Former Mondale speechwriter Charles Krauthammer has been pushing a line for some time about increasing gasoline taxes. He does it again in an extended article in the current Weekly Standard, this time getting picked up by Sully and I’m sure others, who are latching on to his idea. This is an idea that will empower mobsters and encourage criminality throughout our society, and should thus be avoided.

The basic idea goes like this: back when gas prices were over $4/gallon, people seemed motivated to drive around less and spend money on more energy efficient cars. So if the invisible hand isn’t charging $4 for a gallon of gasoline, let’s force it by means of a tax hike, which will then be refunded to people by means of an income tax reduction.

The problem with this is that while people are motivated to drive less and choose fuel efficient cars when the price of gas is actually above $4/gallon, people become motivated to avoid the tax when the price is artificially set above $4/gallon by the government. And the primary catalyst for such avoidance is organized crime, or the Mob.

None of this should be news to anyone who is even casually schooled in economics. The concept is price elasticity, which states that the less elastic a price is, the less the price effects demand. This can be for a number of reasons. In some cases, like cigarettes, it’s because the consumer is addicted. In the case of something like gasoline, it’s because the switching costs are too high, i.e. moving closer to work, selling the car and buying a new one, etc. In THOSE instances, it behooves the consumer to seek out the cheapest alternative when making a purchase. In a world where the actual price of gasoline is above $4/gallon, that may include taking public transportation, etc. In a world where the actual price of gasoline is less than $4/gallon, but the artificial price of gasoline is above $4/gallon, then one becomes motivated to seek out someone who can procure the good at its actual market price. That someone would likely be a mobster.

This is basically what happens when goods for which there is demand is either made illegal or absurdly expensive by government. On the illegal side, we saw this with prohibition in the 1920′s, gay bars in the 1950′s, and see it with prostitution and drugs today. On the absurdly expensive side, the big one that comes to mind is cigarettes, where Hamas started smuggling them into New York City to help keep the price low. And of course, there’s gasoline in Europe, where the Russian Mob currently does a brisk business smuggling gasoline. I would recommend reading the book Red Mafiya for more details, but if I remember correctly, they already smuggle gasoline into New York City today.

Yeah, that’s exactly what I want, to create public policy that helps Hamas and Russian Mobsters enrich themselves, while encouraging them to be violent on our streets.

Here’s a better idea. If you want the price of gasoline to rise such that people choose more green vehicles and terror states stop being enriched, then you need to cause the ACTUAL price of gasoline or rise, or alternatively find an alternative fuel that is cheaper than gasoline to switch people onto. The former solution would be to bomb Saudi Arabia into dust, but since all our politicians appear to be on the Saudi payroll, I wouldn’t count on that happening any time soon. The latter plan would be the Zubrin plan, which may see some light in an Obama administration, but I wouldn’t count on it.

But raising gasoline taxes, that’s a monstrously bad idea.

Tags: Bob Zubrin, Charles Krauthammer, Energy Crisis, Gasoline Prices, LinkedIn, Mobsters, Russian Mafiya, Saudi Arabia, Taxation, Zubrin Plan

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