Friday, January 2, 2009

Carbon taxes work, cap and trade systems don't: Hansen

This is required reading today. Columnist Tim Bousquet writes how a letter sent from top international climate scientist James Hansen to Michelle and Barack Obama reflects on Canada and specifically our failure to embrace Stephane Dion's Green Shift.

"It's hard to read these words and not think that Canadians have made a terrible blunder," writes Bousquet. The truth is that selling a complicated yet necessary policy during election time remains a daunting task for any leader. Despite his political shortcomings, Stephane Dion will no doubt be seen as far ahead of his time when it comes to the Green Shift.

From a political perspective, how do leaders implement this kind of policy if promising to do so hands you a terrible defeat at the polls (at the hands of other, opportunistic parties like the Conservatives and NDP)?

I would suggest by following the course plotted by Ontario Premier Dalton McGuinty with his very necessary Health Care Premium, implemented in year one of a four year majority mandate. McGuinty made no mention of the need to increase taxes in the 2003 election and won handily. Seeing the books upon taking office, and assessing the growing urgent needs of an aging society, it was clear the structural deficit created by bad Conservative fiscal policies had to go. So McGuinty made the tough choice of increasing taxes and returning fiscal balance to Ontario's budget. The result was a balanced budget in good times and a province better able to finance its essential programs, yet still react well against the ongoing economic recession. In 2007, McGuinty got lucky with an incompetent opposition leader in John Tory and won again big time. Now the health care premium, while still on the books, is a distant memory, at least in the public's mind.

I'd suggest a similar course of action for implementing a carbon tax in Canada: Don't run on it, but then implement it anyway in the first or second year of a majority mandate. We need this policy. I don't care how often greedy, short-sighted Westerners (or others who earn their living making the world a dirtier place) scream about 'NEP Redux.' It's got to happen.

For more on Hansen's letter and articulate arguments to Obama, read this.

The only carbon tax in Canada continues to cause a few headaches for BC's Liberal government. There again, the opportunistic, amoral NDP is making it a big issue in the hopes of grabbing power next year. [A special question to my NDP friends: Why does your party always abandon its principles, including the need to effectively fight climate change or embrace proportional representation, when it has a chance to grab power, as it does in British Columbia?]

We'll see how it turns out.


pogge said...

Dion himself favoured a cap and trade system until shortly before he began trying to sell The Green Shift. So was he amoral right up until the instant he had his epiphany? That's a rhetorical question. Here's my real point:

It was entirely predictable that Dion would be asked about the expected effects of his carbon tax policy on reducing GHG emissions but when the question came he had no answer and, in fact, made a point of saying he would provide no answer and wouldn't even guess. I think anyone seriously trying to grapple with the issue as he presented it was left with two possible conclusions:
1. This guy is an idiot.
2. This guy thinks the rest of us are idiots.

The Liberals did a poor job of selling this policy and I don't think it's fair to say that the electorate has rejected a carbon tax. They rejected Dion, this iteration of the Liberals and an election campaign on their part that wasn't very effective. But Canadians might still be open to the idea if we were shown what the policy would actually accomplish.

So I'm concentrating on what Hansen, the actual expert, has to say and finding at least some of quite compelling and all of it worth further consideration. Thanks for that much.

Matt Guerin said...

The amorality comes into it when you know something is good policy and helps achieve the ends you claim to want (effective action on climate change) yet you attack the one plan (Green Shift) that can most effectively accomplish that and instead try to pretend that your cap and trade policy (years to implement, not effective in cutting greenhouse gases once implemented, costs still passed along to the consumer and those struggling around the kitchen table) is better for all (Layton.) The Conservatives are in a whole different category of amorality.

Dion chose the best policy and to his credit tried to get a mandate to implement it. He was honest to a fault, and a poor salesman and political leader.

I agree that Canadians have more rejected Dion the leader rather than the green shift policy. The carbon tax principle is simple - if something bad is more expensive to use, you'll choose other, cleaner options. If something bad is the same price or even cheaper than the cleaner option, you'll continue purchasing the bad product to save money in the short term.

pogge said...

If there was already unanimous agreement that a carbon tax was a better policy and cap and trade was inferior I doubt that Hansen would have found it necessary to write his letter. But I think there's still room for disagreement without going straight to amorality as the explanation for differences of opinion.

I could also argue that the reason for Dion's conversion was strictly political -- that it was a policy he could use to differentiate himself from everyone else -- and I wouldn't be alone in that. I could add that the Liberals, as the party that signed us on to Kyoto and the party in government for much of the ensuing decade, was in a unique position among Canada's parties to determine the best policy and to marshal the evidence to support that conclusion but they seem to have fallen curiously short. Nor are Liberals really in a position to lecture everyone else about always taking the high road rather than the politically expedient path.

I don't follow BC politics closely and won't try and speak to the provincial NDP but I think the federal party believes that with a cap and trade system they can more easily manage the effects of reducing GHG emissions so that the price for it is paid by those who can most afford it. The more I look into it, the more I think they're wrong about that but it's an explanation the certainly fits their politics without having to pretend that they're pathological.

I trust I've made it clear that your argument about amorality leaves me more than a bit cold, especially when it presents the Liberals as the only moral choice. Liberals have been lying to me for years. I'd like to think they're going to stop but resorting to arguments like yours instead of just saying "here's why this is the right policy" don't convince me.

Matt Guerin said...

My reference to amorality was specifically in regard to the NDP's position on the carbon tax. It was clear that Layton was just playing politics in this past election, while strangely enough the Liberal leader was taking the tough, principled stand. I realize that Liberals taking principled positions can be a rare occurrence. All parties are amoral to some degree.

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