In 1953 the United States enjoyed a robust 28% of GDP that was derived from manufacturing. Now it is barely 11% of total output. Gosh, are we becoming smart! Why pollute our own environment, deplete our natural resources and work hard when you don’t have to. And why produce tangible wealth when you can manufacture fake assets, trade them and count it as economic growth? Obama is carrying on the tradition of a phony economy with his proposed cap and trade system. Our own Chip Hanlon wrote a brilliant piece over at Red County just yesterday.
Just think of all those new government jobs that can be created under Obama’s cap and trade system. First we need to hire G-men to go around and assess the amount of carbon each company should be allowed to emit. Then we need a regulated exchange to ensure the trading of such credits is done accurately. We also must hire carbon police to ensure there aren’t any counterfeit credits running around diluting the value of this new valuable commodity. What a boon this will be to the accounting industry as well. An army of pencil pushers will need to learn how to recalculate book value based on excess credits held on the balance sheet.
Hey, just think how easy it will be to increase profit. A company can just shut down its production facility and sell their superfluous carbon credits. Imagine how high Gross Domestic Product will soar if we just close down what manufacturing we have left in this country and sell our credits to some poor country that has made the mistake of over producing and must go bankrupt by purchasing our unused credits. Wee we’ll all be rich.
Then maybe we can trade credit default swaps and futures contracts on carbon credits. Investors can get wealthy betting on how fast a company can go belly up after they receive a new contract and must increase carbon-belching production.
Who cares if our trade deficit soars and the dollar weakens, just think how nice the GDP print will be. I think we could also use carbon credits as an alternative currency. Do you think Chinese Premier Wen Jiapao will feel better about his Treasury holdings if he knows they are backed by carbon credits? You see how easy it is to solve problems once government gets involved.