Paul Krugman came out today for “border adjustments” (tariffs) on goods from countries who aren’t participating in economy killing CO2 emissions control taxation.
If you only impose restrictions on greenhouse gas emissions from domestic sources, you give consumers no incentive to avoid purchasing products that cause emissions in other countries; as a result, you have an inefficient outcome even from a world point of view. So border adjustments here are entirely legitimate in terms of basic economics.
Actually they’re “entirely legitimate” if you swallow the premise Krugman is pushing here, namely that CO2 is a “pollutant” and its restriction is a “legitimate” reason for imposing taxes on both your own economy and the goods coming from another economy which doesn’t agree with the premise. And, of course, this ignores the probable reaction countries hit with this tariff might have.
Krugman then attempts to justify such a “border adjustment” by claiming such a move is probably legal under “international law”:
The WTO has looked at the issue, and suggests that carbon tariffs may be viewed the same way as border adjustments associated with value-added taxes. It has long been accepted that a VAT is essentially a sales tax — a tax on consumers — which for administrative reasons is collected from producers. Because it’s essentially a tax on consumers, it’s legal, and also economically efficient, to collect it on imported goods as well as domestic production; it’s a matter of leveling the playing field, not protectionism.
And the same would be true of carbon tariffs.
What he sort of dances around when he claims this will “level the playing field” is all products, regardless of their origin, will see dramatically increased pricing. The point of the tax is to hopefully steer consumers to domestically produced products which are produced under government approved conditions rather than those from countries like China and India which aren’t playing the game the US wants them to play. Not only will the consumer here be asked to pay for the CO2 offsets imposed on domestic industry, but they will have to pay for offsets for foreign producers as well when the VAT cost is passed on in the price of the goods.
The thinking, obviously, is that if prices are the same, US consumers will buy US goods instead of, say, Chinese goods. The problem, of course, is much of what we consume isn’t made here anymore. So the result would be the US consumer would end up paying higher prices for goods produced in China with no change in behavior by China.
Additionally, China will view this as a protectionist measure, whether the WTO thinks it is “legal” or not. China will simply claim that the US, as a rich country and large “polluter”, should be doing more than they are doing in terms of emissions control, and impose its own “WTO legal” VAT in response. Same with any other country targeted by the US for a tariff.
This is, frankly, an invitation to a trade war. Krugman can wrap his protectionist argument in whatever legality he’d like, but the fact remains most countries effected will view it as an attempt to limit trade and react accordingly. And, of course, by Krugman’s own admission, it is you who will be paying the tariff cost for China and India if this is ever passed into law.
It appears there is a problem with directly replying to a comment, i.e. if you left click on reply, it doesn’t thread it under the comment you are replying too.
I have no idea why. We recently upgraded to a newer version of WP and it may be a bug in that.
However, there is a workaround that Billy Hollis noted in the comment section of one of the posts. If you will
left click right click [edited by Billy] on “Reply” and open a new tab, the reply you leave will be threaded with the comment.
Sorry for the inconvenience, but we do have a work around until we figure it out.
I have a professional colleague in Honduras who wrote many of us a message yesterday, pleading for help getting the word out about the true situation as he sees it. I don’t know if it’s prudent to give his name at this point.
I requested permission to repost that message here, and he readily agreed. So this is written by a Honduran, directly addressing the rest of world and appealing for us to understand the situation there and take action appropriately:
I seek your advice. I have to find the best way to make all governments, especially the world leaders, understand what is happening in Honduras. I’m gathering IT friends and developers to brainstorm on this and hopefully save our country from terror.
This alias is not political [He refers to the mailing list on which he posted this message] so I won’t write in those terms. But can say that the great majority of my country celebrated the forced departure of our Ex President. He and Hugo Chavez did the best they could to divide this nation, making us fight against each other, but in the end, they made us more united and more aware of what Democracy really is, and embrace it. They’ve done us a favor actually.
Just so you know what happened in one line: Our Ex President was trying to repeat what Hugo Chavez has achieved in four other countries by controlling the national media, bribing top officials and threatening citizens. He wanted to illegally change our constitution so that he could create a one and only Party, do away with national media, change the way referendums are carried and be reelected indefinitely by these false referendums.
If you ask why we voted for him as President in the first place? Well, he presented himself as a normal candidate in opposition to corruption. We basically voted (me included) for him, because we were against the other guy. Little did we know that he would start insulting the USA (country where most of us have family and friends) and befriending all its enemies. He took a hard, hard left. With Hugo Chavez’s money, he bought three TV channels and a News Paper that is delivered “free of charge” to every citizen’s door step. You get 24X7 news on how “Pinky and the Brain” plan to take over the world. His own Party ousted him a few months after being elected President.
You need to know that all of the Churches (all the brands), the Teachers Union, Commerce Chambers, Worker Unions, The Congress, the Supreme Court, the Police, the Armed Forces, everyone has celebrated his ousting. Every single person I know (that did not work directly for him) (rich or poor) is very happy with the actions taken and the new temporary President that we have until November’s elections.
To sum it up we all just had it with this guy and are happy he’s gone. Unfortunately, what I see on the world news is astonishing to us. All Presidents back him up and want him reinstated. Hugo Chavez has troops from Venezuela lined up on our Nicaraguan border. Are we going into war for something that we all wanted as country to stop? Hugo Chavez knows that he has to act soon before the media and world start to see what really happened here. So we have to get the message out as fast as possible.
When I requested permission to repost, this was his response:
I’m sorry it took this long to get back to you. We’ve been having outages of Internet ever since the 7.1 earthquake that hit a couple of weeks ago. There are many reasons why it was so urgent for us to get rid of this man. He disregarded the whole country for the sake of Hugo Chavez’s interest. Bridges fell down, schools and houses broke down, etc, during the Earthquake. Even before that the roads and hospitals are destroyed by total lack of maintenance, etc, etc. We are losing jobs to economy crisis. Becoming a communist (Marxist) country to make Hugo happy is the furthest thing on our minds. Our real government had to take extreme measures (which we applaud) to oust this person.
I also need to add that our Ex President did not submit a yearly budget to the Congress as our Constitution demands every year. He was hoping to suffocate the Congress and Supreme Court by withholding funds. It is calculated that he spent more than three years budget into his campaign to be reelected (strong prohibited by the Constitution and named as treason). The only way that amount of funds availability is possible is by Hugo Chavez’s oil money. But he never reported any of it to anyone. How can the world expect us to carry a fair trial for this man when he has more cash than several neighboring countries together. Kicking him out of the country was the only way. If this was the 70’s, he would be dead. But like all modern terrorists, they rely on our respect for Human Rights; But that has a limit also.
So yes, by all means, post and repost as much as you can, please. Tomorrow I plan to go around taking pictures and video of the city so you can add them if you wish. I greatly appreciate the support I’m getting from several RD’s. [He refers to a program of Microsoft-oriented software developers.] We are very nervous, scared actually. We know very well that we are right and the media and the Presidents of other countries are wrong and uninformed. To me CNN is the USA’s worst enemy. It’s become ours too.[Emphasis mine]
If he is successful in getting pictures and video, I’ll post them. In the meantime, this corroborates the position set out by McQ in his previous two posts, maintaining that Obama’s response has been… well, let’s euphemistically say “unimpressive”, though my own opinion is that it demonstrates that Obama doesn’t seem to place much value on freedom, here or anywhere else. And don’t get me started on our media.
I wish the Hondurans good fortune in getting through this political crisis. I trust my colleague’s account, and I will be guided by it in my own opinions. You may judge whether you agree.
But not Iran.
Hmmm. And even saying anything about Iran could be considered “meddling” in the internal affairs of another country, per the Obama administration, but apparently working actively within Honduras to stop what it characterizes as a “military coup” isn’t meddling.
Confusing foreign policy.
An interesting aspect of the Honduran “coup”, per Fausta is:
-Tuesday last week the Honduran Congress, led by members of his own party, passed a law preventing the holding of referendums or plebiscites 180 days before or after general elections.
– The Honduran Congress, led by members of his own party, named a commission to investigate Zelaya. The Commission found (my translation: If you quote it, please credit me and link to this post)
Zelaya acted against the mandates of legal and electoral laws, the Public Ministry, the National Congress, the Attorney General, and other institutions of the State, which had declared the poll illegal.
Additionally, the court weighed in:
Indeed, Honduras’ La Prensa states that (My translation: If you use this, please credit me and link to this post)
An official statement of the Supreme Court of Justice explained that the Armed Forces acted under lawful grounds when detaining the President of the Republic, and by decommissioning the materials to be used on the illegal poll which aimed to bring forth Executive Power against a judicial order.
Other sources verified that the president of the Congress, Roberto Micheletti, will assume the presidency of the republic in a few hours.
Honduran president Manuel Zelaya was detained this morning by the military in compliance with an order of the courts of law.
I’ve also seen a report that the new president, Roberto Micheletti, is of the same party as Zelaya.
As I said this morning I’m not a Honduran Constitutional expert – but our Constitutional expert-in-chief seems to have it all figured out. I think the “why” should be obvious:
Analysts said quick criticism of the coup by Obama and Clinton on Sunday pleased Latin American countries bitter about the long history of U.S. intervention in the region.
Despite Obama’s claim that this would set a “terrible precedent”, the State Department still hasn’t yet made a determination that an actual “military coup” has actually taken place:
Despite Obama’s comments, Secretary of State Hillary Clinton said the administration was not formally designating the ouster as a military coup for now.
Such a designation could force the U.S. leader to cut off most aid to Honduras. Under U.S. legislation, no aid — other than for the promotion of democracy — may be provided to a country whose elected head of government has been toppled in a military coup.
“We do think that this has evolved into a coup,” Clinton told reporters, adding the administration was “withholding” that determination for now.
The stated reason is they want to leave room for negotiations with “the goal of restoring democratic order in Honduras”.
What isn’t clear, however, is whether or not what happened wasn’t a result of “democratic order” and legal. For instance:
Jason Steck, writing at Real Clear World Blog, explains
what is happening in Honduras may be an example of a coup that is not only legal, but mandatory
because, in Honduras’s case, the military has been endowed with a role in maintaining democratic governance; this time their task was to delivery Zelaya safely out of office and into the airplane to Costa Rica.
If this all ends up being constituitonally legal, it will be interesting to see how Obama backs off his previous statements or whether, instead, he continues to characterize the arrest of Zelaya as a “coup” to play to the leftist crowd now “pleased” with his initial reaction.
Regardless, I’m less than impressed with Obama’s reaction to world events in Iran, North Korea and now Honduras.
From Twitter a minute ago:
NYT NEWS ALERT: Supreme Court Rules for White Firefighters in Affirmative Action Case
This could give new legs to the opposition of Sotomayor’s nomination.
Again, developing …
UPDATE: The Washington Post confirms.
New Haven was wrong to scrap a promotion exam because no African-Americans and only two Hispanic firefighters were likely to be made lieutenants or captains based on the results, the court said Monday in a 5-4 decision. The city said that it had acted to avoid a lawsuit from minorities.
The ruling could alter employment practices nationwide, potentially limiting the circumstances in which employers can be held liable for decisions when there is no evidence of intentional discrimination against minorities.
I’d say that’s a fairly significant ruling and certainly the opposite of what Sotomayor held. Of course, if Sotomayor was on the court right now (and hadn’t had to recuse herself for hearing the case in a lower court) she wouldn’t have made any difference since David Souter, the justice she’s slated to replace, voted in the minority.
It seems what has happened in Honduras is being characterized by most as a “military coup”. However Fausta, who has been following it all very closely, seems not to be sure that is the case. Instead she and some others are characterizing it as the military enforcing the orders of the Supreme Court and Congress.
Not being a Honduran constitutional expert or even really knowing whether that is legally permissible under their constitution, I’ll leave it to others to decide what the action really is. However, from Fausta, some background info that will get you into the picture. It is all about a referendum which President Manuel Zelaya wanted to hold concerning his term in office which is constitutionally limited to one term. Zelaya wanted to be able to serve another and decided a referendum would do to make that happen. The Supreme Court of Honduras declared such a referendum illegal. Zelaya essentially told them to pound sand (a very Jacksonian reaction):
Background on the referendum, which Zelaya insisted on in spite of it having been declared unlawful:
* When the armed forces refused to distribute the ballots, Zelaya fired the chief of the armed forces, Gen. Romeo Vásquez, and the defense minister, the head of the army and the air force resigned in protest.
* Yesterday the Supreme Court ordered by a 5-0 vote that Vásquez be reinstated.
* Honduras’s Supreme Electoral Tribunal ordered authorities to pick up all the ballots and electoral material, which were held by the country’s air force.
* The country’s Attorney General requested yesterday that Congress oust Zelaya.
* The courts have declared the referendum unlawful. Last Tuesday the Congress passed a law preventing the holding of referendums or plebiscites 180 days before or after general elections. Congress has also named a commission to investigate Zelaya.
This is the first coup in Honduras since 1982 when a democratically elected civilian government came to power .
So the question remains, was the military acting on its own or under the orders of some other constitutional body that had the legal right to order the removal of the president? It may turn out that both sides acted unconstitutionally and illegally. However it should be noted that the Honduran Attorney General had weighed in on the situation:
The attorney general had already made clear that the referendum was illegal, and he further announced that he would prosecute anyone involved in carrying it out.
So it is conceivable that the military was acting under the AG’s orders.
What Zelaya was trying to bypass is this provision in the Honduran Constitution:
Title VII, with two chapters, outlines the process of amending the constitution and sets forth the principle of constitutional inviolability. The constitution may be amended by the National Congress after a two-thirds vote of all its members in two consecutive regular annual sessions.
Apparently, at the moment, all is calm and quiet in Honduras. The Congress has accepted a “letter of resignation” from Zelaya which Zelaya (who is in Costa Rica) says he didn’t write. The Congress has also voted to make their head the new president.
Reaction has been swift and negative. The OAS said it would refuse to recognize the new government. President Obama said he was “deeply concerned” and called on Hondurans “to respect democratic norms, the rule of law and the tenets of the Inter-American Democratic charter”, whatever that means.
It certainly seems that at least one party was trying to circumvent the “rule of law” in this case. Whether the others who removed him were remains to be seen. But the Obama administration is sticking by its one-note foreign policy song:
“We think this can be resolved through dialogue,” said the senior administration official.
Meanwhile, Hugo Chavez, with all his new Russian military equipment is rattling sabers in Venezuela as he sees a part of his Bolivarian Socialist revolution go astray. Of course the first knee-jerk reaction is to blame it on the US. In fact the Obama administration claims to have tried to stop the “coup” when it learned about it (some might see that as “meddling” in the “internal affairs of another country”).
Venezuelan President Hugo Chavez, blamed “the Yankee empire”, and threatened military action should the Venezuelan ambassador to Honduras be attacked; President Evo Morales of Bolivia described Mr Zelaya’s removal as “an assault on democracy”.
Of course both Chavez and Morales have stagemanaged similar assaults on their own Constitutions and managed to pull them off to their advantage.
As Drudge would say – developing …
In this podcast, Bruce, Michael, and Dale discuss the situations in Honduras and Iran, and the cap-and-trade energy bill.
The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
Bumped to the top for obvious reasons.
Here’s a perfect example of why Paul Krugman should stick with writing about economics:
One of the favorite arguments of climate-change deniers is “but it was warmer in the late 90s.” In fact, the odds are good that I’ll get that argument from George Will on This Weak tomorrow. I basically know the answer: temperature is a noisy time series, so if you pick and choose your dates over a short time span you can usually make whatever case you want. That’s why you need to look at longer trends and do some statistical analysis. But I thought that it would be a good thing to look at the data myself.
So here’s the data he chose:
Anyone know what happened prior to 1850?
A little thing called the “Little Ice Age”, remember? And before that? Yup, the Medieval Warm Period. So what did that look like?
So what are the two things you notice right away? Well, one is “cycles”. In fact, if you go back even further you’ll see the same sorts of cycles repeated through out our planet’s history. Looking at data from 1850 in the context of climate change history is to use an eyeblink of data for comparison (coming out of the depths of a centuries long planetary cold spell). It is a classic misuse of limited data in an attempt to support a point of view. It certainly can’t be called “science”.
And secondly, our temperature now isn’t much different than in the 1000’s (not to mention there is much debate as to whether the temperature measurements of today are even accurate), with a very small population relative to today and with no industry, no burning of fossil fuel, and no worries about “green house gasses”. How in the world can that be?
Meteorologist Augie Auer said it best:
“It is time to attack the myth of global warming,” he said.
Water vapour was responsible for 95 per cent of the greenhouse effect, an effect which was vital to keep the world warm, he explained.
“If we didn’t have the greenhouse effect the planet would be at minus 18 deg C but because we do have the greenhouse effect it is plus 15 deg C, all the time.”
The other greenhouse gases: carbon dioxide, methane, nitrogen dioxide, and various others including CFCs, contributed only five per cent of the effect, carbon dioxide being by far the greatest contributor at 3.6 per cent.
However, carbon dioxide as a result of man’s activities was only 3.2 per cent of that, hence only 0.12 per cent of the greenhouse gases in total. Human-related methane, nitrogen dioxide and CFCs etc made similarly minuscule contributions to the effect: 0.066, 0.047, and 0.046 per cent respectively.
“That ought to be the end of the argument, there and then,” he said.
“We couldn’t do it (change the climate) even if we wanted to because water vapour dominates.”
Yet the Greens continued to use phrases such as “The planet is groaning under the weight of CO2” and Government policies were about to hit industries such as farming, he warned.
“The Greens are really going to go after you because you put out 49 per cent of the countries’ emissions. Does anybody ask 49 per cent of what? Does anybody know how small that number is?
“It’s become a witch-hunt; a Salem witch-hunt,” he said.
And Krugman seems to be trying out for head inquisitor. There are the numbers Mr. Krugman. Why not try crunching those instead of selectively picking the data that supports your point of view. You wouldn’t stand for that in the economic world. Why should we put up with it from you when you talk about science?
UPDATE: Yeah, no inflammatory language here:
And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.
Quite an argument, isn’t it – “disagree with me and the “consensus” and you’re committing “treason against the planet?”
You have to wonder, would disagreeing over economic policy be “treason against the economy” in Krugman’s wacky world? How desperate are you when you have to resort to name calling like “traitor” over a policy dispute?
UPDATE II: Irony alert Ezra Klein referring to the Krugman chart above which begins at the end of the period known as the “Little Ice Age”:
Paul Krugman has a nice response to the variant of global warming denialism favored by the statistically illiterate.
Who is “statistically illiterate” here, Mr. Klein?
Over the years, one of the purposes the sunday news shows have come to serve is a venue from which to launch political trail balloons and see how well they float.
Some get shot down immediately. Some take flak but survive. And other sail right on through with very little notice. David Axelrod appeared on “This Week” with George Stephanopoulos and launched one concerning taxes and health care. Axelrod first said that Obama still believes taxing health benefits is not the way to pay for health care (although during the ABC informercial, he essentially said that if it happened, it would be a compromise (and obviously not a show stopper for him)).
Stephanopoulos pushed a little harder on funding through taxation:
I pressed Axelrod on whether Obama will draw a line in the sand and veto any bill that funds health care reform with tax hikes for people making under $250,000 a year — despite a pledge Barack Obama made during the 2008 presidential campaign not to raise taxes on the poor and middle-class.
“One of the problems we’ve had in this town is that people draw lines in the sand and they stop talking to each other. And you don’t get anything done. That’s not the way the president approaches us. He is very cognizant of protecting people — middle class people, hard-working people who are trying to get along in a very difficult economy. And he will continue to represent them in these talks,” Axelrod said.
“But they’re also dealing with punishing health care costs, and that’s something that we have to deal with.”
Classic. He could have simply said “we’re open to compromise and if that’s what it takes to pay for it, then yes, we’ll raise taxes on the middle class in a New York minute.”
But instead he had to do the “we’re here to protect the middle class, but …” and then tell us how they really weren’t there to protect them in this particular case.
So to those of you who believed Obama when he said that 95% of Americans won’t see their taxes raised by a single dime – well, that’s no longer necessarily the case – if you let this trial balloon float away unimpeded (not that it will matter really – if they pass health care it has to be paid for somehow and there is no possible way only the richest 5% are enough to pay for that boondoggle).