In a 1999 interview, the late Nobel Prize-winning economist Milton Friedman remarked that there were good arguments for having government take action to reduce pollution, like smoke from power plants.
That’s because the smoke imposes costs on third parties – for example, by dirtying property as well as surrounding public spaces. A power plant produces the smoke but doesn’t pay for all the costs. This might justify government taking action to reduce the amount of smoke or make the power plant pay for the right to emit the smoke.
“But you have to qualify that by noting that when the government enters in,” Friedman warned, “it also is emitting smoke, it’s also imposing costs on third parties. … There’s a smokestack on the back of every government program.”
What Friedman meant was that just like a chimney emitting smoke, government programs impose costs on third parties. Consumers and taxpayers are forced to pay for those government actions.
Indeed, the entire business of government is to emit smoke and pass along the costs. Politicians make their livings by imposing costs on others. Ironically when they do so, it’s often in the name of curbing pollution.
Take for example Ontario’s electric car subsidies, which are supposed to reduce the environmental costs imposed by drivers on the public. But what about the millions of dollars in financial costs (taxes) the government imposes on the public to pay for the subsidies?
Another example of government smoke-emitting: The $1-billion-plus cost to taxpayers announced several weeks ago by the Trudeau government to pay for corporate welfare and other ill-advised green programs across six provinces.
Meanwhile in Ontario, residents are paying billions of dollars annually for unnecessarily expensive power. And 75,000 manufacturing jobs have disappeared thanks to the province’s reckless green policies.
Ontarians paid the steep price to replace coal-fired power with costly and unreliable alternatives, making everybody worse off except the wind and solar companies getting big subsidies.
Notably, green schemes aren’t just a form of ‘pollution’ in the sense that they impose costs on third parties (consumers and taxpayers). Sometimes, policies aimed at environmental protection result in environmental damage.
Windmills in Ontario, for instance, are a hazard for birds and bats. And things are even worse in Germany, a country often cited by North American politicians as a world leader in renewable energy.
Science writer Matt Ridley notes in a recent article that “the renewables are causing an environmental disaster as well as an economic one” in Germany. “The wind farms kill thousands of rare birds of prey every year, the biogas plants cause runoff and soil erosion, while the solar farms industrialize and denature the land.”
The cost of subsidizing this destruction so far is about €190 billion (C$287-billion), according to Ridley, and “heading for €500 billion [C$755 billion] in total by 2025.” That’s one big money burning smokestack.
Meanwhile, Canadian politicians seem intent on going down the same path, with the federal government copying Ontario’s costly green agenda instead of learning from its mistakes.
That cost, as Friedman observed, will be paid by ordinary people, rather than the politicians imposing the costs. When it comes to costly green renewables, it’s past time for governments to stop emitting smoke.
Matthew Lau is an economics writer in Toronto and a contributor to Canadians for Affordable Energy.
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