Ontario, Canada has a Feed-In Tariff and, as a member of the Western Climate Initiative, it is going to have Cap and Trade. This is a scary prospect for working people. This email reproduces a reader's comment taken from the National Post and then gives my tentative reply for your consideration and feedback.
> Who pays for Cap and Trade? I work for a non-unionized company in > Canada. I receive employment income. Who is going to pay for Cap and > Trade or any of the carbon reducing initiatives? Me, and the vast > majority of people who work for non-unionized profit-motivated > companies. > > Business has predominantly one goal and that is to create profit. This > is as it should be. Competition keeps them honest. Business has > revenue and cost with the difference being profit. It is universally > agreed that any carbon reducing initiative is going to increase the > cost of energy. Most businesses have an energy cost. Some are large > and some small but all have the cost. What will business do if the > cost of energy rises substantially? Due to the profit motive, business > will pass on at least a portion of the added cost to the > consumer. They have no choice. As an example, if revenue remains > stable but cost rises 10% the business generates less profit. Assuming > that competition is fierce, which it always is in a free market, there > is little room to absorb the reduction in profit. The competition has > to do the same. > > Why do I pay for it? A hike in price of a good or service due to hike > in cost is a one-time inflationary event. A hike in the price of all > goods and services is a big-time one-time event. If prices for > everything go up 10%, inflation goes up 10%. My employer and most > employers will be reluctant to increase my wage, which is another cost > to my employer. This is especially true if profit is falling. What > about the unionized worker and the public service worker? They will > bargain for a cost of living increase. Cost of living increases may > already be written in their contract. If prices rise 10% they will get > a 10% raise (and probably something on top of that). They are no worse > off after the inflationary event. I am. I won't get the raise. My > company will be in no position to offer CPI offsetting raises. If > inflation jumps 10% and my salary doesn't, I am 10% worse off. I pay > for the carbon reduction initiative. > > I have a proposal. I will agree to the situation if public sector > employees and unionized employees forgo cost of living increases for a > certain period after the carbon reduction initiative is > implemented. If so, they may not be so welcoming of its > implementation. This levels the playing field. The above is taken from http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/03/05/terence-corcoran-ontario-s-war-on-carbon.aspx Here is my response to the person who left this comment going by the nickname "Right On". I can no longer post it there, but I am sending it to this mailing list for discusssion. This Summer I will be teaching a course teaching environmental students how to talk to ordinary working people about climate issues, and I am trying to hone my own skills for this course. We need to get the labor movement on board in order to get the necessary policies passed. Here is what I would say, it is by no means perfect and any criticism or improvement suggestions are very welcome: First of all, higher energy prices are not a bad thing. Right now the market prices of energy are too low. In real terms, energy is more expensive than those who consume the energy have to pay. If the immediate energy consumers do not cover this extra cost, others have to pay for it: perhaps because their child has asthma due to pollution, perhaps because they have to go to war to secure cheap energy or to stem the tide of environmental refugees, perhaps by droughts, hurricanes, wildfires. This is not only a question of equity but efficiency: since you have to pay for other people's energy consumption, you are subsidizing them, therefore they are consuming more energy than would be best for all of us. Everybody could be made better off if energy prices were higher and energy consumption lower. Secondly, you are completely right that people working for profit-motivated companies should not have to pay for the higher cost of energy. The higher cost of energy must come out of profits, not wages. The companies will not like smaller profits, but the energy costs are unlikely wipe out all the profits. The companies may say they are on the verge of bankruptcy but, as you say, all companies must pay energy costs, for most of them this is not going to push them into bankruptcy. How can employees make sure their standard of living is protected? The answers you are rejecting would indeed to it: cost of living allowances and labor unions are time-proven methods to protect working people against corporate arbitrariness. In addition, a strong safety net is needed that those who lose their jobs can retrain and find employment in the many new jobs created by renewable energy. Another thing ordinary working people can do, and should do, in order to protect themselves in these trying times of change, is that they should flex their political muscle some more. They have the numbers, they should use these numbers. The destruction of the climate for the younger generation, the disappearance of environmental services which we all rely on and are taking for granted, is the greatest expropriation of working people in history and needs to be recognized as such. The corporations pay lots of money to climate deniers to muddy the waters, but there are enough people who understand what is going on, and those that do understand have the obligatin to act on their knowledge, because too much is at stake. Therefore we need to fight for two things: (a) the environment must be preserved, (b) the cost of this preservation must be borne by profit-making businesses, not by those living on labor income. Add to this a third point, of course: (c) working people must also be protected from the fallout of the present financial crisis, which comes from the profit motive, not from the labor of workers. Since you are mentioning a level playing field, the best way to level the playing field is that Ontario should not remain an environmental pioneer for long but other states must catch up with similar environmental legislation. The working class has shown international solidarity in the past; they are the ones who can level the playing field. Comments are welcome. Hans. Hans G. Ehrbar http://www.econ.utah.edu/~ehrbar [email protected] Economics Department, University of Utah (801) 581 7797 (my office) 1645 Campus Center Dr., Rm 308 (801) 581 7481 (econ office) Salt Lake City UT 84112-9300 (801) 585 5649 (FAX) _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
