It would remove money from the overall money supply making each dollar worth more per unit.
Money is subject to supply and demand, if demand is high and supply is low, the market value of each dollar goes up; If demand is high, people are willing to pay more.
Right now the supply of all CAD in our economy is higher than demand and so the dollar’s value is lowered.
We can’t fully control demand, but we can affect supply.
Carbon taxes are getting the ball rolling which is the main point. We’re just seeing short term effects at the moment, its literally only been 4 years, so you can’t really yet say it didn’t work because it takes place on a larger time scale than just a couple years. Economically the policy makes a lot of sense.
It goes like this: Corporations have a fiduciary duty to their share holders, they legally have to make profit for the people who hold ownership shares. If something eats into their profit, they might raise prices in the short term, but in the long term, companies which innovate and can do similar processes without releasing as much carbon will be taxed less, and they will be able to offer services for lower than their competitors.
People see the lower prices and will try to go for the more cost effective service, And so the competitors selling for lower prices take market demand away from companies who refuse to innovate, leading to less profits for them, forcing the company charging higher prices, to adopt the new cost-effective method or go out of business.
High-prices are the short-term effects of the market-paradigm. Innovation really only comes if there is a need. Why would a company try expensive new ‘non-polluting’ methods, if the methods that pollutes will make them more money? You just can’t expect companies to make investments to change if they have no financial reason too. However if the older carbon producing methods become more expensive (like through a carbon tax) then companies are more likely to invest in the newer processes, often driving the newer way to become cheaper due to economy of scales effects.
Also btw regular people at least get money back through tax credits to help offset costs. Sure things are more expensive atm, but long term if our current economic system is to do what its ‘advertised’ to do, then we should allow the policy time. Entire supplychain changes don’t just happen in 4 years.
So yea maybe Carbon Tax isnt enough to affect quick change, maybe we need more serious policies aswell, but it’s a direction and a start. We can’t really claim yet it hasn’t worked.
I can’t believe they walked right up and SLAMMED them!
Can’t forget about this banger!