Monthly Archives: December 2009

The ‘great big tax’

…Firms that obtain free [emis­sion] per­mits can­not sell them on exit from the indus­try. This encour­ages them to con­tin­ue to oper­ate even if their out­put could be more cheap­ly sup­plied by oth­ers. The com­pen­sa­tion to house­holds is even worse. Those pay­ments will be income-based, phas­ing out as income ris­es. This will increase mar­gin­al tax rates that are already high, with the lost com­pen­sa­tion mean­ing that each addi­tion­al dol­lar in pre-tax earn­ing could trans­late into less than 60c of take-home pay.” Extract from Hen­ry Ergas in The Aus­tralian

How the deal was done

BASIC group meets with Obama in Copenhagen

Offi­cial Chi­nese account of the nego­ti­a­tion of the accord at Copen­hagen, empha­sis­ing, of course, their own role:

The Copen­hagen con­fer­ence has put Chi­na on a high­er and broad­er world stage. Chi­na has rea­son to be proud and Chi­na will work even hard­er! Ver­dant moun­tains can­not stop water flow­ing; east­ward the water keeps on going.

The report pro­vides a detailed account of Pre­mier Wen’s move­ments and con­sul­ta­tions over three days in Cophen­hagen. No men­tion, how­ev­er, of any talks with ‘Friend of the Chair’ and ‘true friend’ of Chi­na, Kevin Rudd.

Global governance in the aughties

First, bodice-rip­ping as polit­i­cal the­o­ry

We live in an era in which unprece­dent­ed glob­al­iza­tion and eco­nom­ic inter­de­pen­dence, lib­er­al-demo­c­ra­t­ic hege­mo­ny, nan­otech­nol­o­gy, robot­ic war­fare, the ‘infos­phere,’ nuclear pro­lif­er­a­tion and geo­engi­neer­ing solu­tions to cli­mate change coex­ist with the return of pow­er­ful auto­crat­ic-cap­i­tal­ist states, of a new Great Game in Cen­tral Asia, of impe­ri­al­ism in the Mid­dle East, of pira­cy on the high seas, of rival­ry in the Indi­an Ocean, of a 1929-like mar­ket crash, of 1914-style hyper­na­tion­al­ism and eth­nic con­flict in the Balka­ns, of war­lords and failed states, of geno­cides in Bosnia, Rwan­da and Dar­fur, and of a new holy war waged by rad­i­cal Islamists com­plete with caliphates and behead­ings rem­i­nis­cent of medieval times.” Extract from The Nation­al Inter­est


Here’s a more sober, more plau­si­ble, assess­ment of the like­ly route for the glob­al gov­er­nance frame­work (at least) from the U.S. Nation­al Intel­li­gence Coun­cil:

The exist­ing inter­na­tion­al organizations—such as the UN, WTO, IMF, and World Bank—may prove suf­fi­cient­ly respon­sive and adap­tive to accom­mo­date the views of emerg­ing pow­ers, but whether the emerg­ing pow­ers will be given—or will want—additional pow­er and respon­si­bil­i­ties is a sep­a­rate ques­tion. Indeed some or all of the ris­ing pow­ers may be con­tent to take advan­tage of the insti­tu­tions with­out assum­ing lead­er­ship bur­dens com­men­su­rate with their sta­tus. At the same time, their mem­ber­ship does not nec­es­sar­i­ly have to involve heavy respon­si­bil­i­ties or bur­den-shar­ing, allow­ing them to pur­sue their goals of eco­nom­ic devel­op­ment.

That veiw from mid-2008 is hold­ing up pret­ty well, so far…except that ‘accom­mo­dat­ing views’ does not mean doing any­thing. Which explains much about why WTO is stymied and why the Copen­hagen con­fer­ence of the UN Cli­mate Con­ven­tion was a farce (there are oth­er rea­sons, too, in each case).

Plurilateralism… get used to it

Churchill and Roosevelt aboard the HMS Prince of Wales

Unless you’ve been asleep since the mid-1930s (when the League of Nations fell apart), the fail­ures of the UN Cli­mate Con­ven­tion in Copen­hagen or the World Trade Orga­ni­za­tion in Gene­va to reach agree­ment should come as no sur­prise.

It’s not the end of the world (or even of mul­ti­lat­er­al­ism) but it’s an his­toric moment, all the same. I sus­pect it marks the icon­ic end of the pax atlanti­ca; the benign dis­pen­sa­tion that has, since its birth aboard HSM Prince of Wales in August 1941, been the engine and guar­an­tor of mul­ti­lat­er­al­ism as embod­ied in the U.N., the WTO, the World Bank, IMF and the rest of the inter­na­tion­al para­pher­na­lia.

Good idea or insidious threat?

When an econ­o­my has trade lever­age, the threat of dis­crim­i­na­to­ry duties need not be sim­ple pro­tec­tion­ism.

The US can help Chi­na make the nec­es­sary adjust­ments toward a reduc­tion in imbal­ances by adopt­ing a uni­form tar­iff of 10 per cent on all Chi­nese imports, based on their val­ues when they enter the US. Six months after the estab­lish­ment of this tar­iff, the rate would increase by one per­cent­age point a month until the Chi­nese trade sur­plus with the US declines to $5bn a month.” Extract from / Com­ment / Opin­ion — Tar­iffs can per­suade Bei­jing to free the ren­min­bi

But who, oth­er than Chi­na, would loose if this idea worked and the Ren­min­bi was reval­ued? Most of the rest of the world. Espe­cial­ly economies with a com­par­a­tive advan­tage in agri­cul­tur­al pro­duc­tion (Aus­tralia, New Zealand, Latin Amer­i­ca) for whom import­ed Chi­nese defla­tion of man­u­fac­tures prices off­sets the EU’s depres­sion of agri­cul­tur­al prices (and infla­tion of man­u­fac­tures prices).

In prin­ci­ple, too, every­one would loose from anoth­er U.S. defec­tion from the core mul­ti­lat­er­al trade rules. But per­haps you could make the case that this kind of extra­or­di­nary action (like the 1980’s Nixon Admin­is­tra­tion ‘shocku’ blow against Japan) doesn’t real­ly impact the rules.

Don’t tell the trees

Like the ‘Car­bon Pol­lu­tion Reduc­tion Scheme’, this is appalling twad­dle. The main ‘GHG’, CO2, and the cycle of ener­gy dis­tri­b­u­tion that it medi­ates through­out the bios­phere is essen­tial to just about every form of life on earth.

After a thor­ough exam­i­na­tion of the sci­en­tif­ic evi­dence and care­ful con­sid­er­a­tion of pub­lic com­ments, the U.S. Envi­ron­men­tal Pro­tec­tion Agency (EPA) announced today that green­house gas­es (GHGs) threat­en the pub­lic health and wel­fare of the Amer­i­can peo­ple. ” Extract from U.S. EPA Press Release

Aliens vs Censors

Vlad the Impaler—the lengendary Tran­syl­van­ian pro­to­type of Drac­u­la—did not, app­par­ent­ly, con­sid­er that some­one could be impaled on their own head. (Have that image in mind? Shame on you!)