Under a common conception of free-market capitalism, firms should do whatever they can – legally – to maximize value for shareholders, which often means maximizing profits. As long as firms do not bear the costs of the externalities they create – like air pollution – they will continue to create them. That’s all taken as a given.
What is a little more sinister, yet still completely legal, is where they will create them. Even in the absence of cash costs per ton of pollution, the effective costs to polluters will vary from place to place; those costs show up in the political difficulty of getting permits to build and operate facilities, the degree of environmental regulation, the likelihood of local muckraking journalists writing unpleasant exposes, the ability of the local populace to bring political pressure to bear, and so on. The net effect is that the low-cost places to put pollution tend to be communities with relatively less political power – in this country, communities of minorities and the poor.
A team of researchers from the University of Massachusetts-Amherst and USC recently released a new report, “Justice in the Air,” that quantifies the disparate environmental impact of toxic air pollution on minorities and the poor, by firm and by facility. Michael Ash and Jim Boyce also have a working paper that describes the data sources and the methodology.
For the study, they merged three data sets: the EPA’s RSEI-GM database, which measures toxic emissions by all industrial facilities, tracks them to 1-square-kilometer cells, and weights them by their impact on human health; census data showing the proportion of minorities and the poor by census block (mapped into the RSEI-GM’s individual cells); and a U-Mass database that tracks the corporate owner of each facility included in the RSEI. From there, for each firm, they calculated the proportion of its toxicity-weighted pollution that affected minorities or the poor.
The results are not surprising. For example, 18.1% of the health impact of air pollution falls on African-Americans, while they make up only 11.8% of the population; 15.3% of impact falls on the poor, who make up 12.9% of the population. (An alternative, discussed in the paper, would be to compare the disparate impact figures not against national population percentages, but against the minority percentages in the local metropolitan area, or in the firm’s workforce.) At the extremes, the disparities can be large; for example, for ExxonMobil – the 9th-biggest polluter in the U.S. – 55.1% of its pollution impact is borne by African-Americans, largely because of two Baton Rouge facilities that together generate 60% of its total pollution.
One of the goals of the Justice in the Air project is to raise awareness of these environmental impact disparities to encourage corporations – via socially-conscious investors, or pesky grass-roots organizers – to improve their ways. Another potential avenue is litigation, although in most spheres it is difficult to make a claim based on the equal protection clause (of the Fourteenth Amendment) without evidence of conscious racial discrimination. The report’s authors also recommend new regulations, for example to limit pollution emissions based on the cumulative impact of all facilities on a given community, not simply on a facility-by-facility basis. Ultimately, though, the question comes down to how much our society wants to round off the harsh edges of the free market, which otherwise would shift even more of its negative externalities onto politically less-powerful groups.
The Baseline Scenario 
African-Americans are poorer than non-African-Americans. Poorer people tend to live in cheaper housing. Housing near pollution-emitting plants tends to be cheaper than housing that is not near such plants. Hence, more African-Americans, proportionally, live near pollution-emitting plants. It’s not “racism” that’s the problem. It’s poverty.
It doesn’t make it right. It just doesn’t make it racism.
Oh, by the way, pollutants of all types (except carbon) is down dramatically since the 1970s, even with a growing population.
http://www.epa.gov/air/airtrends/sixpoll.html
Ah, except your initial point “African-Americans are poorer than non-African-Americans” originated with racism, segregation, Jim Crow, etc. While much of that de facto systemic racism has been erased, the effects of it are still being felt by today’s generations, which brings us back to your first point.
But of course I agree, it’s the poor who are unable to combat the industries, and that’s where the problem is. These corporations are not “targeting” communities based on color of skin, but purely economic considerations.
On your second point, while pollution is down, it could still go down a LOT further, especially in regards to these companies updating their facilities. It is much cheaper for many of these companies to just keep their old “grand-fathered” in refineries and such than to build new and cleaner ones.
A good book that devotes a lengthy chapter on the subject of this is Antonia Juhasz’s “The Tyranny of Oil”, which I recommend as a good read anyway, especially in these economic times.
While corporate activities are natural targets for environmental groups, a study by Liam Downey and Brian Hawkins at the University of Colorado at Boulder, “Race, Income, and Environmental Inequality
In the United States” found that as African-American household income increased, African-Americans moved away from areas of pollution.
The report found, “[B]lack/white proximity to environmental hazards has less to do with increases in white geographic mobility (relative to black geographic mobility) than with the ability of higher income blacks to escape the highly polluted, disorganized, and deteriorated neighborhoods to which so many low income blacks are confined.”
If Justice in the Air Project focused on increasing the income of minorities by improving the education and the high school and college graduation rates of minorities, minorities and our whole society would be so much better off than by the project’s focus on blaming corporate America.
To highgamma:
Nowhere does Mr. Kwak’s post make a claim of racism, it merely reports which minority communities are impacted. Indeed, the post notes that proving an equal protection claim is all but impossible unless there is a provable nexus to conscious racial discrimination.
Socio-economic trends are obviously important, but where it is also possible to identify racial trends doing so is frequently useful. And this is not at all the same as claiming that polluters are targeting communities on the basis of race. That is possible, but clearly not proven on this evidence alone.
Highgamma,
The charts you link to go back to the 80’s, not the 70’s, and it is not for all pollutants, but only air.
Corporations have one purpose and one purpose only: to maximize shareholder value.
Protecting the population (including the poor) is the job of the government. Exploitation of the poor (by corrupt government, by corporations, by interest groups, by the rich) is a failure of the government.
The solution then lies with the government, not with corporations.
Yes – since corporations are in principle sociopathic predators, the necessary government solution is to restore the proper, historical state of affairs, where incorporation is allowed only in specialized contexts for limited periods of time.
(And we must of course rid ourselves of this execrable “legal person” concept.)
I read this post and think immediately of Summers’ declaration that the best use of the global South is as a toxic waste dump for the rich countries.
(I know he now claims that was a joke or something, but it wasn’t. This has indeed been the record of the globalized capitalism whose water Summers has devoted his life to carrying.)
Not sure cause and effect are in the right order here. For example, the very argument made in the report is being used in a current lawsuit to prevent Chevron’s Richmond (CA) refinery from expanding its range of fuels: the argument is that Richmond has a population of disadvantaged minorities and should be protected.
Except the refinery was built in 1902, in what was then a nearly-deserted place. AFTER the refinery was up and running, poor people came to work there and live in the now-cheap land around it.
Even if a company does the responsible thing and locates its polluting facility away from existing population centers, the fact remains that people will work there, and this community – employees of a polluting industry and their families – will tend to be socioeconomically disadvantaged.
Brazil thought it was starting over when it built its capital hundreds of miles into the jungle. But the squatters camps established by the folks who actually built Brasilia never went away, and all the problems of the coast the government thought it was escaping came with them. We treat (and have treated) some among us horrendously. It extends to all aspects of our lives.
It shouldn’t be right to compare pollution impact to local population, unless the firm ONLY operates (production to consumer) in a local market. Firms choose where to place their factories, and whilst it might not be true that they deliberately choose to pollute the lives of the poor, they do choose cheaper places for their factories, as economic logic would dictate.
Another point, many of these examples will amount to chicken and egg – polluted areas will have cheaper housing (on average) and so would be expected to house a disproportionate amount of the poor, whatever their political power.
I believe that the topic of this blog is “The Global Economic Crises”. Mr. Kwak’s post is completely off topic. Why does it appear here?
I am one of the co-authors of the Justice in the Air report. Although it’s not the focus in the report, there has been much research on two questions that commentators raise: (1) which came first, the community or the polluter? and (2) is it race, or is it income?
With respect to (2), my own research (Ash and Fetter 2004) and other studies using multivariate methods find that race and income have independent effects on exposure to industrial. Some of the race effect can be attributable to the lower average income of minorities, but by no means all. I see that as one of the most important markers of the *political* character of pollution exposure–it’s not pure “economic” decision-making by polluters (or, rather, the political costs are part of the accounting).
With respect to (1), let me refer you to a report by Manuel Pastor, another Justice in the Air co-author, that summarizes research by Pastor and colleagues. http://www.ucop.edu/cprc/documents/pastorrpt.pdf
Although the analysis treats only LA, there is longitudinal (i.e., over time) evidence of placement of new facilities in high minority neighborhoods and, in particular, in neighborhoods undergoing “ethnic churn” (transition from one minority group to another).
These are good questions; they are discussed in the report and the citations may also be helpful.
To echo highgamma and Taunter, there is a key question of causation here. James implies that polluters choose to locate in poor areas because poor people have less political power. I think that gets the causation backwards, and that real estate around polluters is less desirable and therefore cheaper and populated by poorer people. I haven’t read the linked paper. Does it try to control for this?
I agree with AJ that the causation may be backwards, but in the end the net result is the same so perhaps it doesn’t matter.
Ultimately the problem though is that the pollution exists at all. While it certainly is unfair who is getting the short end of the stick, the fact that anyone gets the short end is the real problem.
It seems to me we play a sort of game with pollution where we try to move it, or trade it, or tax it or whatever. We do this all the while where solutions, albeit not free, exist to eliminate it. Instead of playing “whack-a-mole” with the pollution, maybe it’s time to just straight out regulate it?
Of course that not politically tenable, which of course is funny because it has popular support (in general it’s funny how much is not “politically tenable” despite overwhelming popular support – perhaps that says something about our system of government?).
Unfortunately even if we could solve it here, the pollution would probably be exported somewhere else where the system is weaker. In fact I would guess that’s part of why everything has a “Made in China” sticker stamped on it.
Which would lead to my final argument – it’s not really possible to have “free trade” with countries that are neither free, nor exercising reasonable standards in terms of environmental control or workers rights. “free trade” is just an illusion in those cases, because it isn’t a level playing field.
Of course the conservative answer to that is to bring us down to their level, rather than to insist they be brought up to ours. Pathetic.
There seems to be quite a bit of denial when it comes to the effects of preferential treatment of governmental programs. Just for one example, redlining in combination with the GI bill, not only drove prices down for those denied access, but drove up prices for those allowed to live in the “good” neighborhoods.
http://www.pbs.org/race/006_WhereRaceLives/006_01-unclesam.htm
As the discussion in the comments above makes clear, this post seems very superficial because it leaves all the important questions unexamined. Consequently it comes across as a postcard-level piece of ‘sophomoric socialism’.
Just to raise one issue of my own, what about the incentives impact of such an inquisitorial approach to the activities of individual companies? If this sort of calculus were to rule, then most companies could quite rationally avoid investing in areas where minorities live altogether. I guess that’s an outcome which might suit those who believe that minority issues are the property of the collective, and only government can ever get involved in them while keeping its hands clean, but that reflects a set of assumptions which deserve to be argued rationally instead of just assumed.
Love your stuff, when it’s on topic. Yes, I know it’s your blog, but much of the readership you are interested in will not be interested in following you far down this path.
James,
I do think this is an important issue. Since this is new topic, more information might have especially helped. Seems like your post just touches the surface. Are you planning to follow this up with additional data and thinking?
It does seem that most of those who’ve commented recognize that we do no live in “free market capitalism.” I think your final sentence about the question of “how much our society wants to round off the harsh edges of the free market” is framed well. It’s a matter of degree, when, where, how, etc., rather than whether we round off those harsh edges.
-ATCooper,
Reductions since the 70s are even larger than the reductions since the 80s. And the report mentioned in the original post is on emissions of air pollution.
And the aggregate emissions of the six common pollutants and their precursors since the 70s are here.
-Full disclosure; I helped to make the linked graphic.
Exactly.
Was reminded as well of the e-waste being shipped off to mainland China where villagers have no way to know what is poisoning them, and no one but the stray western reporter to let them know.
Can you imagine what’s being dumped in Africa??
My guess is that they consider the environmental crises to be an inseparable part of the other crises. We have one huge global crisis that creates micro-crises in a very unfair way. It’s possible that these fellows are “enlightened globalists,” or have been fooled into thinking they are, or are pretending to be. Only their hairdresser knows for sure. Based on Boone’s association with Brunswick-UBS in Moscow, Simon’s IMF background, and Kwak’s McKinsey-Insurance Industry-Yale flavor — I’m guessing they’re bought and paid for and they know it.
Corporations aren’t targeting anyone. The underlying reality is that powerplants, factories, oil refineries, mines, etc. are built because they are judged to be socially useful – even with imposed undesirable externalities like pollution. Increased prosperity allows resources for avoiding the undesirable externalities. It makes less sense for poor people to invest their limited resources in avoiding undesirable externalities that can be tolerated. A just society will be careful to regulate closely those externalities that may be tolerable on a daily basis, but destroy people’s health so slowly as to be unnoticeable until it is too late. I lived near a chocolate factory for a year. It did not smell as good as you might think. But I save a lot on rent and didn’t get ill.
James, the first sentence of your post and the last represent the very divide. The two are almost mutually exclusive. Free-market capitalism in its purist form would not, could not, include socially conscious expenditures at the expense of shareholders. Until the U.S. feels more comfortable, culturally, with adopting more socially conscious (read, Socialist) measures, we may never bridge the divide. I am an American married to a Brit and spend a LOT of time on the other side of the pond. While the UK is hardly the only or best model of a society with a social net, I am always amazed at how much my fellow countrymen recoil at the idea of socialized-anything at the expense of profits. It’s everyman for himself here, but we don’t seem to have the foresight to see we all pay in the end.
A word of caution – slavery seemed to make a lot sense economically at the time to people in power.
We can rationalize why some should suffer more than others, but at some point we should focus on meeting our needs without damaging the health of non-consumers and the environment.
Is this a joke? I can think of no better way to reduce the first world economies to third world economies in very short order.
Just because something doesn’t cost immediate capital, it can still have an affect on the “cost” of doing business, which i believe is the larger point being made.
From my days in sociology (years ago), FWIR, it wasn’t Either/Or. Factorys needed to be built, and in areas where there was a population, the people with the least amount of political pull (the poor) had the dirtiest factories put by them, which then drove down the value of their property and increased the “cost” of living (through medical care and crime due to increased poverty… etc) decreasing their expendable income further.
However, in areas where there is open space, the heavy polluters could move away from people, but then because the property value around them decreased, they attracted lower income folks who couldn’t afford to live in the nicer areas.
Highgamma, for older communities and infrastructure you’d be increasingly correct perhaps. It requireth not rocket science to see that its all about the zoning. Are wealthier communities zoned the same as poorer communities? Zoning changes all the time and is one of the main reasons local politicians and real estate cats go to jail. Factories that need a lot of land need the land to be cheap. Sure maybe they could put the factory or plant on the outskirts of town, but then will have to bear travel cost. What to do what to do what to do?! So what do we say when the factory is the new neighbor to an existing minority community. Did they set out to be racist, to poison rivers and streams and create six legged three eyed frogs? Honestly, were they trying to kill the American economy? For the folks saying they didn’t mean to be racist and the report doesn’t cite racism. I agree. You’re right. I don’t think they set out to take your 401K or bankrupt your company either. They didn’t mention you by name or say we’re going to run Chrysler in the ground either. Certainly no one on Wall Street said let’s put millions of people out of work. Funny how that works: when its racism they’re supposed to say it, but with everything else were free to draw whatever correlations we want?
We’re talking about pollution and minorities and I have no doubts about the findings of the report in question. Its sinister and evil and anything else foul you might wish to call it as the people who are most affected by this have the least resources to deal with the resulting health problems. I recently viewed a PBS special on three Native American youths who were looking at their tribe, some stolen land as well as pollution. A startling revelation was that nearly 90+ percent of the country’s refineries are near or on Native American land. For the folks saying this isn’t racist I only ask how many treaties have we broken with the Native Americans. You know why, because we were always intentionally giving them land that we thought was worthless. When we found out there was something of value about the land, you got yet another broken treaty. Of import is the fact that there was a conscious decision that Native Americans not have valuable land, even if their previous land was in fact valuable. If they could consciously assign land that was intended to be valueless, then they could also intentionally say, ‘ah just a bunch of indians, go ahead and put the nuclear plant there.’
As with the Native Americans, those responsible for zoning apparently are aware enough of those potentially affected to consistently not zone wealthier neighborhoods for hazardous materials and instead zone areas near or within minority/poor communities. How could such patterns exist if there were not some conscious deliberation occurring? I believe that the only way to have true justice is to seek it on everyone’s behalf. If we had made more effort to see that Native Americans not be polluted, we all would have benefited. If we had worked more diligently to see that there be not even the appearance that was okay to pollute minorities of any race or creed, we all would have benefitted. The US bound itself to Capitalism. Capitalism doesn’t ask about good for environment or responsible stewardship or even public trust and welfare. There are so many pharmaceuticals in the water in Los Angeles, soon who’ll need a prescription? In that equation wealthier people have access to bottled water and other technologies. Still, with the states fighting over an ever decreasing water supply here in the west, it might not matter much eventually because no matter who they set out to target we will all be affected. 25 states have rocket fuel in the water and its in the food supply because its the same water for everyone, plants and livestock included. Everyone’s glaciers are melting and in the US food supply, produce today isn’t as nutritious as previous generations because the chemicals used to force the land to produce abundantly can’t fake vitamins and minerals that have been depleted and of course these are everyone’s vegetables. In the end it won’t matter if they set out to be racist or not, when you don’t protect everyone you don’t protect anyone. When its okay to have protected classes and intentionally not protect others or just not to the same extent, we are seeing that, as the Earth is telling us, no one is protected.