Liberal activist Naomi Klein has a new book out provocatively subtitled “Capitalism vs. the Climate.” (For those of you who don’t want to buy her book, an essay she wrote a couple years ago with the same title is here.)
What amuses me about her attempt to pit capitalism and the climate against each other is that I came across an excerpt from the book in the Toronto Globe and Mail in which, unwittingly, she advocated policies that, even accepting the debate on her terms, can’t be good for the climate.
Not surprisingly, she supports subsidies for renewable energy. It’s hard to have renewable energy without those. But what struck me was that she also argued for tying those subsidies to the use of local content. For example, there is a government program in Ontario that subsidizes solar energy, but only if the energy suppliers use a certain percentage of labor and materials that are made in Ontario.
There are two obvious and related problems with such a requirement. First, by requiring local inputs, you make your product more expensive (especially when local means high-cost Canada). If your goal is cheaper renewable energy, raising the price of inputs doesn’t make a whole lot of sense.
Second, the idea that each sub-federal government should promote local production of a particular product is absurd. Imagine if that happened worldwide: there would be thousands of producers of these products! I can’t think of a more inefficient and energy-wasting approach to manufacturing.
Just to be clear, I know many strong supporters of taking action against climate change who do not believe in this kind of protectionist approach. They recognize that local content requirements are economically harmful and shouldn’t be part of these policies. For reasons that are difficult to understand, Klein seems to have missed this pretty obvious point. (I did tweet it at her, but I’m not expecting much from that!)