You may have noticed that another Earth Day has come and gone.

I sort of like Earth Day. Who can argue with slogans like “It’s the only planet we’ve got”? Funnily enough, one of the major concerns of the first Earth Day back in 1973 was the fear of Global Cooling. You see, many people were convinced that air pollution would eventually reduce the amount of sunlight reaching the Earth, temperatures would drop, crops would fail and…etc.

Taking care of our environment is, of course, a good thing to do and most people, I think, are willing and perhaps even eager to contribute in some positive way. And, a whole lot of serious progress has been made.

Measure it any way you like and you’ll see that our environment is cleaner and healthier than any time in the last 60 years. That is something to be celebrated! It is also something roundly ignored by the Climate Change movement — and they would like you to ignore it too. Another thing they would like you to do is support the Paris Climate Accord. That is the new environmental agreement that is sort of an updated version of the Kyoto Protocol. We are all remember how effective that was – not. Even President Obama acknowledged these failures, stating at COP-15 in Copenhagen, Denmark, on December 18, 2009, “Kyoto was legally binding and everybody still fell short anyway.”

The Paris Climate Accord has less legal bite than Kyoto.

Obama chose to avoid Congress and instead signed a commitment by Executive Order calling for a 26% reduction in greenhouse gas emissions by 2025. But since it is only an Executive Order it is not law. And it can be undone by another president’s executive order at any time. And, it most likely will be. After all, the Paris Accord has one very serious issue: The same computer models that say global warming is a problem, also say that even if everybody faithfully adheres to the Paris Accord, the problems will not be fixed. So, it is pretty easy to reach the conclusion that Paris will be as ineffective as Kyoto. It will also very likely be equally economically inconvenient. So, if Kyoto was proven to be economically expensive and environmentally useless and Paris suggests no greater promise why should anyone support it? But if we don’t, does that mean no one will make an effort to protect and improve the environment?

It is hard to know for sure but a reasonable case can be made that we will continue to make significant improvements without the Paris Accord.

In a recent editorial Investor’s Business Daily took note of a few specific things that are quite encouraging – and that the protest community thinks you should ignore:

Data from the Environmental Protection Agency show that, from 1995-2015, levels of every air pollutant it monitors saw steady declines, to the point where they are at or below national standards.

Carbon monoxide levels plunged 72% over those years; nitrogen dioxide fell 45%; ozone, 24%; soot, 37%; sulfur dioxide, 73%; and lead declined 93%.

The sharp reduction in sulfur dioxide emissions “significantly reduced damage to water quality in lakes and streams, and improved the health of ecosystems and forests,” according to the EPA.

The share of children tested who showed high levels of lead in their blood dropped from close to 8% in 1995 to just 0.5% by 2015.

Water quality overall has improved, with once severely polluted lakes, rivers and streams clearing up. Per-capita water use has declined 30% since 1975, notes the U.S. Geological Survey.

Vast improvements in farming technology mean farmers use less water and far fewer pesticides to grow more crops.  Improvements in crop yields has let the country reclaim vast acres of forestland. In fact, forest acreage has climbed 6% since 1920, despite the tripling of the U.S. population, according to the Department of Agriculture.

But what about global warming? Surely, we’re pumping more CO2 in the air than ever before?

Wrong. In 2015, CO2 emissions were below where they stood in 1996. That’s despite the fact that there are 52 million more people living in the U.S., and despite the fact that the nation’s economic output was 61% bigger, after adjusting for inflation. CO2 emissions have dropped 9% since 2005, according to EPA data.

It is true that at least some of these gains are the result of environmental regulations. But not nearly all of them. The CO2 reductions, for example, came before the Obama administration imposed any meaningful federal regulations. They were largely due to the vast increase in natural gas supplies that resulted from fracking, which let numerous power plants switch from coal to gas and cut CO2 emissions.


In contrast to Al Gore’s claims of Inconvenient Truths, we would like to observe that the accomplishments illustrated in the IBD editorial is a testament to the fact that our society, including our business community, has done a remarkable job of accepting responsibility for stewardship of the environment. Being a good corporate citizen is a thing that nearly all companies now identify as an important goal. We have a lot of faith in the basic goodness of human nature. We have less faith in government mandates that are so often driven by political ends.


Market Minute 4/28/2017 – France in the News

The beginning of this week, on Monday the 24th, markets opened up – way up, and have continued to hold those gains or improve over the course of the week.  What happened?  

It was all about an election in France. 

The History – From Brian Wesbury at First Trust.

When the French elected François Hollande as President in 2012, the global left rejoiced. Mr. Hollande ran on a platform of protecting workers from capitalism. He wanted to raise the top personal income tax rate to 75%. Analysts predicted a political turn to the left across Europe, if not beyond.

But, anti-capitalist policies create blowback. We argued that in the high-tech age, Hollande’s policies simply wouldn’t work. If enacted, they would almost immediately do so much harm that others would not follow. The pendulum would swing the other way soon.

As we now know, Hollande figured this out. As a self-interested politician, he reversed himself to prevent a tailspin in the French economy. France’s top income tax rate is 45%, not 75% and instead of increasing labor market regulation, Hollande made it easier for businesses to fire workers. He also gave companies the flexibility to reduce workers’ hours and pay when the economy was in recession.

None of these shifts made France a free-market juggernaut. But, in the end, Hollande’s Administration bears a resemblance to that of German Socialist Gerhard Schröder. He ran as a man of the economic Left, but governed as a man of the Center, enacting much of the labor-market deregulation that has made Germany the strongest economy in Europe.

Now, the pendulum has swung even more. In an election over last weekend, the French Establishment lost, while a political-upstart, Emmanuel Macron, emerged from a crowded field and is likely to win a run-off in two weeks to be the new president of France. Macron supports expanded free trade, a lower corporate tax rate, a lower payroll tax rate, limits on France’s wealth tax, and more labor market deregulation.

There will be a runoff election so the outcome is still a bit uncertain. However, it appears that markets breathed a sigh of relief at the change from a far-left leaning President.  And perhaps as in the case of Brexit and the surprise Trump election, once the fog clears (somewhat) markets will continue to move in that positive direction we like.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
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