When setting about the task of developing government policy Supply and Demand plays a role. The law of "Supply and Demand" is in no way at an economic theory; the affects of Supply and Demand are as profound and real as gravity. It is a simple reality that the more people value something, the more they will pay for it and if the supply of that valued item increases, price falls. This was true in Soviet Russia, this was true before the first clay tablets were used as currency in Mesopotamia.
Supply and Demand dictate that the better police do their job with the war on drugs, the worse the problem gets. When the police constrain the supply of drugs, the price goes up, people are often addicted to drugs so their demand for drugs is “inelastic”, they have to have them – so they pay more. As the product becomes more valuable, the greater lengths drug pushers will go to provide them, so violence grows. Further, as drugs become more valuable drug pushers look for new ways to get drugs to markets in the more difficult environment police have created for the drug pushers to operate – so now highly potent drugs that are easier to smuggle become required – now the Fentanyl crisis if born. This is just reality, a reality we have to accept – and then build a policy that addresses this reality. We have watched this reality be ignored and we have watched too many of our young people affected by the ravages of drug abuse.
Supply and Demand plays a role in climate policy. The carbon tax as a deterrent to use fails to work. There are years of price sensitivity analysis from all the oil majors that support this statement. The reason, the demand for fossil fuels is inelastic – inelastic because there are presently no viable substitutes for fossil fuels, and there is nothing on the horizon to offer a viable alternative. This is supported by more or less consistent oil consumption over any given time frame, regardless of price fluctuation.
Supply and Demand play a role in supply management, a process whereby government regulation restricts the volume of a given commodity’s production to elevate price. This causes the affected products’ to increase in price and the consumer pays more.
Too often policy makers choose for political reasons to ignore this reality. Ignoring this reality in drug policy has resulted in an escalation in violence, an escalation in the amount and types of street drugs used and to a degree, the Fentanyl crisis. By ignoring the realities of Supply and Demand in climate policy a massive distortion in the public perception of the challenge has given rise to carbon policy that effects regional disadvantage, offers no value in a transition away from damaging carbon emissions, no avenue to developing the safe use of fossil fuels or no reduction in carbon emissions. Ignoring this reality in food policy means a Canadian family pays an estimated $275 more per year for dairy products than they would otherwise, a single parent or the most affluent among us. No amount of political spin will change these cold mechanics, they are as elemental as gravity or any other force of nature.