Jack Mintz and putting a price on carbon

by Aaron Wherry

A central figure in the carbon-pricing debate is economist Jack Mintz. In protesting the NDP’s cap-and-trade proposal, for instance, the Conservatives have invoked—see here, here and here—the projection of the respected economist that the NDP’s 2011 proposal would have raised gas prices by 10 cents per litre. (There was some debate on this point during the last election. Andrew Leach projected the increase at about four cents per litre. The Pembina Institute found likewise.)

For the record, Mintz’s preferred policy in this regard is a carbon tax. Via email, I asked him about his position and he explains as follows.

I remain of the view that the appropriate approach to pricing carbon is a carbon tax, not a cap-in-trade system. Last week I was in Germany at IFO Institute which advocates a cap and trade system. There are pluses and negatives to each approach—I think a carbon tax is superior since capital intensive technologies need to be adopted that take some time and certainty in pricing is critical.

In the past, I have also argued with Nancy Olewiler that it would be an improvement in both efficiency and equity terms that the federal fuel excise tax should be converted into a broad-based environmental tax (carbon, sulphur or noxes or whatever). The current federal excise tax has little rationale except for half of it being a transfer to municipalities. I am still of that view even though the Liberal Greenshift plan that adopted this basic concept based on an academic paper that Nancy and I had written went down in flames.

Finally, I find it very irritating that parties might propose carbon policies without being honest with respect to their consequences for consumer prices or jobs. The NDP platform last election was a case in point. But so are current regulations and feed-in tariffs that are less optimally structured and have consequences that should be understood by voters.

As Kevin Milligan notes, the Mintz-Olewiler report is here.




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Jack Mintz and putting a price on carbon

  1. [SIGH]

    WILL this rubbish never go away!?

    Everybody needs to stop lying, and admit that any one in politics who advocates this rubbish is trying to increase government control, and ability to squeeze more taxes out of us.

    It’s about power and wringing more money out of us – AKA the Limitless Eternal ATM.

    Politicians and policy wonks need to start telling the truth, which is that gov’ts have no focus or spending discipline, and want to carve a bigger piece out of over-taxed working people, while increasing their level of power and control over us.

    It hasn’t been about global warming since ’08, if not earlier. This scam has been revealed and the junk science debunked. Enough already!

    • Did you debunk it all on your own, in your basement perhaps? [ oh god i hope he doesn't reply]

      • There goes your afternoon if he does. :-)

      • Science. Do some research and reading…..it’s not hard.

        Bad policies based on junk science are the most dangerous.

        • Oh, is that all there’s is to it? Why don’t you post a link to some of this wonderful debunking science then?

  2. OK, that`s a start.

    It appears the NDP election platform in regards to a carbon tax in the last election was not being clear in regards to loss of jobs and consumer price increase. Also the price of gas would have increased by somewhere between 4 and 10 cents a litre because of this new tax.

    We also know the NDP appear to be opposed to any new revenues that may be the result of the governments free trade initiatives—they want to roll back the cost-saving measures in regards to OAS—they seem to oppose any cost-saving measures having to do with government cutbacks.

    Further discussion of the future plans of the NDP will be needed.

    • But so are current regulations and feed-in tariffs that are less
      optimally structured and have consequences that should be understood by
      voters

      Mintz also said this. You don’t seem to want to talk about it. This is essentially the reason it’s difficult [very] to take anything you have to say seriously – you wont talk about ALL the facts/issues at stake. The stuff you wrote about the NDP for instance [OAS, free trade revenues] is just partisan drivel.

      • I certainly didn`t mean for my drivel to be partisan on this site.
        If ANY political Party that intends to govern me is proposing a large increase in taxes or consumer prices that result in job losses, and they also appear to be opposed to trade initiatives and government cutbacks, then I want to know about what their actual plans are.
        I would think it would be in the best interests of Liberals to flush out the NDP Agenda—-enough pussy-footing around.

        • Let’s say i require evidence and facts before making a judgement. Your views on the NDP are just that – your opinions, assertions; assertions without evidence are pretty much worthless..They sound like TPs you have lifted out of the media or off some party website.

          Yes, as a liberal i want to see the NDP wear its mistakes,when they make them, but i’m not so partisan that i choose to not look at facts first.[ admittedly they may be over the top on the FIPA thing, but they have a point - what's the rush to sign for 30 odd years?]
          You appear to be simply interested in making them wear their old slightly dotty but well meaning, and economically illiterate label regardless of the facts on the table. That’s what your party wants you to do [ mine too ] but i’m not willing to swallow it with out first examining what i put in my mouth, or my mind.

          • The problem is that the media is not offering opinions, or evidence or facts about the dippers.
            And don`t tell me the media`s job is to concentrate their criticism on the governing Party—-just look at the way the US media are treating their Governing Party—don`t even mention Libya to them.

          • That’s simply BS. I can find stuff about the NDP reasonably often; and yes it is the medias job to concentrate on those in power. What you and the CPC are asking is for the opposition to be under the same level of scrutiny as the executive – this is self serving bull. It was bull when the libs did it, it’s bull now.

          • If you don’t want the media talking about this stupid talking point nonsense, stop repeating it 50 times a day. Don’t expect the media or anybody else to join your circus. By the way, when Harper said he would price carbon at $65 a tonne, what were the ramifications for the average taxpayer?

          • None…they didn’t book any revenue, remember? It was an aspirational tonne, not a job killing, socialist wealth redistribution scheming tonne…makes all the dif in the world, if you’re a card carrying con believer.

          • Ah yes, Harper’s magical mystery tour of environmenat protection – no pain, no gain.

          • Oh, it huwts

          • That is an awesome link. And explains so much about so many of the posters here. Including myself, I expect.

    • So when Harper had cap and trade in his platform he was clear about ‘loss of jobs and consumer price increase’ was he? Have you got a link to where he outlines the consequences of his cap and trade plan?

  3. The thing is….everybody knows what needs to be done and how to do it….they just don’t want to. They are kicking the can down the road. A well-known political practice.

    So they go left, right, up, down, under the bus and through the woods….in an effort to not have to actually do anything at all.

    • Here is the question that maybe some of you more politically astute people can answer for me. Why does Mulcair NOT come out and defend the proposed increases on Carbon that were in the NDP platform.

      If what Emily says is true and everyone knows what needs to be done – then why is Mulcair not defending a $ 21.5 BILLION increase in government revenues from Carbon that was in the NDP Campaign platform?

      • I’m not a Dipper, Bill, and I don’t speak for them. Ask somebody who does.

        Better yet, stop with the partisan drivel and focus on the problem.

      • Probably the same reason the Tories are cutting $8 billion in spending without telling anyone specifically what’s been cut, while SIMULTANEOUSLY overspending their ad budget to tout all of the money they’re spending.

        • Uh, having seen Bill’s comments on this and other threads, it seems we must now type BILLION in ALL CAPS.

          Thank you.

      • Mulcair deflects the issue for the same reason Harper doesn’t answer the question when asked why FIPA will allow Chinese-owned companies to buy oil leases in Alberta (instead bringing up the Investment Canada Act, which we at length discussed does not regulate oil lease purchases, as John Ivison spells out if you don’t believe me)…

        …it’s politically unpopular.

        • That is not accurate. The PM did answer the question; you just didn’t like his answer because it disagrees with your rather reaching interpretation of what Mulcair actually said on this topic.. For the record, the PM said …..

          “Mr. Speaker, that is just completely and utterly wrong, under this particular agreement, the government’s powers and prerogatives under the Investment Canada Act are protected. We will continue to evaluate whether investments are in the net benefit and best interests of this country.”

          Let’s not allow one debate to get into another. I am sure even you would agree that a non answer in question period is not in the same league as playing duck and cover as Mulcair is doing when he runs away from his own NDP party platform.

          I am just surprised that nobody questions that. I will commend you for at leas providing a good answer – Mulcair’s runs for cover and tries to hide from the NDP campaign platform because it is politically unpopular – at least in some places.

          However if the Carbon issue was a big enough one for it to receive a $ 21.5 BILLION commitment from the NDP brain trust then surely they must have some other ideas if they are walking away from that one. Yet we never hear about any of them. At the very least the Mulcair and the NDP should defend the platform – they are taking the hits regardless so why not come out and say “yes, it was our plan and where is yours” The Conservatvies have totally got Mulcair and the NDP on the run over this lame Carbon issue in the platform and they look foolish trying to pretend it is not in there when everyday Canadians ( and obviously not those in the Ottawa media bubble) can clearly see it is there.

          • “The PM did answer the question”

            That’s not accurate. Thomas Mulcair asked a question. Stephen Harper then stood and stated something that is factual about the Investment Canada Act. But it had nothing to do with Mulcair’s question. As I spelled out, and supported by John Ivison (whose article you’ve suddenly gone quiet on), the Investment Canada Act has nothing to say over purchase of oil leases.

            Sort of like asking “What colour is the sky?”, and getting “2 plus 2 equals 4″ as an answer. Sure it’s factual. And nothing to do with the question. Is that the bar you set for Question Period? It’s not mine.

            As to the NDP and Conservatives collective cap-and-trade policies, I’ll stay out of that debate as I support a revenue-neutral straight carbon tax.

          • “As to the NDP and Conservatives collective cap-and-trade policies, I’ll stay out of that debate as I support a revenue-neutral straight carbon tax.” – Matlock
            So in other words you favor a carbon tax more like what the Liberals use in B.C. ?

          • The BC carbon tax model is close to perfect. Better than any other jurisdiction I am aware of. Also much better than Harper’s command and control approach.

          • Andrew, a carry-on conversation on CAFE standards from an earlier SG blog.

            I had a look at EPA CAFE standards for the US fleet.

            http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/FRIA_2017-2025.pdf

            It appears they are claiming a net benefit (savings in fuel cost – upgrades cost) over the life of a vehicle under the new CAFE standards. (tables 13 and 14 in Exec summary).

            How do economists treat this if in fact it is an economic benefit? It’s not really a tax of any sort (paid or avoided through investment) since it stands alone as economic.

            Thoughts?

          • To the extent the carbon tax returns dollar-for-dollar carbon tax revenues in income and corporate tax deductions so that it does not raise government revenues, I support a carbon tax. It gives businesses the freedom to identify what amount of carbon reduction they can achieve and a cost-certainty around that. Freedom for business to make their own decisions. Free markets. I support that.

            I do not support the current regulatory approach whereas Harper says “Here’s the cap. Meet it.” This forces business to pollute at less than economically optimal levels in order to meet the target. This means businesses incur higher costs than are optimal. And businesses acting optimally, they will pass these high costs on to the consumer. Regulations that restrict freedom of business decisions. I do not support that.

            Jack Mintz agrees with this. So does Stephen Gordon.

            Do you support Harper’s wasteful approach to carbon emissions, which increases costs to businesses and ultimately consumers?

  4. “There was some debate on this point during the last election.”

    City-Journal ~ What Social Science Does – And Doesn’t – Know:

    In early 2009, the United States was engaged in an intense public debate over a proposed $800 billion stimulus bill designed to boost economic activity through government borrowing and spending …. prior to the launch of the stimulus program, the only thing that anyone could conclude with high confidence was that several Nobelists would be wrong about it.

    Another way of putting the problem is that we have no reliable way to measure counterfactuals—that is, to know what would have happened had we not executed some policy—because so many other factors influence the outcome. This seemingly narrow problem is central to our continuing inability to transform social sciences into actual sciences.

    Unlike physics or biology, the social sciences have not demonstrated the capacity to produce a substantial body of useful, nonobvious, and reliable predictive rules about what they study—that is, human social behavior, including the impact of proposed government programs.

    The missing ingredient is controlled experimentation, which is what allows science positively to settle certain kinds of debates. How do we know that our physical theories concerning the wing are true? In the end, not because of equations on blackboards or compelling speeches by famous physicists but because airplanes stay up.

    Social scientists may make claims as fascinating and counterintuitive as the proposition that a heavy piece of machinery can fly, but these claims are frequently untested by experiment, which means that debates like the one in 2009 will never be settled. For decades to come, we will continue to be lectured by what are, in effect, Keynesian and non-Keynesian economists.

    http://www.city-journal.org/2010/20_3_social-science.html

    • I’m always amazed at how keen non-economists are to classify economists as ‘Keynesian’ or ‘non-Keynesian’. Keynes’ main contribution was in the area of business cycle analysis, and in particular when interest rates hit the zero lower bound.

      The vast majority – way more than 80%, if not 90% – of economists spend their careers on topics that have nothing to do with what Keynes had to say. It’s silly to use his name to classify work that has nothing to do with what he said.

    • Let me encourage you to use the blockquote html tags. That way we could tell which portions of your posts are your thoughts and which portions are someone else’s.

      Thanks in advance. :-)

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