Tax Me, I'm Carbon-Based!

Next, at the risk of validating a straw man, we know that pricing carbon in Alberta isn’t going to solve climate change. - Andrew Leach

I think I understand what the professor is getting at. As much as I'd personally love to see Alberta take a defiant stance in the face of global pressure to make people pay more for everything, it's just not going to happen. Even if Alberta were to treble her emissions, the net measurable impact on the environment would, I gather, still be virtually negligible at a global level. Yet we're still expected to enact upsetting solutions to address what seems a non-existent problem, and we're told to give the bad medicine a chance...for a brighter future of course.  

Will not the adoptive and compliance costs, for both large and small enterprises to conform to the new carbon pricing schemes, especially in the outset, be challenging to say the least? I predict the mere adaptation to, and integration of the new regulatory frameworks could mean the difference between smaller more fragile business operators remaining in business, or folding-up the tent. Large scale industrial players will likely find the means to minimize losses and absorb administrative woes (if not somehow manage to cleverly use the new normal advantageously). I really have no idea, but I think it goes without saying that a carbon tax will force everyone doing business in the province, including average working/consuming Albertans, to streamline their budgets and seriously reevaluate spending priorities. I can however appreciate the sliver of a silver lining to such forced compliance... necessitating sleeker business models. 

Once upon a time, I worked on a casual basis for a talented independent plumbing contractor. He hired me not because I had a background in plumbing, but because I learn quickly and tend to err on the side of caution. Who am I kidding? The former may indeed be true, but I'm fairly certain his choice had more to do with my immediate availability (vulnerability) and low wage expectation... Anyway, the experience provided me with some insight into how services are contracted, and how easily cost overruns can rapidly accumulate. Here's a simplistic example I devised comparing rudimentary numbers between two independent electrical contractors:

For the sake of comparison, we'll presume that Jim & Steve both have impeccable reputations for workmanship, and scored identical contracts, valued identically, within the same week. Somehow, Jim manages to come out ahead. Why might this be? While any number of factors could contribute to Jim's higher rate of efficiency, notice that in Job One, Steve spends almost twice as much on labour, yet assumably completed the same amount of work as Jim. Jim also spent ten times less on incidentals, and half as much on gasoline as Steve did. Furthermore, it took Steve nearly twice as long to finish the job. What all this might indicate is that Jim is a far more careful planner: perhaps while Steve was in a scramble, traversing the city to gather required materials he'd initially overlooked, leaving his helper on-site to drink coffee on the clock, Jim was thoughtfully double-checking the blueprints for conceivable hurdles, and his helper was happily bending conduit and whatnot.

From the point of view of a casual labourer, I could say my own inability to command a high rate of pay, and always finding myself without much leverage to negotiate wages is an indirect outcome of my own lackadaisical and inefficient approach to life in general. A wait-and-see attitude if you will.

It's the stitch in time saves nine principal. Since you neglected to include critical parts on your materials list for a project requiring very specific widgets that now demand priority shipping, you've needlessly inflated your costs. If successive phases of the job cannot proceed without this key component you're now urgently awaiting, then you're also incidentally paying labour costs for little to no value. You've hit the hemorrhage zone. A disorganized inventory can lead to both time and gasoline being wasted cruising around procuring stuff. You get the idea. Failing to get your ducks in a row will result in cumulative and compounded deficits. The avoidable extra hours spent on a particular job could've better been spent wrangling new contracts or tying-up other loose ends related to your business. 

Of course such a comparison is small scale stuff in the context of the greater economy, but a greater economic sphere wouldn't even exist without smaller components; the inverse is probably true as well, considering certain economic sectors and services owe their very existence to the scalar realities of a global economy. Without going into a litany of snakes eating their own tail style hypotheses, basic efficiency speaks to the bottom line, regardless of whether you happen to be examining the financial forensics of a basic household utility budget, or a perplexing and convoluted YOY ROI of some multifaceted global corporation. Here's a very simplistic projection of possible year-end net totals listed by our two fictional contractors inferred from the sets of averages of Jim's and Steve's efficiency rates:

This tells us that despite Steve landing more (or more lucrative) contracts than Jim, he's still seeing less annual returns than Jim. $4700 a year is not a tremendous difference in terms of making a living however. Perhaps Jim has expansionist goals while Steve is content just rolling along and making a buck - secretly shaking his fist at Jim because Jim always seems to have more time off! At the end of the day, both contractors are doing respectable work, and creating a job for someone else to boot. It's easy to imagine, however, that the disparity in efficiency would become far more consequential were it applied to a mid-sized firm competing for major contracts that oversees the day-to-day of multiple contractors. It's also easy to see how the proceeds of Jim's cost-saving organizational advantage will be swallowed up by the new carbon tax scheme!