Buffet’s Import Certificate idea. What about the people?

By: Divorced one like Bush
Update: Link for Import Certificates fixed

Via Howard Richman’s blog comes this by idea by Buffet: Import Certificates. You have to read down a ways before he gets to the idea.

“We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties — either exporters abroad or importers here — wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.”

Carbon Cap anyone? Think Walmart is on the side of this plan? First of all, what is it with this new approach of solving our externalities via the development of an entirely new market. Have we not had enough with Milken’s Junk bonds, Secure sub prime mortgages, greenmail, etc? Is the creation of new trading cards of stated value the equivalent of polishing a rock and creating a wanted jewel? Maybe so for a “service economy” that makes money from money. You know… have a hammer, everything is a nail.

I’ll admit I’m intrigued by this Import Certificate thing. (But then, I’m intrigued by the APT tax concept.)Seems to capture the benefits of a tariff without having to actually choose (be responsible for the decision). Now that’s American!

How are they to be valued initially? Is this approach to solving problems that are the result of using money to smooth the relationships of people not just another form of printing money by the government? I realize bartering can not take us everywhere we would like to go with our social development, but is this concept just throwing money at the problem?

Buffet notes negative issues. One, a rise in cost to the US consumer. I have a few concerns that piggy back on his.

Like: 1. The certificates being traded on the open market, and the resultant speculation pricing?
2. What would assure that the certificate values do not become the enabler of American junk? Like the US auto industry was back in the 70’s.
3. What protects the consumer from the ability of a US company to gain all the benefit of improved exporting? Are we to just assume that the increase in world demand for our products will increase the demand for labor such that pay for labor will rise? Didn’t happen early on in our history. It took the bloodied rise of unions to force it.
4. What is to stop a company from setting up shell corps in the US, do some fancy booking and benefit from exporting to its self? Kind of like the transfer payments for tax evasion. Can you say Corporate Welfare?
5. Can this work in a global trade system that has let a new virtual nation come into existance: The United Corporations of Global. Does not a nation actually have to have possession of it’s corporations for such to work for the benefit of the nation?

Frankly, I think some of these issue will be issues of the Carbon Cap and trade approach also. They are approaches that address an externality, a single issue solution, but continue to fail to address the most inclusive of issue for all of us (citizens of the world): monetarily benefiting from trade such that our lives are freer to pursue life, liberty and happiness. To steal a line: Show me the money.