Population Growth Injected into Carbon Cut Debate

 

http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE59B2OX20091012?sp=true

As reported in the above-linked Reuters article, at least one low-level government official recognizes that projected U.S. population growth will make America’s goals for reducing carbon emissions much more difficult.  Brian O’Neill, a scientist at the U.S. National Center for Atmospheric Research, who also works at the International Institute for Applied Systems Analysis in Austria, has correctly observed that projected population growth makes carbon emissions reductions more difficult for the U.S. compared to some other developed countries where their populations are stable or declining. 

The leaders of the G8 nations have agreed to cut carbon emissions by 2050 by 80% from their 1990 levels.  Some of these developed nations are expected to decline in population by 2050, but not the U.S., whose population is projected to be 60% higher in 2050 (at 400 million people), vs. its 1990 population of 250 million.  So an 80% reduction in those emissions by 2050 would translate into a per capita reduction of 87.5% for the U.S.  For nations whose populations are projected to decline, their per capita reductions would be less than 80%.  This will translate into a lower standard of living for Americans than for other developed countries. 

Why is O’Neill talking to Reuters correspondents about this?  Is he a rogue low-level official speaking for himself?  Or is he parroting thinking that he’s heard at higher levels in his organization?  Or is it possible that this is an intentional move by the Obama administration to inject the subject of population growth into the carbon emissions debate? 

If the latter is the case, then to what end is the administration broaching this subject?  Two possibilities come to mind.  Since virtually all of our population growth is due to immigration, could it be that the administration is setting the stage for a dramatic change to immigration policy?  The second possibility seems more likely to me – that the administration is trying to shift the focus of carbon emissions reductions to a per capita basis instead of total emissions.  If so, they may think that the U.S. can get some relief on its own emissions goals vis-a-vis other G8 nations, but there’s a danger that such an approach could back-fire.  If total carbon emissions reductions are translated into a per capita basis, then it would be logical to apply the per capita figure evenly to all people of the world.  In such a scenario, U.S. emissions would have to be cut much further, since vast numbers of people already exist at far lower levels of per capita emissions, and population growth projections for many third world countries is even worse than the projections for the U.S.  In other words, if everyone gets to emit their fair share, then U.S. emissions will have to be cut much more drastically than 80%, a level that many already believe is simply unattainable. 

My interest in all of this is, of course, not so much reductions in carbon emissions, but the pressure that this subject brings to bear on the need to reduce our population.  Since economists don’t understand that reductions in our population would actually have huge economic benefits, we’ll all be better off in the end whether the impetus for population reductions is economic or some environmental concern.  The good news here is that, as much as environmentalists would like to keep the population factor below the radar, it’s beginning to be openly discussed.

Finally, the article ends with a quote so egregious that I can’t let it pass without comment:

David Satterthwaite, of the International Institute for Environment and Development (IIED), said … “It’s consumption that drives dangerous climate change, not population.” … “There is at most a weak link between population growth and rising emissions of greenhouse gases.”

Anyone who would make such a statement is being disingenuous, to put it mildly.  The rise in greenhouse gas emissions is directly related to the growth in population over the past couple of centuries.  Even a fifth-grader can understand that total emissions is a function of population times the average per capita emissions.  Only a fool would focus solely on per capita emissions while discounting the role of population growth.  Stabilizing and reducing our population is critical to achieving our goals for greenhouse gas emissions reductions.  If reduced enough, it could also have the side effect of providing a huge boost to the standard of living for everyone.

Renewable Energy Jobs Go Bye-Bye

 

http://www.reuters.com/article/newsOne/idUSTRE5833F220090904

The above-linked article is a little old, but I didn’t want to let it pass without comment.  When the administration began championing “green jobs” and renewable energy as the solution to our unemployment problem, I countered that the manufacture of solar cells and wind turbines was just as likely to end up in foreign plants as any other product. 

Now comes the first evidence of this:

German solar firms Conergy and Solarworld have voiced strong concern about the pricing practices of Chinese panel makers — who undercut their German peers’ products by around 20 percent.

Industry experts say U.S. firms share those German concerns.

… The once red-hot solar sector faces a massive oversupply of cells and modules that has driven down average selling prices for solar systems by more than a fifth in Germany and the United States — two major solar markets — and Chinese companies are grabbing market share by slashing costs.

… Making solar energy affordable through subsidies was always a challenge for Western governments promoting clean energy use, but resisting low-cost imports from China may prove a bigger hurdle.

Equipment for the renewable energy industry is no different than any other product.  It can be manufactured anywhere and, without tariffs to make domestic manufacturing the logical alternative, it will by default end up in the hands of countries where labor is in the worst state of over-supply.  There is no way to gimmick our way out of this fundamental economic truth.

Cap and Trade: Trading One Problem for Another

http://thomas.loc.gov/

http://www.reuters.com/article/politicsNews/idUSTRE55O4R120090627

On Friday, barely noted by the media amid all the hubbub about the death of Michael Jackson, the U.S. House of Representatives passed sweeping “cap and trade” legislation that, over the next forty years, will slowly but profoundly change our way of life in America. 

The main goal of the legislation is to address global climate change by reducing CO2 (and other “greenhouse gas”) emissions by 83% from 1997 levels by the year 2050.  It establishes an all-encompassing energy policy and, though not stated in the legislation, also offers the added benefit of dramatically reducing our dependence on foreign oil (or so I had hoped).  The top link provided above will take you to a summary of this 1200 page bill.  (Just enter “H.R.2454″ in the search window to get to the bill.  The 2nd link will take you to a Reuters article reporting on the passage of this legislation by the House.) 

I applaud the administration for tackling this urgent issue.  But, based upon my reading of the summary, I have two major concerns.  First, upon hearing that the major goal of the legislation was to reduce greenhouse gas emissions by 83%, I jumped to the conclusion that this would translate into an 83% reduction in our use of fossil fuels – eliminating our dependence on foreign oil and, with it, a big percentage of the trade deficit that has driven us to the brink of financial ruin.  But that’s not the case.  Since the law would only require that 20% of our electricity come from renewable sources by the year 2039, it’s clear that the bulk of the reductions in greenhouse gas emissions will be achieved by capture and underground sequestration.  That is, the CO2 will be removed from the by-products of combustion of fossil fuels, stored and then eventually be pumped underground. 

In fact, the legislation calls for programs to incentivize the development of the technology and even a corporation for the management of the underground storage facilities.  In other words, our strategy is to continue extracting fossil fuels from the ground, filling the voids with CO2 and other greenhouse gases, and hoping to God that it never leaks.  This is the same strategy for dealing with waste from nuclear power plants that has been such a source of concern that it has prevented any such new plants from being built in the U.S. in decades.  I think that most people, when they come to understand the strategy, will be very disappointed in this legislation.

But secondly, my bigger concern is that, as far-reaching and sweeping as this legislation is, it has a hole big enough to sail a super-tanker through it.  That is, it does absolutely nothing to address the government’s plans to increase our population by 50% by the year 2050 and indefinitely beyond.  The bill addresses total emissions but, since that’s simply a function of only two variables – per capita emissions and population – it means that if we allow the size of our population to drift higher by 50%, then per capita emissions will have to be cut not by 83% by 2050, but by 92%.  And the underground gas bubble, just waiting to explode to the surface following an unexpected catastrophe or good old corporate mismanagement, will be 50% bigger than it needs to be. 

Opponents of this legislation warn that it could dramatically lower our standard of living, cut consumption and lead to staggering job losses.  They may very well be right.  (Although the alternative of extinguishing life as we know it doesn’t seem a viable alternative.)  It doesn’t have to be this way.  By 2050 we could make dramatic progress toward cutting our population in half.  Greenhouse gas emissions would be reduced by 50% - without spending a single dime, without creating massive new government agencies requiring more taxes to fund them.  The remaining 33% reduction in emissions could easily be achieved through the conversion to renewable energy. 

Obviously, Obama’s economic advisors – avid followers of primitive, 18th century economics that relies upon population growth as an engine for economic growth – had a heavy hand in crafting this legislation.  Even when population growth has brought us to this – relying upon the creation of giant, high-pressure, underground CO2 gas bubbles to avoid cooking ourselves in our own atmosphere, they cling desperately to the mantra of economics that mankind is smart enough to overcome any obstacle to growth. 

This isn’t responsible leadership, it’s creating the illusion of action while actually kicking the can down the road, transforming today’s obstacle to further growth – global warming – into a different obstacle to further growth to be dealt with by future generations and their economists - how to deal with the threat from the rapidly growing, high-pressure, underground CO2 gas bubble.  I suspect that, if they had the opportunity to question their ancestors, they’d grab them by the throats and, barely containing their anger, would shout  ”What in the hell were you thinking?!?!?”

Waving a wand and crossing our fingers, hoping that future generations can come through with technologies to comply with mandates,  isn’t the kind of serious, sober handling of issues that we expected from Obama and his administration.  Is this what they teach at Harvard, that the earth beneath us is an infinite trash can into which we can just dump our problems – out of sight, out of mind?  Come on, President Obama, get real.  We want real, permanent solutions, not dodges.

Higher Mileage Standards to Cut Oil Consumption – or Not?

http://www.usatoday.com/money/autos/2009-05-18-auto-emissions_N.htm

Today President Obama announced plans to increase auto fuel efficiency to an average of over 35 miles per gallon, an improvement of approximately 30% over today’s level. 

The Obama administration announced Tuesday what amounts to a sweeping revision to auto-emission and fuel-economy standards, putting them in the same package for the first time.

The plan would require cars and trucks to average 35.5 miles per gallon by 2016, President Obama said at a ceremony with legislators, regulators, executives of 10 car companies and the United Auto Workers union. The plan would increase the standard and accelerate the requirement from 35 mpg in 2020 set by the 2007 Energy Act.

The president hailed the plan’s potential for cutting our dependence on foreign oil and for cutting greenhouse gas emissions, cutting both by about 30% once all vehicles on the road have been replaced by these more efficient models. 

Thirty percent less oil consumption.  Thirty percent lower CO2 emissions.  Sounds great, doesn’t it?  There’s just one problem.  It’s not true.  Because the government also plans to rapidly grow the U.S. population, through ever-higher rates of immigration and through high birth rates, by 2035 we will be consuming as much oil to fuel our vehicles and we will be emitting as much CO2 as we do today.  After that, further population growth will actually drive oil consumption and CO2 emissions even higher than today’s level!  Don’t believe me?  Check out the government’s own population projections at http://www.census.gov/population/www/projections/summarytables.html. 

It’s not as though the government has no control over this.  They have total control of immigration and use tax policy to encourage a high birth rate.  Why?  Because they can’t envision a healthy economy that doesn’t rely on population growth as the major source of “economic” growth. 

I applaud the president for taking this action, but to sell this as a plan for cutting oil consumption and reducing greenhouse gas emissions is just a bit disingenuous when they also quietly plan to explode the population, more than offsetting any gains from this program.  If the president wants to get serious about cutting oil consumption and CO2 emissions, then we not only need a plan to cut the per capita consumption of oil but a plan to simultaneously stabilize and even reduce our population, the number of “capita,” to a sustainable level. 

Cap and Trade: Don’t Forget the Shipping Industry!!

http://www.reuters.com/article/environmentNews/idUSTRE5364J420090407

The linked article summarizes the Obama administration’s plans for a “cap and trade” system that has a two-fold purpose:  cutting carbon emissions to combat global warming and reducing our dependence on foreign oil.  The basic idea is that the program would begin with the government auctioning permits to industry that would allow them carbon emissions – essentially paying for the privilege of burning fossil fuel.  Once auctioned off, permits can be traded and sold.  This would cap carbon emissions at a certain level.  It would also have the effect of raising the price of fuel and energy, forcing efficiency and a shift to clean and renewable forms of energy.

In crafting such a plan, each nation will have a tendency to draw a line along its borders and apply the program to industries located within.  But there’s one industry that, lying within no one’s borders,  may tend to fall through the cracks – the shipping industry.  For example, each year thousands of container ships arrive from China, Japan, Korea and other exporting nations.  On average, each arrival has burned about 2 million gallons of fuel crossing the ocean, just on the inbound leg.  Obviously, since the U.S. has an enormous trade deficit, many of these ships return empty, burning nearly as much on the outbound leg of the trip.  This amounts to many billions of gallons of fuel per year.  Someone needs to fold this industry into their cap and trade plans. 

The obvious approach may be for each nation to sell permits to shipping industries operating within its borders.  But this would be exactly the wrong approach.  It would simply drive shipping operations offshore to nations without cap and trade programs.  The right approach is to apply a tax to all inbound ships, including ships delivering imported oil.  Each nation has control of its imports, and no control of exports.  Taxing the fuel burned by inbound ships would encourage domestic manufacturing and have the desired effect of dramatically reducing carbon emissions from the shipping industry.  It would also encourage the spread of cap-and-trade programs around the world, forcing other nations to tax the fuel burned by inbound ships in order to prevent their exports from being put at a competitive disadvantage.  On the other hand, taxing the fuel burned by outbound, export-laden ships would encourage other nations not to subject their outbound ships to cap-and-trade, worsening our competitive position and intensifying the global trade imbalance that has collapsed the global economy. 

For the U.S., this would have the highly desirable side effect of reducing our trade deficit.  Sure, nations like China would also tax imports from the U.S. but, since we’re the ones with the trade deficit, any overall reduction in trade will ultimately work in our favor.  

Also, let’s not forget that there may be no industry more capable of switching to renewable energy than the shipping industry.  Until the invention of the steam engine, all trans-ocean commerce was carried in sailing ships.  The wind is still there and could be utilized again.  Sure, ships will be smaller and slower, so we’d need bigger fleets – a boon to the ship-building industry. 

When it comes to a cap-and-trade program, let’s not forget the hundreds of billions of gallons of oil being burned on the high seas.

Tough Choices Highlight Need to Amend Constitution

http://blogs.reuters.com/great-debate/2009/03/26/to-pay-for-vital-programs-congress-must-make-tough-choices/#comment-11315

The linked editorial by Deborah Weinstein, executive director of the Coalition on Human Needs, speaks to the need to make tough choices to fund the intiatives proposed by President Obama in his budget.  In a particularly cynical mood, I wrote the following response:

This may be the fatal flaw in democracy – the inability to make tough choices. Like a family with four children that is run democratically, the end result is inevitably a bankrupt household loaded with toys, run by truant, morbidly obese children, lying around in front of the TV amid the clutter of empty pop cans, potato chip bags and candy wrappers.

How can any tough choices ever be made when we are governed by people interested above all else in re-election who will tell us what we want to hear – that we can have it all while reducing taxes further with each election cycle?

I see absolutely no hope that these problems will ever be addressed.

What hope can we have that any of our problems will be addressed when one party tells us that we can have it all, to be paid for later, while the other party tells us that we can cut taxes more and more without consequence?  Both parties say they want fiscal responsibility, but the time is never right.  There’s always some crisis that must be dealt with first. 

Then I remembered that similar problems are dealt with successfully all the time at the state level.  The arguments about spending and taxes are virtually the same, yet compromise is ultimately reached and budgets are balanced.  Why?  Because it’s mandated by the state constitutions.

In the 222 years since the Constitutional Convention in Philadelphia in 1787, the constitution has been amended eighteen times to add 27 amendments.  Only one amendment, the 16th, ratified 96 years ago in 1913, dealt with the economy and the financing of our federal government.  The 16th amendment established the income tax, addressing the fears of many that the United States would soon become insolvent without it.  Until that time, all federal revenue was generated from tariffs on imports and from some small “excise taxes” that were nothing more than incomes taxes disguised to skirt questions about their constitutionality. 

Just imagine what our nation’s leaders in 1913, concerned about insolvency then, when our national debt was about $2.6 billion, would think if they could see the state of our nation’s finances today.  Today, our national debt is 5,000 times higher.  Even adjusted for inflation and population growth, the per capita share of the national debt burden is about 77 times higher.  In 1913, we had no trade deficit, while in 2008 our trade deficit was $677 billion.  In 1913 we were self-sufficient in energy resources while today we import 75% of our energy needs.   I think it’s safe to say that the framers of our constitution and even our nation’s leaders in 1913 who were so concerned about the potential for insolvency would be absolutely stunned and aghast at what has become of our country, now bankrupt in every sense of the word. 

Because of the political consequences associated with making tough choices, none are ever made.  There is talk in Washington of a complete overhaul of regulation of our financial industry.  But the problems go much deeper and the need for reform extends much further.  Nothing less than constitutional amendments are needed if we are to have any hope of a return to fiscal responsibility and any hope of dealing with mortal threats to the continued viability of our nation, including the trade deficit, energy policy and overpopulation. 

If our philosophical differences prevent us from reaching agreement on how to balance the budget, let’s begin by agreeing that it needs to be done and mandate it through an amendment to the constitution.  If we can’t agree on how long to wait for our free trade policy to eventually restore a balance, we can agree that an enormous, perpetual trade deficit is unsustainable and amend the constitution to require a balance.  If we can’t muster up the courage to utter even a peep of concern about the potential for population growth to transform us into another India, then let’s amend the constitution to at least force a discussion on where we’re going and just high high we’re willing to let our population rise. 

The framers of our constitution could never even begin to imagine the breadth and depth of the problems that now beset us.  Otherwise, they would surely have included mandates to force us to deal with them.  But we can see the problems clearly.  The question is, do we have the courage to act, as our forefathers surely would have if they had a crystal ball, or is this also too tough a choice for us to face?

Energy Consumption Per Capita: Are Americans Wasteful?

https://www.nationalpriorities.org/energy_consumption_per_capita

Here’s an example of how public policy can go awry when the relationships between population density, per capita consumption and employment are not clearly understood.  Click the above link to see a chart of energy consumption per capita for seven different countries.  Recently, I’ve seen something similar posted on various blogs that deal with issues like energy policy and global warming, and in each case the conclusion of the author has been the same – that since Americans use far more energy per capita than other wealthy nations like Germany, Japan and the U.K., then Americans are wasteful and great oil savings (and reductions in carbon emissions) could be realized by becoming as efficient as those nations at the right hand side of the scale. 

At first blush, it seems like a reasonable conclusion, doesn’t it?  After all, the image that immediately comes to mind regarding the relatively higher energy consumption in America is gas-guzzling SUVs, right?  And the image that comes to mind regarding Japan is fuel-efficient cars like the Toyota Prius.  There is some smattering of truth there, although no one thinks about the fact that there are far more Priuses on the road in the U.S. than there are in Japan. 

More importantly, the conclusion that America is wasteful and great energy savings could be realized is erroneous because population density and its relationship to per capita consumption, together with the economic consequences of that relationship,  haven’t been taken into consideration.  In the cases of Japan, Germany and the U.K., their per capita energy consumption is low not because they are more efficient than the U.S. but because their extreme population densities have driven down per capita consumption of nearly everything.  (Japan is ten times as densely populated as the U.S. while Germany and the U.K. are about seven times more densely populated.  Also, notice that, with the exception of the tiny city-state of Luxembourg, the left side of the scale includes the sparsely populated nations of Canada and Australia.) 

For example, consider the effect upon the per capita consumption of dwelling space in Japan.  It’s only 30% of that in the U.S., not because the Japanese like living in tiny homes, but because there is no room for anything larger.  So the energy used to light, heat and air condition their homes, in per capita terms, is only 30% of that in the U.S. as well.  Now, that may sound like a good thing from an environmental perspective until you consider the economic ramifications.

Not only is their per capita energy consumption in their homes reduced to 30% of the U.S., but so too is the per capita employment in all industries associated with building, furnishing and maintaining their homes.  Making matters worse, their per capita consumption of nearly everything, along with their per capita employment in those industries, with the exception of food and clothing, is similarly affected to a greater or lesser extent by their extreme over-crowding.  This leaves them with an enormous glut of labor that can only be gainfully employed by manufacturing products for export.  In essence, this over-crowding and low per capita consumption transform them into a parasitic economy, feeding on the markets and manufacturing jobs of nations like the U.S.

So the only way to reduce per capita energy consumption in the U.S. to a Japan-like level is to cut our overall per capita consumption of everything to their level.  The problem is that this would also cut per capita employment, just like in Japan, but without any other U.S. to turn to for employment of the resulting labor glut.  This would drive unemployment through the roof and start a world-wide decline of living standards. 

So let’s back up and consider the real problem, which is not the per capita consumption of energy but the total, world-wide consumption of energy.  If we want to reduce it, the correct approach is not to drive it down in the U.S., a move that would send global unemployment soaring, along with poverty around the world, but to dramatically reduce the population in overpopulated nations like Japan, Germany, the U.K., China, Korea and so many other places.  Yes, this would actually allow their per capita consumption of everything to rise, but the net effect would be a significant reduction in total consumption while allowing living standards to rise around the world.   

It’s imperative that we understand the economic consequences of overpopulation if we want to avoid a move toward well-intentioned policies that make a complete mess of the global economy.

Obama’s Address to Congress: Clues About Trade Policy

While others may have listened to the president’s speech to Congress last night with an ear for remarks about the stimulus package, mortgage assistance, plans to cut the deficit and some general economic cheerleading, I was listening for clues about what I consider our two most important long-term challenges:  eliminating the trade deficit and stabilizing our population, immigration being the most important aspect of the latter point.

A few days ago, I posted about some hints I was seeing and hearing that, while the administration is outwardly distancing itself from a protectionist approach to trade, they recognize the gravity of the trade deficit problem and are working on it behind the scenes.  (See  Administration Working Quietly on Trade Deficit While Disavowing Protectionism?)  So I was listening intently for any further evidence of this.  For the first half hour or so of the rehash of the economic stimulus plan and bank bail-outs and economic happy talk, I must admit I was growing impatient to hear anything new.  Then came this: 

We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.

Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either. It is time for America to lead again.

He delivered that first paragraph with a look of disgust on his face.  It was a clear signal that he’d like to see products made domestically again.  OK, it wasn’t much, but he piqued my interest.  But the following, delivered later in the speech, really got my attention:

And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe. For the world depends on us to have a strong economy, just as our economy depends on the strength of the world’s.

To me, that’s a clear indication that the U.S. has sent the G20 a message that the U.S. can no longer prop up the global economy by sustaining a huge trade deficit, and that the G20 has agreed.  It sounds as though they’ve made a commitment to cut or eliminate the deficit by spurring demand for American goods in their own countries.  I’ll admit that I may be reading too much into this, but it seems to corroborate some other things I’ve heard.

Will the G20 hold up their end of the bargain by boosting American imports?  These nations have promised this before, but never before has the global economy been collapsed by the trade imbalance.  They don’t want to see it happen again.  But to believe it and commit to it is one thing.  My prediction is that they will fail and the trade deficit will persist, because the economies of badly overpopulated nations are incapable of increasing their consumption.  It will now be interesting to see how much patience the Obama administration has as the trade deficit persists month after month.  Although Obama has expressed a desire to “avoid the possibility” of a turn to protectionism, that’s not the same as an outright rejection of such an approach if others fail.

And finally there was this, just one more indication of his concern with the trade deficit:

… we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.

And the speech was notable for what it didn’t include.  There was not a single mention of anything to do with immigration policy.  Not a peep.  The bad news is that we desperately need real immigration reform that includes dramatic cuts in legal immigration, but the fear was that Obama would do the opposite and even advocate for amnesty for illegal immigrants already here.  So far, there’s been no evidence of that and the lack of any immigration talk last night is further indication that he has no interest in boosting immigration.  As I’ve said before, how could anyone as smart as Obama believe that some of his highest priorities – cutting our dependence on foreign oil and reducing carbon emissions – won’t be made more difficult by importing more oil consumers and more carbon emitters?

One last item:  we can all expect the price of fuels to soar as a result of the following:

But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.

A “market-based cap” would be a plan to tax fuels, making them more expensive and making alternative energy sources more cost competitive.  This sounds like the plan I proposed in Obama’s Opportunity to Kill Three Birds with One Stone.  If it’s kept revenue-neutral by returning those taxes to the taxpayers in the form of reduced income taxes, then it’s nothing to fear.  And, as I proposed, if the fuel consumed by ships delivering imports is included (after all, someone should account for this huge consumption of fuel), then this too would go a long way toward making domestically-produced products more attractive.

If I’m right about all of this - that this administration is committed to eliminating the trade deficit - then there’s great cause for optimism.  We could see an economic renaissance in this country the likes of which we’ve never witnessed before. 

Holdren to be Nominated as Obama’s Science Advisor

http://blogs.sciencemag.org/scienceinsider/2008/12/sources-john-ho.html?cid=143172030#comments

As of the time of this writing, it’s not official yet, but it’s being reported that John Holdren will be named Obama’s Science Advisor.  From what I can gather about Holdren, this is a terrific pick.  Holdren has been an outspoken advocate of strong action to address climate change and, earlier in his career, co-wrote papers with Paul Ehrlich, author of The Population Bomb.  (Here’s a sample:  http://www.sciencemag.org/cgi/pdf_extract/171/3977/1212)

As I’ve said before, although Obama has never directly addressed the problem of population growth, nor has he given any indication at all that he sees it as a problem, you have to believe that someone as intelligent as Obama who is truly concerned about climate change and our dependence on foreign oil will eventually come to the realization that fueling population growth with high rates of immigration will be counter-productive to his environmental and energy objectives.  An advisor like Holdren can surely expedite that day of reckoning.

Obama’s Opportunity to Kill Three Birds with One Stone

The inextricably linked issues of global warming and energy (eliminating our dependence on oil from the Middle East and Venezuela) have been elevated to national security issues by the Obama administration.  So, while consumers have welcomed the plunge in gas prices, they couldn’t have come at a worse time for this administration, for there is nothing that drives down the consumption of fossil fuels (the burning of which contributes directly to global warming) like high prices.  Without high prices, there is no profit potential to provide the motivation for a switch to more expensive alternative energy sources. 

So what is the Obama administration to do?  I see a unique opportunity for Obama to actually kill three birds with one stone here.  “Wait,” you’re thinking.  “You’ve only identified two birds – global warming and energy.”  Stick with me.  We’ll get to the third. 

The key is to drive fuel prices higher, restoring the impetus for improving energy efficiency and for converting to alternative energy sources, without hurting the consumer.  Here’s how that can be done.  It begins with imposing a large federal tax on fuels – oil, natural gas and coal.  Now I can just see your eyes rolling already, so hear me out.  Every penny of this tax should then be rebated to consumers in the form of a tax reduction of some kind – either a reduction in the tax rates or through a tax deduction or tax credit.  This tax reduction should be applied evenly to all individual taxpayers, but not to businesses.  (More on that later.) 

For example, let’s suppose that this tax drives the cost of gasoline back to $4 or $5 per gallon, and that a total of $600 billion is collected from this tax.  And let’s say that there are 150 million taxpayers.  Doing the math, each taxpayer would get back $4,000 at the end of the year.  If, on average, each taxpayer burns 2,000 gallons during  the year, and the tax added $2 per gallon to the price of gas, then that taxpayer comes out even. 

So how does this accomplish anything?  The tax rebate isn’t based upon how much you consume.  It’s based on total consumption by the American public.  So, if you do a better job than average of cutting your consumption, you’re going to come out ahead.  If you cut your consumption to 1,000 gallons for the year while the average remains 2,000 gallons, you’re going to come out ahead by $2,000 at tax time.  In other words, you have an incentive to slash your spending on gas.  At $4 per gallon, we’ve already seen how quickly people begin to use it more efficiently.  The tax rebate at the end of the year is just gravy.  Everyone is going to be highly motivated to cut their spending on gas, just as they were this past summer.  And now the profit potential is still there to motivate a switch to alternative energy sources. 

Why not extend the tax rebate to businesses?  Because, unlike consumers, businesses use vastly different quantities of fuel, depending on the nature of the business.  It’d be an accounting nightmare to try to keep them “whole” in terms of fuel cost vs. tax rebate.  Besides, their products are all consumed by individual taxpayers, so if the fuel tax collected from businesses is also rebated to individual taxpayers, then the latter are kept “whole” in terms of the tax rebate off-setting the higher cost of products.  In addition, with higher fuel costs and no tax rebate, businesses will be super-motivated to improve their energy efficiency. 

But, since businesses will have to add this fuel tax to the cost of their products, won’t this make American-made products uncompetitive with imports?  Ah, this is where the “third bird” comes in!  Imports would also be taxed at a rate that would eliminate this cost discrepancy.  But isn’t that a tariff that violates WTO (World Trade Organization) rules?  Yup!  And this is where it gets really good!  The global community, led by the UN, has been beating us over the head to come up with a plan to address global warming.  So, UN, here’s the plan.  Do you have a better one?  If not, then the global community, led by the UN, needs to sit down with the WTO and demand changes to trade rules that accommodate nations’ efforts to address global warming.  After all, everyone acknowledges that one of the keys to cutting fuel consumption and CO2 emissions is to produce more products locally.  And no one can argue that trade policy takes precedent over the need to fight global warming. 

In fact, that brings up another issue.  Billions of gallons of fuel are burned every year in ships delivering products all over the world.  That’s a lot of oil consumption and a lot of CO2 emissions.  It has to be factored into the equation by someone, in some way, because the cost of dealing with global warming is going to be astonomical.  A good way to account for this is to require each nation to include in its emissions the fuel burned by ships delivering imports, beginning with their point of origin.  What I’m saying is that imports should be taxed based upon the fuel that was burned to deliver them. 

For example, let’s suppose that a ship delivering cars from Japan burns about five million gallons of fuel and delivers 5,000 cars (fairly typical figures).  That fuel should be taxed at the same rate as fuel burned in the U.S.  Again, assuming that the tax adds $2 per gallon to the cost of fuel, then that delivery of cars should be assessed a tax of $10 million.  That would add $2,000 to the cost of each imported vehicle.  In fact, even the delivery of oil in tankers should be taxed in the same way, to mitigate the cost of dealing with the emissions from the oil burned in the ship’s engines.   

This means that imports would have to be taxed twice, or in two ways:  one tax to offset the higher cost of domestically produced products (unless the exporting nation has implemented a similar system of fuel taxes, making the imports equal in cost to domestic products), and a second to offset the cost of mitigating the carbon emissions that came from the ship delivering them.  Of course, all of these taxes or tariffs, whatever you choose to call them, would also be rebated to American taxpayers.  The goal is not to collect revenue, although some additional revenue could go a long way toward balancing the federal budget, but that’s a whole can of worms I won’t open here.  Rather, the goal is to provide incentive for cutting the use of fossil fuels and switching to alternative energy sources. 

The beauty of this is that the higher cost of imports would also go a long way toward restoring a balance of trade, an issue that many experts now agree is at the heart of the global economic melt-down. 

So, with one stone – a tax on fuels – the Obama administration could kill three birds:  reduce oil consumption and greenhouse gas emissions, and even restore a balance of trade, all with minimal impact on American consumers.  He can use the climate change issue to drive a wedge between the UN and the WTO and effect a badly-needed overhaul in WTO rules that would restore some balance to global trade.