Academia's Recipe for Recession a la Kyoto
Author:
John Williamson
2005/08/04
Two Ontario university academics have offered their prescription on how to ensure Canada meet its Kyoto obligations. It is, they write, to "inflict pain" on businesses and individual Canadians. In the summer edition of Policy Options, a magazine dedicated to examining policy quagmires, the University of Toronto's Douglas Macdonald and Debora VanNijnatten from Wilfrid Laurier University call on Ottawa to get radical.
"What kind of pain is called for," they ask. For starters, the pummeling of Alberta's oil industry, binding emissions-reduction quotas, and a job-killing 150% increase in the amount of emissions that businesses are required to make. Next they want higher gas prices and costlier home energy bills to reduce business and individual oil consumption. They conclude that "infliction of such pain is politically viable."
How easy it must be to call for inflicting economic pain on businesses and taxpayers - all from the cozy, tenured confines of the ivory tower. Tenure exists to ensure academic freedom. But the disregard for the wellbeing of Joe Sixpack and Jane Lunchbox - ordinary Canadians - by these academics is astounding. Callously imposing hardship on a people is normally the domain of repressive dictators.
In the 1950s, William F. Buckley, who is perhaps the most important figure in modern conservatism, took aim at faddish leftist ideology embraced by university faculties but at odds with the values of average Americans: "I would rather be governed by the first 200 names in the Boston phone book, than by the Harvard faculty." Fifty years on, Mr. Buckley's rebuke of academia still rings true.
But such thinking clearly drives Ottawa's Kyoto program. The Kyoto Protocol commits Canada to reduce average carbon dioxide emissions to 6% below 1990 levels by 2010. This might not sound like much. But because the country's output of greenhouse gases has increased by 30% since 1990, crippling cuts in energy output are necessary to comply with the international agreement. The retail price of gasoline, for example, will need to rise by as much as 50% to curb consumption.
Industry Minister David Emerson was forced to admit in April that Canada will need to buy emission credits from developing countries. Many economists and environmentalists regard this as purchasing "hot air" since nations that sell surplus gases need not reduce their current CO2 output levels. The result is Canada will continue to pump out emissions and claim victory while it pays foreign governments for credits. This is absurd public policy.
More recently, the Environment Ministry bypassed Parliament and issued a regulatory notice for a carbon tax. Fines start at $200 per excess tonne. This policy change signals Ottawa's intention to penalize companies that engage in routine economic activities. The tax will negatively affect all Canadians.
The more Canadians learn about Kyoto - its foolish assumptions and skyrocketing costs - the less they like it. The 2005 budget stated that Kyoto would cost some $5-billion. When the climate plan was released two months later the cost had jumped to $10-billion. What does Ottawa have to show for this money A costly implementation plan that even environmental groups say is unworkable. Hot air purchases, more taxes and ineffectual spending - it is no wonder the U.S. and Australia refused to ratify the treaty, and others, like Japan, say their targets will not be met.
Canada will not come close to hitting its reduction targets unless Ottawa is willing to trigger a made-in-Canada recession. If this sounds alarmist remember that emissions increase with economic growth. To roll them back means shrinking the economy or achieving negative growth. The economic term for 2 quarters of negative growth is a recession. Fewer jobs, an underperforming economy, and higher energy prices will result in household income dropping, in real terms, by $3,000 - annually - by 2010. Yet this is the medicine Kyoto fundamentalists are calling for.