the memory of empire.

Gee, it sounds like old times.

As bad as it seems, I am more concerned about what’s going on with China and how it is being ignored by most Americans outside of big financial and media centers like New York. China is playing its economic hole card to force America to go along with its mossback ways involving freedom of speech and force projection.

On this score, we always give the Chinese a free pass because we like their cheap goods and also because they hold a lot of their debt. Back in the Cold War, threatening the visas of a couple of dozen U.S. journalists would have been headline news. Not anymore and that’s worrisome.

The Times won a Pulitzer last year for its coverage of the shady and endlessly complex relations between Party members, their wives and children, and various businesses. After the Party announced an internal crackdown on scams, the government last summer promptly started hassling foreign, including U.S., companies with SWAT teams of accountants and court orders for their books.

I’m not a China Hand but the tonality is very different now. It seems bitter. China’s old guard clings to control. Wealth has spawned expectations that seem to be met only with Web crackdowns and gobs of air pollution. Military threats are more common. A comeuppance seems inevitable.

What does it mean to Virginia? China is Virginia’s top importer, double the level of Brazil, the next highest. Top imports are machinery, furniture and salt. Virginia’s export – coals – far outdistances its Chinese imports in volume by many times. And China’s going to keep needing coal, especially the metallurgical type.

In terms of the defense industry, angrier showdowns with China will hurt the state, since the Navy will move assets to the Pacific from places like Hampton Roads which were major staging areas for the decades’ long wars in Iraq and Afghanistan. Obama is already putting a small contingent of Marines in Australia.

Concerns remain about China’s alleged cyberattacks on U.S. data centers and surveillance. It could be that the highly questionable scope of U.S. spying by the National Security Agency could be more directed at China than at Middle Eastern terrorists, but it’s all part of a troublesome mix.

Years  ago when I was Moscow bureau chief for a large business magazine, I was constantly annoyed when my New York editors always seemed to hold China in higher regard as a potential reformer than the Soviet Union. Money talks and I think they liked the advertising potential that never would be realized with the Russians.

History would prove them right on the money. But pre-Putin, Russians did enjoy a number of years of remarkable freedom of expression. Sadly, that’s over (as well as the lives of several of my Russian journalist friends who were either murdered or have died suspiciously).

Yet China never seems to have made all that much of a transition when it comes to freedoms. It has plenty of people in jail for saying what they think and they target websites, shutting many down.

On that score, my New York editors, it turns out, were wrong on both counts. At the moment, though, it’s back to the future.