“Tories five tax credit to energy efficient homes"- The Province, January 21, 2007 Canadian Press
http://www.canada.com/theprovince/story.html?id=7646aadf-e73e-41c9-b75b-89c1e58b14e7&k=16962
Summary
In order to reduce the effect of green house gas emissions, the Conservatives will pay back up to $5,000 to homeowners who make their homes more energy efficient. This will allow all home owners to do their shares in cutting their energy use. The process to install tools like programmable thermostats and increased insulation will benefit about 800 small businesses. This is the final plank of the Conservative’s green energy plan. Environmentalist doubt if this program will have a large impact in the country’s greenhouse gas emissions. World Wildlife Federation director commented that it will take much more ambition than what the Conservatives are showing. The target for this program is 140,000 over 4 years but up to 2 million homes need to be updated. Liberal’s new environment critic said the government had no intention to require and audit after renovations are complete to ensure that people deserve their rebate. Political science professor at McMaster University believed that this latest announcement is designed to improve party support by sending people cheques while Toronto Mayor said that a lot more can be done to address climate change.
Relationship and Reflection
In a market economy, most economic decisions are made by individual buyers and sellers. However, economists identify six major functions of government’s in market economies. Governments provide the legal and social framework, maintain competition, provide public goods and services, and redistribute income, correct for externalities, and stabilize the economy. The above article is a classic example of pollution that is released into the air with no individual owners holding liable, and there are few economic incentives for most people to do so. Government’s role in this situation is to try to correct this imbalance. By intervening, the government can provide monetary motivation for people to help reduce pollution. This action by the government also creates a Third Party Effect by providing businesses to owners for installing tools to increase insulation.
Unfortunately, it is usually difficult and costly to determine the precise source of solution or exactly how much the pollution is actually costing society. Because of these difficulties, the government must be sure that it doesn’t impose more cost to reduce pollution than the pollution is costing society in the first place. To do so would clearly be inefficient. In most cases, the role of government is to improve the functioning of the market economy.
posted by Tiffany King @ 1:03 AM
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