The other day during my daily shopping at my beloved Happy Foods I picked up a bottle of Copper Fox Peachwood American Whisky. I had never heard of it but here’s the squib from the distillery’s web site:

Our continuing quest for whisky flavor perfection has led us to the delicate complexities of peachwood, contributing a symphony of fruity, floral notes both in the smoking medium of the kiln drying process and as a maturing catalyst in our barrels.

and here’s a quote from a representative review:

Creativity is something not lacking at Copper Fox Distillery in Sperryville, Virginia. As an early East Coast pioneer of American single malt, its founder, Rick Wasmund, took lessons from Scottish tradition (they’re the first distillery in North America to install a malt floor and kiln) and combined them with completely original techniques like the use of different fruitwood smoke in their malt. The latest addition to their line-up, Peachwood American Single Malt, is perhaps their most unique endeavor to date, relying on peachwood as both a smoking medium during kiln drying and as a maturing catalyst inside the barrels. Surprisingly, much of the process behind the single malt is spelled out on the label, from the type of still used to the barrel entry proof to the ppm (parts per million) of Virginia peachwood smoke used in the malting. It’s clearly something different, but how does it taste?

On the nose, Peachwood American Single Malt is like a candied campfire. It’s sweet with a blend of toasted grain, ripe peach, and mesquite aromas. On the palate, the whisky showcases a great balance of sweet and savory with vanilla, clove, and citrus complemented by toasted oak, a briny smokiness, and gentle heat. The peachwood is less of a factor on the palate than on the nose, which is probably for the best, but it seems to have created some welcome, honeyed citrus notes not found in the distillery’s standard single malt offering. The finish is slightly drying, but still manages to carry those complex initial flavors for a decent length until they erode into smoke and caramel sweetness. It’s a well-made and extremely interesting single malt — and it’s just what the craft whiskey world could use a little more of.

This is a fine sipping whisky and “unique” is an excellent way to describe it. I plan to check out their rye whiskey as well.

I have no idea how it managed to make its way to Happy Foods’s liquor shelf but I plan to ask.

In an op-ed in the Washington Post John Kerry and Chuck Hagel are outraged over President Trump’s announcement that the U. S. was withdrawing from the Paris Agreement:

Climate change is already affecting every sector and region of the United States, as hundreds of top scientists from 13 federal agencies made clear in a report the White House itself released last year. The past five years were the warmest ever recorded. Without steep pollution reductions, climate change will risk tens of thousands of U.S. lives every year by the end of the century. Rising seas, increased storm surge and tidal flooding threaten $1 trillion in public infrastructure and private property now along U.S. coastlines. The United States has experienced at least $400 billion in weather and climate disaster costs since 2014. The recent hurricanes that slammed America’s southern coasts, as well as historic wildfires in California, resulted in more American victims of severe weather juiced by climate change than ever before.

The problem I have with that is that they’re drawing a straightline connection where none exists. There is no demonstrable connection between the Paris Agreement and CO₂ emissions. India and China have sharply increased their emissions. The U. S. has reduced its emissions. Not only has Germany increased its emissions, its approach to doing so is disastrous—replacing the electricity produced by its nuclear plants with wood for home heating, for example, has resulted in the harvesting of old forests to feed German stoves.

It’s at about this point that someone will point out that the U. S. per capita outputs of carbon dioxide are much higher than those of Germany, China, or India. That, too, is irrelevant. To whatever degree atmospheric carbon dioxide contributes to climate change, it is absolute amounts that matter not per capita amounts. Yes, we can decrease our carbon emissions more. Why not continue our success by reducing cement production?

In conflating the Paris Agreement with carbon outputs I’m not sure what Mssrs. Kerry and Hagel are complaining about. Is it that their labor are coming to naught?

There’s an interesting post on carbon capture and sequestration at FiveThirtyEight. Here’s the kernel:

Today, there are 19 large-scale commercial carbon capture and sequestration facilities1 operating around the world, 10 of which are in the United States, according to the Global CCS Institute. All of them are pulling carbon dioxide out of the emissions from an associated factory or power plant. Systems that pull CO2 out of the ambient air, like the ones Andrew referenced in his question, do exist. They’re just harder and more expensive to operate because the concentration of CO2 in the air is so much lower, Nemet said. “At a power plant, 10 to 20 percent of what goes up the smokestack is CO2, compared to .04 percent in the air,” he said.

So generally speaking, the technology of carbon capture is ready to go. The problem with CCS is that it doesn’t really have a destination, said Dan Lashof, U.S. director of the nonprofit World Resources Institute.

Other climate-adjacent industries, such as electric vehicles and solar photovoltaics, have grown rapidly in the past decade. But Lashof pointed out the other industries offer benefits outside of their climate impact. “Solar is generating electricity you can sell. Electric cars are really fun and fast and you don’t have to go to the gas station. There’s a market for that independent of climate benefits,” he said.

In a world where trapped carbon emissions are essentially worthless, there’s not much reason for companies to invest in a technology that does nothing but reduce carbon emissions, experts told me. Wind, solar and electric cars were all able to start small and build on niche demand. But CCS hasn’t really been able to do either of those things, said Howard Herzog, senior research engineer at the MIT Energy Initiative.

Short version: the real problem with CCS isn’t technological but economic, i.e. monetizing it. The problem I have with carbon taxes is that I think they’re unworkable. Since they’re regressive in order to make them work you’ve got to make the rates very high and and make them very complicated. It also provides an argument for a carbon trading system. The problem with carbon trading systems is that they provide too much opportunity for gaming the system.

Implementing CCS on power generation or cement production facilities seems to me a lot less objectionable than either.

At the Financial Times Gyorgy Matolcsy, governor of the Hungarian National Bank, says it’s time to create an “escape mechanism” for the euro:

The time has come to seek a way out of the euro trap. There is a harmful dogma that the euro was the “normal” next step towards unifying western Europe. But the common European currency was not normal at all, because almost none of the preconditions were met.

Two decades after the euro’s launch, most of the necessary pillars of a successful global currency — a common state, a budget covering at least 15-20 per cent of the eurozone’s total gross domestic product, a eurozone finance minister and a ministry to go with the post — are still missing.

We rarely admit the real roots of the ill-advised decision to create the common currency: it was a French snare. As Germany unified, François Mitterrand, then French president, feared growing German power and believed convincing the country to give up its Deutschemark would be enough to avoid a German Europe. The chancellor of the time, Helmut Kohl, gave in and considered the euro the ultimate price for a unified Germany.

They were both wrong. We now have a European Germany, not a German Europe, and the euro was un­able to prevent the emergence of another strong German power.

But the Germans also fell into the trap of the “too good to be true” euro. The inclusion of southern European economies in the eurozone led to an exchange rate that was weak enough to allow the Germans to become the strongest global export machine in the EU. This windfall opportunity made them complacent. They neglected to upgrade their infrastructure or to invest enough in future industries. They missed the digital revolution, miscalculated the emergence of China and failed to build pan-European global companies. At the same time, companies like Allianz, Deutsche Bank and Bayer launched fruitless efforts to conquer Wall Street and the US.

Most eurozone countries fared better before the euro than they did with it. According to analysis by the Centre for European Policy, there have been few winners and many losers in the first two decades of the euro.

I was in Europe when the euro was being debated and it was quite clear that the Germans saw the euro as a means of getting out from under the thumb of the dollar by providing an alternative to the dollar. That has not developed as they’d hope. But you don’t need a European currency to have a common currency. As things have actually developed the Europeans could have achieved the goals of the euro simply by adopting the dollar as a common currency.

What has happened is that, because of the construction of the euro and German policy, the Germans are able to have an export-driven economy without limits. If the countries of Europe each had their own hard currencies, Germany would either need to curb its exports or buy more goods from the countries of southern Europe. It’s not all Portugal, Greece, Italy, and Spain’s fault. It’s a structural problem.

Rahm Emanuel is appearing on ABC’s This Week again. Where was this Rahm Emanuel when he was mayor of Chicago, indeed, for the last 20 years? I agree with nearly every word that comes out of his mouth.

There are credible Democratic presidential aspirants and there are authentic Democratic presidential aspirants but there are no authentic, credible Democratic presidential aspirants.

Is it a coincidence that 2020 will mark the 100^th anniversary of H. L. Mencken’s famous remark that “there is a well-known solution to every human problem—neat, plausible, and wrong” and that Elizabeth Warren with her various plans is the living epitome of that observation? In her Washington Post column Megan McArdle summarizes Elizabeth Warren’s recently published plan for financing “Medicare For All”:

And even if she somehow pushed her program through, there’s a good chance that courts would strike it down, because so many of the revenue-raisers may be unconstitutional. Between the problems with her wealth taxes (Article I, Section 9), her plan to divert employer premiums to the government (ex post facto taxation of health benefits) and her requirement that state and local governments toss $3 trillion into the kitty (anti-commandeering doctrine), Warren would be a couple of adverse court decisions away from a $15 trillion hole in her $20 trillion plan.

Stripped of the Warren plan’s math-like veneer and the unreasonable reasoning, this is all rather embarrassing — or to steal a phrase, more of a slogan than a plan. It’s certainly not one of the highlights of Warren’s campaign.

Besides being politically difficult, of questionable popularity, and unconstitutional, Sen. Warren’s plan suffers from the deficiency, as I have previously noted, of bad assumptions. To believe that it will actually “work” you need to believe that the Congress will do something it has refused to do in the past—hold the line on Medicare reimbursement rates—and that providers a) have excess capacity and b) will be willing to work more for less money. None of those are credible.

I was prepared to detest Mihir Sharma’s column at Bloomberg criticizing a proposal from Dani Rodrik, Jeffrey Lehman and Yang Yao for ending the trade war between the U. S. and China. It begins as a lament for the fall in prominence of neoliberal policies but improves:

Now, an international group of economists led by Harvard University’s Dani Rodrik, New York University law professor Jeffrey Lehman and Yang Yao, dean of the National School of Development at Peking University — as well as five past winners of the Nobel Prize — have tried to address one of the symptoms of this crisis, the Sino-U.S. trade war. Last week, they released a plan for the future of trade that seeks a middle path between what they fear are two excessively limiting options: forced reform of the Chinese economic model, which they call “deep integration,” or alternatively a “decoupling” of the world’s two biggest economies that could lead to severe welfare losses for both sides.

Their solution: In essence, to expand the group of “permissible” trade policies to include what China is already doing. If the U.S. wished to prevent some trade-distorting internal policy from taking hold in China, it would have to directly and bilaterally compensate Beijing; or else it would be permitted some proportionate response.

This is, I have no doubt, a well-meaning effort. But it is theoretically and practically misguided. It does little more than legitimize past trade-distorting behavior while limiting possible responses going forward.

or, in other words, damage control. So far so good. He continues:

Worse, it is founded on a basically mistaken assumption: that both “deep integration” (by infringing on the ability of nations to determine their own economic policies) and “decoupling” are equally bad outcomes. In fact, the former is not just vastly preferable to any intermediate path — it was the unwritten agreement underlying China’s acceptance into the global trading system in the first place.

This is the direction about which I was initially concerned:

Even if side deals of the sort that the authors recommend are permissible under WTO rules, they are designed to privilege the biggest trading nations — those with the most to lose, the most resources to use for “compensation” and the biggest capacity for trade blackmail. It is a recipe for undermining multilateralism, normalizing America’s disruptive recent politics and entrenching the advantages built up by China over the past decades.

but, fortunately, he did not veer from there into some sort of massive international redistribution system from which only the administrators of the system would benefit which is what I was concerned about. Instead he makes this very good point:

The central problem with the Sino-U.S. trade war is that it is a Sino-U.S. trade war, rather than a broader effort to rebalance a broken multilateral trading system. The economists’ suggestions emerge from the assumption that China’s outsize presence in manufacturing trade — driven, many believe, by hidden subsidies and the deployment of state power in unfair ways — damages countries, particularly the U.S., in clear and quantifiable ways. Their remedy, therefore, is not to force China to correct any unfair practices, but to consider what actions might be available to the U.S. and to make sure they are proportionate to the harm that has been seen to be done.

Only bilaterally, and for countries that already have a manufacturing base, can such a mechanism work even in theory. But what of countries such as, for example, India? The possibly quantifiable damage that has been done to manufacturing in the developed world is an order of magnitude less severe than the quite unquantifiable damage done to countries that have not been able to develop goods exports under the shadow of Chinese dominance.

The point of a multilateral trading system is not to protect existing industry. It is to allow everyone a good chance of building industries that export to the world, so small and underdeveloped countries, too, can start climbing the ladder to prosperity.

Bilateral deals between the old and new rich leave the poor out in the cold. The latter do not need the dubious freedom to implement industrial policy; many already had that freedom to some degree. What they need is for protections and subsidies to be dismantled elsewhere.

The emphasis is mine. I wish he had been more explicit about what he actually means. What actions would those be? For example, I think that U. S. and European subsidies for their agricultural sectors are unconscionable but so are India’s massive import barriers. Substituting a mercantilist India for a mercantilist China would not be much of an improvement in global trade.

You might be wondering about the relevance of the title of this post. You’re probably familiar with the millennium-old proverb, “You can lead a horse to water but you can’t make it drink”. My wife has her own version of that saying: “You can lead a horse to water but that won’t make it into a duck”.

China has seen the benefits of trade but it has violated the “unwritten agreement” under which they were admitted to the international trading system at every turn and all of its written agreements as well. What we have learned is that a country as large as China and as mercantilist as China is disastrously harmful not just to the already developed countries of North America and Europe but even more to the developing world whose path to development has been cut off by a China with tremendous over-capacity. Just as a single example China not only has enough automobile productive capacity to produce all of the automobiles it needs, it has enough productive capacity to produce all of the automobiles the entire world needs several times over. That is repeated in many industries, many sectors.

We cannot make China into a duck, a well-behaved trading partner, we should accept that, but we should also recognize that the risks of trading with China far exceed the rewards.

There’s a good primer at RealClearDefense by David Uren on how China came to dominate global rare earths production:

As the Cultural Revolution subsided and the administration of Deng Xiaoping began focusing on China’s economic development, exploiting natural resources and adding value to them became a priority. In 1986, Deng approved a national high-tech research and development plan to help China ‘to gain a foothold in the world arena; to strive to achieve breakthroughs in key technical fields that concern the national economic lifeline and national security; and to achieve “leap-frog” development in key high-tech fields in which China enjoys relative advantages or should take strategic positions’.

Although I think that reversing the present situation is a vital national security priority, it’s unclear to me how we can manage that. Producing and refining rare earths is environmentally damaging. I’m not sure how we could go about selling the notion that we should be subsidizing domestic rare earths production but that’s what we’d need to do to avoid being dependent on a strategic rival that isn’t hesitant about using their dominance as a weapon for materials we need to maintain both our military and domestic economy.