Tuesday, December 16, 2008

Chu and Pigou

The Wall Street Journal reports that Steven Chu, who was just named energy secretary in the incoming administration, is a member of the Pigou Club:

In a sign of one major internal difference, Mr. Chu has called for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work.

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," Mr. Chu, who directs the Lawrence Berkeley National Laboratory in California, said in an interview with The Wall Street Journal in September.

But Mr. Obama has dismissed the idea of boosting the federal gasoline tax, a move energy experts say could be the single most effective step to promote alternative energies and temper demand.

N.B.: NEC Director Larry Summers is also a club member in good standing. Will the energy secretary and NEC director manage to convince the president-elect to change his mind? Stay tuned.