Trade and the Environment

WM Trade: Promoting Sustainable Environmental Practices Through Trade Policy, December 14, 2022

Our allergy to conforming to tax policy in the rest of the developed world is a boon to consumers, especially wealthier consumers who are also donors. This is not so good for workers. If the United States had a goods and services tax, the wealthy elite could not avoid taxation by borrowing from their asset portfolios to fund consumption. To end this tax dodge, tax consumption. Taxing asset value gains at sale rather than taxing end of the year results also leaves money on the table, but that is a discussion for another day. Please see our paper on taxes and trade policy for how credit invoice AND subtraction value added taxes will impact both trade policy and workers.

Deforestation was a concern of the hearing, however from an environmental perspective, the fact is that if agricultural activities are stopped, trees will retake the landscape. On the whole, given water, they are as environmentally resilient as pigeons, rats and cockroaches. They will inherit the Earth long after we have left it. 

Unregulated fishing is also a concern, although more for our fishing industry than for the fish - who are as mobile as mobile can be. Warming is more of a concern. In fishing grounds off the American Pacific Coast, fish that used to be available are gone. They have been replaced by squid. This is largely attributable to global climate change. I hope you like calamari.

From comments presented to the Subcommittee in April of 2021, on Climate Challenges On warming in general, there is no doubt that it is man-made. While there was a warm period around the first millennium, we came to it gradually. Industrialization may have ended what is called the Little Ice Age, but that warming is sudden and has dire consequences. We do not know that it will stop the way it did in the Middle Ages, indeed, it is not likely to, which makes these hearings vital.

Starting with the coasts, there will be sea level rise. Indeed, the flooding shown in Vice President Gore’s latest film shows how bad it is getting. The wealthy don’t seem to care, because they have flood insurance. The most basic step to at least get wealthier taxpayers on board (including the upper-middle class) is to cap flood insurance benefits to a level where beach houses properties  can no longer be insured. Even that small step could never be enacted. Too many donors have beach houses.

This is a bigger problem for some than the catch of the day, particularly in the Indo-Pacific region. In comments to the Finance Committee on Strategic Climate Engagement in the Indo-Pacific Region in March 2022 Warming in the United States is merely inconvenient. In the Indo-Pacific region, it will be deadly. Island nations and Bangladesh will simply be eliminated. This constitutes a large share of the global population. Java has 154 million people in the same space that the United States has 53 million in the Boston-Washington urban cluster. Visualize relocating them.

American agriculture is in no danger of losing its dominance. Our technological advantage is simply too great, as well as our willingness to look the other way on worker safety, just compensation and immigration rules (not to mention labor organizing) to bring cheaper food to the American table. We addressed the issue of forced agricultural labor, both here and abroad, in comments to the Finance Committee, and other places and have included these comments in the second attachment.

Child labor in farming is a major concern. This is the case in the United States as well. Peasant farmers and migrant workers traditionally employ all members of the family. The answer to this is educational opportunity, including measures such as paid learning to provide young people to meet the opportunity costs of getting an education.  This can be done through a variety of means, but I recommend funding through subtraction value added taxes on the state level rather than property taxes, state income taxes, federal aid or sales taxes.

Enforcement of international labor agreements is lacking in the area of workers rights. Industries have their finger on the scale, including at the tribunal level. Fixing this is about as likely as capping insurance coverage on beachfront property,as mentioned above. The problem is still capitalism and the solution is employee-ownership. This approach works both here and abroad. Once employee-ownership is a fact of life in the United States, employee owners will bring this model to overseas subsidiaries and supply chains. This will do what no trade agreement can.

Exporting more natural gas to Europe is certainly essential, but it does not take trade policy for American industry to fill that need. The promotion of shale mining in North Dakota is a matter of price, not trade. Currently, oil prices are falling and will continue to fall once reforms to the New York Mercantile Exchange oil futures market are restored. American producers have gotten a windfall from this bit of Trump era deregulation. This is a temporary matter.

Increasing nuclear power is an environmentally sustainable path, but it will only occur when the demand for more electricity rises as we move away from using gasoline in our cars. Getting this enacted is as likely, for now, as improving environmental and labor trade enforcement and limiting flood insurance. Since this hearing, Trump’s taxes have been revealed as Hell has frozen over in much of the nation. Even record low temperatures will not convince capitalists.

Employee-owners and forward thinking communities can step in where the market will not. In testimony to the Energy and Water Appropriations Subcommittee, I described an experiment to build an integrated system for providing electric power for cars and trucks, while reinventing the grid, that relied on overhead roof decks to transfer power to vehicles in the same way electric trains and buses work. Please see an excerpt in the attachments. We don’t need to drill for or export more oil. We need much less.

Advanced technology, employee-ownership and space exploration also take us back to the table. The latest news is that lab grown meat has cleared regulatory hurdles and will soon be coming to market. As these products gain a market (and inevitably improve), the need to worry about deforestation, slave labor in food production and manufacturing, ethical sourcing and animal cruelty, overpopulation and water pollution will vanish. 

Employee-owned firms, through cooperative purchasing, can both make such products available, as well as buying into their production and developing home based systems. Such miniaturization is vital for space colonies, both orbital and planetary, to not rely on Earth for their food. This is yet another case where throwing money at a problem works well. The NASA appropriation should be moved to the Defense subcommittee to shift from weapons production to space exploration in a more politically acceptable manner.

Attachment: Trade Policy Video

Attachment: Fighting Forced Labor Video

Attachment: Energy Appropriation Video