Man Without Qualities

Wednesday, May 26, 2004

Jobs, Anyone?

Gregg Easterbrook advances the hoary notion that more national gasoline taxes create all kinds of benefits (and Andrew Sullivan is happy, too). Mr. Easterbrook argues in part:

Had federal gas taxes gone up 50 cents a gallon 10 years ago, several things might not have happened or would have had far less impact. The S.U.V. and pickup-truck crazes would not have occurred, or at least these vehicles would be much less popular; highway deaths would have been fewer; and gasoline demands would be lower as would oil imports. ....

The consequences of using the tax system to create the supposed "benefits" Mr. Easterbrook posits are far more complex than he admits. His column is a virtual tour-de-force of omitted important considerations and disingenuous reasoning. Some of these implicit errors and omissions are the focus of Caroline Baum's wonderful article (although it is not a response to the Kerry-Easterbrook-Sullivan proposal as such). As she notes just by way of example, a gasoline tax does not create incentive for increased exploration or supply - unlike the demand-driven price rise we are seeing now. But Mr. Easterbrook counts as a "benefit" of his tax proposal that the chance of this kind of demand-driven price rise would be suppressed by his proposal. As the old saying goes, be careful what you wish for ... And Mr. Easterbrook's approach gets worse ... a lot worse ... mostly in ways he is careful to avoid even mentioning. [Baum link from Luskin.]

I don't want to generally attack the prospect of a rise in the gasoline tax, or even to argue that such a rise is an absolute negative under all conditions. Indeed, perhaps such a rise could be a positive if coupled with a decrease in other taxes, as proposed in 1999 by N. Gregory Mankiw, now chairman of President Bush's Council of Economic Advisers, a proposal disingenuously cited by Mr. Easterbrook are support for his own quite different proposal. Professor Mankiw's argument proceeded from a set of beliefs regarding the virtue of increasing overall national economic efficiency and reduction of wasteful economic "externalities," not to advance economic redistributionism or some vague environmental imperative. Mr. Easterbrook's past writings certainly show no sign of embracing an approach like Prof. Mankiw's - and Mr. Easterbrook signals no change of heart here. And Mr. Easterbrook's approach gets worse ... a lot worse ...

But what of Mr. Easterbrook's argument taken on it's own terms, setting aside its omissions, implicit dishonesty and outright incoherence? What, for example, is one to make of his naive, unexplained citing as a "benefit" from his (and Senator Kerry's) proposed tax that the S.U.V. and pickup-truck crazes would not have occurred, or at least these vehicles would be much less popular? Senator Kerry and many other Democrats have made a big stink of the "loss" of American jobs, especially American manufacturing jobs, to overseas companies. One of the main reasons more American jobs have not been "lost" is that American auto manufacturers have been relatively good at turning out those S.U.V.'s and pickup-trucks that "crazed" (Mr. Easterbrook's term) American consumers have been buying instead of foreign cars. Those S.U.V.'s and pickup-trucks have been made in this country by American companies employing American manufacturing workers.

Is it a clear benefit that those manufacturing jobs would have been forfeit? Or is the job loss to be considered a loss but a loss obviously worth the cost - so much so that this particular manufacturing job loss doesn't even warrant a mention in a column defending Democrat Kerry's endorsement of a loopy gas-tax increase?

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