Rebates…adjustments…?? I don’t have the answer…I’m the messenger, not the creator.
Date: ca.1835 Note to Congress from the canal companies:
Government! do something to stop these railroads. If they succeed we may be out of business! That would be the end of the good ole’ US (or is it “us”?) if we allow them to continue building into our communities, hauling freight and passengers at ungodly speeds. Just what will happen to the US economy if there are no canals? The rails will bring criminals into our towns and pour soot and fire thoughout the land! God created water for us to ride on, if He wanted us to ride trains he would have created track! Canals are doomed if the railroads are not stopped.
If manufacturers are motivated to move their business offshore to avoid higher domestic labor costs, I don’t see why they would not be likewise motivated to do so to avoid the domestic cost of carbon credits. In either case, the motive comes from the need to be able to compete with foreign-based manufacturers who are not hampered by our labor or carbon credit costs.
There are also business costs that rise from moving operations offshore, so a business must weigh that against the lower costs offshore such as labor costs. If domestic labor costs were to rise here, it would further tip the balance in favor of moving offshore, and more businesses would do so. Likewise, if you add carbon credit costs to manufacturing, it will tip the balance in favor of moving offshore, and more businesses would do so.
Certainly this cap and trade bill will be a powerful motivator that will result in businesses moving their manufacturing to countries which are exempt from such economic burdens.
And - if the business goes overseas, it’s certainly going to release CO-2 just as much - if not more, plus different pollutants as well - as it would have here.
So viewed world-wide, what will have been gained [Q] Same amount of CO-2, just in a different place - but it’s a global phenomenon, and the air currents and wind patterns will bring it back here anyway before too long.
But the jobs and business tax revenue will be gone, and the economy damaged to some extent as well. How that affects the railroads will depend on the business and its raw materials and finished products.
In some instances, this kind of result has been called a ‘race to the bottom’, or ‘to the least common denominator’. Unless something is done pro-actively so that there practically isn’t any other place for a carbon-emitting business to move to to escape whatever is put in place here, then we’re vulnerable to that. But it will take a lot more understanding and analysis than we have space for here to get a handle on all of that.
Finally, keep in mind the points mentioned above regarding our forebear’s experiences 150 years ago or so. They thought whale oil was the only possible source of light - then petroleum - kerosene/ naptha became possible - then electricity was discovered, and the light bulb invented. All it takes is for some genius to figure out a way to use the Carbon in the coal some other way than burning it = oxidation = combining Carbon with Oxygen to make heat plus CO-2, and/ or to sequester = separate the CO-2 from the exhaust gases and make something useful out of it, like bricks - [swg] - and this will be the problem that was. Until then - who knows [Q]
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Paul North.
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Paul North.
Scale. Labor cost difference is big % of value added. CO2 taxsmall. Labor cost differential will determine manufacturing site much, much more than CO2 tax. It may tip the balance for some, but it won’t be the driver.
BuckyBall bricks?
The greater objective of cap and trade is that it be international in scope. Indeed, whatever embodiment of the concept that becomes law in this country will inevitably become linked to other countries either at the outset or soon thereafter. But we are a long way from agreement on worldwide participation. That raises this question that is essential to ask if one is to fully understand the cap and trade concept and its objective: If cap and trade is beneficial, why do whole countries such as China and India refuse to participate?
Bucyrus:
Great point regarding India and China not signing up. They have said to our diplomats…dont mess with OUR industrial revolution. It doesnt hurt their cause when they are sitting on a large amount of our treasury debt.
President Obama recently indicated he is against tariffs on imported goods which have been produced in co2 emitting nations such as China. Ok…where is the leveling of the playing field?
My guess is the enormous amounts of tax revenue generated by this bill will be used to pay for health care reform.
ed
If the reasons for moving work off shore were only because of labor costs, however! There is also taxes, facilities, energy, transportation and the need to make an extroadenary high return on investment (I know a guy who patented a device, engineered it here, etc. Could have had it manufactured here for 3 bucks but sent it overseas to get it done for less than a buck. He still charged his aimed for retail price at $10) and quickly. Labor is a neat target which is no longer a threat. Since Royal Ron kicked the union out of the control towers, labor is not the force it once was, and therefore should no longer be the whipping boy for the Greedy Old Patriarchs!
Henry:
He had a labor savings of 67% by having it produced overseas. That is serious $$$$.
President Reagan didnt kick the union out of the towers…they called a strike which was illegal. He enforced the law.
ed
I cannot cite the source at this point, but I have heard that the bill includes provisions for tariffs on imports of goods made by manufacturing that will be moved off shore in order to dodge the carbon caps in the U.S. So the bill itself anticipates causing manufacturing to flee the higher manufacturing costs that the bill will impose, and the bill closes that loophole by the use of import tariffs to cancel the economic advantage of leaving the country to flee cap and trade. So whether or not there will be sufficient economic incentive for manufacturing to flee cap and trade, the point might be moot if import tariffs cancel out that incentive.
Manufacturing was allowed to move off shore in order to pursue lower labor costs. But the point of cap and trade is to reduce our carbon footprint, and apparently it will not be acceptable to simply move part of that footprint to another country and continue our consumption at normal levels. Instead, manufacturing will be forced to stay here, pay the added cost for carbon credits, and pass it along to the consumers. Consumers will thus reduce their consu
Bucyrus:
You are making a leap of faith here. It seems the assumption is that a company will move it’s manufacturing offshore or remain here. There is nothing to guarantee that the domestic company will remain in business here. That is the great divide which requires an enormous amount of faith.
Another provision which I heard today was that if you sell your house, it must pass a government test which insures the house is properly weather proofed. What happens if it doesnt pass the government test? Who determines the factors for the testing?
My house has something like 48 windows. It is nearly 100 years old with many of the original windows that are part of the architecture of the house. Energy efficient? No. However I compensate by burning wood and by keeping the thermostat at 60 degrees during several months. Then, during the summer the 48 windows provide natural cooling. My guess is my energy consumption is quite similar to other houses, but if I dont sell me house soon, I will be penalized, probably severly (moving is in my plans).
Again, I would strongly recommend that anyone listen to the January 8, 2009 interview with then Candidate Obama.
ed
Ed,
I did not mean to make the leap of faith you suggest. Sorry if I was not clear. When I was talking about companies either staying here of fleeing the cost of cap and trade, I did not mean to exclude the possibility that some will go out of business rather than staying or fleeing. Indeed, going out of business will be an inevitable consequence of c
Bucyrus:
Well stated. This is the tip of the iceberg. Lets all change our light bulbs and everything should be ok. OK? Well, perhaps not.
ed
The real problem of moving jobs off shore is that leaves fewer and fewer able to buy the products our investment oriented big business people proport to be manufacturing. I have always said you need as many keys to the executive washrooms as you do to the janitor’s closets to make an organization work efficiently and effectively. Workers cannot work and earn money where there are no jobs, therefore cannot purchase anything in the economy. But investors cannot earn a return on the investment if nobody is earning enough to afford their product or service. Once either labor or capital become more powerful, more in control, than the other, the house caves in on itself. Greed is has been in both parties of this equation. But so have marks of progress.
As for the government as a catylist, I forgot to mention, way above someplace, that the airline industry, has been manufactured by government armed service contracts and reasearch and development. The airline industry and others have also gained by the research and development of the space program.
Now, although it is an amendment to the Transportation bill, congressmen from a Maine and California have introduced an amendment which will allow 97,000lb trucks on our interstate highways taking away the value of private enterprise investment of the railroads in interstate commerce. This is not a good energy move, not a good safety move, and certainly not one in favor of private investment unless you include the Highway lobby’s investment in congress!
I agree the government did a speedy job with the space program, but did the government fund the Wrights when they were developing manned flight in the bicycle shop?
The government did a good job with the interstate highway system which was funded as it was built, but it took contracts with private companies to do the actual construction.
I firmly believe America is great because of our freedoms, private enterprise, and private ownership of property – not because of government(other than the form, a representative republic, that we have). Remember, every law that is passed has freedom limiting aspects to one side of it.
But for an organization with trillions of dollars of debt, there are few great efficient success stories. The old adage that an organization gets dumber as it gets larger is definitely illustrated with our federal government. Remember the ICC? Read “Brosnan, The Railroads’ Messiah” to see some of the fights over that brilliant organization.
As far as being an inhibitor, why has it been over two decades since a new nuclear electric plant has been constructed in the US while European countries are enjoying the benefits of nuclear plants constructed during that time?
Ask some of the land owners who have fought the government over developing their property only to be told that a hole the landowner dug which happens to hold water is now a wetland or that rat which happened to take residence on ones land is endangered.
Bernie Marcus, the co-founder of Home Depot, has stated that with today’s government it would be impossible to do what they accomplished in the late '70s
But Jay, you’re proving my point: the government deveoped the projects and payed the private enterprises to do the work, i.e., the catylist.
And the Wright Bros. falls outside of this discussion as does Henry Ford, John Stevens, and Robert Foulton for that matter. You are comparing apples to oranges.
Another example of the government acting as a catylist was the electric car. Vehicles like the GM EV1 and the Toyota RAV4 EV only came about because of California’s Zero-Emission Vehicle mandate. If CA had stuck to their guns and not repealed the mandate (And allowed those innovative cars to be taken away from their owners and crushed), we’d be well down the road to energy independence by now.
Acting as a catalyst is one thing, but forcing a mandate for which no market exists or funding that mandate with public money is an entirely different thing. The electric car in general, falls into the latter of the two choices. So do much of the renewable energy mandates.
However large or small the market is for an electric car, the private sector will fulfill that market perfectly by building electric cars with its own capital investment. There is absolutely no need for the government to be involved with mandates and public funding. Their participation will only drive up the cost.
[tup][tup]
The “Green” movement:
*Soccer moms and dads driving their three-ton Land Bruiser to the environmental rally;
*Buying ten pounds of red meat at the grocery store then putting all that meat in a “environmentally-friendly” shopping bag;
*Watching reality shows on their 60" hi-def tv, while the a/c is cranked to 70 degrees, and lighting the house with “eco-friendly” flourescent bulbs;