Monday, February 9, 2009

Green Ethics and Trade

The global slowdown is on the mind of investors anxiously awaiting news of a US stimulus and bank bailout. Despite the bleak economic reality, protectionist sentiments were quelled in the US Senate last week after President Obama warned Senators not to violate existing trade agreements by passing 'Buy American' provisions. Last week also saw a spate of reports and announcements indicating that jobless rates are climbing at an alarming rate in North America and around the world. Today the Wall Street Journal announced that Nissan would be cutting 20,000 jobs worldwide. The week ended with news that the US stimulus package was trimmed in an effort to gain some bipartisan acceptance. To counter Republican opposition, the President is going on the road today seeking grassroots support for his stimulus package.

After eight years of reckless Republican spending in a tragic and ill timed display of pure partisanship, Republicans are now attempting to restrict the government stimulus program as they resurrect their long forgotten and rarely practiced conservative fiscal policy.

Green is a powerful catalyst for growth, but some Green advocates suggest that trade itself is the enemy. With ongoing corruption scandals and reports of obscene corporate bonuses, it is easy to see how these old ideas could gain traction. Contrary to these well intentioned yet misguided views, trade is not the enemy. The world's trading infrastructure represents the most expedient mechanism for disseminating the Green agenda.

Traditionally, people who subscribe to religion believe that there is only one way to do something, conversely, relativism suggests that anything goes. The Carnegie Council for Ethics and International Affairs, 95 year old institution in New York City, advocates a balanced approach premised on three principles: fairness; rights and responsibilities; and pluralism. As stated in the Fairer Globalization blog, "people generally will prefer a fair outcome over one that benefits them unfairly or disproportionately." This approach advocates "a better way to address problems. It’s bringing everyone to the table, it’s creating a more sustainable and a better-informed solution."

Executives have a fiduciary duty to produce a profit, but this should be expanded to include the welfare of people. A good corporate citizen exercises prudence and enacts long-term strategic thinking. The author references a study of intangibles which indicates that ethical, social and environmental leadership have the greatest impact on valuation and brand.

Carnegie advocates a golden mean fair trade policy, where trade is not completely free, nor is it completely regulated. There are "three freedoms that we might think about truncating or limiting or sacrificing: the freedom to trade with anybody; the freedom to trade anything; and the freedom to trade with impunity. [Y]ou should be responsible for your actions that result from the trade that you make. There is a great deal of business literature...which suggests that if you’re benefiting from the externalities of your business relationships, then you do in fact have a duty to ameliorate them."

Free market purists have been chastened by failures arising as a consequence of deregulation. But those who seek to do away with free markets are as anachronistic as laissez-fair capitalists. Radical ideas like zero growth may be premised on laudable ideals, but they are hopelessly disconnected with political, social and psychological realities.

As explained by the author of the Fairer Globalization Blog, "[Y]ou can’t force people to be ethical on their own, rather you have to embed incentives in the system to encourage people to be ethical, you have to create a system of incentives that are based themselves on ethics, and that’s the challenge."


Unknown said...

First of all Free Trade is not really trade. It is primarily based on moving production and factories from place to place for the sake of cheaper and cheaper labor costs.

And it is nonsensical to promote any green ventures and taxpayer funded research & development, if the production phase is sent outside the USA.

We also must know that Free Trade and Globalization pollutes the world with all the long haul ocean, air, rail and truck shipping required plus the added packaging needed for protection.

A new software company in the USA is calculating the cost of this in the USA but it applies across the globe.

See an example at about the 8000 mile energy saving light bulb that comes from "dirty" manufacturing - See The Dark Side of Energy Saving...

See also

Free Trade is the problem behind our economic crisis too as confirmed by what Fed Res Chairman Ben Bernanke told Congress during the last Stimulus package debate. He said the best way to stimulate the economy is to buy "domestically produced goods'.

President Obama is a Globalist Free Trader who follows in the footsteps of the Clintons who betrayed American worker in the passing of NAFTA and GATT.
See and an attention getter at

The Green Market Oracle said...

Thank you for your comments. You are entirely correct to point out that the transportation of goods comes with additional environmental and economic costs.

There are some instances where it makes perfect sense to buy local, but, there are other examples where the opposite is true. A team of researchers from the University of California determined that the carbon footprint of certain locally grown foods in the US (eg: strawberries) is actually greater than the same produce shipped halfway across the country.

The sad reality is that in areas like the automotive sector American workers have been bettered by the competition.

History has taught us that protectionism is counterproductive, particularly in a serious recession. Protectionism is not a solution for a lack of competitiveness, and the lack of competitive advantage is not remedied by walling yourself in.

'Fairer globalization' is the most efficient mechanisms at our disposal to disseminate the Green message.


Unknown said...

The U.S. never really practiced protectionism. The Smooth-Hawley trade act which supposedly was the cause of the Great Depression is fiction. The Great Depression was caused by a money crisis. See and also

We also must note that our domestic production and farming can not compete against countries that allow "dirty" manufacturing and no controls over growing processes.

The Lend Lease Act was a good example of what should be happening. President Roosevelt ramped up our local value added economies by shipping goods to the allies without worrying about getting paid. We won World War 2 based on our local value added economies. See Lend Lease was real Free Trade and not chop liver as in the Globalist World at http:/

And again, Free Trade was never about moving factories and production outside national borders. It was about trading products.

The main question to ask is this:
Who said we had to compete like this in a global economic arena. It certainly did not evolve in any natural economic fashion.

The Green Market Oracle said...

My read of history is a bit more mainstream, rather than engage in interpretation lets review the facts:
1. The Smoot-Hawley Tariff Act of 1930 raised US tariffs on over 20,000 imported goods to record levels.
2. Many countries retaliated with increased tariffs on US goods.
3. 1,028 US economists signed a petition against this legislation.
4. After the legislation was passed American exports and imports plunged by more than half.
5. The was a severe reduction in U.S.-European trade leading to the Great Depression.

The Lend-Lease supplied $50 billion in war materials to our allies for the war against the axis powers. (in adjusted dollars this is roughly the same as Obama's stimulus package). It reflected the beginning of America's movement away from non-intervention and helped defeat the tyrants of the day. As such this was indeed a great and decisive moment in world history.

In the coming years we will see more international cooperation. There is already considerable evidence that the global economic crisis has fostered unprecedented cooperation. Eventually countries that allow "dirty" manufacturing and uncontrolled growing processes will be denied access to foreign markets, but not by starting a trade war.

Even China, the home of some of the dirtiest manufacturing in the world, is taking serious steps to address environmental degradation.
In the final analysis market forces (ie Green demand)combine with common sense to make it a matter of enlightened self interest.

I understand it is hard to patiently wait for international standards and a method of enforcement, but in my view, the day will come. Further, I cannot envision a more effective means of disseminating the Green agenda than free markets.

This economic crisis is an epic opportunity to make our infrastructure's more Green and reduce our reliance on fossil fuels.

What we need now is a Global Green New Deal, and as I indicate in that article, there is already evidence that it is taking place (see As President Obama has said "Just as we work to reduce our own emissions, we must forge international solutions to ensure that every nation is doing its part...the scope of the effort before us will demand coordination"

The bitter reality of globalization is that it benefits economies of scale. America is by far the world's preeminent economic and military power, because of this developing nations have much more cause for concern than the US.

Best Regards,


Unknown said...

Here is the written historical facts. The stock market crashed in 1929. The Smooth Hawley Act was passed in 1930. Roosevelt was elected in 1932. A new trade agreement act was passed in 1934 which gave President Roosevelt the option of lowering, stopping or raising tariffs. They Smooth- Hawley act did not cause the Great Depression.

Most of everything in the world was on hold due to lack of money because there was a worldwide money crisis. Trade was stagnant because of this.

Roosevelt said he was not going to let the dollar sign stand in his way as a reason for enacting the Lend Lease Act.

Compare this short 2 to 3 year spam in history with more than a fifty years of Free Trade failures. The U.S. Federal Government sponsored the moving of factories outside of the USA in 1956. This was the same year the Globalization of money started after the Suez crisis.

A major question is this:
Why is this information not mainstream news.

I witnessed the close down of 1000 small computer businesses in just a tri-state area and hundreds of computer manufactuters closing their doors. More than a million workers in the computer industry lost their jobs in about a ten years period in the late 1980s and throughout the 1990s. I lost more than a 1000 customers and prospects in just a five year period. It took me, twenty years to get them.

In the general poplulation one third of all more than 55 who lost their jobs, never found another one. About 47 percent of all small business owners maxed out their credit cards to keep afloat.

Many lost what it took a life time to save and bankruptcies soared for older Americans.

Compare all this to a two years epidsode relating to the Smooth Hawley trade act, does not make much sense to me.

And note the Lend Lease Act did not move production and factories outside of the USA. It and the Marshall Plan was all about building local value added economies and duplicating success and not chopping up the golden goose that layed the golden eggs.