Sunday, July 13, 2008
Greg Mankiw tells us what would happen if politicians pandered to economists. Hint: It would be an improvement on the pandering we have right now.
Heavily taxing energy usage will lower energy usage, BUT, that's not what the government really wants, because it is addicted to energy taxes like a smack addict.
The secretary of transportation was complaining about reduced federal gas tax revenue because people are driving less.
Given the vastness of the US compared to say smaller European countries, heavy fuel taxes will induce a real recession or depression very quickly. Like it or not, the US economy depends on reasonably priced transportation.
Sure the government could put a $1-5/gal tax on gasoline, but all that would accomplish is to generate a brisk black market, create a new business for the mob to get into, cause the unemployment rolls of low/middle income workers to swell and fuel a massive round of inflation.