Saturday, June 30, 2007

A Reading for the Pigou Club

Several readers email me to commend this piece by Charles Krauthammer. An excerpt:
This country desperately needs better gas mileage. But it does not come free. The most efficient and equitable way to both increase mileage and reduce gasoline use (increased mileage alone can induce people, perversely, to drive more) is with a new gasoline tax, refunded by means of reduced payroll taxes to make it revenue neutral. But there is absolutely no congressional or administration support for that, because it is too honest and open an acknowledgment that there is no free lunch. The reason Congress loves corporate average fuel economy (CAFE) standards is precisely that they hide the cost -- in the sticker price of a new car. Whatever blame there is for the unfairness of life -- that energy efficiency is not free -- goes to the auto company rather than the mandating body, namely Congress.