Saturday, September 20, 2008

"Is carbon-tax recession talk just hot air?" Why yes, it is

An unravelling of Mr. Harper's fearmongering on the green shift can be found in the Globe today. This is the kind of information Mr. Harper would prefer not to have to debate. It's the independent and credible kind. It's also information the Liberal campaign should be doing a better job in circulating, to anyone who cares to know such opinions. The article features comments from Jack Mintz, a Unviversity of Calgary economist - you know, the real kind with an actual Ph.D., not just wannabe M.A's who pass themselves off as economists and who never get called on it - and Marc Jaccard, a Simon Fraser economist - another one with a Ph.D. and a respected expert on energy issues. These are two respected experts who can speak with credibility on the prospect of putting a price on pollution. Both obliterate Mr. Harper's green shift fearmongering.

The report recites one of Mr. Harper's attacks:
Mr. Harper has made attacking this levy a cornerstone of his election campaign, warning it would tip Canada into recession by raising fuel prices.

“It [would] wreak havoc on Canada's economy, destroy jobs, weaken business at a time of global uncertainty,” Mr. Harper told a Montreal crowd during the first week of the campaign.
Then it cites the experts:
But University of Calgary tax economist Jack Mintz, whose expertise the Harper government has previously praised, says he can't see the Liberal plan leading to a recession.

Of the $15.4-billion that a $40-per-tonne carbon tax would collect, according to the Liberal plan, roughly $10.5-billion would be funnelled to individuals and corporations in tax cuts. These are breaks that would surely spur economic growth, Dr. Mintz says. (Another $3.7-billion would be redistributed as support to low- and middle-income families.)

In fact, Simon Fraser University economist Marc Jaccard, an energy expert, says he doubts that either the Liberal proposal or the Conservative plan, entitled Turning the Page, would inflict significant economic pain on Canada.

He says nobody in the worldwide economic community who follows carbon taxes believes there's “any kind of economic impact” from a levy at the level the Liberals propose.
Read that last highlighted part real good. Now given Mr. Harper's track record, who do you believe? Around here, it's not even close.

Throw in Professor Gregory Mankiw at Harvard, cited in Dan Gardner's column, "Carbon taxes pass the Economics 101 test":
Harper says the Liberal "Green Shift" proposal -- a carbon tax on most forms of energy with matching cuts to income, corporate and other taxes -- could do "catastrophic" damage to the economy. He is proposing instead to cut the federal tax on diesel, which will, he says, reduce shipping costs and the costs of goods in stores.

That sort of sounds like the kind of advice an economist would offer. Don't add taxes. Reduce them. Let the market provide.

But Mankiw suggested something considerably different when I called him at his Harvard office. Gas should be taxed much more, he said. So should lots of other energy-related products. But be sure to offset those taxes with cuts to income and other taxes.

Sounds familiar, doesn't it?
Of course, the problem with all this is laid out in Gardner's column:
It's more like "experts versus laypeople. There is a big gap between what economists view as very sensible and non-controversial policy and what the public is willing to swallow." Closing that gap is "fundamentally an issue of education," Mankiw says.
The question is whether such independent expertise will be legitimately valued by the Canadian public as the election proceeds or whether there will be lazy succumbing to Conservative fearmongering.

(Thanks to a regular reader for the Gardner reference.)