WTO Reform: Making Global Rules Work for Global Challenges
Finance: WTO Reform: Making Global Rules Work for Global Challenges, July 29, 2020
Our previous comments explain Regulatory Capture Theory (no agency succeeds unless it is captured by the industries it regulates – this is especially the case for trade policy) and how employee-ownership gets beyond both government regulation and the need to undertake it to protect workers from capital, while saving both American jobs and making overseas jobs create the American standard of living for overseas workers.
Our tax reform plan shows how to get there through both an asset VAT and personal accounts funded as credit to an employer-paid subtraction VAT. We also explain how to turn from tariffs to credit invoice value added taxes (zero rated at the border). The SVAT (not zero rated) is a vehicle for tax credits for each child, for healthcare and for educational expenses. Both are an alternative to personal income tax filing. Small government libertarians like both, big business libertarians like neither. They want tax filing to remain painful while assuring that those with tax shelters can avoid the sure taxation of invoice VAT.
One year ago, the House Budget Committee did a series of hearings on the impact of climate change, to which we also commented. The gist of our comments to the first hearing is that carbon value added taxes (which is a carbon tax that is receipt visible rather than buried in the product price) would help fight warming. These follow hearings from those held in May 2019 by the Ways and Means Committee.
To get the maximum global effect, they would not be border adjusted. To go to the right place, subsidies for families would come through our employer-paid subtraction VAT, with carbon VAT funding environmental research and serve as an incentive to reduce emissions. Such a tax has no chance of passage, however, unless the alternative of a more robust regulatory program is the alternative industry wishes to avoid. There is no such program offered by this administration, although the next is showing promise.
The second of the hearings dealt with environmental consequences within the United States from “Coast to Heartland.” If the WTO ever has the power to unilaterally act on climate change issues, there is a certainty that they have been captured by industry. The other alternative would require that they become such a powerful international body that QAnon will dedicate a page to them.
Whether or not it is captured, the WTO, as an international organization, is an assembly of sovereigns rather than a sovereign assembly. Campaign finance reports show how sovereign assemblies can be captured as well (no offense intended, at least not much). For such organizations to have any weight at all, they would require direct election by citizens. Until all member nations have a decent respect for human rights and contested elections, including our own regarding voter suppression efforts, there can be no such international assembly. Let us hope that the police actions in the Ranking Member’s home state are not reflective of future attempts at electoral mischief.
In my comments on coast to heartland, I addressed the problems of food and of sea level inundation in Asia and Micronesia and how it will produce a surge in migration inland and to our borders. I will develop them further here, rather than simply attaching them.
Given recent incidents leading to marches on police brutality, as well as the general poverty among the newly arrived, I am not sure why anyone wants to migrate here, but they still do. It may be the air conditioning (which is part of the climate change problem). The irony is that the anarchists at some of the recent marches, rather than the local protesters, cut their teeth protesting against the WTO, World Bank and IMF, starting is Seattle.
Domestically, inundation impacts families who have been there for generations, vacationers and the very wealthy. Flood insurance has provided the last with no incentive to support remediation efforts. We pay, they rebuild. If we capped repayments at $200,000, (assuming Congress could get away with it), the wealthy would have skin in the game and support remediation. Of course, this has little to do with the work of the WTO.
The literature on WTO reform is concerned with the role of developing countries and of data, depending on who is writing the report. Tax policy experts want corporate data reported internationally (see the work of Joshua Meltzer of the Brookings Institution, who should be a future witness on this topic).
Food is a huge issue in trade reform. American international food programs tend to have aid show up just before the harvest. While it does feed the people when in most need, it also tends to depress the sale price of domestic crops. In other words, these policies often benefit the Chairman’s home state of Iowa more than the recipients of food aid.
The way we grow our food in America is effective in that very little work produces a lot of food, but it leads to environmental degradation in terms of soil loss, chemicals used and waste produced by factory farms. If there were a subsidized market for farm waste to be converted to fertilizer, even though it may be more expensive than other nitrogen sources, progress could be made – especially if the result can be exported – although as the world’s workers are made wealthier by capitalism, they will eat more meat and create enough of their own farm waste.
Current vegetable based “meat” alternatives are all the rage, but they are not healthy for people with carbohydrate issues (which is most Americans). Cloned meat is an expensive and unsatisfying experience, at least until cloned blood, bone and fat are created and added, with 3D printing processes turn the result into a better facsimile of a steak or real ground beef.
In the current economy, this is unlikely. Unless a methane tax is assessed against farmers, to go along with carbon taxation, such developments will never pass – at least not until global warming becomes extreme or processes become much cheaper than they are now. Fear of nuclear war or COVID type viruses may also spur the development of alternative sources for protein. As we are finding out, fear sells.
The other way to spur alternative food production, such a printed cloned meat, is space exploration. Currently, potential Mars missions include how to do space food. A billion dollars in defense research and development transferred to NASA can create what the market will not touch. Shifting NASA from the Other Independent Agencies appropriation to the Defense subcommittee would make such transfers easier to manage. Cutting the defense budget to increase other high-tech jobs rather than the amorphous demand for social and educational spending is much more palatable.
If there is no necessity, there will be no invention. The environmental necessity of shifting away from current animal husbandry is not as obvious unless you believe in animal rights, live near a factory farm or wish to fish the Severn River. The clean water crisis makes the problem more acute. The person who made a billion shorting the housing market is now working on investments having to do with water.
As your last witness will likely mention, agricultural runoff may be a major problem for the oceans (I am sure stronger language will be used). Like COVID, much of the impact of humans on the ocean is probably misunderstood. There is much more ocean to explore than we have to date and it appears that life there is very robust. A major function of life is adaptability. Even on the ocean floor, we have microbes that eat oil. The human environment is at risk. The planet seems to take care of itself rather nicely.
Space exploration will make artificial and closed loop environmental food production both feasible and cheap. In a capitalistic society, it may not be cheap enough. In a world which fresh water is probably the biggest planetary challenge, one that climate change may exacerbate, the capability to grow your own food, including meat, and process your own water, may be attractive. Interest costs for a home, let alone an environmentally efficient home, are far in excess of the actual price of the structure, making it a non-started in a capitalist economy. Only a cooperative economy will produce the demand for alternative food production and the means to both build and finance it.
A state socialist economy cannot produce anything but weapons and vodka. A voluntary cooperative economy can produce everything. State action, however, along with developmental aid, has a high potential for success in dealing with desalinization. In the short term, simply getting fresh water and effective sewage is a bigger short-term challenge, as is corruption. Corruption also interferes, although the current administration is showing that the developing world has not monopoly on corruption.
Be that as it may, significant international investment, particularly with government sponsorship, is essential in producing cheap clean water. Plastic water bottles create pollution in the ocean, may raise estrogen levels in men and are not as tasty as a good glass of Army Corps of Engineers processed water in the national capital region. The very idea makes one thirsty. That thirst should not be held hostage to capitalist schemes when public works solutions are available. Capture by industry of the WTO and/or the United States Senate must not get in the way of an essentially free glass of water.
For both information and development, cooperative economic systems are superior to such bodies as the WTO, World Bank or the USDA Foreign Agricultural Service. A public sector economic research agency, either U.S. or international, could be helpful in comparing prices and standards of living from nation to nation. The price of a hamburger in China is not the price of a hamburger in Iowa or Washington, DC (Douglass Commonwealth, if you please).
Economists calculate purchasing power parity, although determining the common market basket will be contentious. Whether industry and finance will allow it is an even more relevant question. A monthly report on PPP would need a variety of market baskets: one for subsistence of the poor, one for factory labor – both union and non-union states and households, one for the professional class and not one for the rich – for whom money is no object and who buy for prestige as much as usage.
Ideally, PPP information would have as big an impact on currency prices as the operations of the public banking system (i.e., the Federal Reserve, European Central Bank, etc.). Perfect competition requires perfect information. Capitalism, however, seeks to make information a private good. Keeping wage and cost information secret is why capitalism can exist at all. If workers knew what their real productive value is, they would be paid better. If consumers knew the underlying price of goods, they would pay less. Expecting the WTO or Federal Reserve to provide international information on these very things is very unlikely, given the reality of capture by regulated interests.
Employee-owned firms, as described in the attachments, would have an incentive to know and use PPP information. Indeed, capitalist firms would not have such an incentive. Capitalist firms make money on the margins and play one side against the other. Employee-owned international firms would maximize worker/member well-being. Wages would be set by PPP levels, which “overvalues” foreign labor and thus protects domestic workers from labor arbitrage.
Employee-owned firms are also more likely to be early adopters of advanced food production techniques, which take the most essential goods, food and water, out of the marketplace and into the home. Think of how many fewer hours one could work without having to buy your own food or pay interest on everything from homes student loans! This is even before considering the fact that most cooperativists are also very likely to be environmentalists as well. It seems to be a package deal.
International employee-ownership makes economic development unnecessary. While capitalism, because it takes low skill and low need workers into more skilled workers and consumers is a powerful engine for development. There is no argument about that. Our contention, however, is that given the option to get the same job in a well-run employee-owned enterprise, there would be no contest. Capitalism would fail, as would government.
I have two final points, ones that are not found in any previous comments for the record.
Point One: discussions of trade are about labor, who does it and who buys it. Not my idea. It is the essence of Marxism. Marx was as much about social relations as he was about the mechanics of production. The implication for the WTO is that any reform of trade rules must also involve rules governing migration (again, going back to our environmental refugees from Micronesia).
The current Administration does not understand either one of these with any clarity. The two areas where the President has the freest hand are also where he has made the most mistakes. Any reform of trade should both cut any President’s wings and must relate the two more closely. WTO talks must also be migration talks or they are flying blind.
Point Two: I had hoped that the COVID slowdown and the current solar minimum might have had an impact on short term warming. Maybe it has overall. The prior certainly impacted wildlife management and cleared the air when America was shut down. The current heat wave, however, has proven that short term factors and local factors may be two very different thing. Still, it would be interesting to see if there is any impact on planetary temperature data.
It begs the imagination to assume that long-term carbon and methane usage are the only factors affecting climate change. If we can prove that short-term climate changes exist (we know that volcanoes have an impact already), we can make our models better. This assumes we can recover from the damage inflicted on our public scientific infrastructure by the current Administration.
The Center for Fiscal Equity’s left-wing bias is well known, but the Trump presidency has forced us to make it obvious. Please note that our biases are also on the libertarian side. Please keep this in mind when making lists of witnesses.
Our previous comments explain Regulatory Capture Theory (no agency succeeds unless it is captured by the industries it regulates – this is especially the case for trade policy) and how employee-ownership gets beyond both government regulation and the need to undertake it to protect workers from capital, while saving both American jobs and making overseas jobs create the American standard of living for overseas workers.
Our tax reform plan shows how to get there through both an asset VAT and personal accounts funded as credit to an employer-paid subtraction VAT. We also explain how to turn from tariffs to credit invoice value added taxes (zero rated at the border). The SVAT (not zero rated) is a vehicle for tax credits for each child, for healthcare and for educational expenses. Both are an alternative to personal income tax filing. Small government libertarians like both, big business libertarians like neither. They want tax filing to remain painful while assuring that those with tax shelters can avoid the sure taxation of invoice VAT.
One year ago, the House Budget Committee did a series of hearings on the impact of climate change, to which we also commented. The gist of our comments to the first hearing is that carbon value added taxes (which is a carbon tax that is receipt visible rather than buried in the product price) would help fight warming. These follow hearings from those held in May 2019 by the Ways and Means Committee.
To get the maximum global effect, they would not be border adjusted. To go to the right place, subsidies for families would come through our employer-paid subtraction VAT, with carbon VAT funding environmental research and serve as an incentive to reduce emissions. Such a tax has no chance of passage, however, unless the alternative of a more robust regulatory program is the alternative industry wishes to avoid. There is no such program offered by this administration, although the next is showing promise.
The second of the hearings dealt with environmental consequences within the United States from “Coast to Heartland.” If the WTO ever has the power to unilaterally act on climate change issues, there is a certainty that they have been captured by industry. The other alternative would require that they become such a powerful international body that QAnon will dedicate a page to them.
Whether or not it is captured, the WTO, as an international organization, is an assembly of sovereigns rather than a sovereign assembly. Campaign finance reports show how sovereign assemblies can be captured as well (no offense intended, at least not much). For such organizations to have any weight at all, they would require direct election by citizens. Until all member nations have a decent respect for human rights and contested elections, including our own regarding voter suppression efforts, there can be no such international assembly. Let us hope that the police actions in the Ranking Member’s home state are not reflective of future attempts at electoral mischief.
In my comments on coast to heartland, I addressed the problems of food and of sea level inundation in Asia and Micronesia and how it will produce a surge in migration inland and to our borders. I will develop them further here, rather than simply attaching them.
Given recent incidents leading to marches on police brutality, as well as the general poverty among the newly arrived, I am not sure why anyone wants to migrate here, but they still do. It may be the air conditioning (which is part of the climate change problem). The irony is that the anarchists at some of the recent marches, rather than the local protesters, cut their teeth protesting against the WTO, World Bank and IMF, starting is Seattle.
Domestically, inundation impacts families who have been there for generations, vacationers and the very wealthy. Flood insurance has provided the last with no incentive to support remediation efforts. We pay, they rebuild. If we capped repayments at $200,000, (assuming Congress could get away with it), the wealthy would have skin in the game and support remediation. Of course, this has little to do with the work of the WTO.
The literature on WTO reform is concerned with the role of developing countries and of data, depending on who is writing the report. Tax policy experts want corporate data reported internationally (see the work of Joshua Meltzer of the Brookings Institution, who should be a future witness on this topic).
Food is a huge issue in trade reform. American international food programs tend to have aid show up just before the harvest. While it does feed the people when in most need, it also tends to depress the sale price of domestic crops. In other words, these policies often benefit the Chairman’s home state of Iowa more than the recipients of food aid.
The way we grow our food in America is effective in that very little work produces a lot of food, but it leads to environmental degradation in terms of soil loss, chemicals used and waste produced by factory farms. If there were a subsidized market for farm waste to be converted to fertilizer, even though it may be more expensive than other nitrogen sources, progress could be made – especially if the result can be exported – although as the world’s workers are made wealthier by capitalism, they will eat more meat and create enough of their own farm waste.
Current vegetable based “meat” alternatives are all the rage, but they are not healthy for people with carbohydrate issues (which is most Americans). Cloned meat is an expensive and unsatisfying experience, at least until cloned blood, bone and fat are created and added, with 3D printing processes turn the result into a better facsimile of a steak or real ground beef.
In the current economy, this is unlikely. Unless a methane tax is assessed against farmers, to go along with carbon taxation, such developments will never pass – at least not until global warming becomes extreme or processes become much cheaper than they are now. Fear of nuclear war or COVID type viruses may also spur the development of alternative sources for protein. As we are finding out, fear sells.
The other way to spur alternative food production, such a printed cloned meat, is space exploration. Currently, potential Mars missions include how to do space food. A billion dollars in defense research and development transferred to NASA can create what the market will not touch. Shifting NASA from the Other Independent Agencies appropriation to the Defense subcommittee would make such transfers easier to manage. Cutting the defense budget to increase other high-tech jobs rather than the amorphous demand for social and educational spending is much more palatable.
If there is no necessity, there will be no invention. The environmental necessity of shifting away from current animal husbandry is not as obvious unless you believe in animal rights, live near a factory farm or wish to fish the Severn River. The clean water crisis makes the problem more acute. The person who made a billion shorting the housing market is now working on investments having to do with water.
As your last witness will likely mention, agricultural runoff may be a major problem for the oceans (I am sure stronger language will be used). Like COVID, much of the impact of humans on the ocean is probably misunderstood. There is much more ocean to explore than we have to date and it appears that life there is very robust. A major function of life is adaptability. Even on the ocean floor, we have microbes that eat oil. The human environment is at risk. The planet seems to take care of itself rather nicely.
Space exploration will make artificial and closed loop environmental food production both feasible and cheap. In a capitalistic society, it may not be cheap enough. In a world which fresh water is probably the biggest planetary challenge, one that climate change may exacerbate, the capability to grow your own food, including meat, and process your own water, may be attractive. Interest costs for a home, let alone an environmentally efficient home, are far in excess of the actual price of the structure, making it a non-started in a capitalist economy. Only a cooperative economy will produce the demand for alternative food production and the means to both build and finance it.
A state socialist economy cannot produce anything but weapons and vodka. A voluntary cooperative economy can produce everything. State action, however, along with developmental aid, has a high potential for success in dealing with desalinization. In the short term, simply getting fresh water and effective sewage is a bigger short-term challenge, as is corruption. Corruption also interferes, although the current administration is showing that the developing world has not monopoly on corruption.
Be that as it may, significant international investment, particularly with government sponsorship, is essential in producing cheap clean water. Plastic water bottles create pollution in the ocean, may raise estrogen levels in men and are not as tasty as a good glass of Army Corps of Engineers processed water in the national capital region. The very idea makes one thirsty. That thirst should not be held hostage to capitalist schemes when public works solutions are available. Capture by industry of the WTO and/or the United States Senate must not get in the way of an essentially free glass of water.
For both information and development, cooperative economic systems are superior to such bodies as the WTO, World Bank or the USDA Foreign Agricultural Service. A public sector economic research agency, either U.S. or international, could be helpful in comparing prices and standards of living from nation to nation. The price of a hamburger in China is not the price of a hamburger in Iowa or Washington, DC (Douglass Commonwealth, if you please).
Economists calculate purchasing power parity, although determining the common market basket will be contentious. Whether industry and finance will allow it is an even more relevant question. A monthly report on PPP would need a variety of market baskets: one for subsistence of the poor, one for factory labor – both union and non-union states and households, one for the professional class and not one for the rich – for whom money is no object and who buy for prestige as much as usage.
Ideally, PPP information would have as big an impact on currency prices as the operations of the public banking system (i.e., the Federal Reserve, European Central Bank, etc.). Perfect competition requires perfect information. Capitalism, however, seeks to make information a private good. Keeping wage and cost information secret is why capitalism can exist at all. If workers knew what their real productive value is, they would be paid better. If consumers knew the underlying price of goods, they would pay less. Expecting the WTO or Federal Reserve to provide international information on these very things is very unlikely, given the reality of capture by regulated interests.
Employee-owned firms, as described in the attachments, would have an incentive to know and use PPP information. Indeed, capitalist firms would not have such an incentive. Capitalist firms make money on the margins and play one side against the other. Employee-owned international firms would maximize worker/member well-being. Wages would be set by PPP levels, which “overvalues” foreign labor and thus protects domestic workers from labor arbitrage.
Employee-owned firms are also more likely to be early adopters of advanced food production techniques, which take the most essential goods, food and water, out of the marketplace and into the home. Think of how many fewer hours one could work without having to buy your own food or pay interest on everything from homes student loans! This is even before considering the fact that most cooperativists are also very likely to be environmentalists as well. It seems to be a package deal.
International employee-ownership makes economic development unnecessary. While capitalism, because it takes low skill and low need workers into more skilled workers and consumers is a powerful engine for development. There is no argument about that. Our contention, however, is that given the option to get the same job in a well-run employee-owned enterprise, there would be no contest. Capitalism would fail, as would government.
I have two final points, ones that are not found in any previous comments for the record.
Point One: discussions of trade are about labor, who does it and who buys it. Not my idea. It is the essence of Marxism. Marx was as much about social relations as he was about the mechanics of production. The implication for the WTO is that any reform of trade rules must also involve rules governing migration (again, going back to our environmental refugees from Micronesia).
The current Administration does not understand either one of these with any clarity. The two areas where the President has the freest hand are also where he has made the most mistakes. Any reform of trade should both cut any President’s wings and must relate the two more closely. WTO talks must also be migration talks or they are flying blind.
Point Two: I had hoped that the COVID slowdown and the current solar minimum might have had an impact on short term warming. Maybe it has overall. The prior certainly impacted wildlife management and cleared the air when America was shut down. The current heat wave, however, has proven that short term factors and local factors may be two very different thing. Still, it would be interesting to see if there is any impact on planetary temperature data.
It begs the imagination to assume that long-term carbon and methane usage are the only factors affecting climate change. If we can prove that short-term climate changes exist (we know that volcanoes have an impact already), we can make our models better. This assumes we can recover from the damage inflicted on our public scientific infrastructure by the current Administration.
The Center for Fiscal Equity’s left-wing bias is well known, but the Trump presidency has forced us to make it obvious. Please note that our biases are also on the libertarian side. Please keep this in mind when making lists of witnesses.
Attachment - Finance: Approaching 25: The Road Ahead for the World Trade Organization
March 12, 2019
Attachment - Value Added Taxes (March 2018), Employee Ownership and Trade, (February 2019)
Attachment - Tax Reform, Center for Fiscal Equity, February 21, 2020
posted by Michael Bindner at 10:15 AM
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