No Weaknesses in February Employment Report

March 10, 2018

https://www.bls.gov/news.release/empsit.nr0.htm

Ever since the “Great Recession,” as the economy very slowly recovered, there have always been some hidden weaknesses in even the best of reports.  If the economy added a lot of jobs as measured by the establishment survey, the employment level, as measured by the household survey, didn’t measure up.  If the unemployment rate dropped, it was often because some of the labor force had mysteriously vanished.  Or the average work week declined.  Or there were downward revisions to the previous two months.

But not this time.  The economy added 313,000 jobs – much more than expected.  And the growth in employment blew past that figure, rising by 785,000.  The only reason that the official unemployment rate didn’t drop is because the labor force grew by 806,000 – in a month when the total population grew by only 160,000.  So where did all of these workers come from if the economy was at “full employment” as so many “economists” would have you believe?  They came from the labor force backlog that was created by the “mysteriously vanishing labor force” trick employed by the Obama administration.  As a result, the labor force participation rate rose by 0.3%.

And there was more good news.  Manufacturing employment rose by 31,000 and is now up by 125,000 in just the last four months.  The average work week increased by 0.1 hours and wages rose by 0.1% – a modest increase, but one that keeps wage growth year-to-year at 2.6%, which is greater than inflation.  And the numbers of jobs added were revised upward for both December and January, adding another 54,000 jobs.

I’ll admit that the growth in manufacturing employment puzzles me.  Exports haven’t grown at all, while imports have been soaring.  That leaves domestic consumption as the only possible explanation, but GDP (gross domestic product) grew at only a 2.5% rate in the fourth quarter.  Perhaps growth is accelerating in the 1st quarter?  Perhaps manufacturers are beginning to sense that, while the tariffs we’ve seen so far under Trump have been modest, Trump means business with his “America First” approach and they are changing their strategy away from off-shoring and back toward more domestic production.  If that’s what’s happening, and if Trump continues to levy more tariffs to help domestic manufacturers, then the job gains we saw in February may be only a small taste of what’s to come.

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Trade Deficit Soars in January

March 8, 2018

https://www.bea.gov/newsreleases/international/trade/2018/pdf/trad0118.pdf

The above-linked report, released by the Bureau of Economic Analysis (BEA) this morning, reports that the trade deficit soared in January to $56.6 billion, the worst reading since October 2008.  Here’s a chart of the data, dating back to January of 2010 when President Obama boasted that the U.S. would double its exports within five years:  Balance of Trade.

Exports of manufactured goods fell in January and remain at the same level as March of 2012.  During that time, imports of manufactured goods have risen by $36 billion.  The goods deficit rose to $76.4 billion in January, an annual rate of $917 billion.  The deficit in manufactured goods alone was $68.3 billion, and is rapidly getting worse.  Check this chart:  Manf’d Goods Balance of Trade.  Since Trump took office, the trade deficit has jumped by 16%.

The trade deficit is killing economic growth.  It cut 4th quarter GDP (gross domestic product) growth by 31%.  Without the effects of trade, 4th quarter GDP would have come in at 3.63% instead of the actual figure of 2.5%.  GDP hasn’t grown by 3% since 2005.

This isn’t what Trump promised us.  While tariffs on steel and aluminum would be a good start, what’s needed badly are tariffs that cover the entire spectrum of manufactured products until a balance of trade is restored.  Perhaps with the departure of globalist Gary Cohn from Trump’s economic team, some real progress on trade may finally be possible.


The Trade Deficit is Bankrupting the U.S.

February 13, 2018

Earlier this past week, the Commerce Department released the trade figures for the month of December.  The news wasn’t good.  The overall deficit jumped to $53.1 billion, the highest since the Great Recession in 2009.  Worse yet, the deficit in manufactured goods soared to a new record of $69.0 billion as a $2.7 billion increase in exports was swamped by a $6.7 billion increase in imports, which rose to $183.2 billion.  Check this chart:  Manf’d Goods Balance of Trade.  This is the 3rd month in a row that the deficit in manufactured goods has set a new record.  This is quite the opposite of what Trump promised during the campaign.  To be fair, the increase in the deficit is due to the improved economy, leaving Americans more willing to open their wallets and buy, and is not due to any trade policy blunders by Trump.  But Trump’s dithering on trade is directly responsible for the lack of improvement.  All we’ve gotten is talk, threats and endless (and pointless, I might add) negotiations (primarily on NAFTA) – nothing more than we’ve gotten from previous administrations for decades.

In another story last week, Congress approved (and Trump signed) a spending bill that ended the brief government shutdown – a bill that grows the national debt by an estimated $1.5 trillion over ten years.  This is on top of the $1.5 trillion added by the Republicans’ tax cut legislation.  And all of that is on top of the $1.5 trillion cost of the American Recovery Act implemented under Obama.  Yesterday, Trump introduced a budget plan that would grow the national debt by $7.5 trillion over the next ten years.

So what’s the relationship?  Why do I bring up the trade deficit and the national debt in the same post?  As I explained in Five Short Blasts, the trade deficit is the root cause of our federal budget deficit.  To understand, draw a line around the United States on a map.  Now, draw arrows that represent cash outflows from that circle and cash flowing in.  The money spent on imports – currently running at about $3 trillion per year – is an outflow.  The money we collect from exports that we sell – currently running at about $2.4 trillion per year – is an inflow.  That leaves a deficit of about $600 billion per year.  If that money didn’t come back in some fashion, every penny of U.S. wealth would eventually be gone.  Every American would be flat broke.  It’s exactly the same as your check book.  Keep taking money out without putting any back in and – well- you know what happens.

So the trade deficit puts us in a huge bind.  Fortunately, though, it presents those countries who sold us those imports with an equal but opposite problem.  They’re now collecting a big pile of U.S. dollars that ultimately have value in only one place.  The U.S. is the only place on earth where U.S. dollars are legal tender.  This means that those countries who sold us those imports now have to reinvest those dollars back in the U.S. in some fashion.  For one, they can use them to buy exports from the U.S. – which they do – but obviously not in equal measure.  What to do with the rest?  Invest in American companies?  That makes no sense.  Those are the same companies that their exports are trying to drive out of business.  So they use the money to buy American debt obligations, or “treasuries.”

The federal government then uses the money collected by selling treasuries to finance deficit spending, thus plowing back into the economy the dollars that the trade deficit took out.  In this way, the federal government is able to keep the economy on a positive footing, maintaining an illusion of prosperity in the U.S.  And the biggest way they do this is by collecting less tax revenue from you than it takes to finance their programs.  Essentially, the federal government subsidizes your income.

Check out this chart.  It graphically shows the relationship between the growth in the national debt and the cumulative effect of the trade deficit:  Cumulative Trade Deficit vs Growth in National Debt.  Notice how closely the two parameters track each other.  Also, you’ll notice that any time the growth in the national debt lags the cumulative trade deficit, a recession is the result – the most recent being the “Great Recession” of 2008.  In the run-up to that recession, Congress focused on reining in the deficit and the result was George Bush’s famous “jobless recovery” from the recession that occurred at the turn of the century.  Home ownership was declining and the housing/mortgage industry turned to sham loans to put people into homes – bad loans that nearly collapsed the entire banking industry.  When Obama took office, he correctly blamed global trade imbalances, and world leaders agreed.  What did they do about it?  Not a damn thing.  Like parasites, they could all agree that they were killing the host, but all continued to hungrily feed on it.

So how bad is the national debt?  Let’s begin with a little historical perspective.  In 1929, the national debt was $16.9 billion dollars, which was about 16% of GDP (gross domestic product).  By the end of World War II, it had understandably ballooned to $269.4 billion, or 121% of GDP – unacceptably high.  By 1973, it was whittled back down to only 33% of GDP.  Then it began to grow again.  Not coincidentally, in 1975 the U.S. ran its last trade surplus and became a “debtor nation.”  Soon after, the national debt began to explode.

Some economists have used the benchmark of the GDP to gauge the seriousness of the debt.  As long as it doesn’t exceed 100% of GDP, they would claim, the national debt is manageable.  Where do we stand now?  Take a look at this chart of national debt, measured as a percentage of GDP:  National Debt as Percentage of Chained GDP(2).  We’re back over 100%.  It actually declined slightly last year as the budget deficit shrank a little and as the GDP grew more than it has in years.  We’re not likely to see it decline again any time soon as the national debt is now expected to grow by $7 trillion in the next ten years.  Although it took 32 years to climb from 32% of GDP to 100% in 2013, it will hit 200% in much less time if nothing is done about the trade deficit.

However, the situation is actually worse than that.  The “GDP” isn’t the one who is on the hook for the national debt.  It’s taxpayers – you and me.  So let’s take a look at the national debt in per capita terms – that is, how much of it each one of us owes.  Take a look at this chart:  National Debt Per Capita, 1929-2017.  This should scare the hell out of anyone.  Each of us is now on the hook for $50,000 of the national debt, which is 2-1/2 times the burden of each American at the end of World War II!  And look at this chart:  National Debt as Percentage of Total Household Net Worth.  In 1962, the national debt was only 3% of the total household net worth of all Americans.  Today, it’s hovering near 30%.

“Total household net worth” includes some very wealthy households, like those of Bill Gates, Warren Buffet and other billionaires.  Where does your household’s net worth fit in?  Take a look at this chart of household net worth, as measured by the Federal Reserve in its tri-annual survey of household finances:  Household Net Worth.  While the “mean” (or average) household net worth has grown nicely  from $163,000 in 1962 to $692,000 in 2016, the “median” value remains stuck at about $100,000 where it’s been for two decades.

You need to understand the difference between “mean” and “median.”  If nine people have $1 in their pockets and a tenth person has $100 in his pocket, then the “mean” value of what these ten people have in their pockets is the total divided by the number of people which, in this case, is $10.90.  The “median” represents the value at which half of the people have more and half have less.  In this case, the “median” value of how much these people have in their pockets is only $1.  Half of these ten people have $1 or less, and half have $1 or more.  (One of them has a lot more!)

This means that the household net worth of at least half of all Americans is $100,000 or less.  And, in all likelihood, most of the other half don’t have a whole lot more than $100,000.  The median value is skewed by only a small percentage of households.

On average, a household has 3.2 people.  Remember that each American “owes” $50,000 of the national debt.  That means that each household owes about $160,000 on the national debt.  Compare that to the median household net worth of $100,000.  In all likelihood, if the amount you owe on the national debt were subtracted from your net worth, you’d be completely broke.  You’d actually be “in the hole” by about $60,000!

To be honest, I’ve been hearing warnings about the national debt for all of my nearly seven-decade life.  So far, nothing really bad has happened.  At some point, you have to begin to wonder if those who claim that the national debt doesn’t matter are right.  Who knows how this might actually turn out?  Nobody knows.  Will Americans ever have to pony up the money to pay the debt?  I doubt it.  It’s in no one’s interest to bankrupt Americans.  After all, the rest of the world depends on us continuing to buy their products.  What is likely to happen, in my opinion, is the same thing that has happened in other cases where nations have been unable to repay their debts.  There will be a “debt-forgiveness” program of some sort, perhaps overseen by the World Bank, that will let us off the hook, but will come with some extremely harsh concessions – a Greek-style austerity program as a minimum.  The U.S. will become a slave-state for the rest of the world, never again able to exert any influence over world events or even our own destiny.

Is that what we want?  There’s only one escape from this dilemma – the restoration of a balance of trade.  The only way to make that happen is through the use of tariffs.  It’s exactly what Trump proposed during his campaign but now seems unwilling or unable to implement.  Where is the media outrage over this situation?  Instead of the news being dominated by stories of our looming economic demise – which it should be, all we get is stuff that more properly belongs in tabloids or on page 20 of The Times, at best.  It seems that our journalists are either too ill-informed on the subject of economics to probe the issue, or are too lazy to bother looking into it.  The salacious “she said, he said” stuff is easier and sells better.  It’s not exactly “fake news” but, in the grand scheme of things, it’s certainly trivial news.  There are much more important things, like the trade deficit and the national debt, that needs our focus.


Another Month, Another Record Trade Deficit

January 6, 2018

Yesterday the U.S. Bureau of Economic Analysis released the international trade data for the month of November:

https://www.bea.gov/newsreleases/international/trade/2018/pdf/trad1117.pdf

The overall deficit rose to $50.5 billion, the worst reading since January of 2012, but not quite a record, thanks to steady, dramatic improvement in the balance of trade in petroleum products which, at one time, used to be the driving force behind the trade deficit.  But no more.  What drives the deficit now is manufactured products, and the deficit in that category hit a new record in November of $65.1 billion, topping the previous record of $64.7 billion set only one month earlier.  Check out this chart:  Manf’d Goods Balance of Trade.  Exports of manufactured goods rose to their highest level since December of 2014, but that rise was swamped by a jump in imports to a new record of $176.8 billion.  Here’s a chart of imports and exports that also shows the goal that Obama had set in January of 2010 to double exports within five years:  Manf’d exports vs. goal.  It never happened.  It never will.

Scrapping existing trade deals and returning to the use of tariffs to restore a balance of trade, bringing manufacturing back to the U.S., was the centerpiece of Trump’s promise to “Make America Great Again.”  So far, all we’ve gotten is the same dithering on trade that we’ve gotten from previous administrations for decades.  This trade data shows that instead of becoming great again – at least in the manufacturing sector of the economy – America is getting worse.  This isn’t what Americans voted for a year ago.

 


Seven Months Into Trump’s Administration, Has Anything Changed?

August 14, 2017

I’m back from a hiatus at my north woods retreat, and there’s a bit to catch up on.  For now, however, I’m wondering what has really changed in terms of the economy since Trump took office seven months ago.  Let me begin by sharing a recent experience.

My wife and I stopped into a small restaurant in Boulder Junction, Wisconsin for dinner one evening earlier this week.  Boulder Junction is a tiny town in Vilas County in northern Wisconsin, a popular vacation area frequented mostly by folks from Chicago and Milwaukee.  A polite Asian lady, speaking broken English, seated us and told us the waitress would take our order shortly.  Upon ordering, the waitress assured us that our order would be prepared as we had requested.  It wasn’t.  When we complained, the waitress – without even offering to make it right – apologized and explained that there was a “language barrier” in the kitchen.  A language barrier in Boulder Junction!  I couldn’t believe it.

Another old lodge that we visit for dinner is staffed with waiters and waitresses from Lithuania.  They just can’t find reliable help in the north woods of Wisconsin, they explain.  However, another restaurant just up the road seems to have no problem.

I know what’s going on here.  These little businesses don’t have the wherewithal to recruit foreign laborers.  So how do they get them?  While I can’t provide proof, I’m certain that the Chamber of Commerce is importing foreign labor and pushing them on these businesses, or making them available at rates so cheap that these businesses don’t even have to bother with trying to hire locally.  So, when it comes to Trump’s promises to stop these kinds of practices, there’s no evidence that anything has changed.

Changing gears, the Commerce Department released the June trade figures last week.  Here’s a chart that shows the balance of trade in manufactured goods:  Manf’d Goods Balance of Trade.  As you can see, it continues on the same downhill trajectory that it’s been on throughout the Obama administration.  In fact, in the 2nd quarter of 2017, the deficit in manufactured goods set a new record of $185.6 billion.  In other words, contrary to Trump’s inaugural vow that:

“… rusted out factories scattered like tombstones … stops right here and stops right now!”

matters have actually gotten worse.  While the Trump administration is currently involved in renegotiating NAFTA and in negotiations with the Chinese, and the U.S. negotiators are reportedly taking a much harder line in these negotiations, I’m very pessimistic that any improvement in our balance of trade will result.  Why?  Because there’s nothing to negotiate.  The ONLY thing that will make a difference in America’s favor is tariffs, something that no nation would agree to in “negotiations.”  Anything they will agree to will be totally unenforceable and any attempts to enforce them would be met with whining and, more importantly, a cut-off in funding of candidates unless they pressure the Trump administration to back off of enforcement actions.  These same kinds of negotiations have been tried and have failed for decades.  Most recently, Obama’s deal with South Korea, which he hailed as a “big win for American workers,” has actually proven to be a disaster.

In the meantime, the “new normal” economy that emerged during the Obama administration, in the wake of the Great Recession, goes on.  GDP growth remains stuck in the 1-2% range, wages are stagnant and job growth (when viewed in the context of the “100,000 jobs is the new zero” economy) is anemic at best.  The economy is being kept afloat by deficit spending (up 10% so far this year), a once-again growth in credit and an inflated stock market.  The illusion of good times isn’t going to last.

I’m growing impatient with the Trump administration’s dithering on these issues.  Can you tell?


Population Density Drives Trade Imbalances Again in 2016

June 26, 2017

I’ve finished my analysis of trade in manufactured goods for 2016 and, as expected once again, the news isn’t good.  The overall deficit in manufactured goods soared to yet another new record in 2016 of $680 billion, beating the previous record set one year earlier by $32 billion.  A thorough, country-by-country analysis of the data reveals one overriding factor that’s driving this deficit- population density.  Since the signing of the Global Agreement on Tariffs and Trade in 1947, the U.S. has systematically lowered barriers to its market for all countries, as required by that treaty and by the World Trade Organization that it spawned.  But that policy has yielded vastly different results.  While the U.S. enjoyed a surplus in manufactured goods of $34 billion with the half of nations with population densities below the world median, it was clobbered with a deficit of $704 billion with the other half of nations – those with population densities above the median.  Same number of nations.  Starkly different results.

Check out this chart:  Deficits Above & Below Median Pop Density.  First, some explanation of the data is in order.  I studied our trade data for 165 nations and separated out those product codes that represent manufactured products.  That’s no easy task.  There are hundreds of product codes.  While the Bureau of Economic Analysis makes it easy to track what’s happening with “goods” in general, that includes such things as oil, gas and agricultural products – goods that aren’t manufactured.  You’d think that they’d be interested in tracking manufactured products, given the level of political rancor on that subject, but they don’t.  The only way to arrive at that data is to sift it out, product code by product code.  Subtracting imports from exports, I was able to determine the balance of trade in manufactured goods for each.  I then sorted the data by the population density of each nation and divided these 165 nations evenly into two groups:  those 83 nations with a population density greater than the median (which, in 2016, was 191 people per square mile, up from 184 in 2015) and those 82 nations with a population density below the median.  I then totaled our balance of trade for each group.

As you can see, in 2016, our balance of trade in manufactured goods with the less densely populated half of nations was once again a surplus, but a smaller surplus of $34 billion.  This is down from $74 billion in 2015, is the third consecutive decline, and has fallen by almost 80% from the record high of $153 billion in 2011.  Why?  As the manufacturing sector of our economy is steadily eroded by huge trade deficits, we simply have fewer products to offer for sale to other nations.  Exports fell by $44 billion in 2016.  (Remember Obama’s pledge to double exports?  What a laugh.)

Conversely, our balance of trade in manufactured goods with the more densely populated half of nations was a huge deficit of $704 billion, down slightly from the record level of $722 billion in 2015.

Some observations about these two groups of nations are in order.  Though these nations are divided evenly around the median population density, the division is quite uneven with respect to population and land surface area.  The more densely populated nations represent almost 77% of the world’s population (not including the U.S.), but only about 24% of the world’s land mass (again, not including the U.S.).

Think about that.  With the people living in 76% of the world’s land mass, the U.S. enjoyed a surplus of trade of $34 billion in manufactured products.  But with the rest of the world – an area less than a third in size – the U.S. was clobbered with a $704 billion deficit!  Population density is the determining factor.  It’s not low wages.  The average purchasing power parity (or “PPP,” a factor roughly analogous to wages) of the densely populated half of nations – those with whom we have the huge deficit – is almost $20,000.  The average PPP of the less densely populated nations with whom we enjoy a trade surplus was about $18,000.  Wealthy nations were just as likely to appear among the deficit nations as among the surplus nations.

Nor is the other popular scapegoat – “currency manipulation” – a factor.  Nearly every currency in the world weakened against the dollar in 2016.  (Only 19 nations experienced an increase in the value of their currency.)  Among the 19 nations whose currencies rose, we had a deficit in manufactured goods with 8, and a surplus with 11.  On average, the deficits worsened by 115%, driven by a huge increase with Madagascar.  Remove that anomaly and the deficits actually declined by an average of 8.4% – in line with the currency theory.  Among the 11 nations with whom we had a surplus, the surpluses improved on average by 14% – again, in line with the currency theory.

However, among the 85 nations who experienced a decline in their currency vs the dollar, we had deficits with 27 of them.  On average, those deficits fell by 13.4% – exactly the opposite of what the currency theory would predict.  Among the remaining nations with whom we had a surplus, the surplus rose by an average of 33% – again, exactly the opposite of what currency theory predicts.

Therefore, we can conclude that our trade deficit in manufactured goods behaved exactly the opposite of what the “currency theory” would predict 80% of the time.  Why?  As noted earlier, most currencies fell vs the dollar last year.  This happened because the U.S. economy was in better shape than the rest of the world, at least in the minds of investors.  That’s what determines currency valuations.  Not manipulation.  Currency valuation has almost nothing to do with trade imbalances.  It affects the profitability of companies operating in different countries, but rarely makes any difference in the balance of trade.

This is absolute proof positive that trade imbalances in manufactured goods are driven by population density and almost nothing else.  Any trade policies that don’t take this factor into account are doomed to failure as evidenced by the destruction of the manufacturing sector of America’s economy.  The only remedy that offers any hope of turning this situation around is tariffs (or a “border tax,” as the Trump administration likes to call it).  Preferably, such tariffs would target only high population density nations like Japan, Germany, China, South Korea and a host of others.  Why apply tariffs to low density countries with whom we enjoy surpluses and anger them unnecessarily?

Trump was elected due in large part to his promises to tear up NAFTA and withdraw from the World Trade Organization and begin imposing a “border tax.”  It’s time to follow through on those promises while we still have a shred of a manufacturing sector left to build upon.

 


Trump was right to pull out of the Paris Climate Agreement

June 3, 2017

Let me begin by making clear that I am an environmentalist.  It was my concern for the environment – especially my little piece of the environment that I enjoy in the north woods – that was the genesis of my discovery of the inverse relationship between population density and per capita consumption, which I presented and explained in Five Short Blasts.  It’s a clear-eyed look at just where unending population growth will take us.  Few have devoted as much of their time to trying to save the planet.

Let me also make clear that I’m neither a GOP conservative nor a Democrat.  As I stated in Five Short Blasts, the platforms of both parties – both of which embrace and promote population growth – produce nothing more than weaving left and right along a path to ruin.  So this post isn’t politically motivated.

“Climate change,” the now-politically correct term for global warming, is real.  The link to human activity is undeniable.  I’ve watched Al Gore’s “An Inconvenient Truth”  and agree with its premise.  Greenhouse gases like carbon dioxide (CO2) and methane are building up in the atmosphere and trapping solar heat.  The science is clear.  Kudos to the scientists.

But shame on environmentalists.  The environmental movement has been a colossal failure.  If it weren’t, we wouldn’t now find ourselves in the fix that we’re in.  We wouldn’t be in the midst of a mass extinction.  The dire consequences of global warming are now inevitable.  Environmentalists admit as much.  And who is to blame for all of this?  There’s plenty of blame to go around but it could be argued that no one is more to blame than the leaders of the environmental movement themselves.  There may be a special place in hell for these people for what they’ve done.

Why do I say such a thing?  A little history is in order.  Going back decades, to the ’80s, if my memory serves me correctly, the environmental movement was in trouble.  The Vietnam war was over and young, impatient activists seized upon the environment as a new cause.  Their approach was radical and intolerant.  Industry, the civilian half of the “military industrial complex” that was the object of so much scorn by young radicals during the Vietnam era, was demonized as the enemy of humanity by the environmental movement.  The environmental movement was anti-industry, anti-development anti-everything to the point where they were perceived as being anti-humanity.

At the same time, as a result of new trade policies ushered in by GATT (the Global Agreement on Tariffs and Trade, enacted in 1947), the de-industrialization of America was underway.  Factories were closing.  People were losing their jobs.  And the country was being flooded with imports from Japan.  Eager to find a scapegoat, industry successfully blamed the environmental movement for making it impossible to continue manufacturing in America.  People began to despise these young, impatient, intolerant and uncompromising environmentalist radicals.

Industry had its own image problems.  Both sides saw an opportunity and began to collaborate.   The environmental movement softened its approach to development and, in return for the environmentalists’ endorsement of new development projects, industry began to embrace some of their more reasonable demands and causes.  The environmental movement made a deal with the devil and the concept of “sustainable development” was born.

Soon after, the company I worked for served up an example.  They announced plans to build a new plant on a pristine “green field” site – a piece of undeveloped property they owned.  At the same time, they also announced that another such piece of property was being set aside as a sort of wildlife refuge, never to be developed.  This, they proudly proclaimed, was a prime example of “sustainable development.”  “How the hell is that sustainable?” I wondered.  Half of the property in question was now gone.  It didn’t take a genius to figure out where that will ultimately lead if such “development” is “sustained.”

The term is an oxymoron and there is no such thing as “sustainable development.”  It makes me bristle every time I hear it.  By it’s very definition, “development” means putting natural resources to work to enhance the lives of human-kind.  There’s nothing wrong with that, as long as you recognize that, in a finite world, the process has to stop at some point.  It can’t be sustained forever. A finite resource can only sustain a certain number of people at a high standard of living.  Even a child should be able to understand this.  Yet, that is exactly what corporate leaders and their environmentalist lackeys would have you believe – that we can continue growing our population and continue to consume more and more, and thus grow their profits – “sustainably.” Forever.

Of course, the leaders of the environmental movement responsible for this mess won’t find themselves alone.  If there’s a hotter place in hell, it’s occupied by economists – those people who, in the wake of their Malthusian black eye, proclaimed that there is no limit to man’s ability to overcome all obstacles to growth, and vowed never again to even consider that population growth could present challenges.  It is yet another claim unable to stand up to even the most rudimentary scrutiny, but is the foundation upon which the concept of “sustainable development” is built. Incredibly, the environmental movement has bought into this.

With all of this said, I decided to do my own objective evaluation of the Paris Climate Agreement to decide for myself the wisdom of Trump’s move.  I started with Wikipedia’s take on the agreement, but then decided to go right to the United Nations’ web site that documents the whole thing.  I wanted to read the agreement for myself.  But, try as I might, I’ll be darned if I can find it.  There’s lots of explanation from the UN about the agreement, but I couldn’t find the agreement itself.  That kind of thing always makes me a little suspicious.

Anyway, here’s some key aspects of the agreement:

  • Certain few developed countries – most notably the U.S. – are targeted to generate all of the reduction in greenhouse gases.  Many undeveloped nations are actually allowed to increase their emissions in order to allow them to develop.  China, the world’s worst polluter, committed to only 25% of the reductions in greenhouse gas emissions, in per capita terms, that the U.S. committed to achieving.
  • Aid, beginning at a minimum of $100 billion per year above and beyond aid that nations are already receiving, must be provided by developed nations to help undeveloped nations develop faster and to help them deal with the effects of climate change.
  • Each nation sets its own goals, consistent with the overall goal to limit global temperature rise to 2 degrees Celsius or less, but then must report annually on their progress toward meeting their goals.

Already, I was beginning to have my doubts.  Forcing dramatic emissions cuts on the U.S. while allowing other nations to increase their emissions seems to preclude the U.S. from ever re-balancing trade and rebuilding the manufacturing sector of the economy, even if it meant producing products in plants that operated under strict environmental regulations as opposed to the filthy factories spewing smog in China.  This feels like some sort of “eco-trade barrier.”

Secondly, the requirement that wealthy nations boost their aid to developing nations by a minimum of another $100 billion per year to help them develop seems like a money grab.  We all know where the vast majority of funding would come from – the U.S. – just as the U.S. funds a disproportionate share of the U.N., the World Trade Organization, the World Bank, NATO, and virtually every other multi-national organization.

Finally, as I scanned through the many web pages that the UN serves up, I found the real goal of the agreement.  In the UN’s own words, here it is:

  • The ultimate objective of the Convention is to stabilize greenhouse gas concentrations “at a level that would prevent dangerous anthropogenic (human induced) interference with the climate system.” It states that “such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner.”

And there it is!  “… enable economic development to proceed in a sustainable manner.”  This agreement isn’t about saving the planet or the environment.  It’s about keeping environmental degradation just tolerable enough that we can continue to pack the planet with more corporate customers.

If climate change is the result of human activity, then isn’t it logical that any effort to combat it should begin with a focus on limiting the number of humans or their activity?  What is gained if we all cut our greenhouse gas emissions per capita by 50% but then double the population?  Absolutely nothing!

The U.S. has already made strides in reducing greenhouse gas emissions. But it isn’t even close to being enough.  To achieve the cuts that President Obama committed to in the Kyoto protocol – cuts of 80% or more – the plan relies heavily on “carbon capture.”  That is, CO2 would be extracted from exhaust stacks and stored in tanks or underground.  Essentially, it’s a process of creating a CO2 “landfill” which, if we all cross our fingers and toes and hope real hard, maybe it’ll never leak and create such a catastrophic jump in atmospheric CO2 levels that the planet is almost instantly cooked!

Any approach to the climate change problem that doesn’t begin with a plan to stabilize and gradually reduce the human population to a level where we can all enjoy a high standard of living without threatening the planet is a hoax.  Climate change is real, but this Paris agreement is just that – a hoax.  It has little to nothing to do with fighting climate change.  Instead, it’s globalization and “sustainable development” on steroids.  There is an old saying that goes something like this:  “If you can’t bewilder them with brilliance, then baffle them with bullshit.”  That’s exactly what “sustainable development” does.

Critics have mocked President Trump, saying that he is incapable of grasping the complexities of the Paris agreement.  It could be argued that perhaps it was President Obama who didn’t understand that the agreement he proclaimed to be such an accomplishment actually does nothing for the climate and simply suckered the U.S. into yet another self-destructive deal.  And it’s time for all people who are concerned about climate change and the environment to wake up to the fact that the environmental movement has been hijacked by those who profit from plundering the planet and that they, too, are being suckered by the concept of “sustainable development.”

I’m not terribly concerned.  I believe that if the world doesn’t wake up to the inverse relationship between population density and per capita consumption, then the unemployment, poverty and rising death rate that it fosters are going to do more to put a lid on greenhouse gas emissions than the Paris agreement could have ever hoped to achieve.

In the meantime, other world leaders have rushed to the defense of the Paris agreement.  No surprise.  They can kiss goodbye the $100 billion (per year!) they were counting on.  Plus, championing the Paris agreement is all upside for politicians with no downside.  Everyone loves them for their concern for the planet and they can never be held accountable, since it’s impossible to gauge success under the agreement.  It’s like a campaign promise that never has to be kept because no one can tell whether or not you’ve delivered.

Americans have been fleeced far too much in the name of globalization.  Clearly, Trump wasn’t baffled by this BS.  I applaud him for having the guts to walk away from this deal and for being willing to take the political heat for doing so.