Global Warming - Why We Won't Muster An Effective Response

One of the reasons I am operating from the assumption no significant response will happen to slow down global warming is because almost any response by individual countries will be ineffective if it isn't simultaneously adopted in every major industrial country in the world.  That won't happen due to the realities imposed by countries economically competing with one another.  An example is the proposed Carbon Tax intended to encourage a reduction in greenhouse gases.

Here's a hypothetical:

USA.Inc and China.Inc both manufacture widgets.  It costs both $1 to produce each widget.

The US imposes a carbon tax that adds $.05 per widget to USA.Inc's cost per widget.  The US also imposes a border tariff on incoming widgets of $.05 per widget, so USA.Inc and China.Inc, in theory, remain equally competitive within the US.

But USA.Inc is no longer competitive anywhere outside the US, because their fixed cost on every single widget they manufacture is now $1.05 and China.Inc's fixed cost per widget is $1.00.  So USA.Inc's market share outside the US will plummet, while their market share inside the US will remain static, so they will sell fewer widgets.  This undermines their economies of scale, over time driving their fixed costs per widget up even higher.  At the same time China.Inc's market share is rising, they may be experiencing greater economies of scale so their cost per widget may continue to come down over time.

USA.Inc won't just stand by and sink into bankruptcy.  Their only real solution will be to move their manufacturing facilities to another country so they don't have to pay the tax, and only pay the tariff on widgets sent to the US.

So the net effect of a unilateral carbon tax adoption by the US will be more US companies moving operations out of the country, fewer jobs in the US, and a slowed down economy, while boosting the economy of countries that are not addressing global warming.

If we adopt a carbon tax will other nations also adopt one out of the goodness of their heart or to avoid our tariff?  Short answer is No.  It is hard for me to imagine, for example, China's leadership, having suddenly been handed the gift of a huge industrial competitive advantage over wide swaths of US industry would upset that situation.  (Or our Congress doing anything if China suddenly made their industries less competitive).  They would take about it, and might eventually, dawdling around for 10 or 15 years to let their industries get thoroughly entrenched as market leaders, but by that time the damage to the US economy will be considerable, and probably very little will have been accomplished in reducing greenhouse gases.

So in essence to effectively address the problem we have to get much of the world to agree to the solution, simultaneously.   Will Russia, a oligarchy built on oil wealth, or any country whose political stability depends on selling petroleum to the rest of the world, jump on board?   Will teetering governments in developing countries who would have to tell their people they have to wait to achieved the access to stuff they see on electronic media be able to put the whole country on the path of delayed gratification?

I hope to be proved to be an excessively cynical old Grinch, but I put that hope in the same category as my hope to discover the fountain of eternal youth.