Thursday, September 24, 2009

Friedman and the gas tax

Thomas Friedman stumps for the gas tax in his latest column. Although this blog agrees with his conclusion, as previous posts have noted, Friedman's column presents the arguments poorly; you get the feeling he phoned in the article from a dinner party.

While a gas or carbon tax de-incentivizes in a far more direct and honest manner than CAFE or similar government-mandated standards, it cannot be argued — as Friedman does — that a gas tax is "win, win, win, win, win — with no uncertainty at all."

Like most consumption taxes applied to basic goods, such as a state sales tax, the adverse effects of such taxes have more impact on the poor. And on an even more basic level, nobody likes higher prices, even after understanding the [dis]incentives behind a gas tax.

And there is uncertainty aplenty, as there is with every mechanism intended to push a market in a particular direction. The intent of any gas tax is to coerce the free market in a desired direction; a form of intentional, legal market manipulation. Hopefully a benevolent manipulation for which market participants will be well prepared. But that process is filled with uncertainty — and that's a good thing! It is the free market at work.

Friedman makes his case, but he does so poorly, omitting key factors incumbent in an honest debate.

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