Tuesday, July 12, 2005

On a lighter note--an economic question

This is from an IT magazine I was browsing:

"Every year, Americans waste 2.3 billion gallons of gas idling in traffic. At today's prices, that's a $6.2 billion wallop in the nation's pocketbook. Figure in 3.7 billion hours of lost productivity and the gridlock tab tops out at $65 billion."

We see analyses like these about lost productivity and lost dollars everywhere, but it seems to me that they misunderstand the cyclic nature of our economy. That "6.2 billion dollar wallop" went right back into the pockets of the oil companies, who employ hundreds of thousands of workers--so from an economic standpoint it was good for their pocketbooks.

Assumably it also led to more purchases at gas stations, more purchasing of CDs and DVDs to watch/listen to while stuck in traffic, and more car repairs. In fact, I bet you could make the argument that traffic is pretty darn good for the American economy. What it's not good for is the American psyche, as almost everyone hates being stuck in traffic, or the American environment, as cars pollute. But, you wouldn't have an article if you conducted the analysis this way, right?

This is what's wrong with people's arguments against being taxed (at all), as if tax dollars simply disappear when they leave our paychecks. Now, this is not to say that we shouldn't be taxed less, as we definitely should; or that our tax dollars could be used more efficiently, as they definitely could; or that our government isn't a sprawling bureaucracy that could stand a lot of trimming, as I wish the RepubliDems would stop expanding it (and their salaries) every year.

Tax dollars are just like those dollars listed above: in fact, I bet you could do a pretty sweet PhD thesis on the returns people in different occupations get on their tax dollars. Just as some states, like those in New England, get more transportation money back than they're taxed, so I bet certain people get more "value" out of the things their taxes pay for than others. Those who drive more get more money out of the roads; those who are healthy get less out of the health care system; those who work for giant farms get money from subsidies.

One man's inefficiency is another man's job.



At 4:00 PM, Blogger StandingOutInTheCold said...

This is sort of the idea behind a national sales tax rather than an income tax. The reasoning is that if people have more money they'll spend more money. And since the gov gets money from the sales tax it ends up with about the same amount but it went through businesses first, rather than coming straight out of the paychecks. The net result is the same (in theory) for the gov but its way better for the economy. The problem, again, is in the psyche -- no one wants to pay a 20+ percent sales tax, even if their net tax is the same as with an income tax. There are other flaws to the system, I'm sure, but the basic principle is kinda in the same vein as your tie between percieved 'waste' and economic benefit.

At 4:05 PM, Blogger StandingOutInTheCold said...

This is kind of a conspiracy theory and probably not very true, but I can't help but wonder if the connection between fossil fuels and our economy isn't the real biggest reason we are still so dependent on them. We say that the reason we don't have many nuclear power plants (we have 200 or so) is for environmental reasons. Yet France, which is much more environmentally conscious than us, relies almost completely on nuclear power. On the other hand, there is a huge interest among many big players in the US economy to keep nuclear power out. There's the oil people, the coal miners, the power plant operators, the refineries, etc. Its a multi-billion if not trillion dollar enterprise put in jeopardy if good, clean nuclear power is developed. So it seems more than a little likely that some of those billions are going to make sure that nuclear development stays slow. I wouldn't be surprised to find out that some oil mogul is secretly funding some environmentalist group because they're vocal against nuclear power (especially since it seems better for the environment than fossil fuels to me). But now I'm just being paranoid...

At 4:56 PM, Blogger Hans-Georg Gadamer said...

Standing - great insight! I have always wondered why we weren't more involved in nuclear power, considering its amazing upside and small downside (waste management, but there have to be solutions?). I don't think it is a conspiracy theory at all. We should be more involved with nuclear power, especially since the negative side of plants blowing up like an atomic bomb suprisingly enough can't happen. Yay to real science!

On a seperate note, one summer I guy I worked with (who was a professional Santa Claus) thought the government was sticking to oil instead of powering the nation by --hemp. Apparently hemp is God's real gift to the world, this guy said you could use it for gas, harvest it for food, plus those cool necklaces guys wear. So maybe we should look into the power of hemp, or become Santa Clauses. I mean, the beard is pretty cool, pretty cool.

At 5:33 PM, Blogger Jackscolon said...

Here's one (thought that is)...

Money taken out of the economy for social security... three counties in Texas showed that leaving the money in the hands of private investors is much better than investing it in social security. The money earns a higher return without the waste involved with government- leaving the investors with more money and allowing at least the same investment benefit to the economy. I really don't think you are arguing that the money wasted on government bureaucracy plays a big enough positive role to account for that... are you?

While this is only one example, I would guess that government inefficiency reduces the positive effect on the economy caused by projects more than leaving the money in the private sector the entire time.

At 11:15 AM, Blogger RedHurt said...

The other problem with a national sales tax is it doesn't descriminate based on age, income, etc. I know flat tax proponents probably like this, but when I was in college and could file as exempt it went a long way towards helping me pay for tuition and didn't really cost the country much at all. A national sales tax would've kept me from buying as many things to try and keep more of my money, but as some purchases would've happened, I'd have ended up with less money.


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