Sunday, November 23, 2008

Green Liberalism, not a bail-out.

Interesting and true words by McGuinty. While the auto-sector is obviously not in the best shape, the best way to deal with it is in dispute. McGuinty is correct when he talks about not wanting to take Ontario deep into a structural deficit. But the most interesting thing he says is this:

But McGuinty said taxpayers and governments also have to be realistic in demanding carmakers switch to smaller, more fuel-efficient cars and trucks, noting that five out of the top 10 selling vehicles in Canada are trucks and minivans. "If we want them to produce more fuel-efficient vehicles we need to buy more fuel-efficient vehicles," he said.

A simple observation of supply and demand economics opens up some deeper examination. One, is that I believe the environment is subject to something of a "Bradley Effect". People, when asked if they believe the environment should be a high priority, or they want governments to take action on the environment, etc, will say yes. After all, who wants to say they are against the environment, or believes that no action should be taken? However, when an actual cost is associated with the environment, or a more important issue like the economy develops, support for environmental action drops dramatically. The other big examination is that we do, in fact, not buy a whole lot of fuel efficient cars. I believe these factors are somewhat linked, and that Green Liberalism can help solve it.

Rather then writing a giant cheque to the auto sector, the McGuinty government should use this opportunity to implement and help build the 21st century economy, and develop some of the ways Green Liberalism can move past an implementation gap. The Ontario government should look into things like tying in private sector relief with introducing environmental standards, while at the same time, increase tax credits for people buying more fuel efficient cars. Simply dumping more money into the supply side will not guarantee increased demand. Green Liberalism should be about using free-market tools to help the economy and fight climate change, not interventionist corporate welfare or redistributionist ideas.

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