The problem with a carbon tax in Canada
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.
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