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June 26, 2009
A cap-and-trade plan to combat climate change gets a bit closer to reality today as the American Clean Energy and Security Act of 2009, a 1,200-page bill requiring the U.S. to cut reduce greenhouse gas emissions by 17% from 2005 levels by 2020 and about 80% by the next century looks set to pass the House. Ahead of a final vote, analysts are weighing in on what it could mean for companies and investors.
Mostly bad things, it turns out.
Paul McWilliams at Next Inning Technology Research says cap-and-trade simply opens the door for corruption:
There are many easy, painless and even economically positive ways we can encourage reduced CO2 emissions and the development of new technologies that will reduce our dependence on foreign oil, which is what is implied by the "security" part of the title. However, this bill will not accomplish these goals. What this bill will accomplish is a mechanism for massive corruption, the strengthening of the power of congressional incumbency, the establishment of a full employment act for lawyers and the debasement of the aggregate U.S. economy. Yes, those are bold words, but I can back them up.
If this bill passes, Congress will have the power to decide who gets to release CO2, how much they will get to release, how much they will have to pay if they want to release more than the congressional dictated allocation and who they must pay. Because nearly everything we do from raising cattle to growing crops to powering our electric grid to manufacturing everything we eat, wear and use emits CO2, the implication is Congress will have absolute control over not just our economy as a whole, but also in naming the winners and losers.
Make no mistake; what our Congress is trying to do is give itself the ultimate and nearly infinite power to selectively un-tax without the annoying encumbrances or inconveniences of due process. Congress knows that if it is successful in this ruse, it will have industry cowering at its feet to beg for just one more bowl of CO2 credits and, with that, all the campaign contributions and perks you would expect to change hands when favors are denominated in tens or, in some cases, hundreds of billions of dollars.
The tone is dire, but it's tough to disagree. By its nature, any carbon credit scheme mean doling out large-scale, arbitrary costs to companies that pollute. There's just no getting around it, and the temptation to play politics with how those credits are allocated will be great. (I'll admit I'm not informed enough on the bill to parse whether safeguards are adequate here).
So who will the winners and losers be if the bill becomes law? The IRRC Institute breaks it down for the S&P 500. Unsurprisingly, big polluters in the utilities, oil and gas, industrials and basic resources sectors fare worst.
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June 26, 2009
A former editor of mine, generally mild-mannered and agreeable, would absolutely seethe about one topic: The baby boomers. To him, they embodied the worst of 60s-era excess, 80s-era greed, and an unmatched smugness. I was more sanguine, and the heat of the conversations ultimately left us both feeling like a couple of curmudgeons yelling at the kids (or in this case, our parents) to get off our lawn.
But it turns out he had a point, though it was one we largely overlooked at the time. The looming worry for younger generations isn't a boomer legacy of self-centered cultural malaise or financial misconduct. It's that there are simply too many of them.
In one of its regular surveys, The Economist says aging populations are starting to stunt growth, and the situation is only going to get worse.
The issue is simple: We're living too long (good for the individual, but not for economic growth) and not having enough children.
In a nutshell (bold is mine):
This is a slow moving but relentless development that in time will have vast economic, social and political consequences. As yet, only a few countries with already old populations are starting to notice the eff ects. But labour forces are now beginning to shrink and numbers of pensioners are starting to rise. By about 2020 ageing will be plain for all to see. And there is no escape: barring huge natural or man-made disasters, demographic changes are much more certain than other long-term predictions (for example, of climate change). Every one of the 2 billion people who will be over 60 in 2050 has already been born.
The trend is global, but the baby-boom here means the impact on the American economy will be outsized: