Thursday, April 24, 2008

Can they lower the cost of a Wii while at it?

CNN's daily poll today is "Should the Govt step in to lower gas prices?" Shockingly, 61% (as of now anyway) say yes. This poll should be reworded to ask "Do you have any idea how the world works"?

If any of the illustrious 61% is reading this, lemme tell you why the government can't and shouldn't do a damn thing about it.

Indirectly the government can reduce the price of has by being financially responsible. Stop destroying the dollar and oil will fall in price. But if you are part of the 61% I'm guessing that's not what you meant. What you meant was price ceilings.

Price ceilings NEVER, EVER, EVER work. If you get 10 economists in a room and ask a question, you will usually get 10 different answers. Ask all 10 about price ceilings and all 10 will tell you the same thing. A ceiling causes a shortage of the product/service. This in turns creates a black market for which people pay even higher prices than before the shortage. Meaning for a consumer your options are don't buy the product because you can't find it, or buy it for more money than before from a guy down the street in a van. Read up on what happened in the 1970s when Jimmy "Hamas is Cool" Carter went down the price ceiling path. Wasn't pretty. And as I have mentioned before, the best example of how price ceilings do the exact opposite of lower prices, is NYC apartments. NYC has had rent control in effect for 50+ years. And yet which city has the most expensive rents in the country? You guessed it.

Gas is expensive now because the dollar is weak and there's a lot of speculation it will get even weaker. That may or may not happen. Traders think it will and traders around the world are the ones who set the price of oil. And there is nothing the MESSIAH OBAMA can do about it. Get it through your thick skulls people.

Subsidizing gas for people is also wrong because it rewards bad decisions. If the govt steps in and magically makes gas $2 again there is no incentive for drivers to switch to more fuel efficient cars. Take a look at any parking lot whether in an office complex, at the mall, or wherever. Even after a year of $3+ gas the majority of vehicles are still trucks and SUVs. So while people like to complain about the cost of gas, it's really not that much of a burden on them. If it were they would drive something smaller. At some point, be it $5 or $8 or $10 a gallon, people will be forced to change their behavior and drive smaller fuel efficient cars.

Americans want it both ways as usual. They want to drive the 11 MPG monster SUV to work every day. But they also want someone else to pay for it. Just like they want to live in the 6000 sq ft McMansion but have someone else pay for it. Just like they want "FREE" health care paid by someone else.

And also subsidizing gas will slow down the development of alternative fuels. Necessity is the mother of invention. If gas stays cheap there is no necessity for non-gas powered cars. Think of it this way: would you rather pay $2 or $3 for a govt subsidized gallon of gas for the next 50 years or pay $5 for the next 10 and then drive a car that runs on hydrogen or electric power for 40 years and never send another dime of oil money to Saudi Arabia? I take option B myself.

3 comments:

Zach said...

Do you think that when confronted with this poll question, most responders thought of price ceilings or lower gasoline taxes? I bet that most people were thinking tax relief in the context of McCain's recent proposals rather than price controls.

Well, given the results of this poll, less than 40% of the respondents actually think at all, so maybe its a moot point.

Ed said...

I think most respondents' thought process went something like this

I have a problem. Who can solve my problems? Why the government can of course. So yes I do believe government should step in.

Jeremy said...

And thus it goes back to:

"Do you have any idea how the world works"?

The answer is No. Most Americans do not understand the implications of government intervention.

We've been coddled to the point of expecting success and prosperity. We think we are untouchable...life lessons are forthcoming.