Trade and the Triple Crisis

John Weeks, Guest Blogger

A previous article of mine on Triple Crisis trashed the arguments for the international trade proposal called the Trans-Pacific Partnership, and applies as well to the loathsome Trans Atlantic Trade and Investment Partnership. These “partnerships” represent but two more attempts to sell the pernicious nonsense of “free trade”. In my new book, Economics of the 1%, I go to the analytical roots of the neoliberal trade ideology to rubbish the incantation of “gains from (international) trade.”

I recently attended a meeting in London with environmental activists, including a well-known British climate scientist. As a result of that meeting, I realize that my critique of “free trade” was far too timid and narrow. The essential problem is not these attempts by the U.S. bourgeoisie via our government to gain advantage in international markets. The problem is international trade itself. The charts below show why. The two countries with the most exports in 2012 are the United States and China, with Germany and Japan considerably further back (both the U.S. and China over US$2 trillion, Germany at just over US$1.5 trillion).

By no accident, China and the United States are at the top of the pollution list, with Japan #5 and Germany #6. But, “wait,” you say, these are also the largest economies in the world, so the issue is their domestic energy use, not whether what is produced is exported.

Well, actually, No.

World’s leading exporters 2012 (billions of US$)

Source : United Nations Conference on Trade and Development

World’s Leading Polluters 2012 (millions of tons)

Source: United Nations Environmental Program.

A moment’s reflection (and I am ashamed to say that I just realized this blindingly obvious fact) makes the fallacy clear. When something is produced domestically, using it domestically is less polluting than exporting it. Production represents only the first contribution of a product to the world’s pollution.  As an average across all sectors, the domestic production component of pollution is least in Germany, followed by the United States, Japan, and China by far the worst production polluter.

However, before awarding the Germany government a medal for good behavior, we should do a reality check. Over this decade nine new coal-fired power stations will open in Germany, with capacity in excess of all other new sources of energy for industry.  This represents a drop in the bucket (albeit a poisonous drop) compared to over 350 such coal-fired generating plants planned by the regime in China.

As long as we are looking at Asia, it should not escape our attention that the Japanese government pitches in its share of pollution not just by building new domestic coal power plants (partly in response ot the Fukushima disaster). This is the government that funds coal-fired power plants throughout the developing world, for which it has come under attack from the International Energy Agency (and the U.S. government).

Produce it (Factories in China, Northern Hebei province, Source: WikiCommons).

Producing a product for export requires the company in question to transport it to the importer (are you following me?). While ocean transport can claim a greener bill-of-health than aviation, that represents a classical example of “damning with faint praise.”

Air pollution emissions from ships are continuously growing, while land-based emissions are gradually coming down. If things are left as they are, by 2020 shipping will be the biggest single emitter of air pollution in Europe, even surpassing the emissions from all land-based sources together. (www.transportenvironment.org/what-we-do/shipping/air-pollution-ships)

When companies transport products over long distances the environment suffers—it really is that simple. And air-freighting fresh fruit and vegetables puts shipping in the shade, the difference between a pollution misdemeanor and a felony. One source estimates the 1% of the world’s food that travels to you and me by air contributes 11% of carbon emissions.

Transport it (Source: WikiCommons.)

All this transport-generated pollution occurs before the pollution caused by the use of the product. Especially anti-environment are consumer and producer durables, not least because of the energy they use. Then comes the despoiling of the environment that results from having to dispose of the product. Production, consumption, and disposal apply no matter what the geographic source of a product. But exporting and importing make their own contribution to the destruction of the environment—substantial transport costs.

Use it (refrigerator full of imported goodies), then dispose of it (junked refrigerators in the United States).

(Source: WikiCommons)

The huge and growing amount of pollution due to international trade brings to my mind the famous critique of free trade by John Maynard Keynes (infamous and blasphemous for mainstream economists):

I was brought up … to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt … As lately as 1923 I was writing that free trade was based on fundamental “truths” which…no one can dispute …

[But now] I sympathize … with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel—these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national. (“National Self-sufficiency,” Yale Economic Review 22,4, 1933)

Imagine if you can a world in which goods are “homespun” and finance is “primarily national.” If we cannot imagine such a world, there is little hope for the planet. The combination of climate deterioration and the ravages of international finance will fulfill the prophecy of Hobbes, rendering life on Earth “poor, nasty, brutish and short.”

John Weeks is the author of Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy (Anthem Press).

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