My Plan to Escape the Grip of Foreign Oil

By T. BOONE PICKENS

One of the benefits of being around a long time is that you get to know a lot about certain things. I'm 80 years old and I've been an oilman for almost 60 years. I've drilled more dry holes and also found more oil than just about anyone in the industry. With all my experience, I've never been as worried about our energy security as I am now. Like many of us, I ignored what was happening. Now our country faces what I believe is the most serious situation since World War II.

The problem, of course, is our growing dependence on foreign oil – it's extreme, it's dangerous, and it threatens the future of our nation.

Martin Kozlowski

Let me share a few facts: Each year we import more and more oil. In 1973, the year of the infamous oil embargo, the United States imported about 24% of our oil. In 1990, at the start of the first Gulf War, this had climbed to 42%. Today, we import almost 70% of our oil.

This is a staggering number, particularly for a country that consumes oil the way we do. The U.S. uses nearly a quarter of the world's oil, with just 4% of the population and 3% of the world's reserves. This year, we will spend almost $700 billion on imported oil, which is more than four times the annual cost of our current war in Iraq.

In fact, if we don't do anything about this problem, over the next 10 years we will spend around $10 trillion importing foreign oil. That is $10 trillion leaving the U.S. and going to foreign nations, making it what I certainly believe will be the single largest transfer of wealth in human history.

Why do I believe that our dependence on foreign oil is such a danger to our country? Put simply, our economic engine is now 70% dependent on the energy resources of other countries, their good judgment, and most importantly, their good will toward us. Foreign oil is at the intersection of America's three most important issues: the economy, the environment and our national security. We need an energy plan that maps out how we're going to work our way out of this mess. I think I have such a plan.

Consider this: The world produces about 85 million barrels of oil a day, but global demand now tops 86 million barrels a day. And despite three years of record price increases, world oil production has declined every year since 2005. Meanwhile, the demand for oil will only increase as growing economies in countries like India and China gear up for enhanced oil consumption.

Add to this the fact that in many countries, including China, the government has a great deal of influence over its energy industry, allowing these countries to set strategic direction easily and pay whatever price is needed to secure oil. The U.S. has no similar policy, because we thankfully don't have state-controlled energy companies. But that doesn't mean we can't set goals and develop an energy policy that will overcome our addiction to foreign oil. I have a clear goal in mind with my plan. I want to reduce America's foreign oil imports by more than one-third in the next five to 10 years.

How will we do it? We'll start with wind power. Wind is 100% domestic, it is 100% renewable and it is 100% clean. Did you know that the midsection of this country, that stretch of land that starts in West Texas and reaches all the way up to the border with Canada, is called the "Saudi Arabia of the Wind"? It gets that name because we have the greatest wind reserves in the world. In 2008, the Department of Energy issued a study that stated that the U.S. has the capacity to generate 20% of its electricity supply from wind by 2030. I think we can do this or even more, but we must do it quicker.

My plan calls for taking the energy generated by wind and using it to replace a significant percentage of the natural gas that is now being used to fuel our power plants. Today, natural gas accounts for about 22% of our electricity generation in the U.S. We can use new wind capacity to free up the natural gas for use as a transportation fuel. That would displace more than one-third of our foreign oil imports. Natural gas is the only domestic energy of size that can be used to replace oil used for transportation, and it is abundant in the U.S. It is cheap and it is clean. With eight million natural-gas-powered vehicles on the road world-wide, the technology already exists to rapidly build out fleets of trucks, buses and even cars using natural gas as a fuel. Of these eight million vehicles, the U.S. has a paltry 150,000 right now. We can and should do so much more to build our fleet of natural-gas-powered vehicles.

I believe this plan will be the perfect bridge to the future, affording us the time to develop new technologies and a new perspective on our energy use. In addition to the plan I have proposed, I also want to see us explore all avenues and every energy alternative, from more R&D into batteries and fuel cells to development of solar, ethanol and biomass to more conservation. Drilling in the outer continental shelf should be considered as well, as we need to look at all options, recognizing that there is no silver bullet.

I believe my plan can be accomplished within 10 years if this country takes decisive and bold steps immediately. This plan dramatically reduces our dependence on foreign oil and lowers the cost of transportation. It invests in the heartland, creating thousands of new jobs. It substantially reduces America's carbon footprint and uses existing, proven technology. It will be accomplished solely through private investment with no new consumer or corporate taxes or government regulation. It will build a bridge to the future, giving us the time to develop new technologies.

The future begins as soon as Congress and the president act. The government must mandate the formation of wind and solar transmission corridors, and renew the subsidies for economic and alternative energy development in areas where the wind and sun are abundant. I am also calling for a monthly progress report on the reduction in foreign oil imports, as well as a monthly progress report on the state of development of natural gas vehicles in this country.

We have a golden opportunity in this election year to form bipartisan support for this plan. We have the grit and fortitude to shoulder the responsibility of change when our country's future is at stake, as Americans have proven repeatedly throughout this nation's history.

We need action. Now.

More Bailouts, Please!

Ben Bernanke once might have been tempted to duck into the Fed chairman's private bathroom to high-five himself over his heroics to save the financial system. Not anymore, and we're not talking about Bear Stearns, which some worrywarts see as a disastrous precedent.

Let us review the relevant history: Inaugurating the modern era of bailouts was Continental Illinois in 1984, following which a top regulator declared 11 national banks were "too big to fail." (Joked a Swiss banker in the next day's Journal: Which bank is number 12?) Since then, the circle has been expanded willy-nilly to include more banks, one hedge fund (in 1998) and one investment bank (2008).

Getty Images

Since then, too, the country has enjoyed one of the longest stretches of least-interrupted prosperity it has ever known. What's so bad with that?

Bailouts, remember, are an informal substitute for bankruptcy, with its messy and prolonged division of the leftovers. Bailouts create moral hazard, all right, but how much really? Bear Stearns shareholders' experience isn't one other shareholders are keen to repeat. Meanwhile, the real moral hazard disaster lies elsewhere – in the degree to which, in order to avoid being confronted with the bailout question, Washington has relied on monetary policy to contain incipient financial markets crises.

Forget the '87 crash, the dot-com bust and all the episodes in between. The Fed pumped up liquidity in case the Y2K computer bug troubled a bank or two. One result of the Fed's incessant firefighting has been virtually to require financial firms to court a higher degree of risk – or see their customers flee to competitors who will.

This unsavory trend is not unrelated to another, namely Washington's steady politicization of the credit markets. How much did the systemic risk posed by Fannie Mae and Freddie Mac, about which Alan Greenspan began sounding the alarm in the mid-1990s, contribute to the Fed's surrender to a housing boom in the '90s and 2000s? Probably a lot.

And the problem is only getting worse as a result of the subprime crisis. Washington today has its fingerprints on 80% of new mortgages, up from 40% a year ago, and virtually every student loan. A bailout bill before Congress would permanently raise the size of mortgages Fannie and Freddie can buy. Fannie on its own is floating a plan deliberately to refinance mortgages that are greater than the value of a homeowner's house.

Now the Fed wants to pay interest on reserve deposits it holds for banks, allowing the Fed to attract money with which to buy Treasurys in the open market that it can exchange for whatever loans are currently giving the banks trouble. Economist Ed Yardeni joshingly calls it the Fed's "secret plan to own all financial assets."

Now think about Treasury Secretary Henry Paulson's idea of an apt regulatory response to today's crisis, which would be to pile up more chips on the same losing number. He would expand the Fed's power and make it even more responsible for anticipating and preventing financial crises of the sort that might lead to bailouts. The Fed would be charged with showing up and blowing the whistle before the next housing boom or dot-com craze threatens voters with more losses than Washington will decide in retrospect should have been permitted.

Good Lord. This is the same Fed that just caved to congressional pressure to keep student lenders afloat. No political body would really be allowed to throw cold water on a credit boom just as millions of Americans and a phalanx of lobbyists are most enthused about keeping it going. The idea is insane.

Mr. Greenspan, whose reputation for imprecision is itself imprecise, lately has tried to put the toothpaste back in the tube, arguing for preserving a financial system based on "counterparty surveillance" – i.e., warts and all, a system in which lenders and investors set the level of risktaking by financial firms.

Is there an alternative? No. And if policy were to make an intelligent contribution, it would focus first on the way government encourages the bubble propensities that it wants the Fed to combat. Meanwhile, the odd bailout is a teensy price to pay for a dynamic capital market system.

The one flaw in the Bear Stearns case was the use of Fed credit rather than Bear's shareholder equity to sweeten the deal for acquirer JP Morgan. How to fix this? Eliminate the next Bear's leverage to threaten bankruptcy if it doesn't like the terms of a Fed-ordered remedy. Then, let's have more bailouts if it means the Fed is free to focus on preserving the purchasing power of the dollar.

The Story of Max Sanders

What's Wrong with Selling Your Vote?

By SHELDON RICHMAN

Poor Max Sanders. The 19-year-old University of Minnesota student faces five years in jail and a $10,000 fine; he is accused of putting his vote in the presidential election up for auction on eBay. He started the bidding at $10. The charge is bribery, treating, and soliciting.

I'm confused. Aren't all our votes for sale? Each candidate tries to bribe us with future benefits of all sorts. Basically, a campaign is an effort to buy votes wholesale.

Why do you think Barack Obama is "refining" his positions on so many issues? He's in the process of buying the independent votes he needs to win in November. This creates a problem. If he goes too far in buying independent votes, he may have to return votes he already bought from left-leaning Democrats during the primaries. His updated positions on the Iraqi occupation, the death penalty, handgun bans, campaign finance, money for religious groups, and immunity for telecom companies that illegally helped the Bush administration wiretap us without warrants have upset people who thought their vote sales were final. In politics no sales are final.

John McCain may have a bigger problem. He's had trouble buying votes from the conservative base of the Republican Party. Those voters don't seem eager to sell their votes to him because they don't like what he's promising to pay in return. While McCain is trying to close the deal with conservatives, he also needs to buy votes from independents. That's one of the dilemmas of politics. If you buy votes from, say, fiscal conservatives, you might have a hard time also buying votes from advocates of climate control through cap and trade, which would be a tax on energy production.

Keeping most campaign promises costs money. For politicians, money comes from the taxpayers, who are forced to surrender their cash whether they like it or not. As H.L. Mencken understood, "Every election is a sort of advance auction sale of stolen goods." So the only difference I see between a politician who buys a vote and an eBay bidder who buys it is that the bidder spends his own money. Since people spend their own money more wisely than they spend other people's, we can conclude that the eBay sale might be preferable.

I'm sure many people were appalled that young Mr. Sanders -- eligible to vote in his first presidential election -- would even dream of selling his vote. How cynical he is, they must be thinking.

I don't think he's cynical. I think he's naive.

He thought someone would be willing to buy his vote for $10 or more. Why would anyone do that? One vote isn't going to change the outcome of the election. The chance that McCain and Obama will tie in any of the 50 state elections is roughly zero. No single vote will be decisive. So we can be certain that for any voter, on election day it won't matter if he stays in bed.

Now, if a person's one vote doesn't matter, are two votes -- his own and the vote he buys -- likely to change the outcome of the election? Of course not. Yes, his vote total would increase 100 percent, but that only shows you how misleading percentages can be. It's still only one more. So why would anyone pay $10 for it? If there is such a person, tell him I have newborn unicorns for sale.

Mr. Sanders's entrepreneurship would have run into other problems. How would the buyer know the vote he purchased was cast for his favorite candidate? There'd be no way to prove it. He'd have to rely on Mr. Sanders's honesty. That strikes me as a big risk to take with a stranger.

But I guess it's no bigger than the risk you take when you trust the honesty of a politician when you sell him your vote.

Sheldon Richman is senior fellow at The Future of Freedom Foundation and editor of The Freeman magazine.

The Microsoft consent decree: a good start gone bad

By Richard A. Epstein

Just recently, I attended a conference at the University of Virginia, sponsored by the American Bar Association, tackling “Remedies for Dominant Firm Misconduct.” Its arcane title obscures the critical importance of this issue for the long-term prosperity of high-tech industries. Here is why.

The US and the European Union both divide antitrust (or competition) law into two branches. The first half rightly condemns cartels because they reduce output, raise prices and create deadweight social losses. The second mission is more treacherous. Often, single firms with market dominance – a large market share that does not create an absolute monopoly – engage in illicit practices to solidify their position. Isolating these practices is hard work, but once done a court must next choose the remedy from a menu that includes fines, attacks on their profits, restrictions on business practices and contract terms, or a break-up of the company.

At present, an uneasy consensus exists in the US (less so in the EU) that the proper remedy should be “narrowly tailored” to the underlying abuse of competition law. Exhibit A for this approach is Judge Colleen Kollar-Kotelly’s 2003 Microsoft consent decree that refused to break up Microsoft for its efforts to control the desktop by using exclusionary tactics to prevent Netscape’s web browser and Sun’s Java technology from toppling Microsoft’s dominant operating system.

Most commendably, her 2003 remedial strategy focused on supplying all interested parties with sufficient information about the “applications programming interfaces,” or APIs. Most critically, Section III.E established a compulsory licensing program that required Microsoft to “make available” to all comers all information they needed “to interoperate, or communicate, natively” (as easily as Microsoft units talk to each other) with any component of the Microsoft operating system. The onus to make this available was to last for five years, through to November 2007.

Compliance with this provision has turned out to be more onerous than anyone expected. This past January, Judge Kollar-Kottely first “commended” Microsoft for its compliance efforts, only to extend the decree for another two years to November 2009 because of “the extreme and unforeseen delay in the availability of complete, accurate, and useable technical documentation” of its obligations.

William Page and Seldon Childers have spelled out the pitfalls involved. Their writing reminds us how easily judicial intervention can spin out of control when judges do not know how to measure compliance with their decrees. One possible measure is the number of special licences Microsoft issues. This number was tiny – just four in July 2003 and only 47 in February 2008, of which only a third had been successfully commercialised. But so what? That tiny rate could prove either that these licences were not needed or were impossible to get. Price could give some indication which of these were at issue. Initially, Microsoft did charge for licences, but it consistently lowered its prices, until today all the user information is available free of charge. The sensible conclusion, therefore, is that developers had all the information they needed anyway.

But actual demand for this information counted for little in this litigation. Over time, complying with the decree has turned out to be a tall order. In July 2003 Microsoft had ten workers on the project. By January 2008, it had 630. At a salary of $100,000 per worker, that represented $63m in direct costs, not including other expenses and general inconvenience. And this additional expense was to achieve very little. What was at stake was an endless number of “technical documentation issues” on previously uncharted issues. Compliance became an end in itself, as virtually no software developers reported interconnection difficulties working through the usual channels. Instead the private and state plaintiffs pushed the decree’s technical committee to demand uncalled-for precision by testing prototypes for countless protocols which had no immediate commercial use.

Faced with the problems from this exacting standard, Judge Kollar-Kotelly extended the entire decree to allow for its full implementation. In doing so she lost sight of the fundamental principles that should have guided her decision. Messrs Page and Childers rightly insist that Microsoft should meet competitive standards by supplying support that developers need in order to interconnect. But her extended decree elevated comprehensive documentation to being an end in itself, without regard to commercial standards. This massive overenforcement of the consent decree undermines antitrust law. The effort to control monopolies now undermines competition by hobbling one competitor to give an undeserved edge to its rivals.

More generally, judges should be alert to the risks of issuing broad injunctions. Assume, for example, a judge had to enforce a consent decree to stop a manufacturer from polluting. The sensible approach leaves it alone, as long as no pollution escapes the manufacturer’s premises. An unwise approach would order a constant oversight of the plant’s internal operations by a technical committee that is set up to anticipate any and all sources of pollution. This second strategy generates modest benefits at enormous cost. It is far better to intervene when there is some sign of actual harm.

Alas, Judge Kollar-Kottely needed only to force Microsoft to answer specific questions when interconnections broke down. That could have been implemented at a fraction of the cost of the bloated decree. Unfortunately, her latest move gives comfort to the states and private plaintiffs that wanted to break up Microsoft in the first place. And note this odd reversal. There are signs that the EU is happy with the latest round of Microsoft disclosures, just as a US court uses an antitrust club to force an innovative firm to develop soul-destroying compliance culture. What a strange role reversal!

The writer is a professor of law at the University of Chicago and a senior fellow at the Hoover Institution. He has worked extensively with Microsoft and is the author of Antitrust Consent Decrees in Theory and Practice: How Less is More (AEI 2007), which was underwritten by Microsoft.

What we can do in this dangerous moment

By Lawrence Summers

It is quite possible that we are now at the most dangerous moment since the American financial crisis began last August. Staggering increases in the prices of oil and other commodities have brought American consumer confidence to new lows and raised serious concerns about inflation, thereby limiting the capacity of monetary policy to respond to a financial sector which – judging by equity values – is at its weakest point since the crisis began. With housing values still falling and growing evidence that problems are spreading to the construction and consumer credit sectors, there is a possibility that a faltering economy damages the financial system, which weakens the economy further.

After a period of intense activity at the beginning of the year with the passage of fiscal stimulus legislation, strong action by the Federal Reserve to cut rates and provide liquidity and the introduction of anti-foreclosure legislation, policy has again fallen behind the curve. The only important policy actions of the past several months have been those forced on the Fed by the Bear Stearns crisis. It would be a mistake to overstate the extent to which policy can forestall the gathering storm. But the prospects for a more favourable outcome would be enhanced if four actions were taken promptly.

First, the much debated housing bill should be passed immediately by Congress and signed into law. It provides some support for mortgage debt reduction and strengthens the government’s hand in its troubled relationship with the government-sponsored enterprises – Fannie Mae and Freddie Mac. While it is an imperfect vehicle – too limited in the scope it provides for debt reduction, insufficiently aggressive in strengthening GSE regulation and failing to increase the leverage of homeowners in their negotiations with creditors through bankruptcy reform – it would contribute to the repair of the nation’s housing finance system. Failure to pass even this minimal measure would undermine confidence.

Second, Congress should move promptly to pass further fiscal measures to respond to our economic difficulties. The economy would be in a far worse state if fiscal stimulus had not come on line two months ago. The forecasting community is having increasing doubts about the fourth quarter of this year and beginning of the next as the impact of the current round of stimulus fades. With long-term unemployment at recession levels, there is a clear case for extending the duration of unemployment insurance benefits. There is now also a case for carefully designed support for infrastructure investment, as financial strains have distorted the municipal credit markets to the point where even the highest-quality municipal borrowers are, despite their tax advantage, paying more than the federal government to borrow. There are legitimate questions about how rapidly the impact of infrastructure spending will be felt. But with construction employment in free fall, there will be a need for stimulus tied to the needs of less educated male workers for quite some time. Fiscal stimulus measures must be coupled to budget process reform that provides reassurance that, once the crisis passes, the fiscal policy discipline of the 1990s will be re-established.

Third, policymakers need to make a clear commitment to addressing the non-monetary factors causing inflation concerns. Though this could change rapidly and vigilance is necessary, it does not now appear that there are embedded expectations of a continuing wage price spiral. Rather, the primary source of inflation concern is increases in the price of oil, food and other commodities. Even if structural measures to address these issues do not have an immediate impact on commodity prices, they may serve to address medium-term inflation expectations. Appropriate steps include reform of misguided ethanol subsidies that distort grain markets to minimal environmental benefit, allowing farm land now being conserved to be planted; measures to promote the use of natural gas; and reform of Strategic Petroleum Reserve Policy to encourage swaps at times when the market is indicating short supply. Major importance should be attached to encouraging the reduction or elimination of energy subsidies in the developing world.

Fourth, it needs to be recognised that in the months ahead there is the real possibility that significant financial institutions will encounter not just liquidity but solvency problems as the economy deteriorates and further writedowns prove necessary. Markets are anticipating further cuts in financial institution dividends; regulators should encourage this to happen sooner rather than later and more broadly to reduce stigma. They should also recognise that no one can afford to be too picky about the timing or source of capital infusions and rapidly complete the review of regulations that limit the ability of private equity capital to come into the banking system. Most important, regulators should do what is necessary, including possibly seeking new legislative authority, to assure that in the event of an institution becoming insolvent they can manage the resolution in a way that protects the system while also protecting taxpayers. It was fortunate that a natural merger partner was available when Bear Stearns failed – we may not be so lucky next time.

Unfortunately we are in an economic environment where we have more to fear than fear itself. But this is no excuse for fatalism. The policy choices made in the next few months will matter to the lives of millions of Americans, to America’s economic strength and to the global economy.

The writer is Charles W. Eliot university professor at Harvard University and a managing director of D.E. Shaw & Co

Why obstacles to a deal on climate are mountainous

By Martin Wolf

Something has changed in the debate on man-made climate change: the US is engaged. But its engagement – or at least the engagement of President George W. Bush – is neither enthusiastic nor unconditional. In particular, at discussions among the heads of governments of the Group of Eight leading countries in Japan, Mr Bush stressed that China and India had to participate. In this, he was right: it will be impossible to tackle the problem without the participation of leading emerging countries. The question is on what terms they do so.

This is to ignore the debate on whether man-made climate change is either plausible or correctly assessed. I find the arguments sufficiently cogent to justify action. Above all, I find persuasive the argument of Professor Martin Weitzman of Harvard University that it is worth paying a great deal to eliminate the risk of catastrophe.* Those who reject such views need read no further.

Professor Nicholas Stern of the London School of Economics, author of the UK government’s 2006 report on climate change, has analysed the issues in an interesting recent paper.** He starts from a few simple propositions: first, the concentration of carbon dioxide equivalent in the atmosphere is now 430 parts per million and rising at the rate of two parts per million a year; second, the aim should be to stabilise concentrations at between 450 and 500 parts per million; finally, to achieve this, global emissions of greenhouse gas equivalents must peak in the next 15 years and fall by at least 50 per cent, relative to 1990 levels (about 90 per cent of 2005 levels), by 2050, when global average emissions per head must be as low as two tonnes per head.

Historic trends and current emission levels indicate how big a change from “business as usual” these goals are: two tonnes per head is 10 per cent of recent US levels and half China’s. Yet, argues Prof Stern, this must happen if one takes the risks seriously. Worse, the longer the world waits, the bigger reductions must be, because the gases stay up for centuries.

How is this to be achieved? Any set of policies has to be effective, efficient and equitable. Let us examine each of these criteria in turn.

To be effective, the policy will need to reduce emissions sharply. The implication is that every activity and virtually every country will be affected. Developing countries, which will contain close to 90 per cent of the world’s population and generate the bulk of the world’s emissions by 2050, must make a substantial contribution. On this, Mr Bush is correct. The long-run world average of two tonnes of carbon dioxide equivalent per head is so low that no country can be allowed to go much above it.

The sectoral implications are also dramatic: big efforts will be needed to halt deforestation, for example, which currently contributes some 17 per cent of man-made emissions; electricity generation will need to be carbon-free by 2050; and the global vehicle fleet, projected by the International Monetary Fund to increase by 2.3bn vehicles between now and 2050, must become largely carbon-free, as well.

Efficiency is as easy to define as it is hard to accept: the marginal cost of reducing emissions should be the same in all activities everywhere. The price of carbon – whether set by a “cap and trade” scheme on emissions, a carbon tax or a hybrid – should also be the same everywhere. That China is now the world’s single largest emitter shows how vital it is for emissions to be priced there, too.

China’s emissions per unit of gross domestic product (at purchasing power parity) are double those of the US and three times those of Japan. So far as possible, therefore, the best technology must be used everywhere. Yet the existing set of low-emitting technologies is not fully diffused across the globe. Achieving this could, argues Prof Stern, reduce emissions by between five and 10 gigatonnes per annum by 2030 (10-20 per cent of 2005 emissions). Big efforts must also be made to develop and scale up nearly commercial technologies and create new ones. The fact that all the needed technologies do not yet exist makes estimates of what it will cost to achieve the targets an educated guess. This includes Prof Stern’s figure of 1 per cent of global gross output.

Yet the most intractable challenge of all is equity. Emissions have to be reduced everywhere, but the cost of doing so need not be borne by everyone. There are three powerful arguments why costs should be borne by high-income countries: first, they created the current problem; second, they still emit far more per head; and, third, they can afford it. Three-fifths of the stock of man-made greenhouse gases was put up by the high-income countries. In 2004, US emissions per head were also five times those of China and 17 times those of India.

So how is it possible to ensure the same price for carbon everywhere, while imposing the costs on rich countries? One answer is by paying for reductions in emissions in developing countries, while not penalising them for failure to meet targets. Such a scheme exists: the “clean development mechanism”. Its principle is reasonable. The difficulty is defining and measuring benchmarks, monitoring achievement and covering entire economies.

Yet this, however difficult, is the way Prof Stern suggests the world should go up to 2020, when developing countries should also adopt limits. He suggests, specifically, that the current mechanism needs to move from a projects-based one to a “wholesale mechanism, perhaps based on sector-specific efficiency targets or on technology benchmarks”. Can this be made workable in China, India and other emerging economies? To be honest, I doubt it. But it seems to be the only way forward. Moreover, persuading developing countries to accept binding limits even in 2020 is bound to be hard, given the gross inequity of the starting point.

The G8 leaders claim to have made a breakthrough. This is nonsense. They have not begun to reach all the needed agreements, particularly with the developing countries. They have merely taken a first step among themselves. They have not even put in place policies to achieve the necessary reductions in emissions in their own countries, of between 75 and 90 per cent by 2050.

This is much the most complex collective action problem in human history. Solving it requires concerted action among unequal participants over at least a century. Yet the right thing to do is to try. If not us, who? And if not now, when?