Defining Costs and Benefits

The topic of today's discussion is carbon taxes, whether governments should establish them or not (specifically Canada), and what consequences they can have. With one caveat: We're only going to discuss their effect on whether businesses are willing to invest in things in the countries considering these policies, since that's what today's editorial focuses on.

Okay, I lied. Actually we're going to discuss whether that caveat makes any sense.

One of the common problems I have with the discussion for almost any policy that might impact the economy, whether that's taxes, regulations, subsidies, or any one of a number of other things, is that a lot of people tend to only care about whether that policy will have a good or bad impact on the economy. If it will encourage investment and business growth, it's good, if it won't do those things, it's bad.

The problem I have with this approach is that it ignores the large number of situations in which the policies that deliver the most profits as soon as possible aren't the same as sensible long-term policies. Or situations in which there are serious ethical problems with profit maximizing strategies; child labor and a complete lack of concern for workplace safety might work well in some situations, but have unacceptable consequences in other ways.

What I find most interesting is that many people will make arguments about us not being able to afford things if we're just going further into debt to pay for them and yet not realize that using unsustainable techniques now and relying on our descendants to fix the resulting environmental damage isn't a whole lot different. We can choose to pay more now for sustainable strategies and try to reduce how much damage we'll have to fix later, or we can ignore it and pay even more later to fix all the damage and rush development on sustainable techniques that we'll have no choice to adopt.