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When Joe Biden defeated Donald Trump in the U.S. presidential election just over a year ago, most Canadians let out an audible sigh of relief. And when he was finally inaugurated, after two months of Republican filibustering that nearly culminated in a coup, they probably let out another one.
But it’s becoming increasingly clear that while Canada may have dodged the bullet that was a second term of Trump, the political gun in the United States is still loaded — and more than willing to take aim at us.
With Biden in the White House, that threat isn’t taking the form of torn-up trade deals or tariffs on Canadian exports that come out of nowhere. But while Trump’s tactics are gone, his America First approach remains. In fact, it appears to be a rare point of bipartisan consensus. That was made abundantly clear during Prime Minister Justin Trudeau’s recent trip to Washington, where he unsuccessfully lobbied both President Biden and House Speaker Nancy Pelosi to back away from a proposed tax credit of up to $12,500 on American-made electric vehicles that could cripple the Canadian auto industry.
This latest expression of the expanding protectionist streak running through American politics would be a double whammy for Ontario’s economy, given that Doug Ford has already said he has no interest in stimulating or supporting demand for Canadian-made electric vehicles through a tax credit of his own. "I'm not going to give rebates to guys that are buying $100,000 cars — millionaires," Ford said.
That’s a weird flex for the premier of a province that builds cars, especially when he has claimed to want to see it build more electric ones. After all, a new report from IHS Markit shows electric vehicles accounted for just 3.1 per cent of new car sales in Ontario in the third quarter, a far cry from the 9.9 per cent in Quebec and 13.6 per cent in British Columbia.
Ford’s refusal to incentivize the purchase of electric vehicles looks even more self-defeating in the face of the Biden administration’s proposal. Mind you, Biden and the Democrats aren’t looking to hurt Ontario or Canada. As the Toronto Star’s Edward Keenan wrote, “This doesn’t reflect malice so much as obliviousness. Like Biden, House Speaker Nancy Pelosi personally greeted Trudeau and said it was an honour to meet with him, just two days before passing the measure he’d been there to oppose.” As Biden said, “This is one of the easiest relationships you can have as an American president.”
Maybe that’s the problem here.
As Machiavelli wrote in The Prince, “It is better to be feared than loved, if one cannot be both.” And right now, Biden and the Democrats are far more afraid of the American electorate than their Canadian friends. As the CBC’s Chris Hall wrote, “Polls suggest more Americans now disapprove of Biden's performance. Auto-building states such as Michigan and Ohio are key swing states as Americans head into midterm elections for the House of Representatives and Senate next year. A protectionist president, promising and delivering more manufacturing jobs, would be less of a drag on those Democrats running for re-election in 2022.”
For Canadians, it’s the 2024 election that’s the real nightmare scenario. Donald Trump is the prohibitive favourite for the Republican nomination, and if he isn’t able to run, it seems clear that the winner will be a Trumpian candidate, whether that’s Florida Gov. Ron DeSantis or Donald Trump Jr. With that sort of president in the White House, Biden’s cheerful indifference to Canada may look positively charitable by comparison.
Few people should be better prepared for this challenge than Justin Trudeau. After all, it was his own father who famously warned in 1969 that living next to the United States was like sleeping with an elephant. “No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”
Those twitches and grunts are only going to get more violent as America’s standing in the world continues to slip, and it falls ever deeper into the morass of misinformation and nativist populism.
We may not be able to build a physical wall that protects us from this growing threat, but we need to start preparing for the inevitable fallout from the collapse of the American empire. That means deepening our trade and diplomatic relationships with other countries and regions, whether that’s in Europe or Asia. That means enhancing our economic self-sufficiency through deliberate investments in infrastructure and capacity-building. And that means identifying the most vulnerable points in our relationship with the United States and trying to find ways to mitigate them.
For the better part of a century, our geographic proximity to the American experiment has been a boon for Canada. We may be entering a period where that’s no longer the case. Enduring the elephant’s increasingly restless sleep patterns is going to require a level of dexterity and creativity that we haven’t had to draw on to date. And with the 2024 election looming larger every day, we don’t have time to waste.
Comments
If our Yankee cousins don’t value us
-their best friend and trading partner-
maybe Canadians should co-operate with them.
Governments could look for other trading partners. We seem to have more in common with Europe than America. The CETA free trade agreement is a good start but maybe we should consider Joining the EU.
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Private people can start to #BuyElsewhere by adding American products to our private list of countries’ products to avoid when shopping in grocery stores (eg. we personally buy no food from China), and travel agencies (eg. vacation south of America, instead of in California, Hawaii & Florida).
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Our corporations can take another step by consciously looking to #SellElsewhere. Canada is the world’s miner; why not sell our minerals to the world if Americans don’t want to trade fairly? Think of lumber, oil, steel, aluminium, nickel, cadmium, cobalt, copper, lithium, vanadium, etc, the minerals needed to build EVs (electric vehicles).
Let’s link our electricity, oil & NatGas grids north of our border with unreliable America, then use our grids to take care of Canada first. Let’s move our trade from 85% with America to more with Europe, the Pacific, India, Africa and reliable partners elsewhere.
A couple of points, the first being a little didactic.
First.
Was "prohibitive" really the preferred adjective?
Second.
There's not much I would agree with Doug Ford on but rebates on very expensive purchases -- i.e. electric personal transport -- that are, in reality, not available to many Ontarians might be one such point. Given all of the ecological, and other, challenges we face, does it make sense to focus on maintaining the prioritization of a private vehicle transportation system, at least in dense urban areas, wherein we are constantly adding lanes to roads and bridges to accommodate an ever-increasing load? (Also see reference to Doug Ford wanting to build new highways near the Golden Horseshoe).
Third.
I'm reading an interesting book by Cambridge economist Ha-Joon Chang: "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism". I recommend it to the author in hopes that they might instill a little nuance in their writings of trade and protectionism. Together with other books, such as "Glass House: The 1% Economy and the Shattering of the All-American Town". There is certainly a degree of shared economic history between Canada and the US but, I would propose, it is in our long-term interest to have a functional neighbour to the South. If that requires some amount of retrenchment, in the short-term, to get their car out of the ditch, that might not be a bad thing. The least we can do is look for ways, as a good (and self-interested) neighbour, is look for ways that we can help. And, of course, broaden our own markets while understanding the nuances of trade and economic development (see Bad Samaritans).
To the last point, why are we, still, relying so heavily on extraction in our own economy? Eh?
We are, AGAIN, relying so heavily on extraction in our own economy. I mean, it was always fairly heavy, but there was a good deal of Canadian industry at one point, and it was increasing. What happened? That would be free trade. With the United States. And then Mexico. And then everybody. If we want to rely less heavily on extraction in our economy, we'll have to move away from that free trade stuff and have an industrial strategy--public action, picking winners, protecting key industries and whatnot.
I'd actually be happier if we had maybe three or four functional neighbours to the South instead of one behemoth. You know, as long as we're doing pipe dreams, like "Canada could make any noticeable difference to whether the Americans drive themselves into a ditch".
"Doug Ford has already said he has no interest in stimulating or supporting demand for Canadian-made electric vehicles through a tax credit of his own. 'I'm not going to give rebates to guys that are buying $100,000 cars — millionaires.'"
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For once, I stand with Doug Ford. EVs are not a green solution to our transportation needs. EV subsidies go to people who don't need them.
Encourage smart urban design: communities built for people, not cars. Invest in public transit, cycling , and walking. No public money for private automobiles.
EV subsidies are an extremely inefficient way to reduce GHGs. Better to put a realistic price on carbon.
Sprawl drives cars, and cars drive sprawl. Not remotely sustainable. We can't afford either sprawl or cities teeming with automobiles. Price both out of existence.
Yeah, well, Ford ain't gonna do any of that either. So then you got plenty cars, but none of them electric and none of them made in Canada and no other industry to replace that.
And while I support strong carbon taxes, they are ALSO very inefficient and probably actually less effective than EV subsidies, and just as EV subsidies supposedly go to people who don't need them, carbon taxes particularly bite people who can neither afford them nor do anything to avoid them. They are just one tool, and they'll work for a few things.
The idea that carbon taxes are efficient is based on the idea that as use of fossil fuels gets more expensive, people will stop using them, in a pretty direct relationship--that is, that demand for fossil fuels is "elastic". Unfortunately, studies show it isn't. There IS a relationship, but it's not one to one; demand for fossil fuels is fairly inelastic, it doesn't respond all that well to price. So that makes carbon taxes inefficient. There are various reasons for this. First, some of what's spent on fossil fuels is spent by people with no control over whether fossil fuels are used. So, renters cannot buy a new electric heat pump to heat their home, because it is not their home, it's the landlord's home. And the landlord has no incentive to buy the new electric heat pump because it's the renter paying that carbon tax on the natural gas in the existing furnace, while it's the landlord who would be paying for the new heat pump. There are a number of cases like this. Second, much of what replaces carbon-using things is expensive up front, both in money and in effort and attention. For people without a lot of money, a carbon tax just means they have even less money to buy a new electric furnace or water heater. Even if switching would be cheaper in the long run, they have no way to get from here to there. And third of course, carbon taxes have absolutely zero impact on most of the stuff you yourself argue for--transit, changes in how communities are designed and so on. All that stuff takes public action.
All this also means that carbon taxes actively kind of suck, and will generate justified political backlash, IF you don't have measures to make sure they don't bite the poor in the neck. That's why the original French "Gilets Jaunes" got started--a fuel tax meant to be a climate measure was seen basically as just one more attack on the poor by a neoliberal president.
Side note about those EV subsidies: I drive a Leaf. A Leaf is a middle class car, costs a bit over $30,000; there are a few others in that range, and of course electric car models are starting to proliferate. I bought it with a $5000 subsidy and a program that gave me $6000 to scrap my previous car instead of trading it in, so as to take that ICE car right off the road. Since I'd driven my previous car into the ground, I would have gotten very little in trade for it, so I was looking at probably a total $10,000 subsidy. That made the Leaf actually a fairly cheap car. And it's much cheaper to operate than an ICE car, effectively making the car loan more sustainable; in a sense that probably shaves five grand off the effective buying price. The point being that there are electric cars which are, if there are subsides to add in, a good choice for the lower middle class. So the guff about them only being for people with a hundred grand to blow is, frankly, nonsense. Sure, it'd be nice if people didn't need cars (or at least, not many) and didn't have demand created by marketing so they get them even when they don't need them. There are a host of reasons why. But that point can stand on its own, there's no point taking falsehoods on board because they're sort of "on your side".
Halting urban sprawl and ending the era of the private automobile is a global imperative — not just for Ontario.
Replacement industry? Build buses, LRT, trains, and bikes — not cars.
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RP wrote: "And while I support strong carbon taxes, they are ALSO very inefficient and probably actually less effective than EV subsidies…"
Evidence?
Price gas at $100 a gallon, and watch what happens. Put a $50 toll on the freeway, and watch what happens.
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EV rebates subsidize the rich — and keep non-drivers marginalized. Consumers going to buy EVs anyway don't need the subsidy.
EV rebates are an expensive and inefficient way to reduce emissions.
"In Green Illusions Zehner pushes for government to put more money into public transit projects that will affect many more people before backing EVs that he believes benefit only few. "If we're looking at ways to decrease the energy use in the U.S., building more walkable and bikeable villages and cities and towns of various sizes would be a better funding priority than subsidizing electric vehicles."
• www.wired.com/autopia/2012/07/green-illusion/all/
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Economists across the spectrum agree that carbon pricing is the most efficient market mechanism to reduce emissions.
"Carbon pricing seems obvious to economists, but for many voters it just doesn't click"
www.cbc.ca/news/business/carbon-tax-canada-1.4573956
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Climate change is the greatest market failure in history. The most efficient way to prevent and solve environmental problems? Correct the market failure.
We need to price all goods and services properly, including energy. Price in all health, environmental, and climate costs.
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Carbon pricing is not the entire solution. No one said it was. Carbon pricing alone will not meet emissions targets on schedule. We also need massive public investments in public infrastructure (transit, etc). No more public money for private automobiles. And regulations for landlords, developers, and home-builders to promote energy efficient systems and discourage fossil fuels and waste.
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"The Canadian Chamber of Commerce says the business community in Canada is solidly backing carbon pricing as the way for it to 'play its part in the fight against climate change'."
In 2019, 45 senior economists published a bipartisan statement in the Wall Street Journal endorsing a carbon tax: former White House economic advisers, treasury secretaries, Federal Reserve chairs, and Nobel laureates.
"IMF warns world must take urgent steps to reduce global warming and recommends carbon taxes as the best way to do it." (Financial Post)
The alternative — regulation — is more expensive and less efficient.
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RP wrote: "carbon taxes particularly bite people who can neither afford them"
Hence, rebates for modest-income households. Already in place.
The goal of carbon pricing is not to impoverish people, but to change their behavior.
The less fossil fuel energy you use and waste, the more $$$ left in your pocket. With rebates, many households come out ahead.
Rebates buffer households on modest income while still providing an incentive to use less fossil fuels.
"Most Canadian households will get more than they pay from carbon tax: PBO" (CBC, Feb 04, 2020)
• https://www.cbc.ca/news/canada/edmonton/carbon-tax-most-canadian-househ…
"Why Stephen Harper's former policy director is defending Trudeau's carbon tax" (CBC, Sep 21, 2018)
Canadians in provinces with federal carbon tax would get more in rebates than they pay in tax, study suggests
"…if the prime minister follows through on his plan to return revenues from the tax to households in the form of carbon dividends, then most people in those provinces would get more money from the federal government than they would pay out in carbon tax. What's more, the report says low-income people would benefit the most."
• https://www.cbc.ca/radio/asithappens/as-it-happens-thursday-edition-1.4…
I agree that the rebates are a good thing, making the Canadian instance of carbon taxes much easier on the poor than the basic concept of carbon taxes. Doesn't help the fact that the incentive aspect of it often doesn't apply to them, but when you say
"Carbon pricing alone will not meet emissions targets on schedule. We also need massive public investments in public infrastructure (transit, etc). No more public money for private automobiles. And regulations for landlords, developers, and home-builders to promote energy efficient systems and discourage fossil fuels and waste."
That's excellent. Mind you, it frankly doesn't leave a big role for what a carbon tax is supposed to be accomplishing. The carbon tax becomes kind of the minor supporting character I've been saying it is.
On EVs we are arguing at cross purposes. YES, we should have transit in large quantities (which will be produced by direct government action, not by carbon taxes, especially not revenue-neutral ones). YES, approaching abandonment of the private car is a good objective (although it's clearly not going to happen in time to stop climate change, whereas EVs might). I have never said otherwise, so bending my ear about it is irrelevant.
BUT, whether they are otherwise a good idea or not, that does not mean EV subsidies are a subsidy on the rich (primarily). They're not. Since the rich would not respond much to minor price differences on their high end vehicles, and there aren't that many of them in the first place, there is no possible way a subsidy on the rich could make the difference between 3.1% EV sales in Ontario and 13.6% EV sales in BC. For that matter, since all the subsidies currently used or advocated are flat dollar amounts, not percentages of vehicle price, they have an increasing percentage impact the lower the price of the vehicle. It's a stupid argument put about by right wing propagandists just trying to cling to the status quo, and echoing it does you no service.
Maybe the money would be better spent on non-car direct government action. But it certainly seems to WORK--Canadian jurisdictions with a subsidy seem to sell three to over four times as many EVs as Canadian jurisdictions without one.
"Price gas at $100 a gallon, and watch what happens." Ooh! Ooh! I know that one! Fossil fuel use falls to zero, mostly because the economy falls apart. There are no groceries on the shelves because trucking is too expensive and all the agribusiness-based agriculture has shut down anyway. Nobody can get to work. Even the buses stop running, partly because the government is collecting very little revenue. Most people are sacked anyway because the work they do is no longer worth the expense. Gangs of looters take over gas stations and basically we end up going full "Road Warrior", complete with mass die-back to a very small population. We get all the societal consequences of climate change without all the bother of having to wait decades!
On carbon taxes, you asked me for evidence while ignoring my explanation, but you're giving me a lot of argument from authority. And it's authority that I don't find particularly credible or disinterested. Gosh, the Chamber of Commerce and the IMF like "market based" approaches to doing things? This changes everything!!! Not. And economists "across the spectrum"--what spectrum would that be? From violent right to centre right neoliberal?
Economists like to claim markets are efficient, or efficient except for some little external factors. Markets are not efficient. There is no "markets would be efficient if it weren't for these little details we can call 'market failures'" because the whole thing just fundamentally does not work the way economists like to pretend it does. Market efficiency is an ideology bought and paid for by the rich, whose oh-so-impressive math depends from the base on a dozen or so very basic counterfactual assumptions, from "negative economies of scale leading to an infinite number of very small firms" to "no such thing as time, the future, or uncertainty" to "perfect information" and the list goes on.
But even on economists' own terms, again, their claims about the efficiency of carbon taxes rely on them pretending that fossil fuels are a commodity characterized by elastic demand, even though it isn't one. Economists back carbon taxes and claim they're efficient mostly because the carbon tax is the kind of idea that economists feel fit with the economist-y way to do things. Economists want to do things with price signals and supply and demand, not regulation, because any non-economist schmuck could come up with a good regulation if they thought about it and consulted stakeholders, and then who needs to ask an economist what to do? Economists loved cap-and-trade more than carbon taxes until it became ever more clear that cap-and-trade is basically a big scam. But it was even snazzier and more economist-esque than a carbon tax, and totally needed an economist priesthood to run it, so they backed it in droves.
I've been putting a lot of thought and study into political economy for 30 years, and where I've ended up is I basically have no respect for economists from anywhere close to the mainstream. Economists who go around telling, or even learning about, anything more useful to ordinary people than to billionaires, don't get hired to the Very Respectable Chair of Economics at Very Respectable University, endowed by Mr. Very Wealthy Billionaire or by MegaHuge Corp, Inc., and they certainly don't get interviewed by Postmedia, owned by Mr. Revolving Cast of Billionaires.
Carbon pricing is an essential tool in the climate action toolbox. The only way to address market failure? Put the true, full, real price on goods and services.
Who can argue against pricing things properly? What kind of voodoo economics is that?
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If producers and consumers don't pay the full tab, someone else must pay. Externalized environmental and health costs are downloaded to the public purse, the environment, and future generations. An invisible subsidy. A massive illicit transfer of wealth.
In a free market, realistic price signals guide consumers to make rational decisions. Subsidies, visible and invisible, distort these signals.
Full-cost accounting, including carbon pricing, is key to addressing market failure. How can we solve our environmental problems without pricing goods and services properly?
We cannot afford to degrade our life-support systems day after day. A realistic price on carbon, cars, and sprawl makes unsustainable goods and services, infrastructure and design prohibitively expensive. Price the unsustainable out of existence. That's the way to solve environmental problems caused by market failure.
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Like it or not, producers and consumers operate in a marketplace. Business and industry produce goods and services, and consumers buy them. The market is neither left nor right. Every economic transaction takes place in the market. The only question is whether market rules are fair and square — or bent to favor certain interests. Market mechanisms depend on rational pricing. The market breaks down when we fail to pay the full cost of production and consumption. Hence, market failure. Corruption.
There is only one solution. Restore integrity to the system. Full-cost accounting.
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Energy demand not elastic?
I choose not to drive. In my small town, I walk everywhere I go. I don't live in a big house. I don't fly. No annual vacations to Mexico or Hawaii. No giant RV or motorboat. My neighbours' footprints are 10 or 100x larger. Full-cost accounting encourages consumers to make more sensible choices.
Most people waste more energy than they use. Canadians have countless opportunities to reduce energy consumption and waste. Carbon pricing provides the incentive.
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EVs subsidies compound market failure. Making it cheaper to buy unsustainable vehicles. Making the private-automobile lifestyle and urban sprawl more affordable.
Cars would not be sustainable even if they ran on fairy dust. EVs have a huge footprint. Sprawl is hopelessly inefficient. An ecological disaster. The private automobile and the sprawl it perpetuates are a costly detour away from sustainability.
What EV advocates propose is another environmental disaster — just a different one.
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RP wrote: "'Price gas at $100 a gallon, and watch what happens.' … Fossil fuel use falls to zero…"
Highly efficient. In practice, of course, the price on carbon rises incrementally, and the transition to more sustainable systems is gradual. No catastrophic disruption or die-off.
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RP wrote: "the incentive aspect of it often doesn't apply to [the poor]"
The less fossil fuel energy you use and waste, the more $$$ left in your pocket. The incentive applies regardless of rebates.
First time in a while I have really thoroughly agreed with Max Fawcett. I have for some time seen the United States as a ship headed for a giant whirlpool; it is now doing the first lazy circles around said whirlpool. And Canada is a dinghy tethered to that ship. Which means Canada's major political project these days should be to cut the tether loose and row like fury away.
Anyway, free trade was never good for anyone except the already very rich. It was never about economic growth (and in net terms it never caused any; world economic growth didn't increase once free trade took hold, if anything the reverse), it was always about "disciplining" labour--breaking unions via the power to relocate to where pay was lower and laws less stringent. Also for killing environmental regulations, safety rules and so on. Basically, despite all the denials, "race to the bottom" wasn't a bug, it wasn't even a feature--it was THE feature, and it juiced profits at the 99%'s expense. So now we have the "gig economy". We need a judicious measure of protectionism and an industrial strategy so we can do more of our own production, add the value to our raw materials, and pay people decent wages to do it without letting anyone ship the jobs to Indonesia . . . you pay our people's good wages or you pay our tariffs.
I was going to leave a comment about the topic, but I think the section is full. One commenter wrote over a thousand words more than the article. (1977 vs 911 words).
People don't read comment columns that look like that, so I might as well skip.