Brad DeLong's Semi-Daily Journal: Greg Mankiw: For Higher Gas Taxes
リンク: Brad DeLong's Semi-Daily Journal: Greg Mankiw: For Higher Gas Taxes.
Greg Mankiw goes on the offensive against the the letters the Wall Street Journal editorial page chooses to publish:
Greg Mankiw's Blog: Alternatives to the Pigou Club: Today's Wall Street Journal prints various letters in response to my oped on gas taxes.... [L]et me try to spell out more generally the alternatives from which we must choose.... [Y]ou most likely fit into one of these... categories.
- You deny the existence of these externalities [from pollution from auto emissions] as a type of market failure. Perhaps you think you live in a Coasian fantasy world where people bargain without transaction costs to reach efficient allocations. (Note: I am not suggesting that Coase himself thought we lived in such a world--he considered it only a useful thought experiment.)
- You recognize the externalities but you don't think the government should try to respond to them. You are such a believer in small government that you are willing to live with inferior economic outcomes, such as pollution and congestion.
- You recognize the externalities, think the government should try to correct them, but think the current low taxes we put on gasoline are sufficient. In this case, you have weighed and rejected the evidence, such as that of Parry and Small, that higher Pigovian would be optimal. (Parry and Small calculate an optimal tax of $1.01 for the United States in today's dollars. After my proposed phase-in of a $1 hike, the U.S. tax would be $1.40. Assuming 10 years of 3 percent inflation, the tax in real terms would approach almost exactly what Parry and Small recommend. By the way, the published version of Parry and Small was in the American Economic Review, September 2005.)
- You recognize the externalities but think the government should try to correct the market failure through regulations (such as CAFE standards) or through market-based solutions that do not raise government revenue (such as cap-and-trade systems). Perhaps you are concerned that government would waste the extra revenue on useless government programs.
Let me respond to group 4, because my guess is that this is the largest group of antipigovians.
The reason I am less concerned that the extra revenue will be spent is that it already has been spent. The federal government has promised benefits to the elderly far in excess of what it can pay. At some point the nation will have to reckon with the looming fiscal gap. The most likely political compromise will involve higher tax revenue. We should, therefore, be ready to increase revenue in a way that does the least damage--or, better yet, the most good. If not Pigovian taxes, then other taxes will be increased.
An optimistic libertarian might hope that we can deal with the looming fiscal gap without raising the ratio of taxes to GDP above its current level. I wish I could believe that this were possible. In a previous oped, I advocated increasing, slowly but substantially, the age of eligibility for Social Security and Medicare. But even if we could scale back government spending in such a radical way, Pigovian taxes would not lose their appeal. Let's use the extra revenue from Pigovian taxes to reduce distortionary taxes, such as income taxes. Politically unrealistic, you say? Surely, if a future government were so libertarian as to manage a radical reduction in entitlement promises to the elderly, it would have no trouble delivering equally radical cuts in income taxes. In fact, the tax cuts would be the easy part of the package....
Let me try to put the issue in terms of a flow chart.
Question: Do you believe consumption of gasoline is free of negative externalities leading to market inefficiency? If YES, you are part of group 1. If NO, continue.
Question: Do you believe that public policy should ignore these externalities? If YES, you are part of group 2. If NO, continue.
Question: Do you believe the current tax on gasoline sufficiently internalizes the negative externalities? If YES, you are part of group 3. If NO, continue.
Question: Do you believe the best remedy for the remaining externalities is a regulatory system rather than a higher tax? If YES, you are part of group 4. If NO, you are a member of the Pigou Club.
I think most most muembers of Group 4 believe that Greg Mankiw's Pigovian taxes on gasoline and other carbon emissions would be a good thing, but don't think that we can get there easily in today's political climate--especially with a Republican Party that doesn't care about balancing the budget at all but has a large fundamentalist wing opposed to all tax increases that might stabilize our fiscal situation and avoid running big risks of future disasters. CAFE is not a way of avoiding "taxing"--it's a way of getting the auto companies to collect the tax (and rebate the revenue to purchasers of fuel-efficient cars). It's an inefficient policy with little pollution-reduction bang for its excess-burden buck, but it is one that Mankiw's political masters might accept--you see, it isn't called a "tax." The same holds for tradeable permit schemes.
Most members of Group 4, I think, aren't opposed to taxing gasoline in a Pigovian way. What they are is opposed to calling the tax a tax, because they believe Republican politicians need a way to save face.
The Wall Street Journal editorial editors' choice of letters is pathetic: two from lobbyists (one of whom falsely and shamelessly claims to be a "policy wonk") who they decide deserve to run free ads, one dork from Carmel denying that demand for gasoline is not price-sensitive at all, one dork from Fort Worth calling Greg Mankiw(!!!) a socialist, and one confused person from Atlanta who doesn't seem to understand that Mankiw's gasoline tax is pro-growth (when growth is properly measured, that is):
October 26, 2006;PageA19
Higher Gas Taxes Will Never Make Americans Abandon Their Cars Missing from N. Gregory Mankiw's interesting proposal to raise the federal gasoline tax by $1 over the next 10 years ("Raise the Gas Tax," editorial page, Oct. 20) is any context or explanation of why the tax is collected in the first place. It generates dedicated revenue for the Highway Trust Fund that is used solely for transportation programs. The federal gas tax finances almost 45% of all public investments in road improvements each year.
Prof. Mankiw says boosting the gas tax would get people out of their cars and force them to live closer to where they work, thereby reducing road congestion. Yet there is no evidence to suggest this would happen based on the most current Census Bureau data. More than 80% of commuters drive to work alone. That trend will continue in the future.
To much fanfare, the U.S. population officially reached 300 million Oct. 17, and is expected to reach 400 million by 2043. America's highways, bridges and transit systems are now crumbling because of years of under-investment by all levels of government. Between now and 2043, based on current trends, highway capacity will grow only 9%, but traffic levels will swell by 135% to more than seven trillion vehicle miles traveled annually. The average motorist can expect to spend 160 hours stuck in traffic delays, or the equivalent of four weeks each year. It's a recipe for a gridlocked nation, absent any new highway and transit investment that adds major new capacity.
Providing and maintaining the transportation infrastructure is a core function of government. Let's increase the federal gasoline tax, but let's make sure it's used for its intended purpose -- maintaining and improving the highway and public transit systems so crucial to America's mobility, national security, economic strength and global competitiveness.
Matthew J. Jeanneret
Senior Vice President
Communications & Marketing
American Road & Transportation Builders Association
WashingtonWhew! That was dizzying. Tax-cuts convert to the left of me, raise the gas tax to the right! Keep this up and I will need to start wearing a switchable eye patch to prevent vertigo. As regards the gas tax, did Prof. Mankiw see less traffic during the recent price run-up at the pumps? Concerning high fuel taxes in Europe, he would have plenty of time in traffic there to read The Guardian or Le Figaro. On the subject of efficiency, I can hardly wait to watch the Fed spend that tax windfall.
Charles Dusenbury
Carmel, Calif.Count me in as a policy wonk who thinks Prof. Mankiw's self-described "wacky" idea of raising the gas tax is one that should stay on the dusty shelf of economic theory and not in the practical world of public policy. Giving politicians more gas tax revenues is like giving your car keys and a bottle of gin to a teenager.
Over the past 25 years, governments at all levels have collected twice as much in gas taxes ($1.34 trillion in today's dollars) as the domestic oil companies have earned collectively in profits ($643 billion). In only three of those years (1980, 1981 and 1982) did industry profits exceed government's annual tax take. Add on corporate income tax payments and government's total tax take from the industry rises to $2.2 trillion in today's dollars. Not only has this made no dent in the federal deficit, but it has given Washington the means to fund such boondoggles as the Bridge to Nowhere.
Moreover, our great national experiment of trying to use tax policy to dampen consumption is now the textbook definition of the law of unintended consequences. According to the Congressional Research Service, the 1980 windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil. The French have some of the highest gas taxes in Europe yet remain 100% dependent on foreign oil.
As I'm sure Prof. Mankiw teaches his students, taxes should simply be a means of funding government programs, not a tool for advancing social, political or economic agendas.
Scott A. Hodge
President
Tax Foundation
WashingtonWhenever I read an article or listen to someone crow about raising the gas tax, I am reminded of how far removed some people are from the rest of us who have to work for a living. Every point in Prof. Mankiw's commentary boils down to improperly using the tax code to force a certain behavior and enact social change, all in a quest to show us poor folks who have to drive to work, to the store or to pick up the kids that we're just not in line with the professor's progressive thinking. If being in traffic makes Prof. Mankiw wish the rest of us would drive less, reading socialist diatribes like his makes me wish people like him would write less.
Kevin C. Carpenter
Fort Worth, TexasProf. Mankiw suggests that federal taxes on gas should be raised to levels of half that of Britain in order to, among other reasons, grow the economy. While his logic of shifting the tax code's focus from punishing productivity to encouraging consumption is right-headed, I must point out that the U.K. is a country in which both consumption and productivity are taxed at high rates, to the detriment of the economy. It is no stretch of the imagination to see Congress imposing the same misguided policies in the U.S. Instead, the entire focus of our tax code should be shifted from punishing productivity to encouraging consumption. Ultimately, Congress and the people would be playing for the same team.
Simon Arpiarian
Atlanta
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"Let's use the extra revenue from Pigovian taxes to reduce distortionary taxes, such as income taxes."
A good idea, of course, but a much bigger source of revenue for reducing distortionary taxes would be to tax land value.
Odd, isn't it, that so many modern economists don't support LVT. I wonder why...
Posted by: liberal | October 28, 2006 at 01:47 AM
Greg Mankiw:
"Perhaps you are concerned that government would waste the extra revenue on useless government programs....
"The reason I am less concerned that the extra revenue will be spent is that it already has been spent. The federal government has promised benefits to the elderly far in excess of what it can pay. At some point the nation will have to reckon with the looming fiscal gap."
Notice the problem is always always always the scary scary scary elderly. We are in the midst of a disastrous war in and occupation of Iraq for which the cost is flying past $1 trillion on to $2 trillion, but the problem is the scary elderly. The disaster in Iraq is as nothing, the problem is always our grandparents and parents or even us as we refuse to stay young forever.
When Greg Mankiw pays the slightest attention to the tragic costs of Iraq, I may pay attention to his fear of aging. Now, this argument is of no consequence.
Posted by: anne | October 28, 2006 at 03:32 AM
http://select.nytimes.com/2006/10/24/opinion/24kristof.html
October 24, 2006
Iraq and Your Wallet
By NICHOLAS D. KRISTOF
For every additional second we stay in Iraq, we taxpayers will end up paying an additional $6,300.
So aside from the rising body counts and all the other good reasons to adopt a timetable for withdrawal from Iraq, here's another: We are spending vast sums there that would be better spent rescuing the American health care system, developing alternative forms of energy and making a serious effort to reduce global poverty.
In the run-up to the Iraq war, Donald Rumsfeld estimated that the overall cost would be under $50 billion. Paul Wolfowitz argued that Iraq could use its oil to "finance its own reconstruction."
But now several careful studies have attempted to tote up various costs, and they suggest that the tab will be more than $1 trillion — perhaps more than $2 trillion. The higher sum would amount to $6,600 per American man, woman and child.
"The total costs of the war, including the budgetary, social and macroeconomic costs, are likely to exceed $2 trillion," Joseph Stiglitz, the Nobel-winning economist at Columbia, writes in an updated new study with Linda Bilmes, a public finance specialist at Harvard....
Posted by: anne | October 28, 2006 at 03:36 AM
"As regards the gas tax, did Prof. Mankiw see less traffic during the recent price run-up at the pumps?"
I live in Atlanta and I drive a lot due to my work. And, yes, when gas prices spiked earlier this year, I saw a truly amazing decline in traffic congestion. One particular afternoon I was faced with a trip from Woodstock to my home in Lawrenceville starting at 5pm, a 44 mile trip which based on years of experience I fully expected to take at least two hours. It took a hour and ten minutes. On the infamous top end Perimeter (I-285 betwee I-75 and I-85 north) I never got below 30 mph on a freeway that normally backs up for miles.
This in a city with little in the way of alternative transportation, especially for crosstown trips in the suburbs and exurbs. To me, the savings in time was well worth extra cost of gas, and there are those other negative extenalities to consider as well.
Posted by: Tom Marney | October 28, 2006 at 03:39 AM
Imagine, a tragic lunatic occupation of Iraq that even the forever war supporting American Enterprisers count as costing beyond a trillion dollars, but the idea that there is a cost to war and occupation can be ignored completely in a discussion about economic choice.
http://select.nytimes.com/2006/10/24/opinion/24kristof.html
"Another study, by two economists at the American Enterprise Institute, used somewhat different assumptions and came up with a lower figure — about $1 trillion. Those economists set up a nifty Web site, www.aei-brookings.org/iraqcosts, where you can tinker with the underlying assumptions and come up with your own personal estimates."
Posted by: anne | October 28, 2006 at 03:41 AM
Leave Iraq immediately, then we can sit round the fireplace and wonder whether we should be paying $5 dollars a gallon of gas to teach Grandma a lesson. Grandma might even listen then, but for now all she too cares about in her typical selfishness are the lunatic destructive costs of Iraq.
Posted by: anne | October 28, 2006 at 03:46 AM
There's no doubt that London benefited hugely from its congestion charge - even opponents have been pretty quiet of late, and there's room for plenty of increase.
Frankly I don't care where the money goes - give it to Haliburton if you must - people driving 10mpg tanks to the shops while soldiers (and 600,000 Iraqis) are dying to keep that precious freedom juice flowing is plain wrong.
And let's remember it's going to run out one day. Tax now or collapse later, that's the real no-brainer that leaders should be addressing rather than drooling at the thought of another water-boarding.
Posted by: Dave Parker | October 28, 2006 at 03:49 AM
Tom Marney:
"I live in Atlanta and I drive a lot due to my work. And, yes, when gas prices spiked earlier this year, I saw a truly amazing decline in traffic congestion."
There I am wholly sympathetic, though I expect the spike in gasoline will have returned all to soon if I read the market properly.
Posted by: anne | October 28, 2006 at 03:53 AM
Again, I am completely sympathetic on gaining in conservation and efficiency but set the argument there and not on the pretense of what we cannot afford in the way of social insurance and social equity.
Posted by: anne | October 28, 2006 at 04:00 AM
Scott Hodge, the Tax Foundation lobbyist, has it that France is "100% dependent on foreign oil."
This is a lie. France isn't even 100% dependent on foreigners for its oil: it grows its own vetetable, olive, and famously butter, oils.
France, cleverly taxing oil, is perhaps the world's leader in making the transition to the nuclear age.
Scott Hodge, FOAD.
Posted by: David Lloyd-Jones | October 28, 2006 at 05:19 AM
David Lloyd-Jones:
"France, cleverly taxing oil, is perhaps the world's leader in making the transition to the nuclear age."
Again, here I am sympathetic.
However, France has "Total," the oil giant, and I wonder what world reserves Total actually controls. I must look at this.
Posted by: anne | October 28, 2006 at 05:44 AM
"The French have some of the highest gas taxes in Europe yet remain 100% dependent on foreign oil."
Yes; quite a stupid comment. Norway, by the way, which is foreign oil independent is most highly energy conservation oriented.
Posted by: anne | October 28, 2006 at 05:54 AM
Re: And, yes, when gas prices spiked earlier this year, I saw a truly amazing decline in traffic congestion.
Interesting. Here in S Florida high gas prices did not affect the I-95 parking lot (er, freeway) congestion at all.
Posted by: JonF | October 28, 2006 at 06:41 AM
unless wal-mart's is run by liars, they saw a huge difference in traffic thanks to higher gas prices: specifically, they saw fewer shopping trips but higher average purchase levels, which they assumed means that people still had to shop but figured out how to do it less often to save the gas money.
but i digress.
prof, as you know full well, mankiw sold out whatever reputation for integrity he previously enjoyed (i don't keep up, but i'll assume he enjoyed one) for the thrill of joining the dangerous and dishonest folks in the executive branch. when we learn someone is willing to break bread with those who would legalize torture, normally we shun that person and in various ways make them pay a price for shredding their integrity.
why do you continue to treat mankiw as though he were a mature human being instead of a sack of excrement? he was happy to be on the side of the insane jerks who run the wsj op-ed page when he was hanging in the oval office: why should we care that the insane jerks now dis him?
PS. as anne implies, it is simply not true that we can't "afford" medicare as it's structured today. whether we should, or whether we should instead replace the american health care model with a form of a nationalized model is a reasonable topic for discussion, but anyone who says we can't "afford" the benefits we have "promised" demonstrates - even if we didn't know that the sayer was willing to destroy whatever reputation he had for integrity by working on behalf of the dangerous and dishonest folks in the oval office - that he is a sack of excrement.
Posted by: howard | October 28, 2006 at 08:00 AM
The self-described "policy wonk" looks like a bona fide plagiarist (or else the sort of sloppy thinker who confuses things he's heard with his own inventions). The "car keys and a bottle of gin" comment is lifted almost exactly from P.J. O'Rourke. It's just possible that it did not originate with him, but it is presented as a "famous quote" of his http://www.buildfreedom.com/tribute/o'rourke/ and while I'm not a big fan of O'Rourke's politics, I think he's too good a writer to have used it without attribution.
Posted by: PaulC | October 28, 2006 at 09:02 AM
What is wrong with the gas tax argument is the amount of tax needed to drive real fuel efficiency changes, (doubling the MPG)would be several dollars per gallon in tax. $5 /gal gas does not have political support. As an alternative, the CAFE standards should be increased AND the tax on fuel raised to a lesser extent. The higher fuel cost would keep support for high fuel standards.
Why not both raise taxes AND increase CAFE standards? This would be more effective in increasing fuel mileage.
Posted by: bakho | October 28, 2006 at 09:59 AM
France is only dependent for 97% of its oil from foreign sources.
According to the CIA France produces 76,300 bbls/day (2003 est.) but consumes 2.06 million bbl/day (2003 est.). It has proven reserves of 144.3 million bbls (1 January 2002).
There are 63 oilfields within Metropolitan France.
Posted by: blowback | October 28, 2006 at 10:35 AM
My only objection to the sudden introduction of a gas tax as a source of pain to motivate people to make different decisions is the amount of time and/or money that an individual must spend to implement the changes. For example, I believe that the technology to build a replacement for my Honda Civic already exists that would give me a 50-mile all-electric range and gasoline backup for longer trips, at an additional cost of perhaps $5K per vehicle if Honda were producing a million units per year. If Honda decided today to produce such a vehicle, it would be several years before it was available as a mass-market option.
Similarly, it would take large investments for a significant number of people to find the right job closer to where they live, to move to a location closer to the right job, to replace their vehicles early. Or large investment in time: if mass transit or carpooling adds an hour per day to the travel time, what is the cost?
Posted by: Michael Cain | October 28, 2006 at 10:54 AM
France's Total commands easily enough of a reserve internationally to power France and more, but I realize I do not know what it means for Total to have international reserves even though I own the darn stock. After all, Chinese companies command international reserves. What does this mean? I must find out. France however is just not threatened in any energy sense that I can understand, for the country commands a diverse energy supply in domestic and international terms.
Should I sell Total? Not really.
Posted by: anne | October 28, 2006 at 12:07 PM
Why do you, Brad, take Mankiw seriously, when he omits the two largest groups of WSJ supporters?
Group 5 are the idiots, those who are incapable of accounting, incapable of following an argument about externalities, non-optimal equilibria and so on, but simply respond in a pavlovian way to the word tax. You don't believe that such people exist, or that they read the WSJ? Then explain to me exactly why the US got into Iraq --- exactly what was the RATIONAL thought process that ever figured this was a sane idea?
Group 6 are the ultra-venal, those who don't care what happens to the planet or anyone else as long as they remain rich enough to buy protection. They might not be a large group, but they are the movers and shakers. They couldn't care less about externalities and such like, what they care about is that higher gas taxes will hurt them in some way. These are, for example, the same people who are busily denying global warming.
Posted by: Maynard Handley | October 28, 2006 at 12:17 PM
No one has mentioned the strongest argument against a higher gas tax: its ultra-regressive nature.
That is why I favor higher CAFE standards instead. They place the burden on corporate entities rather than middle-class and working-class citizens. And, who knows, they might even actually force GM and Ford to make cars people actually would buy.
We all know the reason Mankiw is in favor of a gas tax is so that he can then claim that in order to be "revenue-neutral" income taxes on the rich must be further cut. Economists are nothing but apologists for the malefactors of great wealth, and every school of economics in the country should be burnt to the ground and the ground sown with salt.
Posted by: Firebug | October 28, 2006 at 12:35 PM
Firebug:
"No one has mentioned the strongest argument against a higher gas tax: its ultra-regressive nature.
"That is why I favor higher CAFE standards instead."
Absolutely; and let out vaunted technology be emphasized. I choose to complain about the always present reference to an aging America in curiously complaining about gas taxes, but I much prefer pushing industry. Much.
Posted by: anne | October 28, 2006 at 12:45 PM
The pay till you hurt gas taxers somehow neglect the regressive nature of the tax or suggest wild compensation schemes, and forget about ever so nicely telling makers of gasoline engines that the time really has come to get smart, and of course moaning about wasting energy is annoying when Iraq is ignored.
Everywhere I go my Prius is meeting other Priuses (Pri-is). Toyota understood.
Posted by: anne | October 28, 2006 at 12:50 PM
Also, I really do think the time has come to be angry about willful blindness that allows for economic analysis that does not so much as mention the terrible waste of a wanton trillion dollar war and occupation.
I can walk for the rest of my life, and the heck with ever driving a fig, but this will not compensate for what we have squandered in Iraq, before the agonizing physical, psychological and moral casualties.
Posted by: anne | October 28, 2006 at 01:01 PM
One problem with a gasoline tax is that it won't deter the behavior of the gazillionaire corporate-jet liquidators. I'm not sure how many resources they use compared to the total used by ordinary human beings, but per capita, each liquidator uses probably a hundred times the resources.
The two big issues with oil are global warming and peak oil. The worst consequence of peak oil is the destruction of civilization dependent on oil. The worst consequence of global warming is a runaway greenhouse effect turning the earth into another Venus, destroying all life on the earth.
Until a couple years ago, I viewed the runaway greenhouse effect as too remote to worry over -- Venus's runaway greenhouse effect was due to its long solar day (117 earth days). However, a couple years ago, the atmospheric concentration of CO2 was reported to have accelerated -- its rate of increase increased about thirty percent in a couple of years. Also, methane (a potent greenhouse gas) was reported released with the melting permafrost in Russia and northern Canada. The melting of the northern polar cap means that less sunlight is reflected and more absorbed -- ice and snow reflect much more than liquid water.
Peak oil may turn out to be our savior with global warming. I would just let our civilization go through peak oil and then sort itself out. The big problem is that research for new energy sources takes lots of energy, as does building the equipment. That energy might not be available if we keep using it as we do now.
Posted by: John M 307 | October 28, 2006 at 01:55 PM
An increase in the gas tax at least in part internalizes the enviromental externalities and sends the right signal re future gasoline prices. Surely no one beleives that the price elasticity of gasoline is zero. The elasticity is certainly higher in the long run than in the short. Recognizing the somewhat regressive nature of gasoline taxes, a portion of the proceeds might be dedicated to e.g. increasing the earned income credit. A portion of the proceeds might be invested in long lived improvements in transportation infratstructure benefiting both today's and tomorrow's travelers. Recognizing that at least one of the reasons for the attempt (perhaps counter productive) to stabalize Iraq is to stablize the supply of oil; the gasoline tax might be labeled as the Iraq war tax with proceeds to reduce the debt incurred by the war.
Posted by: Sonia | October 28, 2006 at 02:16 PM
Ah, Sonia, there is a special poignant sadness there.
Posted by: anne | October 28, 2006 at 02:28 PM
There is an implied, no an explicit moral-economics argument here that I have to think through carefully. This is quite important.
Posted by: anne | October 28, 2006 at 02:37 PM
Bakho's right about CAFE. Think about how we are going to get the marketplace to deliver more efficient cars to the lower income quintiles in the time frame necessary (which is like 6 years ago but let's not even think about that). No way with just gas taxes, it will be too easy to simply not make cars for that market.
My stupid-in-many-ways solution but politically palatable is this: Increase the tax on gas as much as you dare, and at the end of every year take the amount, divide by the number of over-18 year olds, and cut everybody a check for that amount.
The "government just wastes money" fools can't complain, the "poor people will be disproptionately burdened" people got nothin', and the concept of being one of those that are "making out", that is being a person who gets a bigger gas tax rebate than he paid in will result in a new great national sport that appeals straight to the same "bugger the Joneses" sense that caused people to buy SUVs in the first place.
PS: Not that anybody cares, but like 10 years ago the little voices in my head dealing with this very subject started murmuring virtually verbatim Mankiw's observations #! and #2. And that was the exact point on which my parting of company with conservatism began.
Maybe Mankiw will figure it out. Naw.
Posted by: a different chris | October 28, 2006 at 02:41 PM
> The pay till you hurt gas
> taxers somehow neglect the
> regressive nature of the tax
Generally speaking, no we/they don't. But citing this as a reason to not impose an increasing-every-month gas tax has its own set of assumptions.
Possibly, the tax-is-regressive (TIR) people believe in the continuous generation theory of oil and gas, and therefore dispute that the world will ever run out of it. This theory doesn't seem to be in high regard at the moment, but I suppose it isn't totally impossible.
More likely, the TIR people don't see or don't acknowledge that when the change comes it might not be gradual. We saw in the months after Katrina a 40% spike in gasoline prices, to $3/gal in most of the US and close to $4/gal in California. If the US makes not changes in its general consumption patterns for the next 5 years, what do you estimate the chances are of a sudden spike to $5/gal? $7? $10? What do you think the effect on the lower-income population would be of an instantaneous tripling of gas prices?
If you think, as I do, that the possibility of very short, very large oil price jumps is high, then you might also agree with me that the United States _must_ take action now to prepare for (and possibly prevent) these events. The only way to prepare for them is to redesign our personal transportation infrastructure to use vastly less gasoline. This will require many things, including making personal vehicles more fuel efficient and possibly rearranging our living environment somewhat. But it will also require some fairly fundamental changes in behaviour among USians, and I don't see how you get that without changing the incentives such that certain activities have a lower U.
Cranky
Posted by: Cranky Observer | October 28, 2006 at 04:23 PM
"
Peak oil may turn out to be our savior with global warming. I would just let our civilization go through peak oil and then sort itself out. "
A nice sentiment that reveals massive ignorance of the subject.
Their is more to greenhouse gases than oil.
In particular there are coal and methane hydrates, both of which are are far more abundant than oil, and both of which will be tapped to make up for any oil shortfall. Coal to gasoline is quite practical (ask any South African), it's just not as cheap as oil to gasoline. And, of course, the transportaion sector (ie gasoline) is only 1/4 of energy usage.
Posted by: Maynard Handley | October 28, 2006 at 05:18 PM
One of the fallacies made by critics of a specific tax is to mix together the issue of adding more total taxes with the correct issue of getting a given dollar of revenue from source A versus source B. You can see that in the letters too (some of which have such a crafted, iconic sound that I think they are plants...)
Posted by: Neil' | October 28, 2006 at 05:35 PM
For those of you concerned about the regressive nature of the Mankiw gas tax, open your parochial eyes. The U.S. is not the only country in the world. Those living in the U.S. might occasionally look to see how other countries do things.
I suggest you look at Europe.
The Europeans have gas taxes which are multiples of anything Mankiw is advising.
Guess what? They drive fuel efficient cars. They drive fewer kilometers than Americans do. They have less suburban sprawl, more public transport, and a much higher awareness of environmental issues than Americans do. They have a much lower per capita carbon footprint than Americans do.
European poor are not poorer than American poor. They do not have a lower standard of living or quality of life than American poor. Yet they pay a hell of a lot in gas taxes.
Once sanity returns to American leadership, reforms can be introduced to ease the burden of such a regressive tax on the poor. There is too much at stake to dither over this.
In fact, the gas tax is one of many things America must do to reduce its carbon footprint. Global warming is the biggest threat to civilization. It's the biggest threat to life, period. America is the biggest contributor to this problem and the most obtuse obstructionist (with the exception of Australia) among developed nations in the fight against global warming.
Shame on Anne for dithering. Go see Al Gore movie. Read Tim Flannery's book. Visit http://www.realclimate.org/
Stop dithering.
Posted by: Bupa | October 28, 2006 at 08:33 PM
Remember the old maxim: In America, 100 years is a long time. In Europe, 100 miles is a long distance.
Europe is built for mass transit because most European countries are far smaller and denser than the U.S. In America, mass transit isn't really practical outside a few large cities.
Like it or not, low-density housing is what America has, and what America will have into the forseeable future. So we need to figure out how to make it work.
Posted by: Firebug | October 28, 2006 at 09:38 PM