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!)