Real and Affordable Green or Misguideded Dream?

Bjørn Lomborg is the author of The Skeptical Environmentalist and Cool It, head of the Copenhagen Consensus Center, and an adjunct professor at Copenhagen Business School. I trust his analyses much more than the "data free" propaganda of the Sierra Club and the Blue Plant Foundation of Hawaii. Here is a summary in his words of his latest assessment titled Seeming Green.

• Danish politicians – like politicians elsewhere – claim that a green economy will cost nothing, or may even be a source of new growth. Unfortunately, this is not true. Globally, there is a clear correlation between higher growth rates and higher CO2 emissions. Furthermore, nearly every green energy source is still more expensive than fossil fuels, even when calculating pollution costs. We do not burn fossil fuels simply to annoy environmentalists. We burn them because fossil fuels have facilitated virtually all of the material advances that civilization has achieved over the last few hundred years.
• Politicians in Denmark and elsewhere argue as if this were no longer true: a transition to a green economy will create millions of new “green jobs.” But, while green-energy subsidies generate more jobs in green-energy sectors, they also displace similar numbers of jobs elsewhere.
• Many politicians are drawn to photo opportunities and lofty rhetoric about “building a green economy.” Unfortunately, the green-energy policies currently being pursued are not helping the environment or the economy. More likely, they will lead to greater emissions in China, more outsourcing to India, and lower growth rates for the well-intentioned “green” countries.

APEC 2011 in Honolulu Ended. Was there a Result?

Yes, although we did not get much information about it in Hawaii. In general, coverage of APEC 2011 in the international press was limited and mostly focused on countries other than the US. There was little or no mention of Honolulu, Hawaii other than as a reference to the location of the meeting. The lack of leis and aloha shirts in official pictures made the exposure of Aloha even more minimal.

The APEC 2011 accomplishment “headline” was the formal initiation of a possible free trade agreement among Pacific nations, which is referred to as the Trans-Pacific Partnership (TPP). This, in turn, put Japan squarely in the middle of the issue and pinned China in a defensive position.

President Obama made even bigger headlines ... in Australia where he announced that WE ARE BACK!

The Economist’s summaries of “We are Back” and of the TPP are informative. See below. We should be following these developments closely because along with expedited visas for tourists from China these have strong implications for Hawaii.

America in the Asia-Pacific - We’re back
America reaches a pivot point in Asia

Nov 19th 2011 | SYDNEY AND WASHINGTON, DC

BORN in Hawaii, raised for some of his childhood in Indonesia, Barack Obama has since his election wanted to be known as America’s first “Pacific President”. Until recently, he has not done much to earn the title. That, Mr. Obama declares, is now changing.

Allies in Asia have complained about only intermittent American attention to their region. But in a speech to Australia’s parliament on November 17th Mr Obama announced that America is back. “Let there be no doubt: in the Asia-Pacific in the 21st century, the United States of America is all in.” It was, he said, a “deliberate and strategic decision”: America was “here to stay”.

Senior administration officials back up the president. They talk of a new “pivot” in foreign policy towards Asia. America will be around to ensure that China’s “peaceful rise” remains just that.

Free trade in the Pacific - A small reason to be cheerful
An inspiring idea to liberalize transpacific trade hinges on the courage of America and, especially, Japan
Nov 19th 2011 | from the print edition

WITH thunderclouds looming over the trans-Atlantic economy, it was easy to miss a bright piece of news last weekend from the other crucible of world trade, the Pacific Rim. In Honolulu, where Barack Obama hosted a summit of Asia-Pacific leaders, Canada, Japan and Mexico expressed interest in joining nine countries (America, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam) in discussing a free-trade pact. Altogether, the possible members of the Trans-Pacific Partnership (TPP) produce 40% of world GDP—far more than the European Union.

The creation of a wider TPP is still some way off. For it to come into being its architects—Mr Obama, who faces a tough election battle next year, and Japan’s Yoshihiko Noda, who faces crony politics laced with passionate protectionism—need to show more leadership.

Opening up the Pacific
Nov 12th 2011 | TOKYO

MOST Americans have not heard of the Trans-Pacific Partnership (TPP), a free-trade area of countries dotted around the Pacific Ocean. They will soon. The news has electrified the summit of Asia-Pacific Exporting Countries (APEC) convening in Honolulu this weekend. President Barack Obama, who acts as the meeting’s host, hopes the TPP will be the cornerstone of an APEC-wide free-trade area.

There are, however, huge hurdles to overcome in the meantime. Mr Noda’s decision was delayed by a day because of the extent of opposition to trade liberalization within his own Democratic Party of Japan (DPJ), let alone the opposition.

Asia-Pacific trade initiatives - Dreams and realities
A battle over American-led free trade brews in Asia
Nov 12th 2011 | SEOUL AND TOKYO

THE American president is bringing a new—or at least re-warmed—cause to the Asia-Pacific region: free trade. Barack Obama recently signed a ground-breaking free-trade agreement (FTA) with South Korea, after years of Washington foot-dragging. He signed FTAs with Colombia and Panama on the same day. On November 12th-13th the president hosts an Asia-Pacific trade jamboree in Honolulu which, he seems to hope, will give momentum to the idea of a remarkably ambitious free-trade zone at just the time when global trade talks are going nowhere.

Mr Noda will need to convince his counterparts that he has enough domestic support to negotiate in good faith. If he can achieve that, Japan might start a long-overdue push to reform and revitalize its economy. And then the TPP might become more than just another Asia-Pacific acronym that only wonks have heard of.

Mortgage Deduction On the Chopping Block - Big Deal?

The headline reads as follows: Proposal to Limit or Eliminate Tax Deduction for Homes Is Unpopular, Could Raise Billions

There is no doubt that this headline is true on both counts: Unpopular and a Tax Loss for the government. On the opposite side, the mortgage interest tax deduction is Popular with homeowners but is it a big deal?

I set out to answer this for myself in detail using my records. I file separately as head of household with one dependent and I carry a large mortgage in its second year (in 2010), so the effect of a mortgage deduction elimination would be "as big as it gets" in my case.

In the process of estimating all taxes I paid in 2010 I discovered so many hidden charges such as tire disposal fees, and chemical and pollution fees. I do not travel a lot but taxes on hotels, car rentals and airlines are so heavy that they show up clearly.

Also, 2010 was an election year and I run a campaign. My dry clean bill was substantial and I discovered that the actual tax was 10.3% because of the chemical and pollution fees that government has added to the cleaners. The 10.3% includes Honolulu/Hawaii 4.67% general excise tax (GET). So a visit to the cleaners cleans both clothes and wallet!

Utility bills and car fees are vehicles for tax collection and the two of them combined are just as bad as Hawaii's GET which I went at length to calculate from a pile of receipts and statements.

Long story short, my aggregated breakdown of taxes in percentages is shown below, for the actual case with my mortgage and for an estimated case where my $36,000 deduction in mortgage interest was taken away.

It is quite clear that given my total income A, with mortgage deduction in 2101 I paid 0.311A in taxes. If I could no longer deduct mortgage interest then my total tax would have been 0.375A. The difference between the two is substantial and is roughly equal to my 3-year-old's annual day care cost. That's a big deal!

The bottom line is that being in Hawaii without a mortgage interest tax reduction would make me feel quite European. (EU is infamous about its high taxes due to the extensive socialist policies.) Nearly 40% of my middle class income would be lost to taxation.

While the elimination of this deduction may have a small impact in low cost residential markets, it's effects at regions with median housing prices over $300,000 would be significant to the housing and real estate markets, to the taxpayers of those areas and by extension to the general economies of those regions. It would be devastating for the handful of regions with median housing prices over $500,000, and Honolulu is one of them.

Greece Elects a Non-politician as its Savior Prime Minister

Dr. Lukas Papadimos became Greece's Prime Minister on November 11, 2011 through a consensus process that included the ruling socialist party, the opposition conservative party and the President of the Republic.

A member of no political party, Dr. Papdimos is a wise and unusual choice. A physicist and electrical engineer with a doctorate in economics, all from MIT, and professor of economics at Columbia University and the University of Athens. An academic and a numbers man.

Furthermore, Dr. Papadimos has had extensive experience in national banking affairs. Between 1980 and 1985 he worked at the US Federal Bank in Boston. Between 1993 and 2002 he was manager at The Bank of Greece. This was followed by the vice-presidency at the Central Bank of Europe until 2010 when he became financial adviser to the prime minister.

It appears that Dr. Papadimos is "what the doctor ordered" for Greece with its huge banking and debt financing crises. It remains to be seen whether the members of the Greek Parliament will re-orient their thinking around the goal of saving the country as opposed to their petty politicking, service to special interests, and focus on pet regional projects and re-election ambitions. (This may be too much to ask of parliamentarians who consistently did wrong for the country for decades.**)

I can only wish Dr. Papadimos the best of luck, and congratulate him for his bravery to pilot a half-sank ship in the middle of a hurricane.

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(**) As an outside observer with a bit of knowledge of politics I am alarmed by the similarities among the Greek Parliament, the US Congress, and the Hawaii Legislature. Simply put, they keep making the wrong choices time and again, and driving the debt to the Billions and Trillions.

Like in Greece's past, all political "change" in the US and Hawaii has been fake. Until the knife reached the citizens' bones (as it has in Greece.) Although I hope for a big improvement, it may be too late and too painful to return Greece (and the US and Hawaii) to fiscal health and prosperity within a generation.