Lileks and the Gas Tax

Today Lileks took Andrew Sullivan to task. Apparently Andrew is proposing a $1 per gallon national tax on gasoline as a method of dealing with the federal deficit.

Andrew Sullivan is very good at political punditry, but I have noticed over the years that he is very very bad at economics. He really doesn't seem to understand it at all and his biggest objection to the current government is the fact that they are spending money - lots of money. Well, I'll agree, they are spending LOTS of money, and I certainly don't agree with everything being spent.

OTOH I don't believe that we are in the very dire straits that will lead us all to ruin. I could be wrong, but I've been listening to liberals since the time of Reagan. They've said the same thing - we're so far in debt we'll never get out. We'll be ruined, our grandchildren will be paying off these bills.... yada yada yada. It's miraculous how the story changes when a Democrat is in office. During the Clinton years - the debt problem just magically disappeared - amazing how the huge debt that Reagan ran up, that our grandchildren wouldn't be able to pay off - suddenly became a non-issue. Suddenly there was a surplus! How'd that happen?

However, even if we needed to do something, slapping a huge tax on gasoline is NOT the way to do it in this country. Logically, it just doesn't work - period. Putting a tax on gas would have repercussions all the way down the line. Gasoline does not exist in a vacuum. If you up that price - then everyone in every single business will have to up prices to accomodate. Perhaps a good reminder would be to think back to the OPEC oil embargo of the late 70's and what a tremendous mess it made of the economy. Remember how fast gas prices went up, remember the effect on all prices - it was nearly the disaster that Sullivan thinks will happen with the deficit.

Lileks, answers in his own style.

"The only relevant question is, Which taxes? The case for a gas tax is a straightforward one. Gas prices are strikingly lower in America than anywhere else in the world"

And if all your friends jumped off a cliff and imposed a landing-on-the-rocks surcharge, would you do it too? Get out a map. Look at, say, Belgium. Look at America. Compare. Consider the costs of trucking lettuce from Mexico to North Dakota. Discuss.

Go read it all - points well made and amusing too. Econ is such a dry subject - I think Lileks should work on writing an Econ 101 book that liberals and neo-cons like Sullivan could read and maybe enjoy enough to learn from it.

Comments

[Tammi]

Shoot - a gas tax is just about the Worst thing we could do right now.

Just look what has happened since the prices have gone up lately. I know, speaking of consumer goods, costs have risen, and they're raising the price right back to us. We are seeing examples of that everywhere.

In the industry I work in, every major manufacturer has taken a price increase (excpet us - we took one last year). Personally, it's costing me a fortune, as my gas allowance did NOT go up right along with prices. I went from spending $100 a week in case to almost %150. Out of my pocket. I think that's tax enough.

No, I think it best we find other ways to address the defict. I have my own ideas - cracking down on some of the social programs (tighten the reins and don't just spend like it's water). I've got more ideas, but I'll go home and leave room for others. :)

[pam]

"...when your ownership of a gas-inhaling 2-ton SUV puts others on the road at risk... "

This, IMO, was a telling paragraph from clearly out of his mind Andrew. This sounds like ELF, the domestic terrorists. Not that I'm saying he's a member... but this line just jerked me up short.
I don't read him, so I don't know what his views are....

Good post! :)