Carbon tax

Whatever Canada is doing, we shall do that too,” said no nation ever. Join me in this quick exercise. Let’s check off the boxes about the carbon tax proposed by Justin Trudeau’s government.

Will it make a meaningful difference in global emissions of CO2? No. Will it even take us a measurable distance toward meeting our Paris climate goals, or any of the other jet-fuelled climate- conference destination delusions? No. Will it impair our manufacturing and industrial competitiveness? Possibly. Will it hit poor people disproportionately harder than rich folk? Definitely. And, finally, my favourite test: Will Canada’s carbon taxes set an example for the world, will the cast of our glowing foresight present such a bright and clear moral beacon that nations around the globe will be compelled to follow? I will leave that question for you to answer.

Yet, despite these misgivings, I support a carbon tax. Here’s why.

Fundamental changes to economies, to the ways in which we work, live and get around, rarely occur due to rapid and violent tumult. They can, of course. World wars, for example, tend to alter the trajectory of mankind. But I suspect most of us would rather avoid this kind of conflagration just to see our world progress.

Most change, most progress, comes about incrementally. On the edges. It is the failing of history teaching, I think, that we telescope the industrial revolution, or other cultural transformations into a moment in time. All manual and equine labour one day, machines the next. Horses, suddenly marginalized, are left to wander aimlessly forever in the pasture.

It didn’t happen this way. It happened bit by bit. Innovation upon innovation. Small improvements. Small advances. In time, these incremental two-steps-forward-one-back innovations changed the world.

States can’t do this. These are natural forces. Expressions of human creativity. Even the most forward-thinking government acts as a heavy damp blanket on innovation. So enamoured by rules and paper, their sheer oafishness tends to smother the children they are seeking to nurture. Smart ones stop trying. They set up independent agencies or fund favoured university projects, but even then they can’t help but meddle, trying to steer toward a desired outcome.

If governments were sincere about innovation, they would dedicate vast sums to pure sciences and a broad array of research and development projects. But they don’t trust our species to do the right thing.

So we apply a moral compass to our funding of sciences. It is only time before this compass is corrupted by lobbying, special interests and big dollars.

Admittedly this is a bleak view of government’s hands in science and innovation, yet I am confident every reader can cite their own example of such waste and mismanagement.

So…carbon taxes.

Doug Ford was absolutely right about pulling Ontario out of the cap and trade scheme with California and Quebec. It was a convoluted and obscure contraption. As such it was extremely vulnerable to political interference and misdirection. It was also likely to be gamed by more agile market participants.

Ford is wrong about a carbon tax, however, especially the one proposed by Justin Trudeau. (Ford and others may take credit for prodding Trudeau to rebate the tax back to Canadians. It is likely his government had other plans for that money.)

Trudeau’s carbon tax is incremental. It will be visible. We will be able gauge the impact on our life. We can then make our own choices. We can choose to live with the extra cost, knowing we will get some or all of it back. Or—and I expect a great many will choose this option— we can curb our use of fossil fuels over time. Perhaps lower the temperature in our homes. Encourage municipalities to extend transit options. Find ways to make ride sharing services like Uber work in rural communities. We will innovate in our own lives.

In turn, manufacturers and makers of things will respond to these market signals with a faster pace of development, delivering new products aimed at assisting us in this transformation.

This is the only way a state can successfully engineer an economy—by nudging it. Slightly. On the edge.

The Conservatives, on the other hand, are proposing a strategy to pick winners and losers by lavishing them with taxpayer dollars and punishing others with well-meaning but ultimately misguided standards—which will serve only as speed bumps for manufacturers if the market still wants their goods and services. We’ve done this before. Ontario residents will for a generation pay for Kathleen Wynne and Dalton McGuinty’s hubris and mismanagement of energy in this province. We will not go down that road again.

There are risks, of course, to a carbon tax—even one as transparent and simple as the one the Liberals propose. Once this lever is put in Trudeau’s hands, he may be tempted to ratchet it beyond the modest levels proposed— in order to signal his virtue to a distracted world. Or he might come to covet the revenue stream a carbon tax produces, and seek to claw a portion of it back into government coffers.

But these are tendencies to which the opposition benches and provincial governments should be attuned.

We will support a carbon tax—as a nudge toward innovation and progress. Not out of fear, but of hope.

rick@wellingtontimes.ca