Trump and the Truth About Climate Change


July 22, 2017

Trump and the Truth About Climate Change

by Joseph E. Stiglitz

http://www.project-syndicate.com

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Under President Donald Trump’s leadership, the United States took another major step toward establishing itself as a rogue state on June 1, when it withdrew from the Paris climate agreement. For years, Trump has indulged the strange conspiracy theory that, as he put it in 2012, “The concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive.” But this was not the reason Trump advanced for withdrawing the US from the Paris accord. Rather, the agreement, he alleged, was bad for the US and implicitly unfair to it.

While fairness, like beauty, is in the eye of the beholder, Trump’s claim is difficult to justify. On the contrary, the Paris accord is very good for America, and it is the US that continues to impose an unfair burden on others.

Historically, the US has added disproportionately to the rising concentration of greenhouse gases in the atmosphere, and among large countries it remains the biggest per capita emitter of carbon dioxide by far – more than twice China’s rate and nearly 2.5 times more than Europe in 2013 (the latest year for which the World Bank has reported complete data). With its high income, the US is in a far better position to adapt to the challenges of climate change than poor countries like India and China, let alone a low-income country in Africa.

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After 6 months in office, Trump has shown that he is incapable of getting his agenda going. He cannot get at the issues which require his leadership.

In fact, the major flaw in Trump’s reasoning is that combating climate change would strengthen the US, not weaken it. Trump is looking toward the past – a past that, ironically, was not that great. His promise to restore coal-mining jobs (which now number 51,000, less than 0.04% of the country’s non-farm employment) overlooks the harsh conditions and health risks endemic in that industry, not to mention the technological advances that would continue to reduce employment in the industry even if coal production were revived.

In fact, far more jobs are being created in solar panel installation than are being lost in coal. More generally, moving to a green economy would increase US income today and economic growth in the future. In this, as in so many things, Trump is hopelessly mired in the past.

Just a few weeks before Trump’s decision to withdraw from the Paris accord, the global High-Level Commission on Carbon Prices, which I co-chaired with Nicholas Stern, highlighted the potential of a green transition. The Commission’s report, released at the end of May, argues that reducing CO2 emissions could result in an even stronger economy.

The logic is straightforward. A key problem holding back the global economy today is deficient aggregate demand. At the same time, many countries’ governments face revenue shortfalls. But we can address both issues simultaneously and reduce emissions by imposing a charge (a tax) for CO2 emissions.

It is always better to tax bad things than good things. By taxing CO2, firms and households would have an incentive to retrofit for the world of the future. The tax would also provide firms with incentives to innovate in ways that reduce energy usage and emissions – giving them a dynamic competitive advantage.

The Commission analyzed the level of carbon price that would be required to achieve the goals set forth in the Paris climate agreement – a far higher price than in most of Europe today, but still manageable. The commissioners pointed out that the appropriate price may differ across countries. In particular, they noted, a better regulatory system – one that restrains coal-fired power generation, for example – reduces the burden that must be placed on the tax system.

Interestingly, one of the world’s best-performing economies, Sweden, has already adopted a carbon tax at a rate substantially higher than that discussed in our report. And the Swedes have simultaneously sustained their strong growth without US-level emissions.

America under Trump has gone from being a world leader to an object of derision. In the aftermath of Trump’s withdrawal of the US from the Paris accord, a large sign was hung over Rome’s city hall: “The Planet First.” Likewise, France’s new president, Emmanuel Macron, poked fun at Trump’s campaign slogan, declaring “Make Our Planet Great Again.”

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But the consequences of Trump’s actions are no laughing matter. If the US continues to emit as it has, it will continue to impose enormous costs on the rest of the world, including on much poorer countries. Those who are being harmed by America’s recklessness are justifiably angry.

Fortunately, large parts of the US, including the most economically dynamic regions, have shown that Trump is, if not irrelevant, at least less relevant than he would like to believe. Large numbers of states and corporations have announced that they will proceed with their commitments – and perhaps go even further, offsetting the failures of other parts of the US.

In the meantime, the world must protect itself against rogue states. Climate change poses an existential threat to the planet that is no less dire than that posed by North Korea’s nuclear ambitions. In both cases, the world cannot escape the inevitable question: what is to be done about countries that refuse to do their part in preserving our planet?

Globalisation: The Rise and Fall of an Idea that swept the World


July 15, 2017

Globalisation: The Rise and Fall of an Idea that swept the World

It’s not just a populist backlash – many economists who once swore by free trade have changed their minds, too. How had they got it so wrong?

by Nikil Saval

https://www.theguardian.com

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The Annual January gathering of the World Economic Forum in Davos is usually a placid affair: a place for well-heeled participants to exchange notes on global business opportunities, or powder conditions on the local ski slopes, while cradling champagne and canapes. This January, the ultra-rich and the sparkling wine returned, but by all reports the mood was one of anxiety, defensiveness and self-reproach.

The future of economic globalisation, for which the Davos men and women see themselves as caretakers, had been shaken by a series of political earthquakes. “Globalisation” can mean many things, but what lay in particular doubt was the long-advanced project of increasing free trade in goods across borders. The previous summer, Britain had voted to leave the largest trading bloc in the world. In November, the unexpected victory of Donald Trump, who vowed to withdraw from major trade deals, appeared to jeopardise the trading relationships of the world’s richest country. Elections in France and Germany suddenly seemed to bear the possibility of anti-globalisation parties garnering better results than ever before. The barbarians weren’t at the gates to the ski-lifts yet – but they weren’t very far.

In a panel titled Governing Globalisation, economist Dambisa Moyo, otherwise a well-known supporter of free trade, forthrightly asked the audience to accept that “there have been significant losses” from globalisation. “It is not clear to me that we are going to be able to remedy them under the current infrastructure,” she added. Christine Lagarde, the head of the International Monetary Fund, called for a policy hitherto foreign to the World Economic Forum: “more redistribution”. After years of hedging or discounting the malign effects of free trade, it was time to face facts: globalisation caused job losses and depressed wages, and the usual Davos proposals – such as instructing affected populations to accept the new reality – weren’t going to work. Unless something changed, the political consequences were likely to get worse.

The backlash to globalisation has helped fuel the extraordinary political shifts of the past 18 months. During the close race to become the Democratic party candidate, Senator Bernie Sanders relentlessly attacked Hillary Clinton on her support for free trade. On the campaign trail, Donald Trump openly proposed tilting the terms of trade in favour of American industry. “Americanism, not globalism, shall be our creed,” he bellowed at the Republican national convention last July. The vote for Brexit was strongest in the regions of the UK devastated by the flight of manufacturing. At Davos in January, British Prime Minister Theresa May, the leader of the party of capital and inherited wealth, improbably picked up the theme, warning that, for many, “talk of greater globalisation … means their jobs being outsourced and wages undercut.” Meanwhile, the European far right has been warning against free movement of people as well as goods. Following her qualifying victory in the first round of France’s presidential election, Marine Le Pen warned darkly that “the main thing at stake in this election is the rampant globalisation that is endangering our civilisation.”

It was only a few decades ago that globalisation was held by many, even by some critics, to be an inevitable, unstoppable force. “Rejecting globalisation,” the American journalist George Packer has written, “was like rejecting the sunrise.” Globalisation could take place in services, capital and ideas, making it a notoriously imprecise term; but what it meant most often was making it cheaper to trade across borders – something that seemed to many at the time to be an unquestionable good.

In practice, this often meant that industry would move from rich countries, where labour was expensive, to poor countries, where labour was cheaper. People in the rich countries would either have to accept lower wages to compete, or lose their jobs. But no matter what, the goods they formerly produced would now be imported, and be even cheaper. And the unemployed could get new, higher-skilled jobs (if they got the requisite training). Mainstream economists and politicians upheld the consensus about the merits of globalisation, with little concern that there might be political consequences.

Back then, economists could calmly chalk up anti-globalisation sentiment to a marginal group of delusional protesters, or disgruntled stragglers still toiling uselessly in “sunset industries”. These days, as sizable constituencies have voted in country after country for anti-free-trade policies, or candidates that promise to limit them, the old self-assurance is gone. Millions have rejected, with uncertain results, the punishing logic that globalisation could not be stopped. The backlash has swelled a wave of soul-searching among economists, one that had already begun to roll ashore with the financial crisis. How did they fail to foresee the repercussions?

Anti-Globalisation protesters in Seattle, 1999. Photograph: Eric Draper/AP

In the heyday of the globalisation consensus, few economists questioned its merits in public. But in 1997, the Harvard economist Dani Rodrik published a slim book that created a stir. Appearing just as the US was about to enter a historic economic boom, Rodrik’s book, Has Globalization Gone Too Far?, sounded an unusual note of alarm.

Rodrik pointed to a series of dramatic recent events that challenged the idea that growing free trade would be peacefully accepted. In 1995, France had adopted a programme of fiscal austerity in order to prepare for entry into the eurozone; trade unions responded with the largest wave of strikes since 1968. In 1996, only five years after the end of the Soviet Union – with Russia’s once-protected markets having been forcibly opened, leading to a sudden decline in living standards – a communist won 40% of the vote in Russia’s presidential elections. That same year, two years after the passing of the North American Free Trade Agreement (NAFTA), one of the most ambitious multinational deals ever accomplished, a white nationalist running on an “America first” programme of economic protectionism did surprisingly well in the presidential primaries of the Republican party.

What was the pathology of which all of these disturbing events were symptoms? For Rodrik, it was “the process that has come to be called ‘globalisation’”. Since the 1980s, and especially following the collapse of the Soviet Union, lowering barriers to international trade had become the axiom of countries everywhere. Tariffs had to be slashed and regulations spiked. Trade unions, which kept wages high and made it harder to fire people, had to be crushed. Governments vied with each other to make their country more hospitable – more “competitive” – for businesses. That meant making labour cheaper and regulations looser, often in countries that had once tried their hand at socialism, or had spent years protecting “homegrown” industries with tariffs.

These moves were generally applauded by economists. After all, their profession had long embraced the principle of comparative advantage – simply put, the idea countries will trade with each other in order to gain what each lacks, thereby benefiting both. In theory, then, the globalisation of trade in goods and services would benefit consumers in rich countries by giving them access to inexpensive goods produced by cheaper labour in poorer countries, and this demand, in turn, would help grow the economies of those poorer countries.

Construction workers in Beijing, China. Photograph: Ng Han Guan/AP

But the social cost, in Rodrik’s dissenting view, was high – and consistently underestimated by economists. He noted that since the 1970s, lower-skilled European and American workers had endured a major fall in the real value of their wages, which dropped by more than 20%. Workers were suffering more spells of unemployment, more volatility in the hours they were expected to work.

While many economists attributed much of the insecurity to technological change – sophisticated new machines displacing low-skilled workers – Rodrik suggested that the process of globalisation should shoulder more of the blame. It was, in particular, the competition between workers in developing and developed countries that helped drive down wages and job security for workers in developed countries. Over and over, they would be held hostage to the possibility that their business would up and leave, in order to find cheap labour in other parts of the world; they had to accept restraints on their salaries – or else. Opinion polls registered their strong levels of anxiety and insecurity, and the political effects were becoming more visible. Rodrik foresaw that the cost of greater “economic integration” would be greater “social disintegration”. The inevitable result would be a huge political backlash.

As Rodrik would later recall, other economists tended to dismiss his arguments – or fear them. Paul Krugman, who would win the Nobel prize in 2008 for his earlier work in trade theory and economic geography, privately warned Rodrik that his work would give “ammunition to the barbarians”.

It was a tacit acknowledgment that pro-globalisation economists, journalists and politicians had come under growing pressure from a new movement on the left, who were raising concerns very similar to Rodrik’s. Over the course of the 1990s, an unwieldy international coalition had begun to contest the notion that globalisation was good. Called “anti-globalisation” by the media, and the “alter-globalisation” or “global justice” movement by its participants, it tried to draw attention to the devastating effect that free trade policies were having, especially in the developing world, where globalisation was supposed to be having its most beneficial effect. This was a time when figures such as the New York Times columnist Thomas Friedman had given the topic a glitzy prominence by documenting his time among what he gratingly called “globalutionaries”: chatting amiably with the CEO of Monsanto one day, gawking at lingerie manufacturers in Sri Lanka the next. Activists were intent on showing a much darker picture, revealing how the record of globalisation consisted mostly of farmers pushed off their land and the rampant proliferation of sweatshops. They also implicated the highest world bodies in their critique: the G7, World Bank and IMF. In 1999, the movement reached a high point when a unique coalition of trade unions and environmentalists managed to shut down the meeting of the World Trade Organization in Seattle.

In a state of panic, economists responded with a flood of columns and books that defended the necessity of a more open global market economy, in tones ranging from grandiose to sarcastic. In January 2000, Krugman used his first piece as a New York Times columnist to denounce the “trashing” of the WTO, calling it “a sad irony that the cause that has finally awakened the long-dormant American left is that of – yes! – denying opportunity to third-world workers”.

Where Krugman was derisive, others were solemn, putting the contemporary fight against the “anti-globalisation” left in a continuum of struggles for liberty. “Liberals, social democrats and moderate conservatives are on the same side in the great battles against religious fanatics, obscurantists, extreme environmentalists, fascists, Marxists and, of course, contemporary anti-globalisers,” wrote the Financial Times columnist and former World Bank economist Martin Wolf in his book Why Globalization Works. Language like this lent the fight for globalisation the air of an epochal struggle. More common was the rhetoric of figures such as Friedman, who in his book The World is Flat mocked the “pampered American college kids” who, “wearing their branded clothing, began to get interested in sweatshops as a way of expiating their guilt”.

Arguments against the global justice movement rested on the idea that the ultimate benefits of a more open and integrated economy would outweigh the downsides. “Freer trade is associated with higher growth and … higher growth is associated with reduced poverty,” wrote the Columbia University economist Jagdish Bhagwati in his book In Defense of Globalization. “Hence, growth reduces poverty.” No matter how troubling some of the local effects, the implication went, globalisation promised a greater good.

Image result for Jagdish Bhagwati in his book In Defense of Globalization.

 

The fact that proponents of globalisation now felt compelled to spend much of their time defending it indicates how much visibility the global justice movement had achieved by the early 2000s. Still, over time, the movement lost ground, as a policy consensus settled in favour of globalisation. The proponents of globalisation were determined never to let another gathering be interrupted. They stopped meeting in major cities, and security everywhere was tightened. By the time of the invasion of Iraq, the world’s attention had turned from free trade to George Bush and the “war on terror,” leaving the globalisation consensus intact.

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Above all, there was a widespread perception that globalisation was working as it was supposed to. The local adverse effects that activists pointed to – sweatshop labour, starving farmers – were increasingly obscured by the staggering GDP numbers and fantastical images of gleaming skylines coming out of China. With some lonely exceptions – such as Rodrik and the former World Bank chief and Columbia University Professor Joseph Stiglitz – the pursuit of freer trade became a consensus position for economists, commentators and the vast majority of mainstream politicians, to the point where the benefits of free trade seemed to command blind adherence. In a 2006 TV interview, Thomas Friedman was asked whether there was any free trade deal he would not support. He replied that there wasn’t, admitting, “I wrote a column supporting the CAFTA, the Caribbean Free Trade initiative. I didn’t even know what was in it. I just knew two words: free trade.”

In the wake of the financial crisis, the cracks began to show in the consensus on globalisation, to the point that, today, there may no longer be a consensus. Economists who were once ardent proponents of globalisation have become some of its most prominent critics. Erstwhile supporters now concede, at least in part, that it has produced inequality, unemployment and downward pressure on wages. Nuances and criticisms that economists only used to raise in private seminars are finally coming out in the open.
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A few months before the financial crisis hit, Krugman was already confessing to a “guilty conscience”. In the 1990s, he had been very influential in arguing that global trade with poor countries had only a small effect on workers’ wages in rich countries. By 2008, he was having doubts: the data seemed to suggest that the effect was much larger than he had suspected.

In the years that followed, the crash, the crisis of the eurozone and the worldwide drop in the price of oil and other commodities combined to put a huge dent in global trade. Since 2012, the IMF reported in its World Economic Outlook for October 2016, trade was growing at 3% a year – less than half the average of the previous three decades. That month, Martin Wolf argued in a column that globalisation had “lost dynamism”, due to a slackening of the world economy, the “exhaustion” of new markets to exploit and a rise in protectionist policies around the world.

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In an interview earlier this year, Wolf suggested to me that, though he remained convinced globalisation had not been the decisive factor in rising inequality, he had nonetheless not fully foreseen when he was writing Why Globalization Works how “radical the implications” of worsening inequality “might be for the US, and therefore the world”. Among these implications appears to be a rising distrust of the establishment that is blamed for the inequality. “We have a very big political problem in many of our countries,” he said. “The elites – the policy making business and financial elites – are increasingly disliked. You need to make policy which brings people to think again that their societies are run in a decent and civilised way.”

That distrust of the establishment has had highly visible political consequences: Farage, Trump, and Le Pen on the right; but also in new parties on the left, such as Spain’s Podemos, and curious populist hybrids, such as Italy’s Five Star Movement. As in 1997, but to an even greater degree, the volatile political scene reflects public anxiety over “the process that has come to be called ‘globalisation’”. If the critics of globalisation could be dismissed before because of their lack of economics training, or ignored because they were in distant countries, or kept out of sight by a wall of police, their sudden political ascendancy in the rich countries of the west cannot be so easily discounted today.

Over the past year, the opinion pages of prestigious newspapers have been filled with belated, rueful comments from the high priests of globalisation – the men who appeared to have defeated the anti-globalisers two decades earlier. Perhaps the most surprising such transformation has been that of Larry Summers. Possessed of a panoply of elite titles – former Chief Economist of the World Bank, former Treasury Secretary, President emeritus of Harvard, former Economic Adviser to President Barack Obama – Summers was renowned in the 1990s and 2000s for being a blustery proponent of globalisation. For Summers, it seemed, market logic was so inexorable that its dictates prevailed over every social concern. In an infamous World Bank memo from 1991, he held that the cheapest way to dispose of toxic waste in rich countries was to dump it in poor countries, since it was financially cheaper for them to manage it. “The laws of economics, it’s often forgotten, are like the laws of engineering,” he said in a speech that year at a World Bank-IMF meeting in Bangkok. “There’s only one set of laws and they work everywhere. One of the things I’ve learned in my short time at the World Bank is that whenever anybody says, ‘But economics works differently here,’ they’re about to say something dumb.”

Over the last two years, a different, in some ways unrecognizable Larry Summers has been appearing in newspaper editorial pages. More circumspect in tone, this humbler Summers has been arguing that economic opportunities in the developing world are slowing, and that the already rich economies are finding it hard to get out of the crisis. Barring some kind of breakthrough, Summers says, an era of slow growth is here to stay.

In Summers’s recent writings, this sombre conclusion has often been paired with a surprising political goal: advocating for a “responsible nationalism”. Now he argues that politicians must recognise that “the basic responsibility of government is to maximise the welfare of citizens, not to pursue some abstract concept of the global good”.

One curious thing about the pro-globalisation consensus of the 1990s and 2000s, and its collapse in recent years, is how closely the cycle resembles a previous era. Pursuing free trade has always produced displacement and inequality – and political chaos, populism and retrenchment to go with it. Every time the social consequences of free trade are overlooked, political backlash follows. But free trade is only one of many forms that economic integration can take. History seems to suggest, however, that it might be the most destabilising one.

Nearly all economists and scholars of globalisation like to point to the fact that the economy was rather globalised by the early 20th century. As European countries colonised Asia and sub-Saharan Africa, they turned their colonies into suppliers of raw materials for European manufacturers, as well as markets for European goods. Meanwhile, the economies of the colonisers were also becoming free-trade zones for each other. “The opening years of the 20th century were the closest thing the world had ever seen to a free world market for goods, capital and labour,” writes the Harvard Professor of Government Jeffry Frieden in his standard account, Global Capitalism: Its Fall and Rise in the 20th Century. “It would be a hundred years before the world returned to that level of globalisation.”

Image result for Jeffry Frieden Global Capitalism: Its Fall and Rise in the 20th Century.

 

In addition to military force, what underpinned this convenient arrangement for imperial nations was the gold standard. Under this system, each national currency had an established gold value: the British pound sterling was backed by 113 grains of pure gold; the US dollar by 23.22 grains, and so on. This entailed that exchange rates were also fixed: a British pound was always equal to 4.87 dollars. The stability of exchange rates meant that the cost of doing business across borders was predictable. Just like the eurozone today, you could count on the value of the currency staying the same, so long as the storehouse of gold remained more or less the same.

When there were gold shortages – as there were in the 1870s – the system stopped working. To protect the sanctity of the standard under conditions of stress, central bankers across the Europe and the US tightened access to credit and deflated prices. This left financiers in a decent position, but crushed farmers and the rural poor, for whom falling prices meant starvation. Then as now, economists and mainstream politicians largely overlooked the darker side of the economic picture.

In the US, this fuelled one of the world’s first self-described “populist” revolts, leading to the nomination of William Jennings Bryan as the Democratic party candidate in 1896. At his nominating convention, he gave a famous speech lambasting gold backers: “You shall not press down upon the brow of labour this crown of thorns, you shall not crucify mankind upon a cross of gold.” Then as now, financial elites and their supporters in the press were horrified. “There has been an upheaval of the political crust,” the Times of London reported, “and strange creatures have come forth.”

Businessmen were so distressed by Bryan that they backed the Republican candidate, William McKinley, who won partly by outspending Bryan five to one. Meanwhile, gold was bolstered by the discovery of new reserves in colonial South Africa. But the gold standard could not survive the first world war and the Great Depression. By the 1930s, unionisation had spread to more industries and there was a growing worldwide socialist movement. Protecting gold would mean mass unemployment and social unrest. Britain went off the gold standard in 1931, while Franklin Roosevelt took the US off it in 1933; France and several other countries would follow in 1936.

The prioritisation of finance and trade over the welfare of people had come momentarily to an end. But this wasn’t the end of the global economic system.

The trade system that followed was global, too, with high levels of trade – but it took place on terms that often allowed developing countries to protect their industries. Because, from the perspective of free traders, protectionism is always seen as bad, the success of this postwar system has been largely under-recognised.

Over the course of the 1930s and 40s, liberals – John Maynard Keynes among them – who had previously regarded departures from free trade as “an imbecility and an outrage” began to lose their religion. “The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success,” Keynes found himself writing in 1933. “It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t deliver the goods. In short, we dislike it, and we are beginning to despise it.” He claimed sympathies “with those who would minimise, rather than with those who would maximise, economic entanglement among nations,” and argued that goods “be homespun whenever it is reasonably and conveniently possible”.

The international systems that chastened figures such as Keynes helped produce in the next few years – especially the Bretton Woods agreement and the General Agreement on Tariffs and Trade (GATT) – set the terms under which the new wave of globalisation would take place.

The key to the system’s viability, in Rodrik’s view, was its flexibility – something absent from contemporary globalisation, with its one-size-fits-all model of capitalism. Bretton Woods stabilised exchange rates by pegging the dollar loosely to gold, and other currencies to the dollar. GATT consisted of rules governing free trade – negotiated by participating countries in a series of multinational “rounds” – that left many areas of the world economy, such as agriculture, untouched or unaddressed. “GATT’s purpose was never to maximise free trade,” Rodrik writes. “It was to achieve the maximum amount of trade compatible with different nations doing their own thing. In that respect, the institution proved spectacularly successful.”

Partly because GATT was not always dogmatic about free trade, it allowed most countries to figure out their own economic objectives, within a somewhat international ambit. When nations contravened the agreement’s terms on specific areas of national interest, they found that it “contained loopholes wide enough for an elephant to pass”, in Rodrik’s words. If a nation wanted to protect its steel industry, for example, it could claim “injury” under the rules of GATT and raise tariffs to discourage steel imports: “an abomination from the standpoint of free trade”. These were useful for countries that were recovering from the war and needed to build up their own industries via tariffs – duties imposed on particular imports. Meanwhile, from 1948 to 1990, world trade grew at an annual average of nearly 7% – faster than the post-communist years, which we think of as the high point of globalisation. “If there was a golden era of globalisation,” Rodrik has written, “this was it.”

GATT, however, failed to cover many of the countries in the developing world. These countries eventually created their own system, the United Nations conference on trade and development (UNCTAD). Under this rubric, many countries – especially in Latin America, the Middle East, Africa and Asia – adopted a policy of protecting homegrown industries by replacing imports with domestically produced goods. It worked poorly in some places – India and Argentina, for example, where the trade barriers were too high, resulting in factories that cost more to set up than the value of the goods they produced – but remarkably well in others, such as east Asia, much of Latin America and parts of sub-Saharan Africa, where homegrown industries did spring up. Though many later economists and commentators would dismiss the achievements of this model, it theoretically fit Larry Summers’s recent rubric on globalisation: “the basic responsibility of government is to maximise the welfare of citizens, not to pursue some abstract concept of the global good.”

The critical turning point – away from this system of trade balanced against national protections – came in the 1980s. Flagging growth and high inflation in the west, along with growing competition from Japan, opened the way for a political transformation. The elections of Margaret Thatcher and Ronald Reagan were seminal, putting free-market radicals in charge of two of the world’s five biggest economies and ushering in an era of “hyperglobalisation”. In the new political climate, economies with large public sectors and strong governments within the global capitalist system were no longer seen as aids to the system’s functioning, but impediments to it.

Not only did these ideologies take hold in the US and the UK; they seized international institutions as well. GATT renamed itself as the World Trade Organization (WTO), and the new rules the body negotiated began to cut more deeply into national policies. Its international trade rules sometimes undermined national legislation. The WTO’s appellate court intervened relentlessly in member nations’ tax, environmental and regulatory policies, including those of the United States: the US’s fuel emissions standards were judged to discriminate against imported gasoline, and its ban on imported shrimp caught without turtle-excluding devices was overturned. If national health and safety regulations were stricter than WTO rules necessitated, they could only remain in place if they were shown to have “scientific justification”.

The purest version of hyper-globalisation was tried out in Latin America in the 1980s. Known as the “Washington Consensus”, this model usually involved loans from the IMF that were contingent on those countries lowering trade barriers and privatising many of their nationally held industries. Well into the 1990s, economists were proclaiming the indisputable benefits of openness. In an influential 1995 paper, Jeffrey Sachs and Andrew Warner wrote: “We find no cases to support the frequent worry that a country might open and yet fail to grow.”

But the Washington consensus was bad for business: most countries did worse than before. Growth faltered, and citizens across Latin America revolted against attempted privatisations of water and gas. In Argentina, which followed the Washington Consensus to the letter, a grave crisis resulted in 2002, precipitating an economic collapse and massive street protests that forced out the government that had pursued privatising reforms. Argentina’s revolt presaged a left-populist upsurge across the continent: from 1999 to 2007, left wing leaders and parties took power in Brazil, Venezuela, Bolivia and Ecuador, all of them campaigning against the Washington consensus on globalisation. These revolts were a preview of the backlash of today.

Rodrik – perhaps the contemporary economist whose views have been most amply vindicated by recent events – was himself a beneficiary of protectionism in Turkey. His father’s ballpoint pen company was sheltered under tariffs, and achieved enough success to allow Rodrik to attend Harvard in the 1970s as an undergraduate. This personal understanding of the mixed nature of economic success may be one of the reasons why his work runs against the broad consensus of mainstream economics writing on globalisation.

“I never felt that my ideas were out of the mainstream,” Rodrik told me recently. Instead, it was that the mainstream had lost touch with the diversity of opinions and methods that already existed within economics. “The economics profession is strange in that the more you move away from the seminar room to the public domain, the more the nuances get lost, especially on issues of trade.” He lamented the fact that while, in the classroom, the models of trade discuss losers and winners, and, as a result, the necessity of policies of redistribution, in practice, an “arrogance and hubris” had led many economists to ignore these implications. “Rather than speaking truth to power, so to speak, many economists became cheerleaders for globalisation.”

In his 2011 book The Globalization Paradox, Rodrik concluded that “we cannot simultaneously pursue democracy, national determination, and economic globalisation.” The results of the 2016 elections and referendums provide ample testimony of the justness of the thesis, with millions voting to push back, for better or for worse, against the campaigns and institutions that promised more globalisation. “I’m not at all surprised by the backlash,” Rodrik told me. “Really, nobody should have been surprised.”

But what, in any case, would “more globalisation” look like? For the same economists and writers who have started to rethink their commitments to greater integration, it doesn’t mean quite what it did in the early 2000s. It’s not only the discourse that’s changed: globalisation itself has changed, developing into a more chaotic and unequal system than many economists predicted. The benefits of globalisation have been largely concentrated in a handful of Asian countries. And even in those countries, the good times may be running out.

Statistics from Global Inequality, a 2016 book by the development economist Branko Milanović, indicate that in relative terms the greatest benefits of globalisation have accrued to a rising “emerging middle class”, based preponderantly in China. But the cons are there, too: in absolute terms, the largest gains have gone to what is commonly called “the 1%” – half of whom are based in the US. Economist Richard Baldwin has shown in his recent book, The Great Convergence, that nearly all of the gains from globalisation have been concentrated in six countries.

Barring some political catastrophe, in which right wing populism continued to gain, and in which globalisation would be the least of our problems – Wolf admitted that he was “not at all sure” that this could be ruled out – globalisation was always going to slow; in fact, it already has. One reason, says Wolf, was that “a very, very large proportion of the gains from globalisation – by no means all – have been exploited. We have a more open world economy to trade than we’ve ever had before.” Citing The Great Convergence, Wolf noted that supply chains have already expanded, and that future developments, such as automation and the use of robots, looked to undermine the promise of a growing industrial workforce. Today, the political priorities were less about trade and more about the challenge of retraining workers, as technology renders old jobs obsolete and transforms the world of work.

Rodrik, too, believes that globalisation, whether reduced or increased, is unlikely to produce the kind of economic effects it once did. For him, this slowdown has something to do with what he calls “premature deindustrialisation”. In the past, the simplest model of globalisation suggested that rich countries would gradually become “service economies”, while emerging economies picked up the industrial burden. Yet recent statistics show the world as a whole is deindustrialising. Countries that one would have expected to have more industrial potential are going through the stages of automation more quickly than previously developed countries did, and thereby failing to develop the broad industrial workforce seen as a key to shared prosperity.

For both Rodrik and Wolf, the political reaction to globalisation bore possibilities of deep uncertainty. “I really have found it very difficult to decide whether what we’re living through is a blip, or a fundamental and profound transformation of the world – at least as significant as that one brought about the first world war and the Russian revolution,” Wolf told me. He cited his agreement with economists such as Summers that shifting away from the earlier emphasis on globalisation had now become a political priority; that to pursue still greater liberalisation was like showing “a red rag to a bull” in terms of what it might do to the already compromised political stability of the western world.

Rodrik pointed to a belated emphasis, both among political figures and economists, on the necessity of compensating those displaced by globalisation with retraining and more robust welfare states. But pro-free-traders had a history of cutting compensation: Bill Clinton passed NAFTA, but failed to expand safety nets. “The issue is that the people are rightly not trusting the centrists who are now promising compensation,” Rodrik said. “One reason that Hillary Clinton didn’t get any traction with those people is that she didn’t have any credibility.”

Rodrik felt that economics commentary failed to register the gravity of the situation: that there were increasingly few avenues for global growth, and that much of the damage done by globalisation – economic and political – is irreversible. “There is a sense that we’re at a turning point,” he said. “There’s a lot more thinking about what can be done. There’s a renewed emphasis on compensation – which, you know, I think has come rather late.”

https://www.theguardian.com/world/2017/jul/14/globalisation-the-rise-and-fall-of-an-idea-that-swept-the-world

DJT is Making America a G-20 Pariah


July 11, 2017

Wake Up: DJT is Making America a G-20 Pariah

by John Cassidy

Australian journalist Chris Uhlmann demolishes Trump after G20: ‘biggest threat to the west’

Mr Trump is a man who craves power because it burnishes his celebrity. To be constantly talking and talked about is all that really matters. And there is no value placed on the meaning of words. So what is said one day can be discarded the next.

So what have we learned?

We learned Mr Trump has pressed fast forward on the decline of the US as a global leader. He managed to diminish his nation and to confuse and alienate his allies.He will cede that power to China and Russia — two authoritarian states that will forge a very different set of rules for the 21st century. Some will cheer the decline of America, but I think we’ll miss it when it is gone. And that is the biggest threat to the values of the West which he claims to hold so dear.– Chris Uhlmann

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Just when you think you’ve seen it all, out comes another Donald Trump tweet, or tweetstorm, to prove you wrong. On Sunday morning, America’s forty-fifth President, having just returned to Washington from the G-20 summit in Hamburg, Germany, pronounced his trip “a great success for the United States.”

It says something about Trump’s grip on reality that he could reach such a conclusion after a summit in which he and the rest of the U.S. delegation were utterly isolated on major issues such as climate change and international trade. In fact, the only way that German Chancellor Angela Merkel’s diplomatic sherpas were able to cobble together a communiqué that everyone could sign onto was to include a section that noted America’s decision to withdraw from the Paris climate accord, but which added, “Leaders of the other G20 members state that the Paris Agreement is irreversible.” The symbolism here was powerful: in a global forum that the U.S. government, especially the Treasury Department, helped to create during the late nineteen-nineties, Trump’s America stood alone.

Of course, the G-20 is far from perfect: the protesters assembled outside the Messehallen Convention Center, most of whom were peaceful, were right about that. The organization’s membership is arbitrary—Italy is a member, Spain isn’t; South Africa is in, Nigeria is out—and its pronouncements can reflect the sometimes hidebound thinking of finance ministers and central bankers. But the G-20 is also one of the few political forums for tackling global economic problems, such as financial contagion, tax evasion, and climate change (which is ultimately a market failure). And, until Trump’s election, U.S. leadership was widely recognized as an integral part of any G-20 get-together.

The message of Hamburg was that Trump’s “America First” rhetoric—and his inability to see international agreements as anything other than zero-sum deals—have changed that situation, at least temporarily. The rest of the world hasn’t turned its back on the U.S.; the country is still far too big and powerful for that to happen. And, in any case, many foreign leaders harbor respect for the values that the U.S. espouses and the global order that it has helped maintain for seven decades. At the moment, however, they are looking for ways to work around Washington and its rogue President.

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Outplayed by Valdimir Putin of Russia?

Judging by his Twitter comments on Sunday, Trump is proud of having turned the U.S. into a G-20 pariah. But even more revealing, and disturbing, was the readout he delivered on his meeting last Friday with Russia’s Vladimir Putin. Here it is, not quite in its entirety (as, since we’ve heard Trump criticize Barack Obama and the “fake news” media many times before, I’ve left out those bits):

I strongly pressed President Putin twice about Russian meddling in our election, He vehemently denied it. I’ve already given my opinion. . . . We negotiated a ceasefire in parts of Syria which will save lives. Now it is time to move forward in working constructively with Russia! Putin & I discussed forming an impenetrable Cyber Security unit so that election hacking, & many other negative things, will be guarded . . . and safe. Questions were asked about why the CIA & FBI had to ask the DNC 13 times for their SERVER, and were rejected, still don’t . . . have it. . . . Sanctions were not discussed at my meeting with President Putin. Nothing will be done until the Ukrainian & Syrian problems are solved!

In the spirit of generosity, it should be acknowledged that the final sentence here was a welcome one. And Moscow’s many critics in Congress will surely remind Trump of it if he decides, during the coming months, to relax the restrictions that the Obama Administration imposed on Russia following its annexation of Crimea.

But the rest of what the President wrote on Sunday was a mess of confusions and contradictions. Trump didn’t out-and-out confirm the claim made by Sergey Lavrov, Russia’s Foreign Minister, that he had accepted Putin’s denials of any Russian involvement in hacking during the election. But Trump made perfectly clear that he still rejects the view of the U.S. intelligence community that Russia was responsible for hacking and that, for policy purposes, he considers the matter to be closed. Any effort to get to the bottom of what happened—much less impose some real punishment on Moscow—will be subjugated to the imperative of “working constructively with Russia.”

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Sen. John McCain, R-Ariz.and Sen. Lindsey Graham, R-S.C., on Capitol Hill in Washington have criticised the Trump-Putin proposal to create a joint “Cyber Security unit” to safeguard future elections.

That brings us to the nuttiest part of the tweetstorm, perhaps the nuttiest thing an American President has said in decades: the proposal to create a joint “Cyber Security unit” with Moscow to safeguard future elections. Whether Trump himself came up with this ingenious proposal, or whether it was Putin’s idea, the Tweeter-in-Chief didn’t say. But it drew instant ridicule from both sides of the political divide.

“It’s not the dumbest idea I have ever heard but it’s pretty close,” the Republican senator Lindsey Graham told NBC’s “Meet the Press.” Representative Adam Schiff, the top Democrat on the House Intelligence Committee, said on CNN, “If that’s our best election defense, we might as well just mail our ballot boxes to Moscow.”

What was Trump thinking? As ever, we have to consider the possibility that he wasn’t thinking at all, and what he says doesn’t mean anything—not even when he is reporting on his dealings with the leader of a rival nuclear power. “Donald Trump is a man who craves power because it burnishes his celebrity: to be constantly talking and talked about is all that really matters,” Chris Uhlmann, the political editor of the Australian Broadcasting Corporation, said, in remarks about the G-20 summit that went viral. “And there is no value placed on the meaning of words, so what’s said one day can be discarded the next.”

The other reading is a darker one, and it involves taking Trump at his word. For whatever reason, he still appears to see Putin as a potential partner—maybe even one who can be trusted with some of America’s most sensitive secrets, such as the workings of its voting systems. If this is indeed the case, it matters little whether Trump is a Russian dupe or a Russian stooge: he needs to be stopped.

On Sunday night, Trump disavowed part of what he had said earlier in the day, writing in another tweet, “The fact that President Putin and I discussed a Cyber Security unit doesn’t mean I think it can happen. It can’t-but a ceasefire can,& did!” This message illustrated Uhlmann’s point about the half-life of Trump’s utterances, and also confirmed the truth of the Australian journalist’s over-all conclusion about the President’s trip to the G-20 meeting: “So what did we learn? We learned that Donald Trump has pressed fast forward on the decline of the United States as a global leader.”

Understanding the Productivity Puzzle


January 21, 2017

Understanding the Productivity Puzzle

by Howard Davies

https://www.project-syndicate.org/columnist/howard-davies

Howard Davies, the first chairman of the United Kingdom’s Financial Services Authority (1997-2003), is Chairman of the Royal Bank of Scotland. He was Director of the London School of Economics (2003-11) and served as Deputy Governor of the Bank of England and Director-General of the Confederation of British Industry.

 

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In all major economies, the so-called productivity puzzle continues to perplex economists and policymakers: output per hour is significantly lower than it would have been had the pre-2008 growth trend continued. The figures are stark, particularly so in the United Kingdom, but also across the OECD. And while it goes without saying that economists have many ingenious explanations to offer, none has yet proved persuasive enough to create a consensus.

According to the UK’s Office for National Statistics, output per hour in France was 14% lower in 2015 than it would have been had the previously normal trend growth rate been matched. Output was 9% lower in the United States and 8% lower in Germany, which has remained the top performer among developed economies, albeit only in relative terms. If this new, lower growth rate persists, by 2021 average incomes in the US will be 16% lower than they would have been had the US maintained the roughly 2% annual productivity gain experienced since 1945.

The UK exhibits a particularly chronic case of the syndrome. British productivity was 9% below the OECD average in 2007; by 2015, the gap had widened to 18%. Strikingly, UK productivity per hour is fully 35% below the German level, and 30% below that of the US. Even the French could produce the average British worker’s output in a week, and still take Friday off. It would seem that, in addition to the factors affecting all developed economies, the UK has particularly weak management.

Some contributing factors are generally acknowledged. During the crisis and its immediate aftermath, when banks’ efforts to rebuild capital constrained new lending, ultra-low interest rates kept some firms’ heads above water, and their managers retained employees, despite making a relatively low return.

On the other hand, new, more productive, and innovative firms found it hard to raise the capital they needed to grow, so they either did not expand, or did so by substituting labor for capital. In other words, low interest rates held productivity down by allowing heavily indebted zombie companies to survive for longer than they otherwise would have done.

The Bank of England has acknowledged that trade-off, estimating that productivity would have been 1-3% higher in the UK had it raised interest rates to pre-crisis levels in the recovery phase. But they believe the consequences – slower income growth and higher unemployment – would have been unacceptable.

This argument has now been extended beyond the banking system, to the capital markets themselves. Critics of central banks have claimed that a sustained policy of exceptionally low interest rates, reinforced by huge doses of quantitative easing, have caused asset prices to rise indiscriminately. That has not only had adverse consequences for the distribution of wealth; it has also muted the ability of capital markets to distinguish between productive, high-potential firms and others that deserve to fail. According to this view, a rising tide lifts even fundamentally unseaworthy boats.

This argument has some explanatory power, though it says little about the value added by highly paid asset managers and whether they really are prepared to put their money to work simply on the basis of a monetary-policy effect on relative prices, paying no attention to individual companies’ strategies and performance. But the key question the argument raises is what to do about it.

Would it really have been preferable to tighten policy far earlier, to kill off weaker companies in the interests of improving productivity? The BoE has given an explicit answer, and the other major central banks implicit answers, to that question. They do not think so.

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http://www.institutionalinvestor.com/Article/3315202/The-Great-Divide-over-Market-Efficiency.html#.WUpY4elRPIU

A preferable approach to resolving the problem might be more vigorous use of the tools available to market regulators. These authorities tend to focus more on investor protection than on the allocational efficiency of the markets they oversee. Investor protection is important, of course, but as the Nobel laureate Eugene Fama put it, “the primary role of the capital market is allocation of ownership of the economy’s capital stock.”

A regulator focused on that objective would be especially rigorous in overseeing the transparent disclosure of information, and would seek to promote vigorous competition among companies and also, crucially for this objective, among investors. It should not be acceptable for asset managers to earn extravagant returns for following a market benchmark.

There are, no doubt, other dimensions to the productivity puzzle. Maybe we are not measuring output well. As developed economies become more service-based, our measures of output become less objective. In many service industries, outputs are effectively measured by inputs. Maybe we are not measuring enhancements in quality, which may mean that output increases are understated. Maybe we have reached a point at which the productivity boost from Internet-based technology has been cashed, and we need another technological leap to move forward again.

But one key challenge for central banks, as we edge toward the normalization of interest rates, will be to develop a framework for thinking about the impact of monetary policy on the allocation of capital. The task is urgent, as the social and political implications of a prolonged period of no productivity or real wage growth may be very serious. Indeed, arguably they have been factors behind the political upheavals in the US and the UK already.

The Costs and Benefits of SOCIAL INCLUSION


June 10, 2017

The Costs and Benefits of SOCIAL INCLUSION

by Dr. Lim Teck Ghee@www.malaysiakini.com

COMMENT | Amongst inclusion, integration, affirmative action, ethnic preference or similar policies implemented to redress perceived socio-economic differences or imbalances in social groups, probably the longest lived and arguably most successful of those pursued by the world’s nations have been those of Malaysia in the field of education.

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The beginnings of this achievement in education can be traced to active measures undertaken by the British colonial government to upgrade the economic progress of Malays in 1950 through the establishment of the Rural Industrial Development Authority (Rida).

According to an official history account, Rida had first opened its doors to some 50 students to help in the training of rural Malays in 1956.

Following independence and the May 13 racial violence, Rida morphed to become Majlis Amanah Rakyat or Mara as everyone today knows it.

Since then, this modest educational component of Rida/Mara has grown to become the largest higher education institution in the nation.

Today, Universiti Teknologi Mara (UiTM) comprises one main campus, 13 state campuses and 22 satellite campuses. With 17,000 academic and non-academic staff, UiTM offers over 500 programmes ranging from foundation to postgraduate level.

It has some 170,000 students – all bumiputeras and a small number of international students – and teaching is fully conducted in English.

There is no disputing the benefits and advantages that ethnic preference policies in higher education have had for the Malays. UiTM can be said to have spawned an entire generation of the Malay middle and upper class. It has also been the catalyst to the rapid proliferation of Malays in key targeted professional and high income groups during the New Economic Policy (NEP) and post-NEP era.

Putting UiTM under the microscope

The Economic Planning Unit does not appear to have updated a key table showing the racial proportion of professional and high income groups for some years now.

This is probably because Malays have comprised the largest number among accountants, architects, dentists, medical doctors, lawyers, veterinary surgeons, engineers and surveyors in the country for at least one decade, if not longer now.

Less easy to assess are the costs and the impact of this racially structured affirmative action education and training agency on the country’s manpower needs and talent pool. The most contentious issue relates to the closing of the university’s doors to non-Malay students.

Although the university’s Pro-Chancellor, Arshad Ayub, in 2015 called for opportunity to be given to non-bumiputeras to study there, so as to encourage healthy competition and produce more intellectuals among students, his proposal – even though he qualified it by stating that these opportunities should be opened at post-graduate levels and not at diploma and bachelor’s degree levels – has proven to be a political minefield and non-starter.

Contentious issues aside, it is also unclear today the extent to which the Malay poor – indeed, the entire bumiputera poor – are the prime beneficiaries according to the mission objectives of the institution.

Or whether the institution is catering to a privileged Malay middle and upper class which can well afford to meet its educational needs in the same way that the rest of the country’s citizenry are doing. If the latter is happening, not only are non-Malays being marginalised, but also poor Malays and poor non-Malay bumiputeras.

According to a recent report, 3,000 Sijil Pelajaran Malaysia (SPM) and Sijil Tinggi Pelajaran Malaysia (STPM) school-leavers who failed to pursue further studies despite obtaining excellent results were offered placements at UiTM in 2016.

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Vice-Chancellor Professor Emeritus Hassan Said said the opportunity was being given to to students from poor families and rural areas who could not continue their studies due to various factors, among them financial constraints. This total – even if increased greatly – will be a miniscule of the total number of 200,000 students envisaged for the year 2020.

A stand alone comprehensive and independent review of UiTM is not only necessary. It is overdue for at least three reasons.

One is the dominant role of UiTM in the country’s higher education and manpower planning system.

The second is the very large amount of public expenditure that has been spent during the past four decades on the institution. According to the latest data, the operating budget for UiTM alone in 2016 came up to RM2.23 billion of the total RM7.57 billion allocated to all 20 public universities in the country, or nearly 30 percent.

Even after the latest round of budgetary cutbacks, UiTM is slated to receive an allocation of RM1.67 billion of the RM6.12 billion allocation for all public universities in 2017.

 

Finally, a rigorous assessment is necessary because the government is continuing to position Mara and UiTM as the crucial driver of bumiputera economic and educational development for the coming decades.

Meanwhile there should be concern about the quality of higher education provided by UiTM. In the current Wikipedia article on UiTM, the table below shows that hardly any progress has been achieved by the university in its standing among universities in Malaysia, the region and world.

What is preventing UiTM from living up to its self characterised description of being “a research-intensive entrepreneurial university’ leading the way for Malaysia to become an innovation-based and knowledge-based economy are just two of many questions that need to be asked by all concerned Malaysians, not just politicians and the university’s staff and alumni.

Trump’s Climate-Change Sociopathy


June 9, 2017

Trump’s Climate-Change Sociopathy

by Jeffrey D. Sachs

https://www.project-syndicate.org/columnist/jeffrey-d-sachs

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Dr. Sachs is Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and of the UN Sustainable Development Solutions Network. His books include The End of Poverty, Common Wealth, The Age of Sustainable Development, and, most recently, Building the New American Economy.

 

President Donald Trump’s withdrawal of the United States from the Paris climate agreement is not just dangerous for the world; it is also sociopathic. Without remorse, Trump is willfully inflicting harm on others. The declaration by Nikki Haley, the US Ambassador to the United Nations, that Trump believes in climate change makes matters worse, not better. Trump is knowingly and brazenly jeopardizing the planet.

Trump’s announcement was made with a bully’s bravado. A global agreement that is symmetric in all ways, across all countries of the world, is somehow a trick, he huffed, an anti-American plot. The rest of the world has been “laughing at us.” These ravings are utterly delusional, deeply cynical, or profoundly ignorant. Probably all three. And they should be recognized as such.

After Trump claimed to be representing “Pittsburgh, not Paris,” the mayor of Pittsburgh immediately declared that Trump certainly is not representing his city. In fact, Pittsburgh has made the transition from a polluted, heavy industrial economy to an advanced, clean-tech economy. And it is home to Carnegie Mellon University, one of the world’s great centers of innovation in information technologies that can promote the transition to zero-carbon, high-efficiency, equitable, and sustainable growth – or, more simply, an economy that is “smart, fair, and sustainable.”

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Trump’s announcement was rooted in two profoundly destructive developments. The first is the corruption of the US political system. Trump’s announcement was not really his alone. It reflected the will of the Republican leadership in Congress, including the 22 Republican senators who sent Trump a letter the week before, calling on him to withdraw from the Paris accord.

These senators, and their counterparts in the House of Representatives, are on the take of the oil and gas industry, which spent $100 million on campaign contributions in 2016, of which 90% went to Republican candidates. (In fact, the total was almost certainly far above $100 million, but much is untraceable.)

The second destructive development is the twisted mindset of Trump and his closest advisers. Their view, defended with “alternative facts” that have no basis in reality, is paranoid and malevolent, aimed at inflicting harm on others, or at best indifferent to harm befalling others. “The Paris agreement,” rants Trump, “handicaps the United States economy in order to win praise from the very foreign capitals and global activists that have long sought to gain wealth at our country’s expense.” This is nuts.

The Paris accord is a universal agreement among 193 UN member states to cooperate in decarbonizing the world’s energy system and thereby head off the dangers of climate disaster, such as a multi-meter sea-level rise, extreme storms, massive droughts, and other threats identified by the global scientific community. Some of these threats are already evident in vulnerable parts of the planet.

The Paris climate agreement requires each country is to do its part with “common but differentiated responsibilities.” America’s differentiated responsibilities start with the fact that the US is, by far, the largest cumulative greenhouse-gas emitter in the world. As such, the US has contributed more to ongoing climate change than any other country. And US per capita emissions are higher than in any other large country, by far. The Paris accord does not victimize the US; on the contrary, the US has a world-beating responsibility to get its house in order.

According to data from the World Resources Institute, the US accounted for an astounding 26.6% of global greenhouse-gas emissions from 1850 to 2013. America’s population today is just 4.4% of the world’s population. In short, it is America, where per capita emissions have always been several times higher than the world average, that owes the world climate justice, not the other way around.

Consider the most recent data for the year 2014 from the International Energy Agency’s Energy Statistics 2016. The world’s CO2 emissions from energy and industry averaged 4.5 tons per person (32.4 billion tons per 7.2 billion people in the IEA tabulation), while US emissions were nearly four times that level, 16.2 tons per person (5.2 billion tons for 320 million people). Trump carries on about the Paris agreement’s supposed bias in favor of India, but fails to acknowledge that India’s per capita emissions are 1.6 tons, just one-tenth of the US level.

Trump also bemoans the US contributions to the Green Climate Fund (and sneers at the name for some reason as well). He complains that the US has already given over $1 billion, without explaining to the American people and the world that $1 billion is a contribution of $3.08 per American. Indeed, the $10 billion expected from the US over many years is a mere $30.80 per American.

Here’s the simple truth: The entire world needs to move quickly and resolutely to a low-carbon energy system, in order to end emissions of CO2 and other greenhouse gases by mid-century. This is not a move against the US. It’s a global imperative – true for the US, China, India, Russia, Saudi Arabia, Canada, and other fossil-fuel-rich countries, as well as for fossil-fuel-importing regions such as Europe, Japan, and most of Africa. Fortunately, the technologies exist: solar, wind, geothermal, hydroelectric, ocean, nuclear, and other low-carbon energy sources.

Here’s more simple truth: With its large, rich, fossil-fuel-intensive economy, the US has done more than any other country to bring about the global peril of climate change, so it should accept its responsibility in helping to get us all out of danger. At a minimum, America should be eagerly cooperating with the rest of the world.

Instead, Trump’s sociopathic behavior, and the corruption and viciousness of those surrounding him, has produced utter disdain for a world nearing the brink of human-made catastrophe. The next human-caused climate disasters should be named Typhoon Donald, Superstorm Ivanka, and Megaflood Jared. The world will not forget.