RE: Clinton, McCain, Take Pandering To A New Level
May 1, 2008
So on one of my recent posts, deb commented that
i would think that an 18 cents/gallon savings would add up to more than $20-30 over the summer months.
According to most journalists and economists, it would actually like be LESS than that amount. Below is an explanation of just how insignificant this tax would be. I would have just added to the comment thread, but I can’t embed videos in the comments section.
i see. i hadn’t considered that point. i was just thinking personally how often i fill up and an absolute cut of 18 cents/gallon over the summer period would save me around $45-ish. still not a huge amount of money in the overall scheme of things, but then again i imagine the amount of gas i buy isn’t that much and my mpg is a lot better compared to most cars i that i see on the road. still, i’d rather have $45 in my pocket b/c back home that feeds me for a week of groceries (here in hk that’s 2 weeks).
deb - That 45 bucks adds up to 9 billion dollars for Highway Repair and Maintenance. I know 9 billion might not seem like much on a quarter trillion dollar deficit, but we can’t keep on pretending like federal spending money grows on trees, or like some federal services are not necessary and vital to our country (like roads and police). Until government spending is lowered enough to match government revenue, I view it as highly irresponsible to remove any taxes.
Additionally, shouldn’t we be encouraging LESS gasoline use, not more? And I can think of no better way to encourage or discourage a behavior in a capitalist system than with pricing.
So, I did the math.
Currently, where I live, gas is $4.00 a gallon. When I fill up I usually get 12 gallons, which adds up to $48.00. If it was 18 cents less ($3.82 a gallon) I would save $2.16 a tank of gas. I fill up about twice a month. So, over a period of 3 months, I would save $12.96. Not that much at all! Not worth putting our government into even more debt.
Also, I would have to fill up twice a week in order to save $45 over the summer. I know some people need to fill up this often, but still, you can see the savings is not that much at all.
“Until government spending is lowered enough to match government revenue, I view it as highly irresponsible to remove any taxes.”
gov’t bureaucracy never has an incentive to spend less or behave efficiently even in a good economy with a surplus, it will certainly never have an incentive to spend less if it keeps getting more taxes, or if taxes are raised. all that will happen is more bureaucracies will be made, or the current ones will just keep growing. a lot of tax money gets wasted by bureaucratic inefficiency.
“Additionally, shouldn’t we be encouraging LESS gasoline use, not more? And I can think of no better way to encourage or discourage a behavior in a capitalist system than with pricing.”
i’m not a fan of command economics.
deb,
You may not be a fan of command economics, but it does happen to be one of the most elegant and simple solutions to the problem of highly specific control over a chaotic system. I’m not a particular fan *emotionally* myself, but intellectually it’s incredibly satisfying because it’s a great way to keep government out of our lives.
Incidentally, Adam Smith’s “invisible hand” was formulated on just such a postulate - that in a capitalistic economy, rather that the state appropriating funds to do “good things”, a nebulous and usually disastrously naive presumption, the enlightened self interest of corporate entities would lead them to make socially responsible choices, as if lead by an invisible hand.
Now, there is quite a bit of disagreement with that idea, but it happens to be the one place where command economics actually works - when fossil fuel ceases to be an economically and socially viable resource, you’d expect that our ability to effectively control its usage through price would very quickly lead to alternative fuel sources. In fact the ONLY reason that it doesn’t is because fuel is so heavily subsidized in the US to keep our prices down - we SHOULD be paying $12 a gallon, not $4. Europeans scoff at us when we complain of gas being $4 a gallon. And that government interference in what would otherwise be a classic example of a supply and demand market is precisely what has gotten us into this mess.
For my own part, I just did the math and even if I am VERY generous in how many gallons I’d use over the summer, I would save $25. Keep in mind I use 2 gallons of gas a day. I think I’d rather be confident that the 8-lane bridge I drive over every day is well-maintained, more than I will really care about that $25.
patrick:
i’m not clear on how command economics keeps government out of our lives.
i’m also not clear on the difference between being an emotional v. intellectual fan of command economics.
i think it’s irresponsible to so easily endorse a system that happens to be “one of the most elegant and simple solutions to the problem of highly specific control over a chaotic system”. that was the same mentality mao used, and look what good the great leap forward and iron rice bowl did for china.
i get the point that the individual savings may be small v. the potential amount of collective tax revenue from this, but i’m still a big believer that the individual knows best how to spend their own money than the government, with its infinite gaping black holes of red tape. moreover, it’s not as if there isn’t a myriad of other things we are taxed on aside from just our income to provide for our local and federal government budgets–gasoline tax isn’t always earmarked for maintaining our roads, rather in many states that revenue is appropriated into the general fund, so your $25 may not even go to maintaining that 8-lane bridge you drive over every day.
i think in our privilege, we also forget that $25 is not a lot to us, but is to many others in our nation.
i think adam smith was referring to a free market as the guiding ‘invisible hand’, not potentially corrupt, profit-driven corporations.
we SHOULD be paying $12/gal IF we lived in a country that DECIDED to excessively tax our gasoline (european nations tax is around $7USD/gallon). considering that oil is sold in USD, and the US Dollar is weaker now, gas should be cheaper elsewhere in the world where the local currency is stronger than the USD (e.g. the Euro).
there’s no doubt that cheap gas prices has lead us to be more complacent about using alternative energies, but an increase in prices is still going to hurt regardless of any relative price difference elsewhere in the world. also, consider local salaries and currency strength when making such comparisons. for the most part, oil per barrel is sold for the same price to everyone, additional costs are added during the refining process and distribution, and taxes. i don’t know european nations’ refining/distribution capabilities, but the US has a decent system of refinining/distribution (i.e. many ports, lots of areas to process, some say we need more refineries), and regardless of any tax credits given to those support industries, i don’t see how that makes the US bad for not taxing the hell out of our gas. who cares if people spend $12 gallon somewhere in europe?? people pay 12 cents a gallon in venezuela. what does that have to with our country? i don’t see how making the relative global commodity price argument is relevant to our own domestic issues.
Im a fan of command taxes when it comes to cigarettes and booze. Though my rational is purely emotional.
deb - I think Patrick means that it is a way of minimizing government interference while still affecting behavior.
The reason I support command economics in this case, and have for a very long time, is that I cannot see a way in which oil demand will continue to increase at a very high rate, while supply remains the same. The longer we base our lifestyles off of the idea that gas is cheap, the worse off we will be when gas hits 8 or 10 dollars a gallon.
The reason for increasing oil demand isn’t Americans at the pumps. We can go gas free and oil will still get more expensive. Until China and India slow down their expansion (hint: they won’t), gas is going to continue to skyrocket. That’s how demand for gas will continue to increase at a very high rate, while supply remains the same.
deb:
I think Andy addressed that concern - he hit the nail on the head.
Granted, but that reasoning has a limit. Taken to its logical conclusion, the government wouldn’t collect taxes on anything.
Few local or state governments have enough money to pay for those services as it is. Since this is actually one of the few actually necessary and reasonable services of government, it’s sensible to me to maintain a source of income for them. True, the income for road and bridge management may not come directly from that money, but lopping of a large portion of a general fund isn’t going to help matters.
He wasn’t. The invisible hand concept has been considerably mutilated from Smith’s original meaning.
I think you missed my meaning. While European governments do heavily tax fuel, what I was referring to was the fact that the US government subsidizes the cost of fuel refinement so that Americans pay a cheaper price at the pump. The actual cost of fuel is far higher than we pay, both as a direct cost of refinement and its external environmental cost (called an externality in economics).
I wasn’t talking about taxes - I was talking about the actual market price and cost of fuel.
Unfortunately, much of this discussion is moot. American behavior at the pump will not change because demand for fuel is largely static - if you have to drive to work, you will do so regardless of the cost. It would take years to see differences as a result of increased carpooling, and people changing jobs to ones that don’t require as much driving. Particularly in a recession, where people will cling to the job they have for fear of not being able to find another one.
Taken from Wikipedia:
The invisible hand is a metaphor coined by the economist Adam Smith. In The Wealth of Nations and other writings, Smith demonstrated that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. He argued that each individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.
Taken from Adam Smith himself to illustrate the invisible hand:
“It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Both of these depict the free market as Adam Smith’s base for the invisible hand, not a “corporate entity” but rather individuals seeking to make best use of their assets.
I don’t think Smith’s use of the invisible hand has been mutilated as you say, but rather adapted. After all, Smith intended the invisible hand to be a reference to trade relations. He may not have been talking about a free market, but he certainly wasn’t talking about corporate nobility or the inefficiency of the government to properly use provided funds.
Jeff,
Thanks!
You’re right, he wasn’t talking about corporate nobility, nor did I say he was; yes, he was talking about individuals seeking to make best use of their assets; and the real stick in the craw is that the only market in which Smith’s theory works is one where (by his own restriction) both buyers and sellers have equal power over price. That is hardly true in many of our markets today.
I suppose in my original post mentioning Smith, rather than saying “the enlightened self interest of corporate entities would lead them to make socially responsible choices” I should have said the enlightened self interest of individuals would lead them to make socially responsible choices [in how they utilize their assets].
I didn’t say anything about ineffeciency - simply naive to think they would do so. Smith’s book was as much a scholarly look at economics as it was a treatise against monarchic governments whose rich and powerful used available wealth to their own ends rather than as a public good. This is why he argues that the free market executes that task in a far superior manner; aristocracy has little interest in utilizing funds in the cause of social welfare; a capitalist has little other choice.
That idea, by the way, is in the passages in the book prior to the reference of the invisible hand. It is not present in the Wikipedia article.
By “mutilate” with regards to the invisible hand idea, I meant that it is often used by corporatists as a tabula rasa argument in favor of a free market in any and every regard; that the mere invocation of the concept should shut down discussion on how government might interact with the economy. A free market is often the best way to accomplish many things, but sometimes an incredibly irresponsible way. Human beings are not machines willing to be sacrificed to the greater efficiency of the whole, and a purely capitalistic economy would require exactly that.
Patrick,
I know that Wikipedia isn’t the absolute source of knowledge, but I used it since it is a quick reference guide.
I agree that corporations could and can use the “free market/invisible hand” argument to immediately dismiss suggestions for government involvement, and that isn’t an absolute solution either.
However, I disagree with your last statement that a purely capitalistic economy would require individuals to sacrifice their will (or themselves) for the greater efficiency; that’s communism. The purely capitalist system would require human beings to conduct themselves according to their own will, but have no remorse for those that couldn’t succeed. It would be less “The system will be better if you make sacrifices for everyone else” and more “the system will be better by leaving you behind if you can’t keep up with everyone else.”
I’m not one of those “Don’t trust the government” types that stashes guns in my backyard in case there is a need for uprising. I am someone that thinks there are too many places for governments (local, state, or national) to divert funds that we shouldn’t be so ready to hand over taxes in any form on the assumption that the government knows best what to do with it.
I’ve seen some of the absurd things we’ve built in Iraq, and the “Bridge to Nowhere” project is always a prevalent example of our tax dollars “at work”. Our taxes go towards some pretty irresponsible things (i.e. taxpayers spend nearly twice as much per year supporting illegal aliens than they do for the wars in Iraq and Afghanistan combined). Granted, a corporate entity or even the individual may not be spending those funds that much better, but I’d like to have the choice.
Jeff,
Precisely my point. Humans don’t build communities to leave each other behind if you can’t keep up. Unless you’re openly advocating social Darwinism, humans build communities for everyone’s mutual benefit - we’re not individualistic creatures, as much as our culture tries to tell us we are. We work together for our mutual benefit. It’s inhuman to tell someone “well, I don’t care that you worked yourself to the bone for 60 years, you didn’t succeed so SEE YA!” and throw them off the cliff.
Can’t disagree there. This is one of the biggest reasons to limit the authority that government claims - the fewer things they have authority over, the fewer things on which they can spend money - and the fewer taxes they’ll need to collect.
This is, incidentally, the classic conservative position, one abandoned 100 years ago by both parties.
As I mentioned above, though, I think collecting taxes on fuel for the maintenance of roads and bridges IS one of the very few actually valid functions of government. It’s not the best place to go looking to cut taxes.
I see what you’re saying about capitalism and the social obligations vs social darwinism aspects.
I agree that the gas tax is something that doesn’t need to be cut - especially if the funds are used towards transportation infrastructure. If the gas tax is not the best place to cut back, where would you look to make tax cuts?