Monday, June 23, 2014

Brave Neoliberal World

Former Bush Treasury Secretary/Goldman Sachs CEO Henry Paulson is getting lots of plaudits today for his brave New York Times Sunday op-ed, in which he bravely broke ranks with the climate change denialists of his own Grand Guignol Party and proposed a brave new carbon tax to combat pollution. 

It's the fierce urgency of now, as told by a plutocratic con$ervation afficionado:
For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.
This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course.
Sounds great, right? He was very careful not to mention "Cap and Trade" in his editorial, despite the fact that Goldman Sachs literally wrote the book on how to profit from excess carbon emissions back when he was in charge of the banking behemoth.. And so, Paul Krugman has very thoughtfully taken up the slack and actually gone to the right of Paulson's piece. While Paulson only obliquely and euphemistically refers to "innovation," Krugman pragmatically cuts to the chase and cheer-leads President Obama's beloved profiteering Cap and Trade agenda:
In policy terms, climate action — if it happens at all — will probably look like health reform. That is, it will be an awkward compromise dictated in part by the need to appease special interests, not the clean, simple solution you would have implemented if you could have started from scratch. It will be the subject of intense partisanship, relying overwhelmingly on support from just one party, and will be the subject of constant, hysterical attacks. And it will, if we’re lucky, nonetheless do the job.
(Krugman can't even let a column on climate change go to print without mentioning the non sequitur of Obamacare. Talk about awkward! Then again, the Conscience of a Neoliberal was probably gnawing at him.)

My response to Krugman:
 Goldman Sachs, which Paulson used to run and which he helped bail out at our expense, stands to profit big-time from carbon credit trading.
Whenever a free market guru mentions "innovation" and concern for the planet in the same breath, the bait and switch alarm bells should be ringing in your head.
Instead, Paulson is lauded for courageously breaking away from right-wing nuttery, simply by deigning to believe in man-made global warming.
As Matt Taibbi wrote some years ago in his now-famous "Vampire Squid" magazine piece, Goldman Sachs has long been anxious to blow up the carbon tax bubble:
"The new carbon credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance."
If polluters go over emission limits, they'll be able to buy credits from the more compliant companies. Then the financial predators will corner the market on the ever-scarcer credits, and stand to make as much as a trillion dollars... a year!
 So, if you believe that Paulson wrote his op-ed purely out of altruistic concern for your lungs, I'd say I have a bridge to sell you, except that it's probably already been privatized and plundered by the financial mafia. Call it GoldmanCare.
Paulson's fondness for Cap and Trade (as opposed to the straight tax he is now touting on paper in order to get the money-making debate restarted) goes way back. He co-founded, with Al Gore, a private equity greenwashing firm called Generation Investment Management (GIM) and a now-defunct Goldman-funded offshoot called the Chicago Climate Exchange (CCX) to pre-position the big players for the rigged game... now in limbo, thanks to the "wing-nuts" in Congress who hate it just because Obama likes it.

And since the phrase Cap and Trade is itself a now-tarnished euphemism for "pay to pollute," the neolibs are scrambling to come up with new ways of championing it. EPA Chief Gina McCarthy, for example, euphemizes it as "multi-state market-based programs." 

Obama is simply trying to re-animate it by handing it over to the states and away from a recalcitrant Congress. Oh, and he gets brownie points from Krugman and other denizens of "the left" for once again being seen as trying to do the right thing. It's the audacity of aspiration. Gaius Publius has a good synopsis of how the game is being played.

The predators of the financial class are tired of waiting to cash in on another catastrophe. They are tired, as GIM warns on its web-page, of being able to offer only an "aspirational" investment opportunity to its deep-pocketed clients. Now that climate change, along with income inequality, is all the rage, what better time to foment the fear, clean the air a tiny bit, co-opt environmental groups, feel better about their crazy-rich selves, and make gazillions more dollars at the expense of the precariat? Do it while Hurricane Sandy is still on our minds. Do it while the predators are still profiting off Hurricane Sandy victims.

It's Disaster Capitalism, ad infinitum.

Cui bono.


Kat said...

Thanks for clearing this up, Karen. All makes sense now.

Isaiah Earhart said...

Karen, thank you. This is an outstanding piece.

For anyone who didn't read the links in this article- go back and read the links. This is a very complex issue, and those links provide excellent insight.

Market solutions- because corporations care.

Denis Neville said...

Carbon tax sure gets some unusual support.

In 2008, Ralph Nader said “We Need a Global Carbon Tax” in the Wall Street Journal.

Last year George Schultz and Gary Becker, senior fellows at Stanford University’s Hoover Institution, wrote an op-ed in the Wall Street Journal advocating for a revenue-neutral carbon tax.

The Green Party supports the carbon tax.

Conservative economist Greg Mankiw describes his Pigou Club as "an elite group of economists and pundits with the good sense to have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes."

Dr. William Norhaus, the renowned Professor of Economics at Yale University, calls for “an internationally harmonized system of carbon taxes.”

British economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, says a carbon tax is not the best option. The big advantage of responding to climate change by setting caps on quantities of emissions is that, unlike a carbon tax, capping emissions immediately goes to the heart of the climate challenge.

For pete’s sake, even Grover Norquist, “a proposed “carbon tax swap”- taxing carbon pollution in exchange for cutting the income tax - would not violate his pledge,” supports a carbon tax!!

Eminent climatologist James Hansen supports a carbon tax.

Dean Baker, “Blocking Keystone Is Like a Carbon Tax,” writes, “In a sane world we would have a carbon tax, which would discourage the use of oil in general and in particular oil that was associated with large amounts of carbon emissions.”

Now, Hank Paulson?

I wonder if any of these “save the planet” Republicans have looked at today’s Republican party?

“A casual stroll through the lunatic asylum shows that faith does not prove anything.” - Nietzsche

Which is better: carbon tax or cap-and-trade?

“Men argue. Nature acts.” - Voltaire

Jay–Ottawa said...

As Karen points out, that old horse called Cap & Trade, a real loser, has been limped back into the auction ring after a nice job of teeth whitening.

More than four years ago (Feb 2010) Mark Schapiro wrote a cover article for Harper’s called “Conning the Climate.” His subtitle told you right away that carbon trading was a “shell game,” and that Mother Nature was not impressed. The caps were being measured by an imaginative new group of peripatetic specialists, called emissions assessors, who made a hocus pocus pretend of measuring greenhouse gases coming out of the smokestacks of polluters. Numbers down on a pad, then off to the next site of pollution. Schapiro described how fake, maybe impossible, that whole business was. And even though the “capping” part of the equation turned out to be smoke and mirrors, there were still, as there is now, trillions to be made in the “trading” part. Call in the clowns of Goldman-Sachs and other traders. Not much different from selling those bundled failed mortgages with triple A ratings.

Another new job title was carbon developer or project developer. Sometimes emissions assessors cross over to the other side of the street to become carbon developers. Carbon developers discover and add up all greenhouse gases you never realized your multinational was releasing –– or had the potential to release –– say, felled trees on your properties. If you turn those trees from the jungle into charcoal, which lets off less greenhouse gas than coal, you can sell or use the charcoal while picking up credits or offsets for not using coal. Insiders say the “carbon market is based on the lack of delivery of an invisible substance to no one.” As for carbon credits later found to be spurious, well, the rules say that once sold they are irrevocable. Huh?

Schapiro’s article still sits behind a paywall, so here are a couple of paragraphs:

“Carbon trading is now the fastest-growing commodities market on earth. Since 2005, when
major greenhouse-gas polluters among the Kyoto signatories were issued caps on their emissions
and permitted to buy credits to meet those caps, there have been more than $300 billion worth
of carbon transactions. Major financial institutions such as Goldman Sachs, Barclays, and Citibank now host carbon-trading desks in London; traders who once speculated on oil and gas are betting on the most insidious side effects of our fossil fuel–based economy. Over the next decade, if President Obama and other advocates can institute a cap-and-trade system in the United States, the demand for carbon credits could explode into a $2 to $3 trillion market, according to the market-analysis firm Point Carbon.


“Indeed, carbon exists as a commodity only through the decisions of politicians and bureaucrats, who determine both the demand, by setting emissions limits, and the supply, by establishing criteria for offsets. It was the United States that sculpted the cap-and-trade system during the Kyoto negotiations, before pulling out of the accord and leaving the rest of the world to implement the scheme. Since then, most of the world’s major political, financial, and environmental interests have aligned themselves with the idea, because of its potential to generate profits out of adversity and to avoid the difficult economic decisions posed by climate change. Now the Obama Administration and the Democratic Congress—along with most American companies, which see cap-and-trade as the friendliest regulation they could hope for—want to rejoin the world and multiply the market. That market is, in essence, an elaborate shell game, a disappearing act that nicely serves the immediate interests of the world’s governments but fails to meet the challenges of our looming environmental crisis.”

annenigma said...

If we want to save life on earth, we'll have to save ourselves from Capitalism first.

Pearl said...

Anonymous Pearl said...
Bravo Annenigma! my sentiments exactly. And also for your great comment to the Drone Killings editorial. I am impressed with all the helpful information on our blog about this issue from our Sardonicky supporters as well as Karen's outstanding contribution. Denis you have added the final piece of the circle with your return. I wonder if Krugman reads some of the better articles in his NYTimes?

June 24, 2014 at 12:09 PM

Pearl said...

I am not anonymous Pearl. It is easy to press the wrong button.