C
Captain Compassion
Guest
THE LEGO-FICATION OF HEAVY INDUSTRY
TCS Daily, 23 April 2007
http://www.tcsdaily.com/article.aspx?id=041907B
By Nick Schulz
President Bush recently reiterated his opposition to mandatory caps on
greenhouse gases. He argued that unless rapidly rising economies such
as China and India also agree to caps, then any steps the US takes are
in vain. "Unless there is an accord with China, China will produce
greenhouse gases that will offset anything we do in a brief period of
time," Bush has said.
The administration's critics claim the president is using China as a
convenient excuse to maintain the status quo. Let's assume Bush's
critics are right and that his argument is a rhetorical dodge. And
let's assume that when Bush leaves office his successor embraces a
significant regulatory assault on production of greenhouse gases
(either through a cap-and-trade program or through stiff taxes on
carbon). What is likely to happen?
A glimpse comes courtesy of James Kynge's extraordinary book, "China
Shakes the World: A Titan's Rise and Troubled Future - and the
Challenge for America." Kynge tells the astonishing story of the
Thyssen Krupp steel mill. This Ruhr River valley mill once employed
10,000 people in Dortmund, Germany. For many years after World War II
it was one of the country's largest steel producers.
But competitive pressures from overseas killed the town's steel
industry, and those jobs disappeared. Those German jobs may be all
gone, but the German mill itself is still alive and kicking and
churning out steel. But instead of doing it on the banks of the Ruhr,
it is on the banks of China's Yangtze River.
Just a few years ago, over one thousand Chinese descended upon the
Ruhr valley.
"They bedded down in a makeshift dormitory in a disused building in
the plant and worked twelve hours a day, seven days a week throughout
the summer. Only later, after some of the German workers and managers
complained, were the Chinese workers obliged to take a day off, out of
respect for local laws."
In less than one year, they successfully disassembled the plant and
shipped the 275,000 tons of materials and equipment to China. A
manufacturing entrepreneur and a former peasant farmer named Shen
Wenrong had purchased the plant and reassembled it 5,600 miles away.
This is what could be called the Lego-fication of heavy industry. It
made economic sense for Shen to do this because he had access to all
the relatively inexpensive labor needed to run a big steel production
facility; he just needed western technology. And so he bought it in
Germany, broke it down as if it were a gigantic Lego set, and
reassembled it in China. And he pulled this off faster and cheaper
than it would have taken him to build an entirely new plant.
Serious discussions are now underway in Washington and other capitals
about making the emission of greenhouse gases, such as those typically
generated by heavy manufacturing industries, very costly. Supporters
of increasing the cost of emissions argue that this will trigger
innovation that will yield low or zero-emission technologies. And they
may be correct in the long run.
In the meantime, what is likely to happen? If the cost of emitting is
high enough, energy-intensive industries will thrive in areas where
the cost of emitting is low. Today, that includes countries such as
China. And if it is already cost-effective to dismantle and relocate
heavy industry plants before severe emissions constraints are in
place, we might see more such instances of that when the costs go up.
The net effect on emissions will be unchanged, their point of
generation simply moving somewhere else.
This is why some proponents of mandated emissions reductions besides
President Bush acknowledge the importance of getting China on board if
the United States proceeds with emissions restrictions. But how likely
is it that China will go along?
Anything is possible. But after reading Kynge's deft and even-handed
treatment of modern China, I am not optimistic that it is likely any
time soon, for two reasons.
For starters, while there are many Chinese who are already rich or who
are getting rich, the massive bulk of the Chinese population - more
than the combined total of both Europe and the United States - is
still enmeshed in extreme poverty. China's growth miracle, if it
continues, will eventually pull these people out of poverty. But this
will take a couple of generations, during which time their emissions
will rise dramatically. China's short-run concern for its citizens'
material well-being is likely to trump concerns about climate changes
that could happen down the road.
Another reason is that China faces much more pressing ecological
problems in the near term. Particulate air pollution is a large and
persistent concern. And the nation's water problems are severe and
growing. It will be costly to fix these problems. As China gets
richer, it will begin to address them. But in prioritizing their
environmental threats, these are likely to trump tackling climate
change.
Would the United States and Europe be able to force China to lower its
emissions? The only stick on offing is threat of a trade fight. Given
growing protectionist sentiment in the United States, this prospect is
not unimaginable. But given how costly trade restrictions can be in
perpetuating human misery, this would be a large and nasty price to
pay.
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
"Civilization is the interval between Ice Ages." -- Will Durant.
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
daranc@NOSPAMcharter.net
TCS Daily, 23 April 2007
http://www.tcsdaily.com/article.aspx?id=041907B
By Nick Schulz
President Bush recently reiterated his opposition to mandatory caps on
greenhouse gases. He argued that unless rapidly rising economies such
as China and India also agree to caps, then any steps the US takes are
in vain. "Unless there is an accord with China, China will produce
greenhouse gases that will offset anything we do in a brief period of
time," Bush has said.
The administration's critics claim the president is using China as a
convenient excuse to maintain the status quo. Let's assume Bush's
critics are right and that his argument is a rhetorical dodge. And
let's assume that when Bush leaves office his successor embraces a
significant regulatory assault on production of greenhouse gases
(either through a cap-and-trade program or through stiff taxes on
carbon). What is likely to happen?
A glimpse comes courtesy of James Kynge's extraordinary book, "China
Shakes the World: A Titan's Rise and Troubled Future - and the
Challenge for America." Kynge tells the astonishing story of the
Thyssen Krupp steel mill. This Ruhr River valley mill once employed
10,000 people in Dortmund, Germany. For many years after World War II
it was one of the country's largest steel producers.
But competitive pressures from overseas killed the town's steel
industry, and those jobs disappeared. Those German jobs may be all
gone, but the German mill itself is still alive and kicking and
churning out steel. But instead of doing it on the banks of the Ruhr,
it is on the banks of China's Yangtze River.
Just a few years ago, over one thousand Chinese descended upon the
Ruhr valley.
"They bedded down in a makeshift dormitory in a disused building in
the plant and worked twelve hours a day, seven days a week throughout
the summer. Only later, after some of the German workers and managers
complained, were the Chinese workers obliged to take a day off, out of
respect for local laws."
In less than one year, they successfully disassembled the plant and
shipped the 275,000 tons of materials and equipment to China. A
manufacturing entrepreneur and a former peasant farmer named Shen
Wenrong had purchased the plant and reassembled it 5,600 miles away.
This is what could be called the Lego-fication of heavy industry. It
made economic sense for Shen to do this because he had access to all
the relatively inexpensive labor needed to run a big steel production
facility; he just needed western technology. And so he bought it in
Germany, broke it down as if it were a gigantic Lego set, and
reassembled it in China. And he pulled this off faster and cheaper
than it would have taken him to build an entirely new plant.
Serious discussions are now underway in Washington and other capitals
about making the emission of greenhouse gases, such as those typically
generated by heavy manufacturing industries, very costly. Supporters
of increasing the cost of emissions argue that this will trigger
innovation that will yield low or zero-emission technologies. And they
may be correct in the long run.
In the meantime, what is likely to happen? If the cost of emitting is
high enough, energy-intensive industries will thrive in areas where
the cost of emitting is low. Today, that includes countries such as
China. And if it is already cost-effective to dismantle and relocate
heavy industry plants before severe emissions constraints are in
place, we might see more such instances of that when the costs go up.
The net effect on emissions will be unchanged, their point of
generation simply moving somewhere else.
This is why some proponents of mandated emissions reductions besides
President Bush acknowledge the importance of getting China on board if
the United States proceeds with emissions restrictions. But how likely
is it that China will go along?
Anything is possible. But after reading Kynge's deft and even-handed
treatment of modern China, I am not optimistic that it is likely any
time soon, for two reasons.
For starters, while there are many Chinese who are already rich or who
are getting rich, the massive bulk of the Chinese population - more
than the combined total of both Europe and the United States - is
still enmeshed in extreme poverty. China's growth miracle, if it
continues, will eventually pull these people out of poverty. But this
will take a couple of generations, during which time their emissions
will rise dramatically. China's short-run concern for its citizens'
material well-being is likely to trump concerns about climate changes
that could happen down the road.
Another reason is that China faces much more pressing ecological
problems in the near term. Particulate air pollution is a large and
persistent concern. And the nation's water problems are severe and
growing. It will be costly to fix these problems. As China gets
richer, it will begin to address them. But in prioritizing their
environmental threats, these are likely to trump tackling climate
change.
Would the United States and Europe be able to force China to lower its
emissions? The only stick on offing is threat of a trade fight. Given
growing protectionist sentiment in the United States, this prospect is
not unimaginable. But given how costly trade restrictions can be in
perpetuating human misery, this would be a large and nasty price to
pay.
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
"Civilization is the interval between Ice Ages." -- Will Durant.
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
daranc@NOSPAMcharter.net