December 08, 2007

A Tale Of Two Countries

One last time for the Friedman Fanatics out there: the free hand of the marketplace doesn't do a damn thing but make profits for those folks who run companies. It doesn't help a society in any other way. This is important: companies have to make a profit and be competitive if they wish to survive, but to expect them to experience sudden bursts of altruism is naive in the extreme.

Yet many companies do such things. How do I explain that, then, huh? Huh?

Simple enough: the companies can get good advertising from behaving in a socially responsible way, which is good for the company; but they also get tax breaks for helping out, which is a fiscal incentive provided by the government.

Yep, the evil "G-word".

Governments have much more visible responsibilities to their populations than companies do their customers. This is never more visible than when a government applies restrictions or rules on an industry: almost invariably the industry in question will fight it tooth and nail, either by forming Astroturf "people's committees", loudly declaring that the new rules (or the ability to bypass existing ones) will render them bankrupt or unable to compete in the world economy, or trying to entice legislators into attaching poison-pill riders to the bill or simply voting against it.

While there are enough examples of governments changing the laws to benefit corporations, I'm going to look at two things that have happened recently in Canada and the U.S. that show what governments may do for a much vaguer issue like the environment. I'm choosing the environment as the case study because it is an issue well beyond the scope of a company or even of a single nation.

Both of these nations have free market economies within democracies, and both have a conservative ideology in their leadership; there are differences in the powers of each government in relating to their citizens, and that will show up later.

In Canada, the recent meetings in Bali has shown where exactly we stand on climate change: no where. The government that is in power now first pulled out of the Kyoto Accord, loudly proclaiming that they wanted (and would come up with) a "Made in Canada solution" instead of one imposed upon us. Petroleum businesses, needless to say, were enthusiastic. Now, the federal government says they'll sign an agreement only if every other nation is held to the same standard we would be: absolute consensus or no deal.

The problem there being twofold: first, there won't ever be absolute consensus, unless the agreement is reduced to "will think about trees one day per year"; and second, our standards suck. Yes, despite all our advertising about the wondrous outdoors and natural beauty that abounds, we're one of the worst polluters in the world.

In short, the Conservative government in power now is using the same tactic the Liberal one did: talk about doing something until the problem goes away.

In the U.S., a recent bill has passed the House demanding an improvement in minimum car fuel efficiency by 2020. This will be the first time in over thirty years such a law will come into effect - can't imagine what was happening then. Manufacturers are not pleased about it, but more importantly neither are petroleum producers, as they are having their $13 billion in tax breaks recently handed them taken away again.

The government is enacting this bill simply because the auto industry isn't. The technology for more fuel efficient cars is already existent, but isn't being used except in a few brands. The changes are happening slowly, and in some cases not at all; so some added muscle is being applied to make sure the work actually gets done.

The bulk of opposition so far seem to be coming from the petroleum producers and their supporters, who are claiming that the reversed tax breaks "will increase fuel costs". But seeing as granting the tax breaks in 2004 did nothing to reduce the same costs, why should that be? I digress.

These are sorts of things that governments can do for their citizens. The same citizens (that would be us) can also force a government to act on issues which concern them when industry - and Milton's Magic Hand - fail them. Not a bad idea to remember that.


posted by Thursday at 12:53 pm


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