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!)