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Marketing Failure in Canada?

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How to Fix the Green Shift, in today’s Toronto Star, is a sobering analysis of the impact of the Liberal Party’s proposed carbon tax on the Canadian national election. The bad news is that the carbon tax, called Green Shift by the Liberal Party, appears to be hurting the party’s chances in the Oct. 14 election. The better news is that the problem may be more message delivery than substance. Whatever the results of the Canadian election, carbon tax advocates in the United States and elsewhere will be able to build upon the Liberal Party’s experience.

Following are excerpts from the article, by the Star’s Sarah Barmak. We recommend that you read the full article.

“After the Liberal rank and file comes to grips with the results of the Oct. 14 election – which seems poised to turn out poorly for the troubled party – one question may loom large: was the Green Shift really that bad of an idea, or did Stéphane Dion fail to sell it to Canadians?

Maple_Leaf_Halifax.jpg“In many ways, a carbon tax should make sense to Canada’s electorate. Canadians place the environment near the top of the list of things they consider most when going to the polls, according to a Sept. 13 Angus Reid poll. …

“Yet another recent poll shows that whatever enthusiasm the Liberals had succeeded in inspiring about their environmental platform over the summer has evaporated. …This even though almost half of respondents believe pricing greenhouse gas emissions is a good idea. In fact, a majority of respondents – 66 per cent – believe the proposed plan will hurt low-income families, singles and seniors, even though cuts to income, personal and business taxes are part of the plan. …

“Are the Liberals mis-marketing the Green Shift, and shooting themselves in the foot in the process?

“On the surface, political campaigning might not seem to have much in common with the marketing of a product. In some ways, however, it makes sense to approach the Green Shift as a complex product that needs to be explained, packaged and sold to an electorate that doesn’t have the time or inclination to muddle through detailed documents on the plan. …

"’An emotional campaign . . . . would be one way of getting past objections around the tax,’ says David Dunne, a professor of marketing at the University of Toronto’s Rotman School of Management. ‘Make people feel warm and fuzzy about it. (The Liberals) seem to have slipped up on the emotional component. Their advertising is pretty boring, to be honest.’

“Also central in assuaging voter concern about the plan’s cost: Making sure they know what’s in it. According to one expert on climate change, the Liberal plan will be effective in reducing emissions. But you wouldn’t know that by reading the newspaper. …

“In some ways, Dion’s difficulty pinpointing a central slogan for his environmental policy mirrors the struggles of Obama to present his proposals on the economy, health care, and energy in a way that is easy for voters to digest.

"’I see some parallels between Dion and Obama in that they both avoid overly simplistic discourse,’ says Professor Ron Smyth, a linguistics expert who researchers marketing at the University of Toronto. ‘They try to be clear without insulting the public, while [Canadian Premier, the Conservative Stephen] Harper and [John] McCain are masters at reducing complex issues to simplistic slogans and hot-button issues.’

“In another sense, Dion is grappling with selling a complex solution to a problem – climate change – that is itself notoriously difficult to explain. …

“When a party markets a complex idea during an unexpected election, the rules of the game would seem to inherently favour the other side.

"’The most important thing when trying to sell a big idea like that is it’s a lot easier to poke holes in it than to sell it,’ explains David Soberman, an expert in marketing strategy from Rotman. ’The opposition is in a better position because they can cherry-pick ideas that might not be attractive to the general public while ignoring other aspects.’

“… No one expects (or wants) Dion to grow a beard and wave signs outside the gates of coal-burning power plants. Some marketing experts say changes to the Liberal campaign’s choice of words might be a less painful way to win the hearts of voters.

“For one thing, Dion could think twice about repeating that ugly word, ‘tax’ – replayed ad nauseam by Conservative attack ads. …

“Ultimately, whether voters ‘get’ a politician’s message reflects directly on the politician doing the explaining – not just the speechwriters or the media – in the eyes of the electorate.”

Photo: Flickr / archer10 (Dennis)

Boxer the Trapper (of Global Warming Deniers)

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Guest Post by James Handley

I’m a bit surprised that Republicans fell into Boxer’s trap so predictably. With a slim Democratic majority in the Senate and a promised presidential veto, the Lieberman-Warner (“Climate Security”) bill never had a chance. Senate Environment and Public Works Committee Chair Barbara Boxer forced a vote so the environmental score-keepers could notch one up for the Ds and one down for the Rs.

The bill was deeply flawed — Friends of the Earth, Greenpeace and a coalition of other progressive environmental groups point out that it would GIVE AWAY most of the carbon emission permits to polluters. Instead, these groups advocate auctioning ALL permits. Both Hillary Clinton and Barack Obama also support 100% auction. So Lieberman-Warner was already way behind the political curve.

The bill would have auctioned a minority of permits. Who would the lucky revenue winners have been? Mostly big (polluting) energy corporations.

Rep. Markey (D-Mass) introduced a House bill to auction 97% of permits and distribute revenue to individuals, while Sen. Corker (R-Tenn) offered similar amendments in the Senate: worthy improvements that didn’t get serious consideration (yet).

Lieberman-Warner was a trial balloon, but more than that, it was a trap to entice the howling dogs who deny the climate problem out into the open so Democrats and environmental groups can campaign against them. As legislation, it’s a failure. As political strategy, it lured them out and slapped shut with the alacrity of a mouse trap. I can’t help wondering why the Republican leadership didn’t try to improve the bill (or at least fake doing so) instead of obstructing it. There’s plenty to improve on (like moving from cap-and-trade to a carbon tax and requiring revenue-neutrality) and they could have avoided being tarred as Neanderthal global warming deniers.

Boxer’s political trick worked and may provide the Democratic Party with real political benefits as voters register their impatience in November. Unfortunately, the focus on a poorly-designed bill and the failure to consider constructive changes resulted in a wasted opportunity.

Economists from left to right agree that the gold standard for effective climate policy is a revenue-neutral carbon tax with dividend. Maybe the spectacular crash of Lieberman-Warner will help us start that much-needed discussion after the election.

Not Deficit-Neutral, Revenue-Neutral

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Guest Post by James Handley

Senator Barbara Boxer proudly
labels her Climate Security Act “deficit-neutral.” But what our country needs is a climate deal that’s revenue-neutral.

The CSA (co-sponsored by Boxer with Senators Lieberman & Warner) is a cap-and-trade bill mandating government-issued permits for every source that emits carbon dioxide into the atmosphere. The number of permits would shrink gradually, thus forcing down emissions. But who gets the trillions in revenues from the government’s auctions of the permits?

Actually, only about half of the permits would be auctioned under the CSA. In 2012, the initial year, 69% would be given away to emitters. Even as late as 2050, 21% of the permits would be handed out to polluters. All told, CSA authorizes the biggest legislated transfer of wealth in U.S. history.

Dollar_Bills___Ma_Eh.jpgOpponents of the giveaway have been gathering strength for months and demanding auctioning 100% of the permits. They include Friends of the Earth (“Fix or Ditch Lieberman-Warner”), presidential candidates Clinton and Obama, and a new group, Cap and Dividend, that wants auction revenues distributed to taxpayers as dividends. As the Congressional Budget Office suggested in a recent report  (summarized here), combining 100% permit auctioning with ironclad revenue recycling would go a long way to making cap-and-trade more effective and equitable. Indeed, these steps would eliminate two of the four major inefficiencies of cap-and-trade, bringing it much closer to a carbon tax with dividend. (The remaining two, uncontrolled price spikes and profiteering by traders, would be banished by a revenue-neutral carbon tax with dividend.)

But CSA isn’t revenue-neutral, it’s just deficit-neutral. Boxer’s Senate Environment and Public
Works Committee has a slew of ways to distribute hundreds of billions in permit revenues to special interests rather than returning it to individuals or using it to reduce other taxes.

In its present form, CSA’s giveaways include carbon capture and sequestration (which under the most optimistic scenario would ensure that electricity from coal costs more than wind power) and nuclear power (whose historical annual subsidies exceeded cumulative subsidies for wind until recently). And, of course, big bucks to help biofuels pursue their apocalyptic trifecta of increasing greenhouse gas emissions,
driving up food prices and leveling rainforests.

The alternative is obvious; making cap-and-trade revenue-neutral by distributing the auction revenues to taxpayers. An amendment to the Climate Security Act offered by Sen. Bob Corker (R-Tenn) would at least dispense some of the revenue via taxpayer dividends, thus offsetting some of the impacts of higher prices on households. Other amendments proposed by Corker would prohibit permit giveaways and also bar emitters from bypassing permit requirements by buying cheap offsets overseas, a practice that has been badly abused in the EU’s carbon cap-and-trade system.

So why are some Democrats calling Sen. Corker’s amendments “poison pills” that would prompt them to kill the legislation? Are Corker’s worthy changes to Boxer-Lieberman-Warner truly beyond the pale of our political
system? Or are both parties ideologically wedded to subsidies and hostile to returning carbon-pricing revenues to individuals?

At least, and at last, a global warming bill is to be debated on the Senate floor. Perhaps the best outcome would be for this deeply-flawed first attempt to die and make way for a real discussion of a carbon tax with dividend.

Photo: Flickr / Ma-Eh