I marvel at how the emerging markets are doing so much better economically than the old industrialized world of Japan, the EU, the USA and Canada.
China, India, Brazil, Indonesia, Russia and Mexico among a few others have no Nobel Prize winners in economics and yet they mostly have trade surpluses with the old industrialized world and own a lot of its debt.
A combination of three things has led to a huge transfer of jobs and industrial might and wealth to emerging markets: NAFTA, the WTO and the Kyoto accords.
Free trade coupled with a very strong will by the EU in particular and by many groups in the USA to reduce global warming gasses and to wean the world off fossil fuels has led to an exportation of pollution and greenhouse gasses to emerging markets, along with millions of jobs.
All of the emerging-market countries are exempt from the Kyoto Protocol because they claimed that they were too poor to comply with its goals. Since the world signed Kyoto in 1997, greenhouse gasses have increased worldwide. I might add that the world's population as of last year had increased by about 1.2 billion people since 1997.
The USA never ratified the Kyoto Protocols, but the EPA and private groups are always trying to put it into effect through lawsuits and regulations. One of President Obama's goals was to pass a carbon tax, but he could not get it done.
The media in the U.S. tries to keep it a secret but Canada renounced the Kyoto Protocol last December because they said that it would cost Canada too many jobs and that there was no sensible way to make it work for Canada without doing away with all fossil-fuel transport and even that would not prevent it from having to pay billions of dollars in fines for not being in compliance.
The EU and Australia and many people in the U.S. think that it is possible to stop global warming with just the old industrialized nations reducing their carbon emissions. This is patently absurd. What we no longer manufacture comes back to us in free trade from the dirtiest sources in the world like China, which has the world's dirtiest aluminum.
The EU is fighting the entire world to put in place a carbon tax on planes flying into and out of Europe that will hurt the tourist business in all its struggling countries. The fight against global warming is increasing global warming because it drives production to places that have very few controls on pollution and have an electric supply that is coal based. Then we transfer heavy industries like steel and aluminum, shipbuilding, auto and truck manufacturing and all other forms of manufacturing that provide jobs and a demand for fossil fuel vehicles and electricity and other consumer products. In the old industrialized world, displaced workers receive massive social welfare programs that are now no longer sustainable. It is running out of borrowing capacity to keep people on perpetual welfare. Yet the EU refuses to accept this and Australia is going full speed ahead with a carbon tax that its aluminum industry contends will force its smelters to close, shifting production to China.
At the climate conference in Durbin, South Africa last year, China and the rest of the emerging market countries once more refused to take on meaningful carbon reduction programs for the same old reason that they were too poor.
At the very least, the old industrialized world should put a carbon tax on all goods coming from the emerging markets to equalize the playing field.
The cost of energy is a key component along with the cost of capital and labor in determining where to locate a job-creating enterprise. Carbon taxes and the mandated use of alternative energy drive up the cost of energy. Governments subsidize the cost of installing alternative energy, which drives up deficits, and in the end the user of energy pays more for energy as well.
In the U.S. we have a huge competitive advantage from our vast reserves of natural gas and neither political party will embrace it and no presidential candidate has advocated its use to eliminate all our imports of oil and refined oil products, even if it will make us safer and give us much cleaner air and create lots of jobs and bring back more manufacturing jobs.