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Dividends from Cap and Trade

Robert Reich proposes an interesting way for citizens to profit from global warming:

That’s why it’s important that all revenues from carbon auctions be cycled back to citizens. And rather than launch another endless debate over how and to whom – a payroll tax cut for people earning under the median wage? a cut in capital gains? – it would be well to agree to the simplest possible formula: Every adult citizen should receive an equal share. If the carbon auction yields $150 billion in the first year, for example, each of America’s 150 million adult citizens should receive a Treasury check of $1000.

Such direct and simple repayments – what analyst Peter Barnes, who has been pushing this idea, wisely calls “dividends” – deal with another problem. Although the balance of economic studies suggest that the cost of a cap and trade system will be modest, particularly to the extent it induces companies to reduce their emissions, inevitably some costs will be involved and be passed along to consumers. The cost of doing nothing about climate change will be far higher. But consumers Who are already walloped by high fuel and food costs will be in no mood to accept even modest additional price increases. Hence, the yearly dividend checks will be a welcome offset.

And to make the dividend checks really useful to people, they should be paid out on a monthly basis, the same as Social Security checks. Moreover, that way citizens can be continuously reminded of what they’re giving away, and what they’re getting back for it.

T.A. Frank on what he learned as a sweatshop inspector. I’ll summarize: Target good, Walmart bad.

At my company, I quickly figured out which clients cared. The first test was whether they conducted "pre-sourcing"—inspections of labor conditions before placing an order instead of after. This small step truly separates the top-rung companies from the pack, because to prescreen is to forgo the temptation of hiring the cheapest suppliers. (Those suppliers are the cheapest because they tend to break the rules, so they usually fail the preliminary inspection.) The second test was whether the company had a long-term relationship with its suppliers. Long-term commitments are what motivate both parties to behave: the supplier wants to preserve the relationship, and the customer wants to preserve its reputation. The third test was whether the company requested unannounced inspections as opposed to ones that were arranged in advance. The advantages of this are self-evident. And the final test was whether the company made inspection results public. This was almost never done.

Who, then, were the good actors of the trade? There are a number of them, actually, but here I’ll just point out two that often surprise people. The first is Mattel, the same company that was tarnished last summer by a recall of toys that were found to have lead paint on them. Whatever the chemical flaws of their products, Mattel had a reputation among us monitors for earnestness in pressuring its suppliers to improve their labor practices. It also owned and operated a few factories in China—a country with dreadful factories—that were exemplary. These facilities were regularly inspected by independent monitors, and anyone who wants to know what they’ve found there can visit Mattel’s Web site: the reports are public. The second unexpected company is Nike, which long ago took its bad press to heart and remade itself into a role model of how to carry out thoughtful labor monitoring. Nike has become such a leader in the field that its Web site may be the single best resource for those trying to understand the difficult business of international labor standards. Not only does Nike prescreen factories, it also discloses the name and address of every factory it uses and makes public much of its monitoring.

But let’s not be confined to praise. You may get the sense that I’m not Wal-Mart’s biggest fan. You’d be right. I betray no confidence here, since Wal-Mart wasn’t a client of ours while I was at my company. Nevertheless, I still got to visit plenty of its supplier factories. That’s because any given factory usually has more than one customer, and during an audit we would always ask the bosses to name their other customers. Wal-Mart was often one of them. And its suppliers were among the worst I saw—dangerous, nasty, and poorly paid even by local (usually Chinese) measures. I noticed that Wal-Mart claimed to require factories to maintain decent labor standards—but why did it seem to think it could find them among the lowest bidders?

Now, I know about good and bad actors mostly because I saw them directly. But ordinary consumers searching on company Web sites—Walmart.com, Nike.com, etc.—can find out almost everything they need to know just sitting at their desks. For instance, just now I learned from Wal-Mart’s latest report on sourcing that only 26 percent of its audits are unannounced. By contrast, of the inspections Target conducts, 100 percent are unannounced. That’s a revealing difference. And companies that do what Nike does—prescreen, build long-term relationships, disclose producers—make a point of emphasizing that fact, and are relatively transparent. Companies that don’t are more guarded. (When in doubt, doubt.)

(See also my piece, How Not to buy tennis shoes at a sweatshop).

Bob Holmes and Gabrielle Walker about the number of creatures in a typical South American rainforest.

Eighty per cent of the insect species in a typical sample have never been seen before by entomologists, Erwin says. He has catalogued the beetles in just 18 of his 900 samples, and already he has 1348 species. Even among the obscure insect group called treehoppers, the researchers have found 740 species in a single year’s samples.

But these tallies still underestimate the true diversity, since they do not include ground-dwelling species or those that live under the bark of trees where they die without falling onto the collecting sheet. In all, Erwin estimates, a single hectare of rainforest here may harbour between 50 000 and 60 000 species of insects and spiders—compared to just 20 000 in the whole of Britain." The number of species is unbelievable," says Erwin.

About moisture and the rainforests:

It isn’t easy to start a fire in the rainforest. The forest floor has plenty of leaf litter to supply fuel, but the dense, closed canopy keeps sunlight out and moisture in so the litter is usually too wet to burn. "You can go in after three months without rain and throw kerosene on the forest floor, and a match, and the fire doesn’t go anywhere," says Nepstad.

But fire is not as unlikely as it seems. If the roots run out of water and the canopy begins to parch, leaves start to fall and the intense equatorial sunlight will flood in. The litter can then dry out in a matter of days, turning the forest from green oasis into tinderbox.

They later make the point that if the canopy trees are somehow destroyed, more sunlight will shine through, evaporating the available water and accelerate the cycle of destruction for both flora and fauna.  This article was written in 1996, but still fascinating.

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