There is always profit for politicians in pandering to the short term interests of the voters. That’s because there are enough voters who simply don’t understand their long term interest or who don’t care enough about the future to take it into consideration.
The stimulus package is one such case of pandering, and all the politicians got on board. Why? It would be political suicide to refuse to send the poor voters some more money. In the short term, I appreciate this money that will land in my bank account, but it’s not going to solve much in the long term. Long term economic growth will result from accumulation of capital, entrepreneurship, and inventiveness. Unfortunately, the politicians can’t transmit those to my bank account or send them out in an envelope.
Now McCain started, and Hillary Clinton has taken up the call for another short term way to make the voters temporarily happy without solving any of the underlying problems–the gas tax holiday. Gas prices hit me pretty hard in my business, because I do work at my customers’ businesses. What that means is that I have to drive a good deal, and often can’t plan my driving because it’s in response to emergencies. So gas prices have hurt me. But a gas tax holiday will provide some short term relief at the long term cost. We are already not paying for what we are doing. We’re charging it all to the future when some other congress can create a short term solution until, as will inevitably happen, we run out of such short term solutions.
In an election year, this is to be expected. Yet I would urge my fellow voters not to make your decisions based upon this type of vote buying. We need to work toward effective energy independence in this country. That will take a great deal of time and effort, and there are many different ways in which we will have to work. But the technology is getting better all the time, and the potential is there. One silver lining to the cloud of higher gas prices is that the higher those prices go the more incentive there is to develop alternatives.
That type of economic incentive will produce better alternatives. Right now the government is trying to mandate particular alternatives that we need to develop. But technology moves much faster than the speed of government. What the government is mandating today may be tomorrow’s rejected option. You have to research in order to find that out, but the government can’t get in and out of such market’s fast enough.
Similarly, a government windfall profits tax on the oil companies for such research is not the best way to bring about innovation. Robert Reich proposed such a tax here, after writing an excellent challenge to the gas tax holiday. Further, despite much erudite talking about defining windfall profits by economists, the real, practical definition is that any profit someone doesn’t like is a “windfall.” And yes, I have studied the technical definition–I just think it’s garbage.
In fact, such government redirection of money is more likely to stagnate than to stimulate the process. The simple fact is that painful as they are, the greatest incentive to developing new energy resources is the pain of higher gas costs. A whole range of options immediately comes up, and starts to become economically feasible: More mass transit, alternative sources for oil, clean coal, solar and wind, more efficient vehicles, and the list goes on.
It’s quite possible that the solution lies outside of the range of ideas at the present, or that there is no single major component, but rather lots of small ones. Whatever it is, you can count on the government to screw it up.
Hillary Clinton should be ashamed of herself for supporting such a bad idea. Clearly she believes she can increase her lead amongst blue collar voters. I’m thinking they may catch on to what’s happening instead.
