Sunday, July 27, 2008

Raise the price of gas!

From Joel Stein, via Greg Mankiw:
I love $4 gas. It makes me appreciate freedom. I watch as the dollars spin and think, "You, Triceratops, did not get squished by an asteroid in vain. You got squished for a $60 drive to Vegas." ...

If MoveOn and Barack Obama really were going to bravely confront America with hard, necessary truths, they'd tell us how great $4 gas has been for us. With public transit use nationally at a 50-year high, traffic dropped 2.1% in the first four months of this year across the country. That mileage reduction — along with people driving smaller cars, and more slowly, to save gas — could mean that 12,000 fewer people will die in traffic accidents this year, according to a study by professors Michael Morrisey at the University of Alabama at Birmingham and David C. Grabowski at Harvard Medical School. Air pollution has been reduced enough, according to UC Davis economics professor J. Paul Leigh, to prevent 2,200 respiratory-related deaths over the last year. Less eating out and more walking and biking could mean a 10% reduction in obesity, according to Charles Courtemanche, an assistant economics professor at the University of North Carolina at Greensboro. And, apparently, higher gas prices also keep econ professors employed. ...

Cheap gas is unfair. Driving creates huge social costs in the form of traffic, health-damaging pollution and global warming that aren't suffered solely by the person buying the gasoline. Governments usually set up idiotic systems to offset such social costs (emissions trading, ethanol subsidies, taco truck regulations) instead of forcing individuals to pay for their own mess by adding a tax to remedy the imbalance. That kind of tax — the most fair kind, really — is called a Pigovian tax, and its use is why gas costs $8 to $10 a gallon in Europe, where they have fewer road deaths even though they drive like complete idiots. ...

If the U.S. were to slowly jack up gas taxes until we're in the $8 range, life would be better. We'd not only be safer and have reduced greenhouse-gas emissions, we'd probably be happier too. Studies show that the only thing that consistently increases personal happiness is social interaction; high gas prices have led to real estate prices falling faster in suburbs and exurbs than in cities, so we may soon have more content downtown-dwellers. Those same studies show that the thing that makes people least happy is commuting, and telecommuting is way up this year. We could use the tax revenue to fund public transportation. And we'd go back to the days when driving a car was a way to show people what a rich jerk you were. In other words, we would no longer need SUVs for that.

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