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Poor Vic Fedeli

I love Vic Fedeli – he is a nice guy and he is deeply committed to Northern Ontario. He is also deeply confused about climate change and what to do about it.vic-fideli

Vic is a conservative. That means he likes the price system and dislikes taxes. That puts him in a bind when the price system fails – for example when the environmental costs of burning fossil fuels don’t get added into the price that consumers pay.

The result is that consumers burn too much fossil fuels and cause too much global warming. Prices only do a good job of allocating goods when the prices are right. Science and economics tell us that gasoline prices are at least 25 cents a litre too low. Consumers are subsidizing their driving by dumping CO2 into the atmosphere.

Conservatives generally believe that people should pay for what they get. They don’t like free riders. By this measure, Vic should want to charge Ontario drivers quite a bit more for gasoline.

But Vic also dislikes taxes, so he doesn’t like the idea of a corrective tax on fossil fuels. A corrective tax is just a tax that makes consumers pay the full cost of the fuel they use. Poor Vic. This is a deep philosophical dilemma for him and for many conservatives.

As a Conservative, Vic should support a carbon tax to make the price system efficient. Then, as a conservative he should support giving all the tax revenue back to people as a per-capita grant. He would fix the price system and he wouldn’t take money away from people.

Instead Vic finds himself railing against the extra cost of a carbon tax: “The price of fuel is going to go up and everything that is delivered will also increase in cost,” said Vic.

So poor Vic is fighting against fixing the price system. He is fighting against individual responsibility. He is fighting against protecting the natural world he loves. He is fighting for policies that will increase global warming.

And he is doing this because he wants to win votes. He is taking a populist but very wrong position on the provincial cap and trade system.

He should instead be calling for a Conservative cap and trade policy: put a CAP on Glen Murray’s bureaucratic system and TRADE it in for a simple and effective Fee and Dividend system like the Greens, the Citizen’s Climate Lobby and his favorite economist (me) all suggest.

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