Eco-lunacy: harmful gas deliberately produced to cash in on carbon credits
Economics was memorable labeled “the dismal science” by Thomas Carlyle, but I’ve never thought it was dismal at all, particularly when considering its basic laws. It’s fascinating to explore the way government, human behavior, and the principles of commerce interact. One reason that small government and maximum private-sector liberty are so essential to prosperity is that such an approach is harmonious with the immutable laws of economics, while all other systems of governance amount to doomed efforts at repealing them.
Something as simple as the law of supply and demand is forgotten with surprising frequency by central planners. It becomes a rake lying hidden in the tall grass of history, which they keep stepping on as they march toward the distant horizon of a heavily regulated utopia. No one should ever be surprised that large groups of people, including corporate enterprises, generally seek to take advantage of incentives placed before them, without giving much thought to the high-minded rationale behind the creation of those incentives.
Thus we have a delightful New York Times report on the United Nations’ latest encounter with “unintended consequences,” which should have been easily foreseeable to anyone except an insulated trans-national bureaucrat.
The UN, you see, is still heavily enthralled by the discredited fantasy of “global warming,” and set out to control it by issuing “carbon credits” to industrial plants in developing countries. The idea was to reward them for generating reduced levels of greenhouse gas. Industrial facilities would be allowed to produce a certain amount of these gases; if they produced less than their quota, they could sell the unused carbon credits to other businesses.
But as the Times relates, manufacturers located primarily in China and India “quickly figured out that they could earn one carbon credit by eliminating one ton of carbon dioxide, but could earn more than 11,000 credits by simply destroying a ton of an obscure waste gas normally released in the manufacturing of a widely used coolant gas. That is because that byproduct has a huge global warming effect. The credits could be sold on international markets, earning tens of millions of dollars a year.”
The upshot is that “since 2005, the 19 plants receiving the waste gas payments have profited handsomely from an unlikely business: churning out more harmful coolant gas so they can be paid to destroy its waste byproduct. The high output keeps the prices of the coolant gas irresistibly low, discouraging air-conditioning companies from switching to less-damaging alternative gases. That means, critics say, that United Nations subsidies intended to improve the environment are instead creating their own damage.” (Emphasis mine.)
Just how profitable is the deliberate production of garbage, for the sole purpose of immediately destroying it? As a climate negotiator quoted by the Times explained, “you get nearly 100 times more from credits than it costs to do it. It turned the economics of the business on its head.”
So: an imaginary “problem” led to a ham-fisted Big Government solution, which created a thriving market for an imaginary “product” called carbon credits, which exists only because government has willed it into existence. The easiest way to rake in the chips from this illusory marketplace is to deliberately create a worse-than-useless physical product… because government is willing to pay a premium price for its destruction. The end result doesn’t even make sense under the terms of the global-warming mythology that set the whole corrupt process in motion.
Naturally, the solution to this little dilemma will involve even more regulations, which are encountering entirely predictable resistance from those who have profited under the old regime. When I say “resistance,” I mean certain Chinese plants are threatening to blast greenhouse gases directly into the sky as an act of revenge, if they don’t receive their waste gas credits. Since these gases are produced under long-term contract, it will take years for any regulations that survive political combat to have any real effect.
The European Union has said it will begin refusing to accept these bogus waste tax credits into its “carbon markets” next year. It’s wonderful that the EU can afford to indulge a fake marketplace based on the trading of non-existent goods… while its real markets, filled with useful industries that fulfill genuine customer demand, tremble on the verge of collapse.
Army Promotes 1st Openly Gay General
Less than a year after the repeal of “Don’t Ask, Don’t Tell,” the Army has promoted Tammy Smith to the rank of brigadier general, making her the first openly gay general in the US military, reports the Los Angeles Times. Smith stood with her commanding officer at the promotion ceremony, then her father was introduced along with her wife, Tracey Hepner. “This part is a little fuzzy for me, because I have to confess, I got choked up,” said one Army veteran and friend of the couple who attended the event. “People have been working toward this moment for decades.” A 26-year veteran who has served in Afghanistan and Costa Rica, Smith downplayed the social significance of her groundbreaking promotion. “I don’t think I need to be focused on that,” she said. “What is relevant is upholding Army values and the responsibility this carries.”
Fourth California Bankruptcy Comes Knocking
Fourth California Bankruptcy Comes KnockingJust outside Los Angeles is the City of Compton, home to 93,000 people…a city running out of money. As the city treasurer eloquently put it, he has $3.0 million in cash and $5.0 million in bills due in the next month. (Source: Reuters, July 18, 2012.)
If debt restructuring decisions are not made soon, the City of Compton could file for bankruptcy as early as September.
Due to the fact that Compton has a $43.0-million budget deficit hole, it has been unable to secure a line of credit to get it through a difficult period. The reason why it can’t secure a line of credit is that the budget for 2012 is forecasting a further budget deficit of $9.0 million!
The city warns that it needs to make critical repairs to its water system in order to bring it up to code…and that will add another million dollars to the budget deficit!
The issues plaguing Compton were the same factors that took down the other three cities in California and are threatening to take down many more cities and states across the U.S. as budget deficits grow: falling tax revenues due to a drop in house prices, large pension budget deficits, generous public employee pay, and weak economic growth.
Speaking of the bankrupt California cities, one of them—San Bernardino—can now only provide services to its citizens on a cash basis. (Source: CBS Los Angeles, July 19, 2012.) San Bernardino is asking the State of California to assist, because it may not be able to collect the trash this week. The city is warning residents not to leave the garbage outside for too long or it will become a health issue.
The Federal Reserve is so concerned about the budget deficit situation, it created the State Budget Crisis Task Force to study it.
The study simply confirmed what the states and municipalities have already been saying. Medicaid, the federal-state health-care program for the poor, is eating away a bigger portion of state budget deficits than spending on school education.
The study also highlights the fact that pension costs are overwhelming budget deficits. Another disturbing trend is that, to close budget deficits, cities are cutting their funding of local colleges by a significant percentage. That in turn is increasing tuition costs for the average citizen, which is making it harder for the average person to attend college and so places the U.S. on a precarious path of weak economic growth for the future.
Dear reader, the above is evidence that this issue will continue to take on greater and greater importance, because it does affect the country and its economic growth potential. (See: “Madness in Pennsylvania and One More Bankruptcy in California.”)
The more pressing problem is that, as the budget deficits get worse, individual states will certainly come knocking on the door of the White House for answers. Does the White House have any solutions to the budget deficits or will money printing be needed to solve the problem? I believe the answer is obvious.
American Jordan Burroughs’ gold medal victory over Iran’s Sadegh Goudarzi in men’s 74kg freestyle wrestling led to this poignant photo, proving the Olympic brings the world together like no other event.
Originally posted 2012-08-12 14:03:56. Republished by Blog Post Promoter