30

Realignment? (continued)


 

It isn’t only the media and expert reactions to the two main parties’ environmental plans that bespeak a strange reordering of the political universe. It’s the parties’ own rhetoric. Briefly, the Liberals have become the Conservatives, and the Conservatives have become, well, the New Democrats, circa 1975.

Here’s the sort of language the Liberals use to describe the strategy contained in the Green Shift document. “We will cut taxes,” they say, “on those things we all want more of, such as income, investment and innovation.” They promise “major personal income tax reductions,” and “broad-based corporate income tax reduction,” since “there is no doubt that taxes have a significant impact on our economy and our society.” 

The best way to reduce greenhouse gases, they say, is “to put a price on carbon.” That way, “the true cost of … pollution [will] be built into the decision-making process of every polluter.” Once that’s done, “we can let the market determine the most cost-effective means of reducing greenhouse gas emissions.” 

The plan, then, is to “harness the power of market forces,” as much when it comes to the environment as the economy.

Now compare the Tories’ rhetoric. Listen to Jason Kenney, minister of state for multiculturalism, sent out to present the Conservative rebuttal the day the Liberal plan was released. The carbon tax, he said, will simply “force people to allow companies to pay more to pollute.” 

By contrast, the Tory plan “will effectively prohibit dirty coal fire plants from operating in the future, and we will require them to use carbon sequestration technology…. Mr. Dion’s plan doesn’t prohibit people from using dirty coal. It just puts a charge on it.

“Our plan targets major emitters whereas Mr. Dion’s plan essentially shifts the cost indirectly onto consumers. We have an absolute commitment to regulations…” And again, for emphasis: “The centrepiece of our plan in terms of carbon emissions is regulations …”

Not only that, but “we’ve announced $9 billion of investment in green programs…”

This is simply extraordinary. Where the Liberals talk of using price signals and harnessing market forces, the Tories now boast of their commitment to top-down, command-and-control regulations. It’s all prohibit this and require that, as opposed to the Liberals, who would — gasp! — allow companies to pay more to pollute!

For fifty years or more, conservatives have preached that taxes affect people’s behaviour, that incentives matter, that “if you tax something, you get less of it.” But now, suddenly, they don’t matter — not when compared to the miracle of regulation. 

For fifty years or more, conservatives have also said that prices are the vital signalling device of a market economy, informing consumers, workers, investors and businesses as to the costs of different choices. But now, suddenly, they’re irrelevant. Subsidies — sorry, investments — are the new Tory orthodoxy.

We may be witnessing one of those historic exchanges in which the parties sometimes engage, where each takes on the ideological position that the other used to occupy. Just as the Liberals were once the party of free trade, and the Tories the party of protectionism, only to see those positions reversed in the 1980s, can it be that the Liberals are about to become the party of markets and tax cuts, while the Tories embrace regulations and subsidies?


 

Realignment? (continued)

  1. Just one question: Why should Canadians be OPPOSED to global warming?

    Wouldn’t your country be a nicer place if the average temp went up a degree or two?

  2. RE: “For fifty years or more, conservatives have also said that prices are the vital signalling device of a market economy, informing consumers, workers, investors and businesses as to the costs of different choices.”

    A serious question – Have *Canadian* Conservatives typically talked this way in the past? I can’t picture Bob Stanfield or Bill Davis talking this one, but I was too young to be paying attention when these guys were in office.

    But NDP circa 1975 is an apt comparison. To me, though, he looks more like the OSHA and EPA-creating Richard Nixon.

  3. @Greg: Except that global warming doesn’t work like that. There isn’t some gentle heater working away that’s just adjusting things a bit in this corner. When hundreds of studies and thousands of computer models and thousands of climatologists say it will warm a couple degrees, that’s a planetwide average.

    While Canada might get lucky in that we’ll have some newly arable land, we’ll also be unlucky in that the permafrost might melt, animal migration patterns could be fatally disrupted, and the food chain and ecology of the north could be permanently damaged… all of which trickles down to us here near the 49th.

    @Andrew: thanks for these posts — I think it’s fascinating to see how the entire conversation shifted almost overnight. Although I don’t think this is true, it’s almost like *that* was the green shift Dion wanted to make! :)

  4. It’s all part of Harper’s grand vision of being more liberal than the Liberals. Emerson, a former Liberal, is running foreign affairs, chairs economic dev, and is the go to guy in Harperdom. Don’t be surprised to see John McCallum as Finance Minister at the next shuffle.

  5. “…and the Conservatives have become, well, the New Democrats, circa 1975…”

    I agree. The difference being that, relatively speaking at least, the dippers were serious.

  6. AC – this isn’t an isolated example. Two years ago the Conservatives slapped an arbitrary tax on certain vehicles as part of their ill-conceived environmental program. “Tax cars, not people” or “tax ownership, not use”. Compare that to their historic ideological position on guns and gun regulations and they’re completely incompatible.

  7. I think the ideological shift happened in the early 90s, we didn’t notice it because of the split between the PCs and the Reform/Alliance. The Jean Chretien government was able to govern the country from the centre right using debt and deficit reduction combined with investment and tax breaks to businesses to foster a robust free market economy while the Reform/Alliance was able to from opposition say the government wasn’t going far enough. With the merger and the formation of government, the Conservatives have been unable or unwilling to take things as far as they once promised to do, instead tinkering with the tax system and rewarding people they feel will vote for them with tax credits and modest tax cuts for example the GST reduction. On the issue of the environment for the first time the Liberals are on a strategy of combining free market forces with public policy and a reduction to personal income tax to encourage the country to reduce carbon emission. Stephane Dion gets the fact that without economic incentive there will be no green market in Canada. By creating the economic incentive, both new and existing businesses can compete for the ability to supply goods and services to people who want to avoid paying the carbon tax, thus reducing Canada’s carbon emissions.

  8. “but as these costs permeate the system they will increase the price of nearly everything, contributing to a phenomenon known to economists as cost-push inflation. Text books tell us that cost-push inflation is the result of a decrease in aggregate supply caused by an increase in the cost of production inputs.”

    Maybe Samuelson-esque Keynesian texts from the 1970s. Most modern treatments of the subject typically take more of a monetarist view that in the long-run, inflation is a monetary phenomenon, so these cost-push pressures will be matched by declines in prices elsewhere.

  9. Excellent series of posts.

    There are so many other dynamics to this foray that intrigue me, I suspect we will be talking about it for a very long time.

    On the same line of thinking as your current realignment posts, don’t forget to examine the odd dynamic on the left. The NDP are in the awkward position of being against David Suzuki, Elizabeth May and the growing urban left wing. And, fancy that in BC, where there is a carbon tax already announced, the NDP is offering to “scrap the gas tax” – which will essentially give a huge tax break to people who drive Hummers and Limos, and raise taxes for average working families. LOL.

  10. … not to mention that the federal NDP are in the awkward position of arguing against a massive wealth transfer from heavy polluters and corporations (read: the rich) to poor families particularly those with children (read: the tax credits you decry)

    Under the NDP plan corporations will exchange climate credits and the companies that reduce their pollution will make the most money, but there is no wealth transfer from the rich to the poor. In fact, the companies that will be able to reduce their pollution most under a cap and trade system will be the dirtiest, most polluting companies – so they will see the most benefit. Get that? The NDP plan will see the biggest rewards going to big polluting corporations in exchange for reducing their emissions through this government plan. Isn’t that kind of like the subsidies to big oil they used to decry?

  11. Why is Wayne using his post to just cut and paste an article by one Harvey Enchin from today’s Vancouver Sun and not giving even the slightest citation, link or other recognition?

    Does he want us to think that he is so erudite on matters economic and environmental that he is able to churn out an in-depth response to Andrew Coyne’s hypothesis on realignment?

    Just asking.

  12. Normally sites “Report Abuse” link is to be used if you think there’s been plagarism and copyright infringement as well as abusive comments, etc. The website owners don’t want lawsuits over comments accepted on their blog.

  13. Thanks Scott M. I’m sorta new to the whole blog and comment stuff though I have made a few here at macleans.ca.

    I guess as Wayne tends to be a regular (and “somewhat” partisan) commenter he needed to be called on it.

    Thanks and I’ll use the “Report Abuse” link in the future.

  14. Yes it was copied pastet from Harvey and an excellent article as it is opublic domain from then paper – sinc ewhen did you using information from Andrew Chantal or harvey become an issue? – too much time on your hands folks

  15. I tried to read the first couple of paragraphs of Wayne’s essay, but it’s way too long. It kind of sounded like Economics 101 though, so let’s actually put it to some good use.

    When you tax or regulate an industry, they necessarily pass the increased cost of doing business to consumers. It doesn’t matter how many millions (or billions!) or dollars they make in profit, they will not absorb the new costs. And it’s not that these industries are greedy, it’s because that’s the way the market works (please refer to your supply-demand graph for more information).

    Any plan to deal with carbon emissions (Liberals, Conservative, NDP, or otherwise) will necessarily raise prices for consumers. Anyone trying to tell you otherwise is outright lying to you. There is no such thing as “making big polluters pay” while keeping prices at current levels for consumers.

    Say what you will about the Liberal plan, but they’re currently the only major party being intellectually honest with Canadians about this fact.

  16. ROFL LMAO – I need a web form spell checker hahaha – Oh by the way folks copy pasting from public domain is not abuse or half the posters in web forums would be either prohibited or in court. You do need to mention such if it is from the source when you see the disclaimer etc or from the original document before it has become public but after that it is called information and surely anyone with half a brain could tell I sure as heck didn’t type it as there are no spellling mistakes!!! DOH! another one bites the dust.

  17. Sorting through all this mumbo, jumbo, economic environment policy green sh*t leaves me mystified. We all went through the GST tax. Now we’re being hit with:-

    higher property taxes
    rising water and sewage taxes
    new annual garbage receptical taxes
    increased public transit fares
    exorbitant gas prices
    home heating prices going up

    and we’re suppose to be happy campers, by saying we’ll pay for a new tax for the environment?

  18. I read Mr. Coyne’s current opinion column on a similar topic. It focused more on the “half shift” notion explored in an earlier blog post, where the lack of deep tax cuts is criticized on both policy and political terms.

    I’ll add my own two cents as to why the Liberals decided to go easy on the tax cuts. They don’t really believe in them.

    If you look at when they propose or enact them, it’s almost always in reaction to someone else’s policies, or part of some political calculation.

    Did Paul Martin enact the largest tax cuts in Canadian history as finance minister? Probably. Why did he do it? He did it because the Alliance was proposing even larger tax cuts, and people liked the idea. So, Liberals gave it to them, but not as much.

    A similar thing is going on presently, where the political calculation trumps matters of belief or principle.

    I don’t think you’ll ever see large scale income tax cuts from the Liberal party, just as you’ll never see large scale government programs from the Conservatives. They both play on the other team’s court, but never really want to concede home court advantage. If that makes sense.

  19. “I’ll add my own two cents as to why the Liberals decided to go easy on the tax cuts. They don’t really believe in them”

    Dennis, may I be the one to remind you that this whole thing is about reducing emissions? I realize that the cuts are very much a part of this policy but, really, the focus here is supposed to be about climate change, not how big a tax cut we can all get out of this deal. In fact, some of us would have embraced the carbon tax proposal without the tax cuts.

    Just a thought.

  20. @While Canada might get lucky in that we’ll have some newly arable land, we’ll also be unlucky in that the permafrost might melt, animal migration patterns could be fatally disrupted, and the food chain and ecology of the north could be permanently damaged… all of which trickles down to us here near the 49th.

    Permafrost melting is bad why?

    Ah, those darn “animal migration patterns”. Gosh, I guess we all know animals are so fragile and stupid that they won’t merely react to changes, they’ll all just lay down and die.

    Oh, and of course, slowly making Canada’s weather more like that of places current 100 (1000?) miles south of it will completely destroy the ecology and wipe out civilization. After all, it’s not like there’s a functioning ecology in places with temps that Canada might aspire to if AGW actually turns out to be correct.

    In other words: sorry, doesn’t pass the laugh test.

    Here’s a hint: neither the world, nor the environment, are static. They are dynamic, constantly changing. Anything that can’t adapt to changes was wiped out millions of years ago.

  21. @Greg: “neither the world, nor the environment, are static. They are dynamic, constantly changing. Anything that can’t adapt to changes was wiped out millions of years ago.”

    I agree that species have been wiped out due to inability to adapt. But adaptation is not really what we’re talking about here. The rapid rate of change is the big problem — if it were slow, which is to say more like natural changes in the past, then we could adapt, and so could the rest of our environment. But the rapid rate of change means that humans can probably get by and just have to spend a lot of money, but the animals don’t have time to adapt and they will, as you pointed out, be “wiped out”. What could go wrong?

    As for permafrost melting – although strictly speaking I should have said “thawing” – what about the thousands of humans and millions of animals who depend on the current state of the northern tundra for food and life? What about supplies reaching the north over frozen highways that can’t exist anymore unless we spend billions on pavement? There are plenty of troubles down this route.

    But to bring it back on topic: I’m glad to see this debate on what *level* and *type* of carbon taxation is important. Far better than the more common pseudo-scientific shouting match around untruths and stretched facts. :)

  22. Dennis is spot-on.

  23. I understand the tax cut strategy involved in the shift and that they are meant to redistribute the the tax load to reference the avoidable. Whether they can pull it off is, of course, another question. What I have a hard time accepting is the premise that tax cuts are prima facia a good thing, for two reasons I can mention.

    First, although its safe to assume somewhere in the beast there are efficiencies to be found, such is its nature and its not exclusive to the public sector, in comparision to other industrialized nations our tax burden isn’t half bad.

    Second, I honestly don’t think its a good idea storming the Comptroller’s office axes in tow until we get a chance to find out what Flaherty’s really done with the books. Between his legacy and that of the previous federal Conservative regime a modicum of skepticism about our nation’s cash flow is not uncalled for.

  24. It is comical to see when Conservatives in this country, so ignorant of Canadian history, adopt the rhetoric of their republican brethren to the south and attempt to supplant the attacks towards the Liberal Party.

    The term “tax and spend Liberal” is right out of the 2004 US presidential election, with the intended target being John Kerry.

    Now you see every right wing armchair pundit in the country using this terminology as if it somehow applies in Canada.

    The Liberals cut taxes and spending drastically in the 1990s — so much so that the general mood was the the cuts were too extreme. The Dept of Finance had a myopic goal of reducing government debt and making Canada a more favorable environment for investment.

    Contrast this with the Tories, both of present and past, whose schizophrenic fiscal policies have nearly destroyed a decade of careful economic management. Everyone in the PCO and media know this, but they fail to call the CPC and their sycophants on their BS rhetoric.

  25. Ted T, you’re quite amusing. According to you, liberals can do no wrong financially, while conservatives blow everything up to high hell.

    Do you really consider that to be a credible argument?

    Next.

  26. I don’t know that the Conservatives aligning themselves against market forces is a huge reversal from a position that they have held for fifty years or more.

    It seems to me that a big shift in Tory policy happened when Brian Mulroney hailed free markets and free trade. Tory governments before then tended to be more suspicious of free enterprise.

    Perhaps you are confusing the Canadian Conservative Party with the American Republican Party.

  27. @Cameron

    It is a fallacy to believe that global warming MUST be bad to everyone, everywhere. It is frankly alarmist and discredits your arguments. Some people will benefit. Northern countries, notably Canada, Russia, the UK, Scandinavia etc. stand to benefit as their climates moderate, providing more habitable, arable land farther north. The Arctic Ocean melting will dramatically improve trade between Canada, Europe, and Asia. Yes, there may be some downsides, as well. Diseases and invasive wildlife species will move their way north. Some species may die off. But the reality is that Canada is in fact one of a fairly small number of countries that have been identified by various studies, including the IPCC, as likely NET beneficiaries of global warming.

  28. It isn’t really a considered shift in ideology because the Conservative Party is being reactive and populist (they think) in order to get power. What they say to defend their policy is separate from what they are actually doing, which is favouring the largest emitters with intensity based targets.

  29. comment by Johnny LaRusic on Thursday, June 26, 2008 at 12:15 pm:

    I tried to read the first couple of paragraphs of Wayne’s essay, but it’s way too long. It kind of sounded like Economics 101 though, so let’s actually put it to some good use.

    @comment by Johnny LaRusic

    “When you tax or regulate an industry, they necessarily pass the increased cost of doing business to consumers.”

    This is not necessarily the case. If the regulation or tax is not related to the amount the company produces then how much they pass on their consumer depends on their market power.
    If the regulation/tax imposes a per unit cost then how much passes on to the consumer depends on the elasticities of demand and supply.

    “It doesn’t matter how many millions (or billions!) or dollars they make in profit, they will not absorb the new costs. And it’s not that these industries are greedy, it’s because that’s the way the market works (please refer to your supply-demand graph for more information).”

    Maybe you should refer to the supply-demand graph for more information! lol

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