But it turns out that Grove is not your average CEO.

the great Silicon Valley innovation machine hasn’t been creating many jobs of late—unless you’re counting Asia, where American tech companies have been adding jobs like mad for years.

The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs…

Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

The underlying problem: the rules are stacked in favor of off shoring manufacturing jobs.

Each company, ruggedly individualistic, does its best to expand efficiently and improve its own profitability. However, our pursuit of our individual businesses, which often involves transferring manufacturing and a great deal of engineering out of the country, has hindered our ability to bring innovations to scale at home. Without scaling, we don’t just lose jobs—we lose our hold on new technologies. Losing the ability to scale will ultimately damage our capacity to innovate…

We got to our current state as a consequence of many of us taking actions focused on our own companies’ next milestones. An example: Five years ago a friend joined a large VC firm as a partner. His responsibility was to make sure that all the startups they funded had a “China strategy,” meaning a plan to move what jobs they could to China.

How do we get out of this mess? Not by big corporate tax cuts but by rebuilding “our industrial commons.”

We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.

Grove’s strategy doesn’t address how we could at the same time ensure our brothers and sisters in China also get good jobs . But it’s still a pretty amazing statement from the head of one of the most successful US manufacturing companies in the last 25 years.

Mrs. Merkel, who heads a new coalition of conservatives and the business-friendly Free Democrats, said the global financial crisis would result in a fundamental reshuffling as competition increased for market share, raw materials and human capital….

“Without growth, no investment; without growth, no jobs; without growth, no money for education; without growth, no support for the weak,” Mrs. Merkel said….

Unemployment, now at 8.3 percent, “will rise further,” she said, and added that the government’s subsidy plan known as Kurzarbeit would be extended.

The Kurzarbeit program encourages companies to reduce the amount of hours their employees work rather than laying them off. Under the plan, companies only pay for the hours their employees work and the government compensates those whose hours are cut with an allowance covering some of the lost wages.

“Without Kurzarbeit, more jobs would have been lost,” Mrs. Merkel said.

The program has already saved 400,000 jobs, according to IAB Research Institute, which is affiliated with the Federal Labor Agency. At least 1.4 million employees are working shorter hours, according to the labor agency…

Wow.

As we saw yesterday, the strongest argument for a market-based framework is that it allows for decentralized, flexible, creative solutions vs. what Krugman calls “a ‘command and control’ fix that issues specific instructions in the form of regulations.”

That’s the theory. But step into the nitty-gritty details of creating a market-based solution, and a very different picture emerges. A market-based framework does allow for lots of flexibility and creativity. But the creative energy it unleashes can just as easily be spent making money while undermining the goals the market was supposed to accomplish. This isn’t a showstopper. But to put this destructive creativity in check, you’ve got to create lots and lots of “specific instructions in the form of regulations.”

It’s hard to get a visceral sense of just how much regulation a “market-based” approach requires to actually work. So in this post we’ll take a look under the hood of Krugman’s favorite solution, cap and trade, at five ways it can go south if it isn’t kept in check by lots of regulations.

1) Speculation Pew has a great brief on what it takes to set up an emissions market so speculators won’t blow it up. And baby, it ain’t pretty.

For starters, you have to close “the Enron Loophole, the London Loophole, and the Swaps Loophole.” What are they? Trust me, unless the idea of reading sections like “Options for Improving Oversight of OTC [over-the-Counter] and Exchange-based Transactions” makes you feel tingly, you don’t want to know. And this loophole list is just the beginning, based on past speculative tricks. The creative boys and girls at Goldman Sachs are sure to come up with new loopholes.

Mind you, that’s not a reason to avoid using a market-based solution. The point of Pew’s brief is to explain what we need to do to make emissions markets work. And as Krugman pointed out last year,

Any time you have a market, there’s some opportunity for speculation… So, should fear of speculation lead us to ban trading in wheat? Nobody would say that… Now substitute “emission permits” for wheat. It’s exactly the same story.

My point isn’t that a market-based solution can’t work because of speculation. It’s that it will require lots and lots and lots of rules and regulations to keep speculators from blowing it up.

2) Emissions Offsets. The European Union has been running an emissions market, the Emissions Trading Scheme (EU ETS), for half a decade, and they’ve learned some very valuable, painful lessons. One of them is that if you don’t limit the ability of folks to buy offsets, some people will go at them with all the reserve of a crack addict. And we’re not talking some shady Eastern European country, we’re talking about the Netherlands. According to professors Tamra Gilbertson and Oscar Reyes, the Netherlands’s 2008-2012 emissions trading National Action Plan (NAP)

stated its intention to purchase 20 million tonnes of offset credits every year towards its reduction target. This would be equivalent to outsourcing all of its emissions reductions commitments during that period.

At least these supersized offsets help reduce emissions somewhere else, right? Maybe — if you create a bunch of those icky “specific instructions in the form of regulations” plus monitoring & enforcement to ensure the folks who develop and sell these offsets don’t get too creative…

3) Giving Away the Store. When the EU created their emissions market, there was a lot of political pressure to hand out more permits to corporations where the market could hurt their “competitiveness.” The end result: more emissions permits were given away than the current amount of pollution.

Take ArcelorMittal, one of the world’s largest steel makers. According to Gilbertson and Reyes,

The EU’s own data on emissions showed that ArcelorMittal’s verified emissions increased by 6.7 per cent in 2006 and by 15.5 per cent in 2007, with a downward trend of -8.4 per cent in 2008 due to the economic crisis. Yet whether its emissions increased or decreased, the fact that it was awarded massively more permits than it would have needed even to begin reducing emissions remained a constant: a 36.9 per cent overallocation in 2005, 26.9 per cent in 2006, 25 per cent in 2007 and 31.7 per cent in 2008.

Actually, it’s worse than that. Not only is the emissions market not providing pressure to go green, because so many permits were granted, folks in steel are making a profit off them without lifting a finger. From the industry rag Metal Bulletin in April 2009:

European steel producers are selling allocated carbon permits that have become surplus to requirement due to production cuts, carbon analysts told MB. “Steelmakers are using the EU Emissions Trading Scheme (EUTS) as a cash cow,” one analyst said. “The steel sector has received more permits than it should have.” Nevertheless the steelmaker’s actions are perfectly legitimate as the EU carbon market is a free one, carbon traders said.

Overall, according to the October 2007 UK Parliament’s Environmental Audit Committee’s assessment of the first phase of the EU’s emissions market

most observers believe that too many allowances to emit carbon have been allocated in phase 1, meaning there is overall little or no incentive for firms to cut back on their emissions, and thus that the entirety of this phase is likely to be ineffective in driving down emissions.

4) Banking. Both the EU’s Emissions Trading Scheme and most US proposals allow companies to “bank” some or all of the emissions permits they don’t use. There are a number of reasons why you might want to allow banking. But if you make a mistake at the start — say by giving corporations way too many emissions permits — leading companies bank unused permits is a gift that keeps on giving. A more nuanced approach could give you the benefits of banking without this huge downside. But guess what that nuance means? Lots more “specific instructions”…

5) Fun with Numbers. Another downer from professors Gilbertson and Reyes:

An inquiry by the UK Parliament’s Environmental Audit Committee found that ‘it is widely accepted that UK power generators are likely to make substantial windfall profits from the EU ETS amounting to £500 million a year or more’. The German environment minister cited figures from his own ministry which showed that the four biggest power producers in his country – Eon, RWE, Vattenfall and EnBW – would reap profits of between €6 billion and €8 billion from the first phase of the scheme.

How did the power companies pull this off? Since the politicians didn’t want to hurt corporations who had tough overseas competitors, they put more of the burden on the energy folks, assuming that they could just pass the cost onto the consumer. So the power companies fired up some of that fabulous market creativity:

The costs that are indirectly passed on to consumers through an increase in wholesale energy prices do not reflect what carbon credits actually cost, but rather what the companies assume they could cost. This leaves considerable scope for overestimates: first, by assuming a larger than necessary need to buy permits or credits; second, by assuming that there will be a high carbon price; and third, by assuming the costs of replacing EUAs, irrespective of their actual use of offset credits which have consistently commanded lower prices. Yet if these assumptions turn out to be over-generous, the surplus is more often pocketed as profit than returned to the consumer….

They then seek to maximise the value of these permits – so while the cost passed on to consumers approximates to the cost of reducing emissions in accordance with a cap, what the company actually does is whatever it considers to be cheapest – which may be to buy EU ETS permits from other installations in the scheme, or buy offset credits instead.

The EU could stop all of this — with lots more of those icky “specific instructions in the form of regulations” — but so far they’ve only done a half-assed job. A snark from Gilbertson and Reyes sums it up:

It makes more sense, then, to view the EU ETS as two parallel schemes: one that encourages the power sector to buy extra allowances – which, as we have seen, passes the notional cost on to consumers to generate large profits for the energy companies – and another that awards a large surplus of free permits to heavy industry, requiring no emissions reductions but allowing them to sell permits back to the power sector to generate large profits.

Conclusion
Again, we’re talking Europe — a place where you can have a conversation about the health-care system without it degenerating into accusations of Death Panels and Socialism. You can imagine how these issues will play out in the good old USA.

This isn’t to say that cap and trade is a bad idea or that it couldn’t work. I’m not a green policy geek, and I don’t understand the details well enough to say one way or the other. But what I do know is that anybody who thinks using a market based solution is somehow going to be simpler or require fewer detailed rules and regulations is kidding themselves.

Up next: principles of a value-based framework.

[a] message is gaining currency in Congress; it frames American leadership as manifesting not so much the courage to seize the initiative as the determination to prevent others from doing so. Senator Charles Schumer, one of several lawmakers who have begun to cast China’s role in environmental technology as a threat to American jobs, has warned the Obama Administration not to provide stimulus funds to a wind farm in Texas, because many of the turbines would be made in China. (“We should not be giving China a head start in this race at our own country’s expense,” Schumer said in a statement.) Senators John Kerry and Lindsey Graham, in an Op-Ed in the Times, vowed not to “surrender our marketplace to countries that do not accept environmental standards,” and suggested a “border tax” on clean-energy technology.

Obviously we want to create more good jobs, especially good green jobs, for folks in the US. But if you’re a progressive, jingoistic nationalism is a nonstarter. So how do we deal with this tension?

If the economy is like a game where players get to set some of the rules, then when choosing these rules we should go back to our core values. As a Christian, I’d put it this way:

Thou shalt love thy neighbour as thyself. There is none other commandment greater than this. (Mark 12:28-31)

Or as Rabbi Hillel said:

If I am not for myself, who will be for me? If I am not for others, what am I?

What does this mean in practice?

• For Americans, it means that we have to create good jobs in the US in such a way that our brothers and sisters in China can also end up with good jobs
• For policy wonks and op-ed writers who aren’t worried about having their lives destroyed by outsourcing, just saying “free trade will create good jobs for everybody” or saying the environment comes first — in short, treating working-class families like widgets instead of their brothers and sisters — doesn’t cut it

So where does this leave us? Creating rules that are based on the principles that all countries:

• have a right to encourage good jobs for their folks
• have a moral interest and a self interest in encouraging trade that creates good jobs at home through exports and good jobs abroad

If we set aside the Econ 101 fairytale that “free trade” — a.k.a. a form of trade that hasn’t ever existed and that no politicians will ever vote into reality — will magically solve the problem, then we need to use trial and error to figure out how to make this work.

For starters, we need to stop talking about companies and start talking about jobs. Take what the article called the “Apple model”:

So far, many of the most promising energy technologies—from thin-film solar cells to complex systems that store carbon in depleted oil wells—are luxury goods, but the combination of Chinese manufacturing and American innovation is powerful; Kevin Czinger, a former Goldman Sachs executive, called it “the Apple model.” “Own the brand, the design, and the intellectual property,” he said, and then go to whoever can manufacture the technology reliably and cheaply.

That’s a good deal for Apple’s executives, shareholders, and a handful of skilled professionals, and — hopefully — it creates decent jobs in China. But it’s an example of why US median wages for working families have stayed flat.

Conversely, if a foreign company creates good jobs here, they’re still good jobs (obviously it’s a problem if most US companies are wiped out by competition, but we are a long, long way from there).

Some concrete proposals:

First, we should do everything we can to encourage the rise of strong unions working together around the globe. Without strong unions, a broad-based white US middle class wouldn’t have developed after World War II. Even though the profit pie was growing after World War II, corporations didn’t just hand over a decent-sized slice of the bounty workers had helped produce — workers had to fight for it. The same is true today for global trade.

And if we want to make sure that US and Chinese workers end up better off, there’s nothing like fighting together for justice for all to get folks to truly see each other as neighbors, as brothers and sisters, to understand what it’s like to struggle to get by in Tianjin and Detroit, to give both a chance to have a real voice in the solution.

Second, any government should be able to say that a certain percentage of the work done for their contracts should create jobs in their country. Not too high a percentage — then there’s no pressure for local/national companies to become more competitive. But enough to make sure that folks in their country benefit, both from the wages and from the skills & knowledge that come with new markets like clean energy.

Finally, countries should try to figure out a reciprocal way to discourage the Apple model. It won’t be straightforward to do. If, say, we just added a small tax on US companies that followed the Apple model, their global competitors would get a significant advantage. And whatever disincentives we put in place need to be moderate enough so they don’t kill off any incentives to create better jobs in China. So long as our Chinese neighbors make one seventh the income that we do, we have a moral obligation to help them.

Ditto for Kerry’s and Graham’s idea of a border tax on “countries that do not accept environmental standards.” It’s not good for anybody to when countries compete for jobs based on lowering environment standard. But any proposed solution has to take into account the needs of our Chinese brothers and sisters.

This answer isn’t as neat and simple as “unleash free trade, and everyone will have more milk & cookies.” But it’s also not based on a fairytale about how the economy actually works. So long as our attempts to tweak the economy’s rules are based in our core values, and so long as we are humble/smart enough to not pretend we can figure out the answer without real-world experience I think we will find the right balance and the mutual prosperity and care that comes with it.

Taking on corporations around the globe may sound insanely ambitious, but boring it’s not. But using local/state government? It’s more Kumbaya than Mortal Kombat. Sure, there’s evil here — just ask the environmental justice groups who fight against toxic dumps and pollution-induced childhood asthma in inner-city neighborhoods. But if mayors like Bloomberg are on your side, we’re not talking social justice-style bloodsport. And that makes it a lot harder to get massive numbers of folks fired up enough to mobilize big-time. So how do we add some sizzle?

Here’s one way to do it: turn it into a sport. Cities around the globe could compete against each other to see who could make the biggest drops in CO2 emissions — like the Solar Decathlon only with a lot more smack talk.

And like real sports, we could tweak the rules to make it a more exciting contest — one where Dallas or Seoul might stand a chance of wiping the smug off San Francisco’s face.

The key to making this work is to make it as fun and as head-bangingly competitive as possible to really get folks bloodlust up. To take very geeky discussions about, say, the right kinds of solar panels or filtration systems and tie them back to a bigger picture of who’s the bigger badass. To take the stats and serve them up with style. In other words, to actually treat it like a sport and try to use the same kind of tricks that help rev up cadres of obsessed sports fans. Call it ESPNization.

The best way to pull this off? Bring the “obsessive entertainment behavioral economics” experts — sportscasters and sportswriters from around the globe — into the mix from the beginning. You’d end up with a much better result than if enviros just did it on their own (not to mention better media coverage).

There are plenty of ways to play off the idea. Cities could pull in their actual sports teams to help rally folks. And for cities that already have sports rivalries, it’s another great way to go at each other.

Mind you, it’d take some effort to work out the details of the contest. For example, does it make sense to have different leagues so cities in undeveloped countries that don’t have the kind of resources a San Francisco has could still have a chance of winning? Or maybe teams of cities could go head-to-head — take the usually bland “sister city” concept and juice it up, giving cities with more money and incentives to really help out cities with less?

We might also want rules to promote sharing ideas across cities. Maybe you’d win points for new innovations — even more points if other cities used your innovations.

And we’d certainly want to think about how we incorporate social justice/equity. Maybe you’d win points for a Green for All-style approach – or lose them if all the benefits skipped inner cities and slums.

Yes, working out the rules – and dealing with attempts to game the rules or cheat – would take a lot of work. But we’ve got that problem right now. The difference is that today nobody except for a handful of Enviro nerds pay attention to the details that tell you cities are really reducing their CO2 emissions. With the games, we’d have obsessed fans around the globe watching the details like a hawk. In fact, if we do it right, fights over scoring, over refs, over all of the nitty gritty details would actually strengthen the drive to stop global warming.

How would we know it’s working? My “metric” would be when Lou Dobbs started ranting that Koreatowns across the US were acting as a fifth column for Seoul.

I don’t know enough about global politics to know if this idea would work, or if it would create more problems than it’s worth it. And no, I’m not crazy enough to think that creating bike paths will have more drama than a mid-court three point basket. My point in spinning this out is just to show that with a little creativity, there are plenty of ways to play on the Local Board that would get folks fired up.

Up Next: Ready, Fire, Aim!

For starters, Seoul intends to “spearhead” a “green policy paradigm shift” in green city design,

which re-designs not only buildings, transportations and urban area but also the functions of the city reflecting low-carbon, low-energy and resource recovery aspects, and realization on Human Oriented
City which enables people to live on green jobs with higher salaries.

A few details:

We will establish urban planning and development standards considering climate impacts, minimize impenetrable level, add 11km2 of more green space in the city, pursue gradual roof greening at large buildings in the city, and restore 13 streams into eco streams by 2020 to increase urban climate control ability…

Transform 10,000 buildings larger than 2,000 m2 into green building:
- Make it mandatory for all new buildings to acquire green building certificates
- Transform all public transportation into green vehicles
- Expand public transportation ridership rate to 70%
- Create 207km long bike-only lanes at main roads to increase bike ridership rate up to 10%…

We will promote 100% resource management system that recycles and reuses waste resource repeatedly as long as waste can be re-used as a resource by encouraging industries related to repair & reuse of resources, recovering energy resource from waste, promoting urban mining project, and pursuing maximum use of water resources.

They also plan on harnessing the well-known power of Seoul social movements by creating a “Low-carbon citizen movement for ‘Rational Inconvenience’”:

- Energy saving is regarded as the 5th energy and citizens’ voluntary participation is crucial in cities such as Seoul where consumption account for a major part. Thus citizen movements to endure “rational inconvenience” should be expanded by aggressively promoting activities such as Eco-Mileage, Eco-Drive and Eco-Tour.

- To create low-carbon civil society, Seoul will promote various policies, establish educational facilities such as Climate Energy Experience Site and reinforce energy saving educations from primary and elementary school, to transform current Citizens and Netizens (Internet + Citizen) into future Ecotizens.

Seoul doesn’t just plan on doing its part in saving the planet. They also plan on using it to build a strategic economic advantage:

By 2030, invest $2 billion in Green technology R&D and support commercialization.

Seoul will invest around total of 2 billion USD (100 million USD for annual average, $200 million for each technology) in research and development for green technologies. Among invested projects, Seoul will continuously support exemplary projects to commercialize them, and will support participating industries, academics and R&D sectors in matching manners to expand the scope of financial resource….

Develop world best GT research network by establishing Magok district as a hub and training talented human resources

- We will establish cooperation system for business, academic and R&Ds for each green technology, and develop the system into world leading research network. We will also strengthen partnership between major large cities and private professional institutions around the world. At the same time Seoul will actively foster talented human resources in green technology field.

- Prepare stable environment for development by providing test beds for ideal planning and creating domestic market, based on road map for purchasing.

- We will promote development of green technologies and create domestic market by preparing test beds for ideal planning to conduct verification test on products developed and by pursuing continuous group purchase. We will also use policy road maps including advance purchase announcement to minimize potential risks from aggressive investment, and create stable environment for investment and development of green technology.

- Subsidize and protect Green Technology related mid-to-small scale businesses and venture startups: For mid-to-small scale businesses and venture startups that have best green technologies, Seoul will support overseas marketing and the process of acquiring and maintaining patents and other intellectual rights. Also Seoul will protect and actively support stabilization of the business through capital loans and trust guarantees.

- Promote greening major industries: We will link industrial New Town with 6 major industries of new growth engine in Seoul, and emphasize on the development of the industries such as new/renewable energy, LED application, Green City, Resource Recovery, Climate Change Adaptation, and IT integrated system. Examples of connecting with new growth engines: Fashion & Design (climate adapting clothes, green design, etc.), Convention (host GT related international conferences, exhibitions, trade fairs in carbon neutral manner), Finance (attract carbon exchange), tourism (eco tourism), R&D (GT), Digital contents (develop contents related to low-carbon green growth)

- We will lead Green Mart movements that some large chain retail stores are promoting voluntarily. We will establish systematical sales environment, product sales and green selling methods and then expand such activities to all large chain retail stores across Seoul

The next time you somebody tells you we can’t afford to really take on global warming because it’ll be too expensive for business, remember Seoul’s plan. If anything, the real danger we face is that U.S. businesses will make the same mistake today that the companies formerly known as the Big 3 made in the 60s and 70s — sitting on their fat asses while their competitors blaze ahead.

Imagine if McKibben had decided to use the same move — vigils and other protests — but did it on the Corporate Accountability Board. Here’s how it might have played out.

Nine months before Copenhagen, 350.org would’ve said, f**k Copenhagen — it’s going to be a joke. Politicians have given up on saving us, so it’s time for the rest of us around the globe to step up.

In the next nine months, everyone from activists to academics to accountants, from India to Indiana, are going to start talking amongst ourselves about what it would take to get the biggest, most profitable corporations around the globe to do their part in getting us under 350.

We aren’t going to waste any energy on the Copenhagen farce. But during the same week as Copenhagen, we’ll have our own “No-Joke Copenhagen” meetings (that’s a placeholder name — yes, I know it sucks). In vigils and teach-ins around the planet, we’ll get millions of folks up to speed. We’ll share stories within our own communities and with other communities, and we’ll talk – and stream and twitter — about the power we have to save the planet if we are willing to take it.

We’ll also teach each other about which corporations are being naughty and which ones are being nice — from what we can see as workers, as community members, as scientists, as financial analysts, and as students. And we’re going to ask millions of folks to sign up — for the industries where they want to help “thank ‘em & spank ‘em” and for the enviros/church/etc. groups out of which they want to work.

And instead of our spending the week shouting outside the main Copenhagen meeting, hoping to get heard? We’ll spend it watching hundreds of corporate flacks scrambling to convince everybody that their company is one of the nice ones — they’re really, really, really serious about global warming, and they’ve got the hard numbers to prove it.

At the end of the No-Joke Copenhagen week — the biggest hard-core global teach-in in the history of the world — we’re going to tell the multinational corporate leaders they’ve got nine months to get their act together. Because we’re going to spend the next nine months gearing up, working out the details of each industry campaign.

Would this be simple to do? No. There’s a lot we have to figure out.

For example, corporations aren’t going to sit still — they’re going to play every card they’ve got to undermine this movement. So any strategic plan would have to talk about what the “naughty” corporations might try doing and how we’d respond.

But this ain’t rocket science. Plenty of activists have experience dealing with these issues — even when working across the globe in many cultures and languages and in many different types of political environments (e.g., Western enviros rarely have to worry about getting shot by the cops).

The difference is that with this campaign, operating at this scale, we’ve got much better cards to play then we normally do. Usually corporations win because too few people notice when a company stomps folks into the ground. But here? Pity the poor corporation that was the first to get caught playing dirty — the one folks across the globe retaliated against with everything we’ve got to make sure other corporations get the memo.

We could even get proactive. For instance, when rating a corporation’s naughtiness/niceness, we could include how they spend their PR and lobbying money. If they switch to fluorescent light bulbs but keep spending millions fighting green laws, they’re going to get spanked (or at least a time-out).

So yes, there’d be a lot to work out. Yes, it would be hard. But Mission Impossible it’s not.

Maybe you’re still daunted by how much work it would take. So stop for a second and ask yourself a question. It’s a little more than a week after Copenhagen. How do you feel right now? Are you feeling hopeful? Fired up? Powerful? Really?

Then imagine what you would feel like right now if we’d spent the last nine months playing on the Corporate Accountability Board — and if we’d just spent a week with folks around the globe exploring the power we have as we gear up to use it.

So you tell me. Despite all the obstacles we might face, which way do you wish we’d played? How do you wish you felt at the start of this new year?

Up next: playing on the Local Board

Business groups are worried by the potential effects of provisions banning the import of all goods made with convict labor, forced labor, or forced or indentured child labor that were included in a customs bill sponsored by Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA)…
These groups are examining the ramifications of the bill’s provisions, especially in light of the bill’s requirements that a newly created office in the Department of Homeland Security (DHS) annually report to Congress on the volume and value of goods made with child labor, forced labor or convict labor that have been stopped at the border.

Business sources say this reporting requirement could cause DHS to more actively seek out imported products made with child labor, forced labor or convict labor…

One source did expect a push from lobbyists closer to the Finance Committee markup of the bill, and speculated that U.S. industry groups and foreign governments could form ad hoc coalitions to help send a united message.

Ewww , Eww, Ewww!

Aside from being truly morally disgusting, there’s a basic economic problem with this vile approach:

Whereas comparative advantage used to be about natural advantages (ie. one country has optimal soil for grapes, another country has optimal soil for corn), “free trade” encourages countries to create comparative advantage through man-made laws. Some countries, for instance, creates a comparative advantage by letting factories pollute as much as they want, thus encouraging companies to move their factories there from other countries where pollution controls are more serious. Other countries create a comparative advantage by permitting children to be enslaved, thus encouraging companies operating in countries with more expensive non-slave labor to shift operations to a place where they can make products with all but free labor.

The way to stop this is for the world’s largest economies to establish basic rules which everyone else will inevitably follow as a price of admission to those economies’ markets. If the United States says companies cannot sell products in our market made with child slave labor, most companies will cease making products with child slave labor fearing the loss of access to our market which would destroy their business.

Of course, that’s why business has opposed every effort to put basic labor, environmental and human rights standards into our international trade agreements…

Actually, according to BusinessWeek, Europe just showed us we’ve got a lot more power than you think. Europe’s in the middle of passing a bunch of new rules around Finance — and they won’t just affect folks in the Old Country.

U.S. firms will have to play by the new rules—or find a way around them. Otherwise, they risk losing a large pool of buyers, including European pension funds, insurers, and other big investors.

If anything, globalization gives us the power to set global rules if companies anywhere in the world want access to our markets. Take the case of mortgage-backed securities.

In May the European Parliament passed a plan that likely will force banks and others to maintain a 5% stake in the asset-backed securities they create, rather than selling them off completely. Lawmakers reason that firms with more skin in the game will adhere to strict underwriting standards; lax practices fueled many of the blowups in the bust. “European regulators want to make sure regulated institutions aren’t being used to offload risky securities,” says Rick Watson, managing director of the European Securitisation Forum, a London-based trade group.

The U.S. is mulling a similar law. Whether or not federal lawmakers pass it, U.S. firms may decide to keep a chunk of the investments anyway. If they don’t, their securities won’t sell in Europe, where investors owned more than $500 billion of U.S. asset-backed securities at the peak.

So yes, companies can threaten they’ll leave if we pass new rules. But if they want to sell to us? They can run but they can’t hide.