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Notwithstanding economically illiterate attempts to pretend otherwise, higher consumer prices for GHG-emitting goods and services are an essential component of any serious attempt to reduce emissions.

Jordan Verlage

John Ibbitson quite rightly notes in today's Globe and Mail that there is no point in blaming politicians for Canada's spectacular failure to meet its Kyoto obligations to reduce greenhouse gas emissions (GGE).



They were simply carrying out the mandate we gave them.



Here is what Paul Krugman put at the top of his list of Paul Samuelson's contributions to economics:

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  • Revealed preference: [I] was Samuelson who taught us how much can be inferred from the simple proposition that what people choose must be something they prefer to something else they could have afforded but didn’t choose.


Notwithstanding economically illiterate attempts to pretend otherwise, higher consumer prices for GHG-emitting goods and services are an essential component of any serious attempt to reduce emissions. Counting on people to reduce GGE emissions out of the goodness of their hearts was the strategy of the Chrétien-Martin Liberal governments, and adopting this policy made Canada's Kyoto failure inevitable long before Stephen Harper's Conservatives came to power.



Political parties rarely win when they campaign on a platform that promises to increase the price of fossil fuels -- the Progressive Conservative government of Joe Clark lost power in large part because of its proposal to increase the gasoline excise tax by 18 cents a gallon (4 cents a litre).



We all know the fate of Stéphane Dion's Green Shift (pdf), the most recent attempt to increase the price of GGEs. The Conservatives and NDP joined forces in an unlikely alliance to denounce higher prices for fossil fuels and to claim that their alternatives would not inconvenience households. Jack Layton even promised that under a NDP government, a federal ombudsman would ensure that the costs of its climate change policy would not be passed on to consumers.



Indeed, the trend has gone the other way in recent elections -- look at the various proposals to remove the GST or HST from greenhouse-gas-emitting activities.



It doesn't matter what Canadians tell pollsters about how much they are concerned with climate change; what matters is the choices we make. And whenever we have been offered the choice of accepting personal inconvenience in order to reduce greenhouse gas emissions or of making sure that fossil fuels are cheap and plentiful, we have consistently and overwhelmingly chosen the latter.



And politicians have paid attention.



Stephen Gordon's recent posts and Twitterfeed can be viewed here.

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Economy Lab, winner of the 2011 Eppy Award for best business blog. Follow Economy Lab on twitter

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