ECO105Y Micro Op-Ed Exemplars 2016-2017
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Much Ado About Nothing: Rabid Reactionaries and Environmentalist Extremists Lash Out over PM Trudeau’s Altogether Lacklustre National Carbon Strategy. Prime Minister Trudeau's comments in the House of Commons early last October concerning a national carbon strategy sparked perhaps the greatest drama in recent Canadian politics. Provincial environment ministers very publically, and somewhat melodramatically, walked out of negotiations with Ottawa saying they were being subverted and strong-armed. Since then, the slinging of proverbial muck has only grown more intense, especially after the PM finally used the dreaded word “tax.” Scandalous. What critics from the left and right fail to understand is that carbon pricing is premised on basic economic concepts of negative externalities and internalization. Carbon pricing will not pull the rug out from under the Canadian economy. And what government would pursue policies that would self-sabotage? If we could all tone down the political rhetoric, we can attempt to premise this debate on facts. Industrial activity and pollution will always have negative repercussions for society. The cost of cleaning up environmental messes and the additional burden to health-care systems are negative externalities of pollution. Negative externalities are costs which stem from a lack of defined ownership concerning common goods, in this case the environment. There have been no mechanisms for ensuring that individuals pay their fair portion of environmental damage as no individual can claim ownership over the environment. Until now, that is. The entire point of carbon pricing mechanisms is to divvy up those costs and impose, or internalize, them onto polluters so that society is not left with the bill. The method of carbon pricing suggested by Trudeau is an emissions tax. Ideally, the price per tonne of emissions set by the tax equals the cost of the negative externalities of pollution. Trudeau's plan only begins to reflect the full cost, beginning at 10$ per tonne to 50$ in 2022. This is where radical environmentalists believe Trudeau is being too weak. Alternatively, provinces can implement a cap and trade system. This mechanism creates a market for emissions in which the government auctions permits for producers to pollute, with the total amount of emissions allowed by the permits equal to the province’s emissions target. Some environmentalists disapprove of this because selling “permission” to pollute is unseemly to them. Brad Wall, the firebrand premier of Saskatchewan, epitomizes the conservative stance. He argues that carbon pricing hinders business and growth while rendering Canada uncompetitive in the world market. This is quite exaggerated. The tax only seeks to reflect the true costs of doing business, which most people would agree the businesses themselves should pay. If carbon pricing just barely covers the cost of pollution, it won’t restrict competitiveness and will incentivise businesses to cut costs and approach the economy in a new way. The economy and the environment are about trade-offs, one without the other is unsustainable. A certain degree of pollution is necessary for the economy to function, and if we balance it with modest proposition such as carbon pricing, we can insure that the environment and the economy can move forward into the millennium stronger than ever. (499 words) https://www.thestar.com/news/canada/2016/10/03/justin-trudeaus-liberals-unveil-plan-to-price- carbon.html
ECO105Y Micro Op-Ed Exemplars 2016-2017
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Take the High Road, Canada With an incoming Trump administration comes an expected resurgence in the American fossil fuel industry. The timing is less than opportune for Canada, as the liberal government has taken a tough stance on the oil and gas industry, and instead has pushed for increased research into sustainable resource development. Although Financial Post’s Joe Oliver argues that Canadians should abandon their stance of “morally superior denial,” I resolve that Americans are in fact those who are in denial; by ignoring the very real threat of climate change and inherent negative externalities caused by resource extraction, the Trump administration will cause irreversible damage that future generations will be forever indebted to. Canada should be commended for their morally superior stance on this issue. The environmental and societal impact of climate change cannot be ignored. Unlimited resource extraction will lead to vast expenses burdened onto both current society and future generations. From an economic standpoint, these inherent costs felt by a third party are called negative externalities. The negative externalities associated with resource extraction are extensive; by continuing to make this resource widely accessible on a global scale, we are responsible for increasing carbon dioxide levels within the atmosphere. This leads to a rise in global temperatures and declining air quality, cites Environmental expert and University of Toronto professor, Andrea Olive. The costs of these worsening global conditions cannot be underestimated, and will leave nobody untouched. One could argue that our industry will not remain competitive against pro-oil states, and the short- term economic repercussions will be too great. Trudeau’s response to this particular point is that Canada will face great opportunity for investment within a few years time. Although Oliver may label this as a naïve stance, I commend Canada’s foresight within this sector. Through their support of sustainable resource development, the Canadian economy is undergoing changes now that other countries will be forced to make in the coming years. The potential for future investment is truly significant. Finally, Oliver makes the point that all other resource-rich affluent nations are proceeding without caution, so why not Canada. This ignores the fact, however, that such nations will be held financially and socially accountable for their actions all the same. Canada is simply one step ahead on the global stage; by phasing out resource extraction, we are doing now what other countries will be forced to do in years ahead. Though choosing this path presents drastic challenges at the present, the end result will most certainly be worthwhile. Taking the high road is never easy after all. (Word count: 416) Source: http://business.financialpost.com/fp-comment/joe-oliver-as-u-s-energy-prepares-to-roar- canadas-liberals-cling-to-their-morally-superior-denial
ECO105Y Micro Op-Ed Exemplars 2016-2017
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Lower income tax, higher paycheques - Is it as good as it sounds? Michigan state representative Lee Chatfield has announced a new bill to reduce personal income tax starting from 2018 and bring it down to zero over next 40 years. However, does making individual residents wealthier by the cost of cutting state income benefit everyone? Lost state revenue must be made up in other ways, which may not be pleasing to all. The biggest portion of Michigan’s revenue is the income tax, generating more than $9 billion annually. This is the money used by the government to build roads and schools, improve transportation systems, fund college students and other projects that are aimed to better the life for the residents of the state. If such a large chunk of money stops flowing into the state budget, government initiatives will be put under risk of not being approved for the lack of financial support. This may slow down infrastructure development and improvement, making the state a less desirable place to live. The officials are claiming that the Michigan state economy is on the rise and there is a budget surplus, which allows them to make this decision. The expectation is that lower income taxes will attract more residents and businesses that will create more jobs. State Senator J. Brandenburg has said that influx of people will result in higher tax revenues for the state. However, this is only an expectation and the state hasn’t announced a clear plan on how to make up for the lost revenue, so the whole idea sounds less convincing. This bill is not a new practice - 7 states currently have no income tax. Methods to make up for the revenue loss are simple - raise other taxes. Tennessee has the highest sales tax in US and New Hampshire has one of the highest property taxes. Other states have high gasoline and natural resources taxes. This all results in a higher than average cost of living in these states, which includes prices on housing, food, health care, etc. Residents are earning more, but they also end up spending more money on everyday needs. Current tax burden (amount of money deducted for taxes from one’s paycheque) for the lowest 20% of the income class is around 11% and top 1% of the population is at 5%. Higher taxes on food, gas, and property will hit the poor, who earn just the minimum wage, harder than the others. As seen from the practice of the aforementioned states, this method of raising wages does not necessarily make residents wealthier in the long run. Kansas is an example of things going wrong - tax cuts from businesses and individuals have resulted in budget shortfalls and slow job growth. A comprehensive study must be conducted and presented to answer questions like: how likely are businesses to move to the state? or what is the current wealth distribution among residents? Cutting income tax simply shifts the tax from paycheques to bills and it is not necessarily a good thing. (495 words) Original article: “Michigan Republicans Roll Out Plan To Eliminate Income Taxes” from 01/11/2017 at http://www.huffingtonpost.com/entry/michigan-income- tax_us_5876e4d0e4b092a6cae54bcd
ECO105Y Micro Op-Ed Exemplars 2016-2017
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What Goes Around, Comes Around on the Autobahn For decades, the slogan “Freie Fahrt für freie Bürger” (Free driving for free citizens) lingered throughout German society. There was always an implicit agreement between citizens and their leaders in regards to free-of-charge public highways. In 2013, however, a new law was passed by German transport minister, Alexander Dobrindt, enforcing payment for the use of the Autobahn motorway. As millions of travelers entered the Autobahn from Austria and Switzerland annually, they were now required to pay 8.90€ for 10 days of usage or a yearly price of 86.40€. Subsequently to the charges, immediate disputes broke out throughout Europe. Recently, the Austrians made a claim that they regard this law as a friendship betrayal from their neighboring country. They teamed up with the Netherlands, intending to sue Germany in the European Court of Justice for “discriminating against the citizens of other [European Union] member states”. Nevertheless, Germany’s actions were based on economical-thinking and well developed smart- choices. Generally, free motorways produce positive externalities, or benefits that are enjoyed by parties other than the providers of the roads. In this case, the externalities were simple: foreigners used the public Autobahn without paying for any land taxes, construction costs, or maintenance fees. A free-rider problem arose when non-paying drivers benefited from the actions and investment of the government. Although the public enjoys receiving free benefits, the parties involved in providing them often lose motivation to continue their work without appropriate compensation. When this occurs, all parties, including drivers on the Autobahn, must consider the smart social choice as a priority over the smart private choice of the free-riders. Consequently, the German government used smart economic thinking to fix the issue. They established property rights for the motorway. By charging tolls for entrance, they were able to remind the free-riders that there is ownership to the road and that its benefits need to be paid for. Through this lens, Germany aims for an outcome that is both efficient, in regards to getting paid for externalities, and equitable. Prior to the road-tolls, Germans were required to pay similar prices for entering the Austrian and Swiss Alpine motorways. Now, Germany is also charging a toll, and is able to achieve an equitable solution by treating the Austrian citizens the same way that they treated German travelers. Recently, Austrians protested new German tolls that only apply to foreign “free-riders” of the Autobahn. Still, to pay for the externality domestically and reach the socially responsible equilibrium, Germans increased their carbon tax for German citizens. Regardless, the Austrians are appealing to the European Union because they fear that the tolls will decrease their citizens’ demand to travel. This fear translates into a lack of confidence and balance between the needs of citizens and their influence on the Austrian government. In fact, Austria initiated the controversy by charging their own motorway fees. Therefore, it should be no surprise for the Austrian government, as well as the European Union, when Germany introduces and enforces tolls on the Autobahn. (Word Count: 496) Another european crisis; motorway charges. (2017, Jan 07). The Economist, 422, 24-43. Retrieved from http://myaccess.library.utoronto.ca/login?url=http://search.proquest.com/docview/1856037446?ac countid=14771