The Canadian federal government is taking a lot of heat for its climate-driven subsidy to Loblaws to buy refrigerators, including an Op Ed smackdown by Canadian Taxpayers Federation federal director Aaron Wudrick. The policy does seem badly confused and not only because it’s such a small response to what they allege is such a big crisis. If we need to use less energy, why not just make energy expensive and let consumers, especially multi-billion-dollar corporations with huge equipment budgets, find the best way to conserve? The federal Liberals talk a lot about Nobel-prize winning economists supporting their carbon tax concept. But they don’t seem to read much economics.
Many people have pointed out that when economists endorse a carbon tax, they specify that it has to be international and that it must replace inefficient regulations not add to them. By which standard, as Wudrick notes, this sort of cheesy handout combined with a carbon tax is lousy policy as well as lousy politics.
It is obvious that in one sense the grant to Loblaws is just part of the federal government habit of handing out money to everyone all the time. By which we don’t just mean the incumbent administration. The previous Conservative ministry sprayed cash at everyone with a hat to hold out (and probably subsidized hat purchases for those without) and sprayed press releases boasting of what they’d just given blueberry farmers, laminated door makers or whoever got lucky that day. But the Loblaws fridge thing was just part of a flood of handouts to cultural centres, pork producers (ironically), maple syrup and what have you (all real examples from the same week).
It might even be argued that when a handout is billed as climate-friendly, it’s just checking a particularly attractive PR box. Given the policy of subsidizing everything in return for popularity and votes, every grant should be made to sound as appealing as possible to as many constituencies as possible and climate is always a winner. But it’s also part of the government’s ideological commitment to micromanaging the economy and to “nudge theory” which holds that people are so stupid that instead of giving them a rational incentive you just have to give them a gentle nudge and they’ll wander bleating in the direction you want.
Finally, it’s part of the disconnect between alarmists politicians’ rhetoric and their actual behaviour. In going to court to block the federal carbon tax Ontario Premier Doug Ford may call it “the worst tax ever. Bar none.” Which shows that he knows as little about economic history as its proponents do of economic theory. (Just for starters, how about the French gabelle? Or the British window tax? Or the infamous 1765 Stamp Tax that cost more to administer than it raised and helped trigger the American Revolution?) But Ford is right, the wrong way, that it “will make no difference to the environment”. The reason it won’t is that it’s too small. Way too small. (Mind you Ford’s government, in going to court, says it “agrees with Canada that climate change is real and that human activities are a major cause” while proposing doing nothing at all which calls into question their frankness, their reasoning ability, or both.)
As for handing Loblaws $12 million, it’s too small to buy you any favours from the business community and a slap in the face to every citizen staring at an ugly old fridge they can’t find the cash to replace. It certainly won’t help Canada cut carbon emissions by half by 2030. But if you wanted to be ridiculed, it was a splendid investment.