Thursday, April 27, 2006

Next year: using tax rebates to fight gravity!

It looks like the rest of this election cycle is going to be spent listening to politicians explain how they are going to lower gas prices. The Republicans want to show they care by sending everyone a $100 check and calling it a tax rebate. This is even stupider than the plans being emailed around to force companies to lower prices either by boycotting the one that charges the most, or by boycotting on a certain day etc. (The commentator on linked NPR story gives economic reasons why this won't lower prices. There is a more basic explanation available. Boycotts are all about people forgoing short term self interest to further a higher cause. But the desire to lower gas prices is all about not making sacrifices.) In any case, a hundred dollar check in the mail is certain to make everything all better and convince the nations that Republicans care. Meanwhile Democrats are going to increase the supply of gasoline by adding a windfall profit tax on gas.

When I lived in Alabama, there was a governor’s race where both candidates promised to (1) lower taxes (2) balance the budget and (3) increase spending on education. The Democrat, I think, promised to do this with a lottery, or something. The Republican wanted to do this by making 2 + 2 = 5, at least when you are calculating government revenues.

The current proposals are no more realistic than the Alabama budget proposals. Basically, congress wants to change prices without altering either supply or demand. No one dares suggest reducing demand, that would actually require people to drive less, and while there are some proposals to increase supply a little by opening up ANWR, no one seriously thinks these will go anywhere. The boycot proposal is just as stupid. The claim is the consumers could bring down prices without actually reducing demand, simply by moving their demand around. But as the NPR commentator points out, if you move your business from company A to company B without actually reducing consumption, you are making B raise their prices just as much as you are making A lower their prices. There is just no free lunch.

There really is nothing like an overwhelming sense of entitlement to bring out the moron in all of us.

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