The Gas Tax... revisited again
by SevenStrings, Mon May 19, 2008 at 02:46:21 PM EDT
Okay, this diary is not really about the gas tax, or Sen. Clinton's proposed gas tax holiday which did not find support from a single mainstream economist. This diary is about a larger issue: when do we listen to economist, and when do we reject their advice ?
Economic theories are all about maximizing societal benefits (such as GNP, per capita GDP, growth rates, housing starts etc.) using sound economic/fiscal policies etc. Generally, disparites in income/asset distributions do not concern economists too much ~ some disparity in income and asset distribution is desirable, because that disparity is the reward for hard work; and we cannot promote growth without rewarding hard work. Thus, while some economists also worry about extreme economic disparities, they agree that economic disparity is a smaller concern than overall growth.
This is where, I believe, we should reject the economists advice. Let us consider the emerging food crisis as an example.
According to a 2006 study, about 850 million people go hungry every day. Out of this, 35 million live in the US... this number includes 22 million adults (1 in 10 of all adults) and 13 million children (1 in 6 of all children in the US). The numbers are even more disturbing for black (21%) and hispanic (19%) households, and households led by single women.
Think about this: 1 in 6 children goes to bed hungry . In the US... the leader of the free world, where household assets top 70 trillion!! 1 in 6 !!
What should be the proper response to this problem ? It is a problem that has festered for many years. After all, a war on poverty was felt appropriate in the 1960s.
According to economic theories, the problem would not be worth any effort ~ after all, the GDP has been expanding at about a 3% rate... a rate which outpaces inflation and population growth. Thus, the average quality of life has been increasing steadily. Thus, society is making steady progress towards a goal where there would be no hunger. Thus, we should not do anything to alter the present course ~ with sound economic policies, and with sound fiscal policies, combined with appropriate technological innovations, we can eliminate hunger... in about 50 years.
Do we want to wait 50 years ?
The gas tax populism was an effort to alleviate some of the suffering today. I know that not every penny of the proposed tax holiday would be passed on to the consumer (I recall reading that the best estimates said that the oil companies would pocket about 30%). I know that it rewards consumption, and is bad for global warming.
But are we really that heartless that we will argue all those points, and ask even more children to go hungry ?
Because, I am fairly certain, that with the increase in the gas prices, more people are foregoing even more meals.
Including in the US !!