Well, there are some ways in which people do try to estimate some of the costs, but not all the ones you're thinking of.
For example, the cost of raising tax revenues has been studied quite a bit. In fact, my colleague Bev Dahlby at the University of Calgary, who is actually one of the international experts in this area, has estimated the marginal cost of taxation.
Usually you might think that when you raise a dollar of taxes, it costs a dollar, but then when you start adding on the economic costs, which result in, let's say, discouraging work effort, risk-taking, savings and investment, depending on the type of tax you're looking at, one can then incorporate those costs. For example, typically corporate income taxes are the highest in terms of economic costs. The marginal cost of funds, instead of being a dollar, would be two dollars or more with the corporate tax.
Land transfer taxes are actually really high. Australian studies and some others have shown that these real estate transfer taxes actually could be almost as high as the corporate tax in terms of their impact, especially when they apply to commercial property, because of all of the distortions that are imposed. Then when you get down to the property tax, it's actually not too bad in terms of its distortions on the economy,
As you can see, there are measures right now that one can include.
The other big issue, which both Philip Cross mentioned and I mention in my notes, is the whole question of displacement, and that's the competitor issue. When you give a subsidy to somebody, usually they go to various groups that will do what's called an economic impact analysis, which is, frankly, the biggest joke in the world when it comes to economic analysis.
What is it based on? It says, “Okay, we're going to create so many jobs in the sector”, which again is the point you raised. There are ways of trying to estimate how much the net job increase would be, but then you also have to take into account whether there's displacement from other sectors. What economic impact analysis assumes is that there's never displacement, but in fact it's the opposite: If you create more jobs here, then there is an indirect impact, such that the industry is going to buy more goods from another industry, etc. Then they start adding up and say, well, that's going to create jobs in every other sector as well.
That's pure garbage, because really what happens is that there's a displacement of labour and capital in the sense that if you give a subsidy to somebody—let's say somebody who's competing with somebody else—then you may be taking business away from the other person and reducing demand for labour and capital in the competitor.
Economists have taken that into account. It's usually called “general equilibrium analysis”, and there are ways of actually incorporating that so you take into account the constraints in the economy.
Let me give you my favourite example. Quebec, at one point—