Thomas Friedman has a good column today. But first, I have to get this out of the way.
Anyway. Friedman addresses the mind-boggling idea currently being pushed by McCain and (good Lord) Hillary about getting rid of the 18.4¢ gas tax. Not only is this fiscally irresponsible, nearly worthless in the face of $4 gas, and shameless pandering, but it’s precisely the wrong way to go on oil.
Markets are great ways of pricing and allocating goods… except when there are significant externalities involved. If manufacturers get something for free, or cause harm without paying for it, then their prices just don’t reflect these things, and the market operates on false information.
The price of gas doesn’t reflect the fact that it’s running out, or the pollution and carbon emissions it causes, or the cost of the foreign policy we pursue to secure it. The single simplest way to address this is with a gas tax. It’s one of the few taxes that actually affects economic incentives in the right way.
No one likes a nag; but living in denial for another eight years is not an acceptable alternative. It’s not just that we should kinda maybe face these issues. We will face them. We will soon live in a world where cheap gas is a thing of the past, and people will rethink those SUVs and sprawling suburbs. The choice isn’t between cheap energy and annoying liberal contraints. It’s between starting to deal with the problem now, while we have time to adjust and research alternatives, or dealing with catastrophic failure in a few decades.
One of Friedman’s most telling bits:
In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”
What’s kept the US on top for a century and given us bigger incomes (and energy footprints) isn’t our moral values; it’s our technology. We did things earlier and better than other nations. If we lose that edge, we can’t ultimately keep our lead in wealth either. We need to be applying ingenuity to energy production, rather than to creating ever more tenuous types of mortgages.