Let's not forget that Carbon Taxes and Cap-and-Trade are Basically Complementary

{Note: the following posting was originally written on January 16, 2010. I re-print it now in light of the current reconsideration of climate change policies by the Christy Clark government}

Alan Durning and Clark Williams-Derry have both written excellent pieces for the Sightline Daily on the issue of carbon taxes versus cap-and-trade that help to clarify the issues.

Basically, the difference between carbon taxes and cap and trade is in where they concentrate uncertainty. "With carbon taxes, the government locks in the price of carbon, and the market decides how much carbon to emit. If fossil fuel prices fall, or the economy surges, or inflation runs hot, emissions can rise despite the tax. With cap and trade, on the other hand, the government locks in the carbon emissions, and the market decides what price carbon needs to be; ideally, emissions fall, slowly and steadily, no matter what happens to the rest of the economy. I tend to think of cap and trade as a variable tax: one that fine-tunes the price to guarantee a certain level of emissions." (Williams-Derry, Sightline Daily January 4.)

I think that there is a complementarity between the "fixed" element of the carbon tax and the "variable" element of the cap-and-trade mechanism. The former has the virtue of clarity: it is a little harder to 'game' or manipulate because loopholes are generally easy to see. (It also easier for businesses and consumers to plan around.) The latter has the virtue of flexibility, providing a constant incentive for emissions reduction. The former might be better at catching small emitters--who account for half of all emissions-- and who might otherwise be oblivious to what is happening in emissions auctions. The latter catches large emitters who might otherwise just write off any carbon taxes on their inputs as a cost of doing business, without greatly changing their behaviour.

Recent news out of Europe has been encouraging to the NDP and the Sightline writers who generally favour cap-and -trade over carbon taxes. First of all, the emissions trading scheme (ETS) is finally working fairly smoothly after a 3-year period when rights allocated to polluters were evidently issued too generously. Secondly, on December 30, the French Constitutional Court struck down France's carbon tax because it was so full of loopholes that it violated the principle of tax equality!

So we now have two perfect examples of how the carbon tax can be "gamed" and the gaming in cap-and trade can be fixed, right? Yes, but note that it took five years to get cap and trade working properly, while the flaws in the French carbon tax were exposed right at the starting gate.

In other words, le Conseil constitutionnel exposed the weakness in a particular carbon tax, but still validated the concept of the carbon tax in general: that it operates in a clear, direct, transparent and (when done properly) equitable and efficient manner.

So, carbon tax or cap-and-trade?  In both cases, the devil is in the details.

Gregor Robertson for BC NDP leader--and Premier in 2017

Yesterday's convincing general election victory for Gregor Robertson and Vision Vancouver in the Vancouver civic elections shows that competent centrist government is what voters really want--and if it can also be ethical with a green and progressive tinge, so much the better.

Applying those same precepts to the provincial scene, I have long maintained that what voters want is someone who can pick up where Mike Harcourt left off-- a more competent and effective version of Harcourt--and NOT some one who picks up where Glen Clark left off and provides us with a more effective version of him.

Since Allan Blakeney, Roy Romanow , David Vickers and Tom Berger are not available, that just leaves Gregor Robertson.

The real question is: how do we get around the problem that is Adrian Dix?

To put it bluntly--how do we get rid of him?

Sectoral Bargaining for British Columbia?

I have just returned from the Parkland Conference conference in Edmonton this weekend, at which  I heard a talk by Alberta Federation of Labour president Gil  McGowan.  He mentioned  that the #1 item on the B.C. Federation of  Labour wish list is a move to European-style sectoral bargaining, which would force major employers to bargain for the entire industrial sector rather than on just a workplace-by-workplace basis.  This would be a radical change, and the  B.C. NDP should be forced to clarify how it intends to respond to this demand.

Canadian Centre for Policy Alternatives economist Marc Lee has recently described sectoral bargaining this way:

Unions have made some headway in the low-wage service sector, but small shops and high turnover confound organizing. Sectoral bargaining is an approach to unionizing the service sector that would give broad sectors (retail, restaurants, security, etc) a vote on whether to demand collective bargaining and if approved, different unions could then make their pitches on ability to represent those workers. This would quickly increase union density across the economy and lead to wage compression. For employers, it puts all work on a level playing field, so that there are no competitiveness issues, and wage increases would generally be passed on to consumers in the form of higher prices. Another related model to study is the German model of regional wage-setting institutions, which goes even deeper to include works councils (shop-level management practices that include workers in decision making) and co-determined boards (that give workers in large companies half the seats on the board).

Would it be a good thing?  My experience studying and teaching comparative political economy favourably inclines me toward broader sectoral bargaining and even centralized cross-sectoral bargaining, not primarily because it makes unions stronger, but because it makes unions both act and appear to act less like narrow interest groups.  For example, in Sweden,  it is not uncommon for trade union leaders to restrain wage demands or to be receptive to technological change in one part of the economy in order to help workers in another area or to save taxpayers money.  On the other hand, it might not be good for employment and investment  to have generally higher sectoral wages than those being bargained in the rest of Canada and the United States.

'Trade unions have always had two faces, sword of justice and vested interest ' (Flanders, 1970: 15).  James Medoff and  Richard Freeman make a similar point in their article,"The Two Faces of Unionism" (1979). While a change to the B.C. Labour Code to strengthen collective bargaining is a foregone conclusion if the NDP is returned to office, a more interesting question is whether social unionism can be strengthened without simply increasing the monopoly power of unions to raise wages, thereby increasing both inequality (vis a vis unorganized workers) and inefficiency (due to labour market rigidities).  The reason that this question interests me is  that while the economic monopoly power of unions can be expected to be curtailed as soon as a right of centre party is returned to power, a successful advance of social unionism  could become a permanent achievement. At least, that is my hope.



{Economics Addendum:    "International competitiveness with respect to the U.S. and other developed countries could be a problem for B.C. only under three conditions: first, if this province's wages rose much above those in the rest of the country; second, if the real cost of production in B.C. rose relative to the real cost to our competitors; third, if the Canadian exchange rate appreciated with respect to the currency of a country specializing in the production of a principal B.C. export." --Robert C. Allen, "Trade Unions and the B.C. Economy,"  in Restraining the Economy (1986) p.227.   What needs to be said about this in the current context is that migration within Canada generally prevents the first possibility, and that the second and third conditions need to be both verified empirically.  Even if  the second or third conditions are met, it would be quite a leap  to the conclusion that 'trade unions have too much power'.}

The Order of British Columbia's Liberal, Vancouver 'Establishment' Bias

According to wikipedia, the Order of British Columbia  "is a civilian honour for merit in the Canadian province of British Columbia. Instituted in 1989 by Lieutenant Governor David Lam, on the advice of the Cabinet under Premier Bill Vander Zalm ... the order is administered by the Governor-in-Council and is intended to honour current or former British Columbia residents for conspicuous achievements in any field, being thus described as the highest honour amongst all others conferred by the British Columbia Crown".  The  B.C. government web page states that the award is decided by the Lieutenant-Governor-in-Council (i.e. the Cabinet)   on the advice of an independent advisory council consisting of:

• The Chief Justice of British Columbia – Chairperson
• The Speaker of the Legislative Assembly
• The President, in turn, of British Columbia’s Public Universities, for a two-year term
• The President of the Union of British Columbia Municipalities
• The Deputy Minister, Intergovernmental Relations Secretariat
• Two past recipients of the Order

Obviously, the Chief Justice is non-partisan and above reproach, but he just serves as the chair of the proceedings; the UBCM President can usually be expected to be quite independent of government, but everyone else (with the possible exception of the president of the Universities Council) is an appointee of the provincial cabinet.

So, armed with this knowledge, we can start to make sense of the highly anomolous treatment of  former politicians and political advisors   in the making of this Award. Gordon Campbell was nominated within a couple of months of leaving the premier's office , even though he still occupies a post in London as Agent -General.  This is the political equivalent of Wayne Gretzky or Mario Lemieux having the usual 5-year waiting period waived for installation in the hockey Hall of Fame.  Campbell was described in his citation as having been a "visionary".

But Bill Bennett, the third-longest serving premier in B.C.'s history, had to wait until 2007---21 years after he retired from politics.

And David Barrett? Who brought Hansard and Question Period and MLA research staff to the Legislature, created the Agricultural Land Reserve, gave BC a modern Labour Code,  created a BC Gas Corporation that subsequent governments relied upon to balance their budgets, brought in public auto insurance, etc.?  He left the premier's office in 1975 and left active politics in 1993.   But when the 2011 awards were named,  Campbell advisors Ken Dobell and David Emerson got the nod for their "passion for making British Columbia a better place," while David Barrett did not.  Mike Harcourt, who left office in 1996 after presiding over an unusually temperate and humane government that brought in  the far-sighted Land Use Plans and a Treaty Process  that ended the "war in the woods" in BC--- as well Freedom of Information and a doubling of  the number of provincial parks---has also been overlooked, notwithstanding his additional work on sustainability, both before 1987 (as Mayor of Vancouver) and after 1997 (at the Sustainability Institute at UBC).

This pattern reveals an attitude: one that reveres Gordon Campbell for being the most perfect representative of the business and professional elites of Vancouver since the old Liberal-Conservative coaltion left office in 1952; one that grudgingly acknowleges Bill Bennett and other Socreds as politicians they once had to hold their noses and vote for; and one that considers two highly distinguished former NDP premiers as being beyond the pale.


The government could have easily avoided the impression of partisan bias simply by appointing Barrett and Bennett at the same time. And by delaying Gordon Campbell's  elevation until such time as they were ready to appoint Mike Harcourt. 

In 2012, David Barrett will turn 82 years of age.  No one has personified the passion for making British Columbia a better place to live more than he has.  He deserved to be named to the Order of BC over a decade ago.  His rival  Bill Bennett was selected ---despite a conviction for insider trading. This intentional oversight is becoming a disgrace. C'mon people--do the right thing and appoint David Barrett to the Order of British Columbia.

Conservatives new Power Base Makes Dairy & Poultry Vulnerable to Trade Talks

A couple of weeks I commented that the Conservatives' newfound ability to form a majority without Quebec was already starting to have profound consequences for the effectiveness of national bilingualism.  Now, news reports that dairy and poultry farming are finally 'on the table' at the APEC  trade talks are surfacing, alongside the government's abolition of the Wheat Board monopoly.

Although this development is presented as an inevitable aspect of international economic forces stemming from our trade partners, it is even more a product of entirely avoidable and contingent processes of domestic politics.  Brian Mulroney was the champion of free trade in the 1980s, but  his own riding of Manicougan was a the very heart of Quebec's highly protected dairy industry and the linchpin of his political power base.  Hence for his Progressive Conservative  majority,  liberalizing agriculture was UNTHINKABLE.  Now for Harper's new un-hyphenated Conservatives, exposing farmers has become very thinkable, not just for ideological reasons, but for very transparent reasons of domestic political calculation. Highly protected Quebec farmers are now politically expendable.

This is perhaps a textbook  example of how ideas and interests have to intersect for significant policy changes to occur.

An interesting footnote to this issue is what the long-term ramifications, if any, will be for British Columbia's farmers, consumers, and land developers.  Will the removal of protection for Quebec butter and milk create a local market opening for BC farmers, strengthening their local market niche?  Or will the general removal of protection mean more imports from abroad, keeping the price of dairy and poultry in check for consumers but negatively affecting the commercial viability of BC farms---and therefore their viability within B.C.'s Agricultural Land Reserve?  B.C.'s political leaders should be preparing themselves to deal with these questions.