Economy
Nighttime light intensity exposes failure of autocratic regimes
From the Fraser Institute
When people have more economic freedom, they are allowed to make more of their own economic decisions, free of constraints imposed by others. During the 1960s and 1970s, despite the relative economic success of most western democracies, most of the rest of the world rejected strong pro-market policies, with the notable exception of Hong Kong. Milton Friedman said Hong Kong offered “an almost laboratory experiment in what happens when government is limited to its proper functions and leaves people free to pursue their own objectives.” Hong Kong’s success served as the primary example of the uplifting potential of economic freedom.
However, without a quantifiable measure of economic freedom, it was difficult to generalize these claims. This led to the conception and production of the Economic Freedom of the World (EFW) index by the Fraser Institute. Armed with a measure of economic freedom, researchers could test the claim that economic freedom leads to prosperity.
Since its inception, the multiple editions of the dataset routinely confirmed that economically freer countries have higher income levels, enjoy faster economic growth, are more resilient to shocks, and produce great reductions in poverty and income gains all along the income ladder.
But in fact, in a recent article published by the European Journal of Political Economy and co-authored with Macy Scheck and Sean Patrick Alvarez, I offer evidence that the EFW report often underestimates the potency of economic freedom.
Why? Because the economic statistics produced in countries ruled by autocrats are not believable.
In autocratic regimes, rulers must bolster their legitimacy to prevent coups or uprisings, so they produce statistics that exaggerate their country’s performance. And since neither the opposition nor independent authorities are allowed to challenge these claims, autocrats can get away with lying about the size of their economies.
Autocrats also repress economic freedom (along with other freedoms), so any estimation of the effects of economic freedom on economic development will likely be exaggerated due to the lies of dictators.
How can we correct these lies? It’s not as if the autocrats would let us check their books. But fortunately, we don’t have to. We simply need a measure of economic activity that correlates with economic development and cannot be manipulated. Namely, nighttime light intensity, as measured by satellites orbiting the Earth.
Satellites provide accurate and unbiased information, which dictators cannot manipulate. Nighttime light is artificial (manmade) and its level should depict (all else being equal) levels of development. It’s why one can often see images of North and South Korea at night where the former is in utter darkness and the latter sparkles like a Christmas tree.
By examining the relationship between light intensity and economic development as measured by GDP in democracies—where data is generally reliable—one can estimate the extent of inaccuracies in the economic data reported by dictatorships and then create corrected data.
In our article, based on satellite data, we found that in more than 110 countries (including dictatorships), the association between economic freedom and income levels was between 10 per cent and 62 per cent greater than previously estimated. We also found that when using the corrected data, one extra point of economic freedom (on a 10-point scale) generated between 5 per cent and 24 per cent more economic growth from 1992 to 2012.
These results are a powerful answer to those who doubt the value of economic freedom. And they offer a way to see past the lies of dictators.
From LifeSiteNews
Saskatchewan has become the first Canadian province to free itself entirely of the carbon tax.
On March 27, Saskatchewan Premier Scott Moe announced the removal of the provincial industrial carbon tax beginning April 1, boosting the province’s industry and making Saskatchewan the first carbon tax free province.
Under Moe’s direction, Saskatchewan has dropped the industrial carbon tax which he says will allow Saskatchewan to thrive under a “tariff environment.”
“I would hope that all of the parties running in the federal election would agree with those objectives and allow the provinces to regulate in this area without imposing the federal backstop,” he continued.
The removal of the tax is estimated to save Saskatchewan residents up to 18 cents a liter in gas prices.
The removal of the tax will take place on April 1, the same day the consumer carbon tax will reduce to 0 percent under Prime Minister Mark Carney’s direction. Notably, Carney did not scrap the carbon tax legislation: he just reduced its current rate to zero. This means it could come back at any time.
Furthermore, while Carney has dropped the consumer carbon tax, he has previously revealed that he wishes to implement a corporation carbon tax, the effects of which many argued would trickle down to all Canadians.
The Saskatchewan Association of Rural Municipalities (SARM) celebrated Moe’s move, noting that the carbon tax was especially difficult on farmers.
“I think the carbon tax has been in place for approximately six years now coming up in April and the cost keeps going up every year,” SARM president Bill Huber said.
“It puts our farming community and our business people in rural municipalities at a competitive disadvantage, having to pay this and compete on the world stage,” he continued.
“We’ve got a carbon tax on power — and that’s going to be gone now — and propane and natural gas and we use them more and more every year, with grain drying and different things in our farming operations,” he explained.
“I know most producers that have grain drying systems have three-phase power. If they haven’t got natural gas, they have propane to fire those dryers. And that cost goes on and on at a high level, and it’s made us more noncompetitive on a world stage,” Huber decalred.
The carbon tax is wildly unpopular and blamed for the rising cost of living throughout Canada. Currently, Canadians living in provinces under the federal carbon pricing scheme pay $80 per tonne.
As the federal government removes the consumer carbon tax, the Canadian Taxpayers Federation is calling on all party leaders to oppose all carbon taxes, including the hidden tax on business.
“Canadians fought hard to force Ottawa to back down on its consumer carbon tax and now the fight moves to stopping the hidden carbon tax on business,” said Franco Terrazzano, CTF Federal Director. “Canadians can’t afford a carbon tax on business that pushes up prices at the gas station and makes it harder for our businesses to compete while they’re already struggling with a trade war.”
Today, the federal government cut the consumer carbon tax rate to $0. This will reduce taxes by about 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.
The federal government still imposes an industrial carbon tax on oil and gas, steel and fertilizer businesses, among others.
During the Liberal Party leadership race, Prime Minister Mark Carney said he would “improve and tighten” the industrial carbon tax and “extend the framework to 2035.”
Just 12 per cent of Canadians believe businesses pay most of the cost of the industrial carbon tax, according to a Leger poll commissioned by the CTF. Meanwhile, 70 per cent said businesses would pass most or some carbon tax costs on to consumers.
Conservative Party Leader Pierre Poilievre said he will “repeal the entire carbon tax law, including the tax on Canadian businesses and industries.”
“Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive and carbon taxes on fertilizer plants increase costs for farmers and that makes groceries more expensive,” Terrazzano said. “Canadians know Poilievre will end all carbon taxes and Canadians know Carney’s carbon tax costs won’t be zero.
“Carney owes Canadians a clear answer: How much will your carbon tax cost?”
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