Higher gas prices may mean higher salaries

Looking for a silver lining to those scary gas prices? Here it is, courtesy of an intriguing post on the New York Times’ Freakonomics blog. The basic argument is that rising gas prices will result in a higher cost of living, and almost always in the past, our salaries have risen when the cost of living goes up.

If that happens, and you spend as much on gas per year as the average Canadian, there’s no net gain. Your salary will go up, and so will your expenses, because of the higher price of gas. But if you don’t have a car, or you have a very efficient one, your salary will go up more than your expenses, and you’ll actually come out ahead. You’ll have more money in your pocket than you do now.

In way, it’s a bit like Dion’s complicated new carbon tax plan. If it’s implemented effectively, it will be revenue-neutral for typical carbon-based fuel users, but higher than average carbon fuel users will pay a heavy price.

But that makes me wonder whether we need Dion’s “Green Shift” plan at all. It looks very much like our open market could take care of providing the all the incentives we need to cut down on fossil fuels –- all by itself.

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