In Copenhagen Treaty negotiations, poorer nations are demanding massive transfer payments from the United States and other developed nations. Good luck to them in collecting promised payments.
The New York Times reports:
In Copenhagen, some of the most intense and difficult discussions for negotiators center on any potential agreement’s near-term financial arrangements. Some of the poorest and most vulnerable nations are calling for a gigantic transfer of wealth from the industrialized world to island nations and countries in Africa, Asia and Latin America that are most likely to feel the ravages of a changing climate.
Many poor nations are insisting that wealthier nations make deeper cuts in their emissions and contribute more money to help the poorer countries, a split that widened in Copenhagen on Tuesday as competing documents of a potential agreement circulated.
Were such a transfer agreement to be made, it would be hard for poorer nations to collect. The costs of proposed climate regulations, coupled with transfer payments to poorer nations, will push us back toward our levels of production prevailing in 1875. Our ability to pay, other than in depreciating fiat dollars created on the New York Federal Reserve Bank’s books, will dwindle.
The Times tells us happily that the projected costs won’t amount to much, because manufacturing jobs lost to green regulatory costs and mandates will be offset by creation of green jobs. Those green jobs, however, are mostly producers of non-tangible, paper-work regulations, compliance reporting, and compliance monitoring. The lawyers and accountants, of course will have a field day, but their greenhouse-gas activity will produce nothing that other nations want to buy from us.
Production of tangible, exportable goods will decline in the United States because of higher costs arising from green regulations and from elimination of whole swaths of activity (e.g., coal mining, dairy farming, and half of today’s electric power generation). As a consequence many products formerly produced in the United States will no longer be available without increasing our imports.
Where will we get the funds to pay for increased imports and for transfer payments to poorer nations?
Ultimately international trade has to be a two-way street. Importing nations have to export tangible commodities, manufactured products, or technical services needed by other economies. None of these comes under the head of green jobs.
It seems doubtful that China and other Asian producers will be prepared to accept copies of the thousand-plus-page cap-and-trade program as payment for our imports.
As our production costs rise, impelled by greenhouse gas agreements, we will become less competitive on the fewer tangible products still produced here. At the same time, the Obama administration’s multi-trillion dollar deficits arising from socialization of energy production and use, and from socialization of the healthcare system, will contribute to accelerating inflation and a further declining foreign-exchange value of the dollar.
The Chinese and other producing nations, already calling for new international reserve currencies, may no longer accept payment in rapidly devaluing U.S. dollars. And we will have difficulty in earning yuan or other currencies with fewer real products to sell.
Back to summary...
