Wednesday, September 26, 2007

Alan Greenspan Calls for $3 per Gallon Gas Tax

Watching Alan Greenspan on BookTV Cspan2 Sunday night I felt like I was fortunate to be sitting in the presents of a wise sage. He was being interviewed to discuss his new book, The Age of Turbulence. The next day I rushed out and purchased the book at Borders Books for 40% off of the $35 retail price. (Free plug for Borders) I look forward to reading it.
In the past, as Chairman of the Federal Reserve, Mr. Greenspan had to be reserved. If Greenspan sneezed the world economy could catch a cold. Now, out of office Mr. Greenspan is speaking his mind on a variety of subjects and it is obvious that he has thought long and hard on the things about which he has opinions. With the mind of an economist, his utterances are not emotive but reasoned rational arguments.
In the hour, or maybe longer, interview he explained why he was a “libertarian-Republican” and not a “right-wing Republican”. He told of his relationship with Ayn Rand and the impact she had had on his intellectual development. He explained why he viewed China as a partner and not a rival and why Chinese investment in the American economy was a positive development. He discussed the dangers of growing income inequality and how this gap could lead to a dangerous populism. He spoke of the evolving roll of intellectual property and how it was replacing manufacturing as a creator of wealth. He explained how world trade was making the world a more integrated and a less dangerous place. He explained why Bill Clinton was one of our best “Republican” Presidents.
One of the things he discussed that most impressed me was global warming and how to combat it. He said that it was his conclusion that the scientific evidence is irrefutable that global warming is real and a very serious threat and that we must combat it. He said that there is no way to combat global warming without reducing the output of CO2 emissions. To do so we must get the cost of CO2 up in order to get the use of C02 down. The worse single source of CO2 emissions is the private automobile. To significantly reduce CO2 emission, he thinks, we need a gas tax of about $3 per gallon phased in overtime with the revenue rebated to the public as tax cuts. He says this could be achieved without wrecking the economy.
While there are many promising technologies that could flourish, he said, if only gas cost more, the most promising technology is battery-powered vehicles. Hybrids may be an interim promising step but the solution is battery-powered vehicles where the consumer recharges his car overnight. The reason why this is so promising is that it does not require a new distribution system, as would be the case with some other proposed alternatives. Also, we would all be charging our car overnight when demand for electricity is low, thus maximizing the use of the infrastructure already in place.
I know that many of the people who have long warned of the dangers of global warming are not going to welcome economic solutions to the global warming crisis. They are not going to be content until we change human nature and people are no longer “greedy”. Expressing love for Mother Nature however and persuading people to change their evil ways is not going to solve the problem. Without the application of economic principles, the problem of global warming will not be solved. Unfortunately, at the present time no politician can get elected to office while advocating a $3 per gallon gas hike, but with people of the stature of Alan Greenspan calling for rational solutions, policy makers may develop the nerve to provide leadership and offer serious solutions. I just hope that the cowardliness of politicians and the ideologically driven obstructionism of environmentalist do not cause us to wait until we are beyond the point of no return.
I am glad that Alan Greenspan is saying the things that need to be said.

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  1. Good news. Not every politician is a coward when it comes to gas taxes and carbon taxes. Congressman Dingell just released a summary of a carbon tax/gas tax bill he intends to introduce. Congressmen Stark and McDermott have introduced a carbon tax bill as has Congressman Larson. So far they are all Democrats, but a carbon tax certainly isn't and shouldn't be a partisan issue. In fact, Professor Greg Mankiw, former chairman of President Bush's Council of Economic Advisers, is a leading supporter of carbon taxes and is also an adviser to Mitt Romney. The question is whether Romney will listen to good advice and has the courage to do the right thing. I'm not holding my breath. For details on all of the pending legislation and to see a recent op-ed by Professor Mankiw, see the Carbon Tax Center web site.

  2. Anyone interested in hearing more about electric cars should check out the documentary "Who Killed the Electric Car?" released in 2006. Through interviews with government officials, former GM employees and concerned celebrities, writer/director Chris Paine (former EV1 owner) seeks to answer the question of what happened and why the car did not succeed. The piece has received high recognition from several well-known film festivals and is quite good. Definitely worth the watch! Also forces one to examine the corrupt nature of big business and where our nation's priorities potentially lie.