Posted: May 16th, 2010 by Militant Libertarian
I saw this opinion piece by Holman W. Jenkins, Jr. in the Wall Street Journal and found it amusing. First, he’s right for the most part. I won’t argue against his assertion that subsidizing electric vehicles (or anything else, for that matter) is just another way of taking your money and giving it to someone else for doing something that, for whatever reason, people think is “good.” In the case of electric cars, every one sold is a $7,500 federal tax credit, which means that you or someone else isn’t paying that $7.5k into the Treasury.
Personally, I love tax credits for one reason and one reason only: I don’t like taxes and “credits” are as close as we can get to not paying them without fear of being thrown in prison by the Gestapo. On the other hand, they are still a type of wealth redistribution, though admittedly in a much more roundabout way. Instead of taking your money in taxes and then giving it to someone else, what they’re really doing it taking your money and giving it to the electric auto industry. They’re the ones who get to lower their price tags (in advertising) by $7,500 and keep that money in profit, since they aren’t the one paying the subsidy.
Of course, all of this is way beyond most high school graduates whose economic studies never went beyond “the government gives you a REFUND every year! It’s like FREE MONEY.”
Anyway, back to the WSJ and Mr. Jenkins’ thoughts. He’s right on the count that each of us is subsidizing what is, despite my personal leanings, still just a fledgling enthusiast-based industry that is a tiny fraction of the overall automotive market. Sure, in the future it might be more, but we have to be honest with ourselves: most Americans (and probably people world wide) really aren’t interested in owning an electric car right now.
Of course, I’m going to get blasted by all the die-hards and pundits in the EV community because “Electrics are the future, man. The future!” Ya, great, but they aren’t the present. People might SAY that they want an EV, but they follow that up with a lot of reasons why they just can’t have one right now. I’m one of them, since where I live, an EV is completely impractical.
What I’m getting at is that while I find these vehicles endlessly fascinating and love seeing how this brand new (or re-newed, as you wish) industry is building on itself and taking off.. I am objective enough to know that my personal fascination does not change market realities.
Anyway, where the WSJ guy gets it wrong is when he talks about taxes. Specifically, he likes the idea of a gas tax. I don’t. I don’t like anything that uses the term “tax” or anything similar to that word. We don’t need taxes to “nudge” ourselves into the brave new world of electric automotive. No, we need to stop subsidizing and attempting to use the hammer of government to encourage things.
Sorry, folks, but the government is a hammer and the shaping they’re doing is by pounding on the anvil that is US. To hell with that. I’m no anvil. Tell the smith to get a new job.
Instead, why not remove all the subsidies, handouts, “grants,” and whatever else that Washington throws around to all of these differing companies (often in competition – the oil and gas industry vs. the electrics is a good example)? Why not just dump that idea and let the people decide what they want through the power of their pocketbooks?
Trust me, oil is a lot more expensive than the current per-barrel price says it is. If all government subsidies (including foreign aid and military protection for the OPEC nations) were removed, it would skyrocket. Bet you didn’t know that, did you?
Remove them and watch gasoline costs fly through the roof and you’ll see people eyeballing those CNG, EV, and TDI cars with a much more favorable look. There’s no need to tack on extra taxes to petroleum-based fuels to make that happen. Just stop sending money to everyone and their brother, from the oil company to the transportation groups that haul the stuff to the refineries that build them and everyone else too.
That should take care of this and a lot of other problems all in one easy shot. Plus, as a bonus, it shrinks the size and cost of government to boot. That, of course, is why it will never actually happen.