Last week, Environment Minister Catherine McKenna indicated the federal government has not yet determined the national minimum carbon price which is part of its climate strategy. McKenna rejects any assertions the current economic environment is not the time to impose carbon pricing.
Frédéric Bastiat (1850) forewarned of demagogues like McKenna who demand the use of force to substitute their own inclinations for those of the human race. To seek support for her position, Minister McKenna is appealing to popular desires and prejudices using the most benign language conceivable. Using economic principles to unpack her message reveals its manipulative and sinister nature.
For decades, buyers and sellers have been peacefully discovering mutually agreeable prices for pieces of pure, crystalized carbon, more commonly known as diamonds. If she chose, the Minister could walk in to any reputable jewelry store and survey the asking prices of diamonds which relate to the weight, shape, colour and clarity of the crystalized carbon. But this is not the carbon she has in mind that requires a national minimum price.
Instead the focus is carbon dioxide, a gas produced by all aerobic organisms when they metabolize carbohydrate and lipids to produce energy by respiration. It is also produced as organic materials decay, as sugars ferment in bread, beer and wine making and though the combustion of wood and fossil fuels such as coal, peat, petroleum and natural gas.
Carbon dioxide is a versatile industrial material. It is used as an inert gas in welding and fire extinguishers, as a pressurizing gas in air guns and oil recovery. It is added to drinking water and carbonated beverages including beer and champagne to add sparkle. As a liquid it is used a solvent in decaffeination of coffee and as dehydration agent. In solid form it is used as a refrigerant, a solvent and an abrasive. Like diamonds, carbon dioxide in its various forms is bought and sold in markets every day at prices mutually agreed to by buyers and sellers.
The study of economics makes clear that prices are the outworking of market processes which are transpiring in Canada and beyond for various forms of carbon and carbon dioxide. It also contributes to a clearer understanding of what the Minister would like to implement: a carbon tax. The difficulty with this however is that carbon cannot be compelled to pay tax, only individuals can.
The optics of coercively expropriating the property of individuals because their activities lead to the creation of carbon dioxide is an accurate but far more difficult political sell than the vacuously named “national minimum carbon price” scheme. It also reveals three unflattering implicit assumptions of the Federal government’s climate policy: [1] the private property of Canadians is subject to majority vote; [2] that authorities can expropriate individuals to whatever degree the government feels is necessary to realize a policy objective; and [3] there exists an institution with the moral legitimacy that may direct our physical resources and our lives in ways against our wills, even if we are doing nothing more than exhaling and causing no particular harm to anyone.
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