At the ripe age of 67, Edward Boe’s life is a tapestry woven with both struggle and resilience. Working part-time in the bustling Vancouver Downtown Eastside, he finds himself grappling with a monthly pension of merely $1,500. With rent and utilities devouring a substantial chunk, Boe is left with a meager $300 for food—an amount hardly sufficient to sustain any human being. “No one can live on that,” he lamented recently, a sentiment echoed by many of his fellow British Columbians facing similar predicaments. This narrative of hardship, emblematic of the broader issue, became a rallying cry for voters across party lines during the recent elections, as the ever-increasing cost of living tightened its grip around the populace.
On the momentous day his cabinet was sworn in, Premier David Eby articulated a resolute message to his ministers: the prevailing cost-of-living crisis demands immediate and effective action. However, addressing this monumental challenge necessitates a rigorous examination of every new policy through the prism of affordability. The inquiry at heart is a simple yet profound one: “Will this make life easier or tougher for British Columbians?”
Yet tackling such a question is no straightforward endeavor. The reality is that government policies must navigate the intricate web of economic principles—scarcity, incentives, trade-offs, and the ever-harrowing specter of unintended consequences. A deft understanding of these elements is paramount; policy successes hinge on this awareness. Ignoring economic fundamentals can lead to disastrous outcomes, inadvertently burdening those least equipped to bear the weight.
Take heed: resources are indeed limited. The fervent ambitions of government often clash with fiscal sustainability, leading to an inevitable reckoning. A failure to acknowledge this basic tenet can unleash a tide of unsustainable programs, spiraling debts, and difficult decisions that loom over future administrations.
Consider the influence of incentives—potent forces that alter behavior in sometimes unexpected ways. While the effects of increased taxes might be clear-cut, the ramifications of certain policies may unfold in subtler, more insidious fashions. Crafting effective policy within such a complex economic landscape is akin to navigating a labyrinth; while one cannot foresee every outcome, prioritizing the minimization of harm is essential.
For instance, the recent edict mandating that all newly constructed apartments be fully accessible — while undoubtedly a laudable goal — carries with it a hefty price tag that could add upwards of $75,000 to the cost per unit, thereby threatening affordability and limiting access for potential renters. Similarly, initiatives like the Scrap-It program, which seeks to phase out older vehicles to curb emissions, inadvertently shrinks the pool of affordable used cars, creating barriers for low-income families to secure necessary transportation.
Every spent dollar represents a sacrifice—a forgoing of alternative investments that could yield greater benefits. British Columbia’s generous subsidy for electric vehicles, amounting to $4,000, translates to greenhouse gas reductions costing taxpayers over $300 per tonne. In contrast, investing in the preservation of natural ecosystems could achieve similar results for under $100 per tonne.
Moreover, lofty policy aspirations can backfire spectacularly. Businesses often face the brunt of these ambitious targets, forced to invest in anticipation, only to be met with product shortages and rising consumer prices when reality fails to align with expectations. The current electric vehicle mandate serves as a glaring example, underscoring the importance of utilizing attainable, data-informed benchmarks.
As government officials strive to implement changes, they often find themselves grappling with the inherent complexities of economic systems—much like squeezing a balloon: pressure applied to one area simply shifts the problem elsewhere. The notion that legislation can usurp fundamental economic truths is a fallacy that can lead to unfathomable consequences.
In this milieu, it is imperative that Premier Eby and his ministers hold discussions with economic and policy experts. By grounding their initiatives in pragmatic, economically sound principles, they can forge pathways that lift the burden off the shoulders of British Columbians while promoting a vibrant, sustainable future.
Jerome Gessaroli is a senior fellow with the Macdonald-Laurier Institute and leads the Sound Economic Policy Project at the B.C. Institute of Technology.
