Swamponomics: Exposing This Week’s Economic Fallacies – April 7

Welcome to another installment of Swamponomics: Liberty Nation’s dive into the week’s morass of top news stories and the stream of economic fallacies that have been accepted as conventional wisdom by swamp creatures for years.

Trudeau Punishes Living

Canadians in Manitoba, New Brunswick, Ontario, and Saskatchewan will now be paying more for gasoline and heating fuel – other provinces, like Alberta, already have egregious carbon levies. The federal government recently imposed a tax on provinces that refused to introduce their own emissions pricing. The starting rate adds 4.4 cents to the price of a liter of gas and four cents to a cubic meter of natural gas – you can expect to get charged more for aviation fuel, butane, and propane as well. Overall, the federal levy is $20 per tonne for 2019, which will rise by $10 annually until it hits $50 in 2022.

So, how much will this cost the typical consumer? While the total sum will depend on how much fossil fuel energy you use, early estimates show that the average household can expect to fork over as much as $400 a year. These households will receive a rebate in the next year, and all the revenues the federal government receives will be transferred back to the provinces.

It remains to be seen if Manitoba, Ontario, and Saskatchewan are successful in combating Prime Minister Justin Trudeau’s penalty on consumers. Trudeau believes it is essential to burden everyday living and give the government more of your money, noting that Canada is losing the climate war. But will a levy win this battle?

Obviously, one thing this idea achieves is adding more revenues to government coffers. The other supposition is that it is meant to reduce our reliance on fossil fuels because consumers respond to prices – if something is higher, then there is less demand.

The reality is that it will hurt the average Canadian, not the limousine liberals who think they know better than the typical person. If the studies are true and more Canadians are living paycheck to paycheck and are cash-strapped, then they will feel the pinch, even if there is a rebate at the end of the year. Does Ottawa not think there will be a domino effect to this cash grab?

Consumers will pay more than just four cents at the pump. This will be reflected in everyday prices that rely on transportation, particularly the food industry. Producers will pass the burden onto the shopper, which means fruits, vegetables, meats, and grains will eat more of your monthly budget. Utility suppliers are preparing to raise prices on households by as much as 11%. The transit sector will inevitably face budget gaps and extra costs, which can only mean higher prices.

Simply put, it is a cash grab that will be wasted away by the provinces and a social engineering experiment that will hurt Canadians more than it will help.

One more thing: The U.S. does not have a carbon tax and it is leading the world in reducing CO2 emissions, thanks to the shale revolution. Perhaps countries should noodle that fact.

Gas Tax Harms Consumers

Now that special counsel Robert Mueller has concluded that President Donald Trump did not collude with Russia, some Democrats are ready to work with the administration, a new development pointed out by LN’s Joe Schaeffer. But this newfound bipartisanship could hurt your wallet.

According to McClatchy DC, the White House and congressional Democrats might work together to raise the gas tax. Recently, Energy Secretary Elaine Chao told senators that a gas tax hike is being considered, and Democrats might be willing to endorse the proposal. The latest figure being floated around is a nickel per year over the next five years. There has been no timetable for raising fuel taxes.

Today, Americans are charged 18.4 cents per gallon for gas and 24.4 cents a gallon for diesel.

Like the carbon tax, a gas levy is another punishment leveled against living. The case behind gas taxes is to fund infrastructure – new and old. However, an increasing number of reports continue to show that politicians use large portions of these revenues as a slush fund.

For instance, former Governor Jerry Brown (D-CA) was perturbed when state Republicans fought to repeal the gas tax. He grieved that removing this mandated charge would result in crumbling infrastructure. The problem? About 30% of these revenues did not go to programs that directly improved the roads. Instead, they were allocated to the Department of Food and Agriculture and the Workforce Development Board.

President Trump would be better served to resist the hike the Democrats are setting up for him. A nickel may not seem like much, but as the adage goes: “Watch the pennies and the dollars will follow.”

Facebook Wants Internet Regulations

Mark Zuckerberg and his social media drug, Facebook, want new online regulations. Writing an op-ed in The Washington Post, titled “The Internet needs new rules. Let’s start in these four areas,” he opines:

“I believe we need a more active role for governments and regulators. By updating the rules for the Internet, we can preserve what’s best about it — the freedom for people to express themselves and for entrepreneurs to build new things — while also protecting society from broader harms.”

He listed “harmful content, election integrity, privacy, and data portability” as the subjects to address.

This might seem like a helpful and benevolent suggestion, but as economic history has shown us, whenever a corporation proposes new regulations, consumers need to beware.

Should the state introduce new rules, you can anticipate a few things to happen.

First, Facebook will increase its market share in the social media industry. Regulations erect a barrier to entry because they typically increase costs for business, especially start-ups. Since there would be fewer firms getting into the social networking realm, Facebook would have less competition.

Second, Zuckerberg and his legal team would likely participate in writing these regulations. Or, at the very least, Facebook would use its lobbying team to proffer many signals. In the end, the new set of rules would be pro-Zuckerberg, not pro-consumer.

Third, the website can use these regulations to protect itself from private litigation, public-relations disasters, and public probes by complying with the state. It might use the government as a scapegoat for deleting messages that its left-leaning team disagrees with. Or, it may offload decisions about privacy issues or electoral advertising onto the government – and that would be dangerous.

As legendary economist Milton Friedman observed, the biggest threat to the free-enterprise system are enterprise itself.

Taxes and Regulations

The left justifies theft by arguing that taxes are what we pay for a civilized society. By that logic, the left could also contend that regulations are what we pay to maintain that civilized society. Without taxes, who will build the roads? Without regulations, who will ensure our food isn’t poisoned? But this is nonsense. The public is better off when half of their income is not confiscated and every act in their life is not regulated by bureaucrats, politicians, and virtue-signaling do-gooders.