Posted by Canadian Dream on May 15, 2009
Well right now there is a bit of political uncertainty on the entire concept of cap and trade. After the BC election the words ‘Carbon Tax’ no longer appear to leave such a bad taste in people’s mouth after the entire Dion’s Green Shift plan did in the last federal election.
To most people the matter of cap and trade verus carbon tax is rather confusing. After all they still are just a tax any which way you do it. The reality is both concepts are two sides of the same coin and the difference is mostly about public policy.
A carbon tax provides price certainty to the market. If you know a tonne of CO2 is worth $40 you will change your business to stop emitting those amounts with a cost less than $40 in hopes of saving some tax. The downfall of a straight tax is there is no means to hit a specific target. As such if you want a 20% reduction from 2006 levels by 2020 you don’t have any means to ensure you will get there other than raising the amount of the carbon tax and hoping it is high enough.
On the other side if you do a cap and trade you have no idea what the price is going to be. It’s like trying to predict a stock market value and you don’t even know the trading rules yet. Yet you can move the cap to ensure you hit a certain reduction limit.
One concept that isn’t getting a lot of play in the media is simply doing both. You do two cap and trade systems that interlink. One covers the big emitters directly and the other cap and trade covers the upstream producers of natural gas and oil. That way when you buy gas at the pump your carbon price would already been built in. To give some initial price certainty you put in a floor price on carbon say $15/tonne which acts as a carbon tax.
Why do it that way? Well because getting car and households to reduce their emissions has always been a problem with a cap and trade system. It’s a huge waste of money to make every person trade for every tonne of carbon they emit. So often they get excluded from the system which leaves out a large piece of the emissions.
In the end the solution won’t matter for most people they just want to know how much more tax am I going to pay. Under a cap and trade system the answer will be ‘more, but we can’t know how much.’ Now doesn’t income tax seem a lot simpler compared to this mess?
Posted by Canadian Dream on May 14, 2009
Perhaps the one thing that drives me the most crazy is those people in North America that give up because they have a low income. They seem to resign themselves to their current life with no hope of a long term happiness. They believe their lives suck because they are poor. Yet if you ask if they are doing anything to get out of that trap they look at you funny.
Low income isn’t poor. Poor is more of metal state, then barely having two cents to hold on to. Poor is saying there is no point in trying to make things better because I don’t have the income. It’s laying blame for your life at the feet of your paycheck, but never trying to improve that paycheque or build up a little bit of savings to help cushion the blows of regular life. Poor is about giving up on getting a better life and living in a viscous circle of blame.
I’m not saying that being low income in easy. I actually have a deep respect for those that don’t make a lot of money, but they spend it wisely and try to improve their lives. It’s not easy to do, but the results can be stunning over a long period of time. In general being low income improves the value of each dollar you have. You resources are even more important because you have a limited supply of them to do all the basics in life and work on being a little bit happy about everything.
I’ve been at a low income before right after university for a year, but I’ve never been poor. I never let myself fall into that trap, but I’ve got friends who seem to resign themselves to being poor. You try to help, but it never seems to work because you can’t help them until they want to help themselves. Yes, being poor sucks, but being low income doesn’t have to.
So what’s your view? Is poor and low income two different states of mind or not?
Posted by Canadian Dream on May 13, 2009
During a conversation last week a friend of mine admitted he found saving hard to do. I asked him why he thought that was. It was interesting to note that he said “You don’t seem to have much after doing it.”
Perception is a rather key thing with our minds and even more so with something astract as money and what you personally want money to do. As my friend indicated saving is less about the actual results of saving, but rather people perceive it to be a lack of spending. In order words some people focus more on what they could have bought with the money than the possible results of saving.
I suspect this gap exists in people’s perception because saving money takes a long time to create anything impressive. Really for each dollar you saving you get about a whole four cents of ongoing income over a long period of time assuming it is properly invested. Hardly impressive, actually it’s almost depressing to realize it is that low. It’s only by slowly saving over years do you get to do anything truly impressive like buying a car for cash or after a really long time retire a decade or two early.
On the flip side of this I think perhaps consumer debt repayment is much sexier since the interest rates are much higher it is much easier to see some results. If you are paying 18% interest it is fairly easy to see a significant drop in your interest payments over time with some debt repayment.
In the end saving is about shifting focus from short term gains to long terms gains. Yes you don’t buy something today by saving, but rather you are buying a tiny bit of a future dream. So slowly over time you end up where you want to be. I wonder if this sudden mass acceptance of frugal will last and people will at least consider keeping some savings in the future. Have we shifted a little bit from the “NOW” attitude to a bit of “I’ll do that later.”
What’s your thoughts on this: why is saving hard?
