All Politics Is Local

The phrase “all politics is local” is commonly associated with former Speaker of the House of Representatives Tip O’Neill, but it has an important corollary: the global is local.  Things that happen far away—decisions made by complete strangers—can have a profound impact on quotidian reality, which is why situational awareness is so important: it pays to pay attention to what’s going on around you. Such is the case with Chinese foreign policy and Long Island’s recycling crisis.

Close-up of two people salvaging items from a trash pile with the Shanghai skyline in the background.

“Informal” recyclers picking through trash for usable components in Shanghai.  At first encouraged by the Chinese authorities, informal recycling is dirty, dangerous work, especially when undertaken without any safety equipment.
Photo Credit:ngader – Flickr, CC BY 2.0,

The firms that held recycling contracts here backed out of them when it became clear that they could no longer make a profit re-selling the bundled paper, metal, glass, and plastic.  Recycling Today reported that Green Stream Recycling had to suspend operations because they simply weren’t making enough money.  Long Island’s municipalities have had to scramble to return to more basic recycling efforts, after several years of so-called “single stream” recycling, in which items to be recycled were lumped together at the curb (often resulting in contaminated items that could not be separated or re-sold).  The scramble included having to pay to incinerate or landfill items that were previously sold by the towns, leading to budget gaps.

So how does this connect to Chinese foreign policy?  Well, for many years, China imported much of the world’s recycling in a quest to obtain raw materials.  Acquiring raw materials from the earth is usually capital-intensive, whereas recycling them is labor- and time-intensive.  China had plenty of labor, so it used recycling as a way to kick-start its drive for economic development, beginning in the 1980s.  At its height, the Chinese scrap industry controlled almost half of the total recycling market, importing about 70% of the world’s 500m metric tons of electronic waste and 12m metric tons of plastic waste each year, according to The Guardian.

But becoming the “world’s wastebasket” was uncomfortable.  The largely unregulated industry is a major cause of pollution in China, and led to serious health effects.  Also, China’s economy did so well in the interim that more traditional sources of raw materials were now in reach.  The Chinese government began pulling back on accepting the world’s waste in 2012-13, with Operation Green Fence, announcing that newly rigorous waste quality legislation would be strictly enforced and they would no longer accept poorly sorted or dirty shipments of recyclable waste from foreign exporters.  Within months, hundreds of thousands of metric tons of scrap had been rejected, and hundreds of importer’s licenses had been revoked.

As some noted at the time, Operation Green Fence should have been a wake-up call to the generators of waste—Long Islanders in particular—that their current model of consumption was going to be unsustainable in the very near future.  But area residents and political leaders carried on as before, and failed to create successful domestic recycling treatments, products, and markets. The warning went unheeded until two things happened in 2017: first, Operation “National Sword” cracked down on plastics, and second, China told the World Trade Organization in July 2017 that beginning in 2018, it would no longer accept 24 categories of solid waste.  Accordingly, the ban went into effect January 1, 2018.

Almost immediately, recycling began piling up on Long Island.  Riders of the Long Island Rail Road are familiar with the sight of recycling facilities close to the tracks; these began to burst at the seams with mountains of paper and plastic spilling in all directions.

Overhead shot of overflowing cardboard recycling and a forklift-type machine.
Town of Brookhaven Materials Recycling Facility in Brookhaven on Oct. 29.
Photo Credit: Jessica Rotkiewicz for (click image to go to article)

It’s plainly evident that coverage in the mainstream and trade press provided plenty of warning that recycling efforts in the United States would hit a bump.  But there were even earlier warnings, in the scholarly literature. These are the peer-reviewed journal articles containing research based on both primary and secondary sources.  Analyses of Chinese recycling and waste disposal practices, both formal and informal, and of the authorities’ response to them have appeared at least since 1997: see, for example, this article in the Chinese Journal of Environmental Science, or this 2005 article in Environmental Impact Assessment Review.  

And there have been analyses of both the health effects of environmental contamination have been examined since the early part of this century: in 2006 there’s a paper on e-waste contamination at a particular site in Guiyu, southeast China in the Journal of Material Cycles and Waste Management, which was followed by a study documenting the elevated blood lead levels in children there in Environmental Health Perspectives in 2007.  In 2011, a study in the Journal of Hazardous Materials found that uncontrolled recycling activities led to contaminated soil and vegetables that were grown in that soil.  Analyses of environmental policymaking revealed the deleterious environmental impact on China’s accession to the World Trade Organization in 2006, the government’s attempt to “jump start” a semi-autonomous civil society with the creation of non-governmental environmental organizations (which could coincidentally provide a relatively safe-for-the-Communist-Party outlet for citizen activism) from 2003 and 2007, and of the inefficiency of Chinese environmental regulations in 2010.

This research was done by both Chinese and international scientists, and clearly the Chinese government had been paying attention.  Being the processor for the world’s trash was totally at odds with China’s self-image, and contrary to the view it wanted to project abroad.  After all, how does it look when the host of spectacular 2008 Olympic Games is also known as the world’s wastebasket? Within a few years, China would be making its intention to cut back known within the industry.

The point here is not about recycling; as much as recycling is a good thing that we should all do more of.  The point is that we could and should have seen China’s policy decisions coming. There was ample warning that both their need and their desire for raw materials obtained from scrap was waning years ago—in fact, at the same time that many municipalities on Long Island switched to the less-preferred “single-stream” model.  The island’s policymakers need to keep an eye on what happens elsewhere in order to be prepared for what will happen here.

(Originally published January 25, 2019)


Trade Wars

It’s not for nothing that George Lucas starts his epic story with a trade war that descends into the Clone Wars (Star Wars episodes I-III)

Long Island importers are already feeling the pinch from the Trump administration’s shotgun approach to trade (fire off threats in all directions, hope nothing shoots back).  This is not the same thing as taking a hardline, which is when your interests are aggressive, or taking a softer line as when your interests are less aggressive. In each case, effective negotiation involves making your interests clear, your negotiating points are communicated and consistent, and your redlines are enforced.

Trade wars are bad for business in general. Economic forecasters from the National Association for Business Economics are predicting a sharp slowdown in U.S. economic growth over the next two years, from 2.9 percent in 2018 to 2.4 percent in 2019 and just 2.0 percent in 2020. The NABE economists attributed their weaker outlook in part to a growing economic drag from President Donald Trump’s trade policies. The import taxes that Trump has imposed on China and some other nations have prompted retaliatory tariffs on U.S. exports.

The scattershot approach, on the other hand, means nothing in a negotiation is clear — either to your own side or to anyone else.  This increases political risk, and that raises prices in ways both readily visible and at first hidden.

For example, one way prices rise is through import bonds.  Importers in the U.S. are required to have bonds worth 10% of total estimated duties, fees, and taxes; those that fail to meet this requirement can have their shipments held by U.S. Customs and Border Protection (CBP) and be charged additional fees.  Since the administration has begun slapping on tariffs, the CBP has sent out thousands of “insufficient bond” notices since last fall:

Since coming into effect last year, the tariffs have pushed up manufacturing costs, upended decades-old global supply chains and inflated prices for consumers, resulting in lower sales and forcing companies to defer investments. This, in turn, has dimmed global growth outlook, roiling financial markets.

Other ripple effects are less obvious, among them the rising expense of U.S. customs bonds. But for small companies that can ill afford the added cost, the impact can be crippling.

Given the extra duties associated with Trump’s tariffs, importers have been forced to post bonds that are worth much more to guarantee they can cover the added cost of bringing Chinese imports, and foreign steel and aluminum, into the United States.

The story notes one extreme case where an importer’s normal bond requirement of $50,000 increased to $26 million!

This hurts importers all over the country, and especially here on Long Island where we depend on imports from off the island for almost everything we consume. The Long Island Import Export Association has even posted a resource sheet for importers from Avalon Risk Management that addresses how increased duties will impact import bonds.

Import prices also have a knock-on effect on other industries here on Long Island.  In an opinion piece for Long Island Business News, David G. Schieren, the CEO of EmPower Solar and NYSEIA board member writes about the impact on jobs in the solar industry:

Jobs in New York are increasing despite a nationwide solar workforce decline to President Trump’s tariffs on solar panels. However, if the state truly wants to be a national leader on the issue, there is much more to do. While New York currently has over 1,500 MW of solar energy installed, we have a long way to go to reach our goals. Our neighbors in New Jersey and Massachusetts have produced more solar energy and created more industry jobs than New York.

But that’s obviously not the only industry to be impacted on Long Island, given how little is actually manufactured or grown here.  Some of the largest employers here are supermarket chains like Stop & Shop, and if prices go up too much as a result of import tariffs, one option for retailers is to cut jobs rather than pass prices on to consumers. Another option is to just go ahead and pass the price on, which would hurt those who could least afford it.

And it would seem that we in fact have a little of both going on — employment in Nassau and Suffolk counties appears to have gone down over the past several months:


And according to the Bureau of Labor Statistics, the price of food has gone up in the region, with price increases in five of the six grocery categories.

Someone shopping for groceries at Wild By Nature might not even notice that the price of wild-caught salmon steak has gone up 30¢ per pound (for example — I’m just making this up).  But someone shopping at Dollar Tree is sure to notice that canned tuna is now a nickel more per can. Pushing people at the edge under the water means that those people who were self-sufficient will be no longer and must be helped — either through the state or through charities, or both.  Which also impacts us all. As IMF managing director Christine Lagarde recently noted, “Nobody wins a trade war.”

(Originally published April 17, 2019)