Carbon Taxes and Fairness

New Brunswick now has a carbon tax. Noting our current government's support for carbon-based energy (although this appears to be waning), one might ask: why? A lot of people are not particularly happy with it and view it as a "government imposition." Well ... of course it is. Aren't all taxes government impositions? Aren't all laws? Is not that law against murder (which I support!) a government imposition? Is not that law against child abuse and that one against human trafficking, a government imposition? The carbon tax is a law and for those who are going to call it a government imposition, where do you think the rest of our laws come from? Using language like "government imposition" taps into a deep (and, I think, growing) subculture of distrust in government and, indeed, rejection of the idea that the government (through the state) should do things to improve society and promote fairness.  Hence, things like the Ontario government's (as an example) ditching free prescriptions for youth, original plan to cut funding for treatment for autistic children, cuts to French-language services, etc. If it comes from government, so this theory goes, it must be bad and we need to get rid of it.

I don't want to defend government in all things. My own view is that policies should be assessed in context and on a case-by-case basis. One should not, in other words, make up one's mind in advance that a policy is good or bad based on some preconceived notion (which could change next week -- don't believe me ... watch Fox News in the US waffle with regard to the powers of the presidency when the person in that office changes) of the state. Instead, one should assess the merits of policies, their reasonable chances of success, processes of implementation, etc., as part of a process of determining whether or not a policy should be implemented. Making up one's mind in advance is not, in my view, a "critical perspective" but its absence. It is taking one's cue from ideology as opposed to actually thinking and I tend to be in favour of thinking. So ... with that in mind, what do we think about a carbon tax?

The people that I was chatting with get a carbon tax wrong. Let's begin with some basics: a carbon tax will not, by itself, address (or "solve") the environmental problem. No one ever said it would. A carbon tax is one piece of what should be a series of policies designed to address environmental change and degradation. If one wants to argue that the federal government of Canada has messed up the implementation of a policy or mis-explained it ... get in line. There is a long line of policies that have been messed up or which are, in my opinion, pretty bad. But, don't let that distract from the way in which you think about a carbon tax and its purpose. If you believe that it will, by itself, solve all environmental problems, well, that means: (a) you must think that anyone who opposes a carbon tax is a rotten human being for standing in the way of the one policy that will save the planet, or (b) you are setting up the carbon tax to fail, as it were, by creating a completely unreasonable goal for it. Either way, I disagree with you.

What is more, this line of argument serves to mystify what the tax system does and why we have taxes. Like the whole idea of a federal "imposition," it detracts from clear and democratic debate on the merits of different policies in the name a quick one-liner that makes its speaker feel good but does not get us where we need to be at in order to assess the policy.

So, if a carbon tax is not, by itself, the solution to environmental problems, what does it do? The key thing it does is try to put a price on pollution. The basic argument is this: when you drive, you create pollution but you don't actually have to pay for the cleanup of the pollution that you make. We have been doing this for so long that we don't even recognize this. We get in our car (or, on a plane, etc.) and get going without thinking "what happens to the exhaust?" I seems to just disappear.

The problem, of course, is that it doesn't. It goes into the environment, creates climate change, and that creates expenses. In other words, when we drive our cars or heat our homes, etc., we make a mess that needs to be cleaned up.  That clean up costs something.  What is the cost? Well, all kind of things. In my town, we have a big water diversion project because of flooding caused by climate change. We have to rebuild dikes and fix roads that we did not have to fix in the past or clean up flooded towns.  Those are just the most evident costs; there are a bunch more. Who pays for this? Well, right now ... no one. We put off paying for it by asking the environment to absorb the cost and the environment has said "I can't do this any more." I myself don't actually think the environment speaks.  That is a metaphor but that is what, in effect, climate change is. It is the environment saying "I am so full of pollution that I cannot process it all and keep the planet in equilibrium and things are now going to start to go out of whack."

A carbon tax is an effort to ensure that the people who make the mess actually pay for fixing the problem. Yes, indeed, previous generations who contributed to the mess will not pay but we can't make dead people pay so that is a rather spurious point. What the carbon tax here in NB is doing is asking me (Andrew Nurse) to pay for the mess I am making as opposed to pushing it off, say, on my kids and asking them to pick up the tab (by paying for clean up later).

One of the basic principles of economics is that there is a cost to everything. People get confused up because they associate costs with money and this is a fair enough confusion because most of the time they are right. We do indeed measure our costs in cash. But, a cost need not be in cash, as everyone knows. Imagine you are waiting for a friend who is late. What is the price of waiting for that friend? Time. Imagine you are reading this blog. What is the cost of reading this blog (you get it for free)? Well, it is the other thing you could have been doing with your time (playing mahjong online, say, or reading a good book). What we have done with pollution, as I explained above, is to pollute but to ask someone else (or, something else) to pay the cost of our pollution.

Now, if you think about this for a minute, you will see that this makes a certain sense. We cannot just do whatever we want with, say, the local high school soccer field. If I were to take my garbage up to the field and dump it (heck, let's include all those nasty things you have in your shed, half full cans of paint, etc.) on the field, what would happen? If I did, I would be (a) fined and (b) required to pay for the clean up.  The fine affixes a cost to my violation of the law; the clean up is only fair. It is not a punishment. I am being required to fix the problem I created.

One can agree or disagree with this view. You might, for instance, think, gee, why can't I just dump my trash anywhere? Why can't I leave garbage bags on the soccer field or drop off my paint products in front of the elementary school? And, I will come back to this point in future blog, because there are folks who actually kind of think this way. But, for those who don't, you see the point. There is actually nothing particularly unusual about asking people to pay for cleaning up the mess they make. The problem when it comes to the environment is that people:

1. Don't see the mess and so assume it is not there
2. Have been doing it so long they think it is their right to leave a mess for future generations
3. Believe there is some magic solution that will, ultimately, solve all problems
4. Have not paused to think about who is actually paying the cost for the mess they are making and who will have to pay to clean it up

This is one of those situations where people are more than happy thinking they are "getting something for nothing." They made a mess and ... well ... unlike dumping garbage on the local high school field, no one has come and made them clean it up and so they assume they can just keep making the mess. 

This is a blog and we can't go through each of the points above. Clearly, if you think there is no such thing as climate change ... well ... I don't have a lot to say. We are speaking a different language and there is no use in talking about the issue and we need to find some other subject if we want to have a meaningful dialogue. 

The key point I am trying to make is directed toward other perspectives. It is directed toward those who might not have thought about the environment or about the costs and the cleanup bill and fairness. One can disagree with a policy; one can develop better and more effective policies but the idea that those who helped make the mess should actually clean it up is not radical.  In fact, it is painfully ordinary and normal and a point that, I hazard a guess, most of us take for granted.