Do you shop at Home Depot? If so, then I have some good news for you this Christmas season.
It turns out that Home Depot’s higher ups have decided to stage a big expansion in Canada. They are going to open some new stores, and refurbish the existing ones to serve you, the customer, better.
Sound pretty good? Just wait, it gets better. Home Depot is not going to force you, the customer, to pay for these improvements. It turns out that they are going to send their primary competitor, Lowe’s, to the final bill. I hope you’re not a current customer of Lowe’s, because the Christmas sales are going to be a little more expensive over there this season. If you don’t like that, I’ve got a solution for you – go shop in Home Depot.
Those of you are have not already stopped reading to get to Home Depot for the sales are probably a little bewildered by all this, as you should be. It sounds grossly wrong that Home Depot is going to improve itself and lake its competitor pay. More to the point, why would Lowe’s agree to such a deal?
The truth is that they didn’t, and this is a fictitious story. But this parody is actually occurring today, and I’ve only changed is the names of the characters.
A government-appointed panel has just recommended that Toronto-area drivers should pay for an ambitious transit expansion through higher gas taxes. Gas taxes would be increased by as much as 10 cents a litre, which would cost the average household an additional $260 per year. Of course, this is all in addition to the taxes they already pay on gas at the pump, which Petro Canada estimates to average around 39.3 cents per litre.
Torontonians will see a more extensive, efficient, and (presumably) comfortable public transit system and drivers who do not make use of the system will pay for it. Does this seem like a good deal? (Raise your hand if you live in Toronto, and cue the ire if you are from outside the city.)
Markets allocate goods well when the costs are clearly defined and paid by the person enjoying its services. When the end-user does not have to pay for the good in question it becomes difficult to determine how much of it one should consume.
A simple example is in order. Winter is upon us, and you need some warm clothes. You go to the store and see all sorts of great options. Which to choose, which to choose? Your budget, even though it might seem like a great limiter in the choice before you, is actually a Godsend. Since you will have to pay for the coat yourself you know that you can only afford one. If you want more than one coat it means you will have to curtail your purchases of other goods, sweaters perhaps.
Now imagine what your life would be like if someone else paid for your coat. You’d be bewildered by the choices. Navy Pea Coat or black trench? I know; I’ll take them all! The costs be damned, someone else will pay for it. And don’t worry about buying something you won’t use, it’s not like you will have to pay for your mistake by having something in your closet go unused while you could have spent your money a little more fruitfully.
Paying for Toronto transit with a gas tax makes as much sense as Home Depot expanding its operations and making Lowe’s customers pay the expenses. Much as they would like to, I’m sure Home Depot would never even try such an option because of the terrible press and the inevitable answer from Lowe’s at their proposal.
Only the political process aimed at buying votes from one group (Torontonians in this case) would think of such a terrible misdirection of dollars. Drivers have to pay for the maintenance of their cars, not to mention purchase the car in the first place, and also fund the roads they drive on through gas taxes. As it should be.
Torontonians – I know you want a beautiful and efficient transit system. I’d like to see you have it too. But you need to pay your own way and not be pawns to the politicians buying your votes with gifts from others.