Wednesday, May 07, 2008

New York Times gives Cato dude a forum:

If you read the Op-Ed The 18-Cent Solution and wondered what the heck was going on, here's your answer. The author Bryan Caplan is an Associate Professor of Economics at George Mason University, and an adjunct scholar of the Cato Institute. (which the Times fails to inform)

How else to explain the following points he makes in favor of a summertime Gas Holiday:
  • "the tax holiday is a relatively cheap symbolic gesture that makes truly bad policies less likely"     Where "bad policies" are "a salad of populist nonsense: price controls, rationing, windfall profits taxes, arcane loopholes and lots of lawsuits"

  • "it won’t cost much — the estimated $9 billion in lost revenue is about $30 per person. That’s not a bad price to pay for a little insurance against a rerun of misguided ’70s measures"

  • [Even if all the gains go to the oil companies, this] "'giveaway' to the oil industry sets a positive course for the future"

  • "that oil companies might pocket most of the tax cut could easily be a good thing. It helps cancel out the negative legacy of the last energy crisis"

  • "In a perfect world, policymakers would respond to energy crises with benign neglect."

  • "it’s better for [policymakers] to balance their abuse of the oil industry with an occasional olive branch"
Forget the fact that oil companies are making massive profits. You see, they were hurt 35 years ago and so we must now make it up to them in order to give "businesses an incentive to figure out how to increase output". Apparently they don't have the incentive to increase output with oil at record levels. Also, his claim that the oil companies would hustle, is betrayed by his own remark that "it takes a while to build a new refinery", so why the largess to Big Oil?

And if the $9 billion doesn't go into the Highway Trust fund, and roads deteriorate, then drivers will have an incentive to figure out how to get across town without damaging their cars. Or something like that.

The most offensive point he makes is this:
"In a perfect world, policymakers would respond to energy crises with benign neglect."
That is factually wrong. In California, due to energy standards set by the state, per-capita use has held steady for decades while it has risen for the rest of the country. "Benign neglect" is not the optimal way to go, although it does allow businesses to pursue goals that maximize short-term profits for whatever dynamic is currently in play, without any consideration of the country's long-term well being (and sometimes even an industry's well being).

In case you haven't guessed, Caplan is a fierce supporter of Free Trade.

A total libertarian ideologue. And he doesn't like democracy much either.

EXTRAS: A capsule (unfavorable) bio here, where we learn that:
Columnist Jonah Goldberg, “20/20” co-anchor John Stossel, and former presidential economic advisor Gregory Mankiw have all praised Caplan’s work.
A critical review of Caplan's book at The American Prospect here.

LASTLY: Ever heard of the website? It's interesting.


There will be no increase in output of oil; just as there was none in 1972 when the lower 48 states production peaked. Despite massive government incentives to discover more the decline of domestic oil production has been inexorable. We are now at or near worldwide peak oil. Further, we now import about 14 million barrels of oil per day at a yearly cost of $600 billion.

By Anonymous Anonymous, at 5/09/2008 4:18 AM  

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