DISQUS

Chuck McKinnon · 12 months ago

Sam,

I'm sure you recognize that the gas tax you're suggesting is a market distortion: inflating the price of something in abundant supply in order to create artificial scarcity, and by so doing make an incentive to create alternatives.

Computer programmers have a saying: premature optimization is the root of all evil. I think that applies here. When oil and gas really do become scarce, there's no reason to believe that investment, ingenuity and impressive engineering won't come up with good alternatives. But markets are efficient: they're not going to sink large sums of money into solving what is (today) a solved problem; that money is going to go elsewhere.

It's true that governments distort markets like this all the time (though rarely to the degree you're suggesting), but the question proponents need to answer in order for their proposal to be taken seriously is: why create artificial incentives now (at a significant risk to various sectors of the existing economy) when the real incentives will arrive on their own, gradually, over the next several decades? Why optimize prematurely?

If the answer is AGW, that case (again, as you likely know) is considerably harder to make than it was four or five years ago: the Earth's been in a ten-year cooling trend while CO2 emissions have risen; solar activity is at a standstill; 250 more scientists than last year have signed onto the US Senate's report dissenting from the IPCC consensus; the current financial "crisis" has politicians loathe to impose new taxes (especially consumption taxes).

I respect your principled stand, but I believe that in this as in so many other cases, the market will adapt in due time. Put more bluntly, I agree that people will only change their behaviour when the pain threshold is high enough. I simply disagree that we need to do anything to accelerate the day that pain arrives.

Sam · 12 months ago

Chuck, I'm well aware that a gas tax is a market distortion. All taxes distort the market in one way or another. However, there is a problem that most people overlook with the efficient markets argument. Free markets are actually only efficient when there are enough players on both the supply and demand side to prevent anyone from manipulating the market price. The problem is that in an era of huge corporations and relatively few suppliers, the market is fairly easily manipulated.

As for the real incentives arriving gradually over decades, the aforementioned argument about artificial markets, was quite clearly demonstrated over the course of the past 12 months. The rapid runup and decline of oil prices showed that this is not likely to be a gradual process on its own.

Finally on the subject of global warming/climate change/whatever, that may be argued. However, there are other good reasons including national security and economic stability that provide perhaps an even better rationale for increased efficiency.

The problem is the auto industry is so capital intensive and has such long lead times, that as we've seen it's hard to adapt quickly enough to the kinds of fluctuations that we've seen recently. Providing a tax based mechanism to filter out some of the volatility would provide some breathing room to manufacturers allowing them to adjust and produce products that meet the desired goals of improved efficiency and reduced emissions of all kinds, both noxious and greenhouse gas.