14/11: Run That By Me Again
Category: Politics
Posted by: A Waco Farmer
Tom Friedman has a bizarre column in the NYT today:
"Coulda, Woulda, Shoulda"
He posits:
"On Sept. 11, 2001, the OPEC basket oil price was $25.50 a barrel. On Nov. 13, 2007, the OPEC basket price was around $90 a barrel."
Ouch. You have my attention.
More Friedman:
"In the wake of 9/11, some of us pleaded for a 'patriot tax' on gasoline of $1 or more a gallon to diminish the transfers of wealth we were making to the very countries who were indirectly financing the ideologies of intolerance that were killing Americans and in order to spur innovation in energy efficiency by U.S. manufacturers.
"But no, George Bush and Dick Cheney had a better idea. And the Democrats went along for the ride. They were all going to let the market work and not let our government shape that market — like OPEC does."
As Friedman notes, obviously the President's path proved rocky. But then Friedman makes this outlandish series of counter-factual claims based on the assertions of two economists:
If the feds had instituted a one-dollar per gallon tax on gasoline back in late 2001...
1. We could have replaced the current payroll tax with a gasoline tax. Middle-class consumers would have seen increased take-home pay of between six and nine percent, even though they would have had to pay more at the pump.
2. A stronger foundation for future economic growth would have been laid by keeping more oil revenue home, and we might not now be facing a recession.
3. As a higher gas tax discouraged oil consumption, the price of oil would fall in world markets. As a result, the price of gas to [U.S.] consumers would rise by less than the increase in the tax.
4. The U.S. consumers would have known that, with a higher gasoline tax locked in for good, pump prices would never be going back to the old days, so they would have a much stronger incentive to switch to more fuel-efficient vehicles and Detroit would have had to make more hybrids to survive. This would have put Detroit five years ahead of where it is now.
Run that by me again. I am no economist--but I want to know why a one-dollar tax increase would have initiated market forces, but a two-dollar increase in the actual price has not. Moreover, why would another dollar increase at this point stimulate us toward a wiser energy policy when the two-dollar increase we currently bemoan has made almost no impact on our culture or politics?
On the other hand, if we want to play the "what if" and "crystal ball" game, we might also speculate that a one-dollar tax increase in 2001 or 2002 very likely would have exacerbated the recession we were actually in back then. We might never have had a recovery to lose. We might also assume that China and other emerging economies would have continued to expand at the same rate of growth. We can safely assume that we would have faced the same impasse in Congress in re expanding refining capacity, and surely we would have suffered Katrina even with a tax increase. It is hard to see how a one-dollar per gallon tax increase would have been the magic elixir as advertised by Tom Friedman.
I am all for energy independence. But I'll pass on the snake oil.
"Coulda, Woulda, Shoulda"
He posits:
"On Sept. 11, 2001, the OPEC basket oil price was $25.50 a barrel. On Nov. 13, 2007, the OPEC basket price was around $90 a barrel."
Ouch. You have my attention.
More Friedman:
"In the wake of 9/11, some of us pleaded for a 'patriot tax' on gasoline of $1 or more a gallon to diminish the transfers of wealth we were making to the very countries who were indirectly financing the ideologies of intolerance that were killing Americans and in order to spur innovation in energy efficiency by U.S. manufacturers.
"But no, George Bush and Dick Cheney had a better idea. And the Democrats went along for the ride. They were all going to let the market work and not let our government shape that market — like OPEC does."
As Friedman notes, obviously the President's path proved rocky. But then Friedman makes this outlandish series of counter-factual claims based on the assertions of two economists:
If the feds had instituted a one-dollar per gallon tax on gasoline back in late 2001...
1. We could have replaced the current payroll tax with a gasoline tax. Middle-class consumers would have seen increased take-home pay of between six and nine percent, even though they would have had to pay more at the pump.
2. A stronger foundation for future economic growth would have been laid by keeping more oil revenue home, and we might not now be facing a recession.
3. As a higher gas tax discouraged oil consumption, the price of oil would fall in world markets. As a result, the price of gas to [U.S.] consumers would rise by less than the increase in the tax.
4. The U.S. consumers would have known that, with a higher gasoline tax locked in for good, pump prices would never be going back to the old days, so they would have a much stronger incentive to switch to more fuel-efficient vehicles and Detroit would have had to make more hybrids to survive. This would have put Detroit five years ahead of where it is now.
Run that by me again. I am no economist--but I want to know why a one-dollar tax increase would have initiated market forces, but a two-dollar increase in the actual price has not. Moreover, why would another dollar increase at this point stimulate us toward a wiser energy policy when the two-dollar increase we currently bemoan has made almost no impact on our culture or politics?
On the other hand, if we want to play the "what if" and "crystal ball" game, we might also speculate that a one-dollar tax increase in 2001 or 2002 very likely would have exacerbated the recession we were actually in back then. We might never have had a recovery to lose. We might also assume that China and other emerging economies would have continued to expand at the same rate of growth. We can safely assume that we would have faced the same impasse in Congress in re expanding refining capacity, and surely we would have suffered Katrina even with a tax increase. It is hard to see how a one-dollar per gallon tax increase would have been the magic elixir as advertised by Tom Friedman.
I am all for energy independence. But I'll pass on the snake oil.
A Waco Farmer wrote: