Article content continued

It is pitched as novel, a revolution, but it is in fact how we already deal with most other costs in the economy. It is how we are dealing with the challenge of climate change now, but it is how we have been dealing with a far more pressing challenge to our survival — scarcity — for centuries.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or

If we did not price things — and if we did not encode into those prices the costs of the scarce resources it took to produce them, giving every producer and every consumer an incentive not only to limit their demand, but to search out fresh sources of supply — we would not have achieved anything like the standard of living we now enjoy. None of the extensive division of labour, not only within countries but across the globe, so characteristic of modern economies would be possible without the information that is embedded in prices and passed along, like DNA, from stage to stage through the production chain.

And it is largely in those areas of life where we have failed to apply the logic of price — carbon emissions and other pollutants are one; road use is another — that we still find ourselves beset by the problem of resource overuse. Alberta’s carbon tax initiative, then, like British Columbia’s before it, is less a revolution than a long overdue correction — of a market failure, yes, but in a way that is built on market principles.

Had the government limited itself to a carbon tax, with rebates for low-income households and transitional assistance for workers in particularly carbon-intensive industries, the policy would have fully deserved the praise it has been getting. Had it, indeed, been introduced as a replacement for the regulatory and subsidy schemes already enacted in the name of “fighting climate change,” at high cost and negligible benefit — for the purpose of both is not to reveal the costs of economic choices, as prices do, but to disguise or even offset them — it might even qualify for the revolutionary label.