Mr. Pearlstein,
I have to say that I found your column on the energy bill pretty disappointing. You wrote:
Would you not agree that taxing bad behavior is preferable to the government subsidizing perceived good behavior and picking winners? Rather than demand higher efficiency in cars and appliances, shouldn't we just tax the energy source to the point that captures the externalities that its consumption imposes on society? After all, is not an efficient appliance powered by a utility that uses coal is arguably less preferable than a less efficient appliance that uses solar cell power? Tax the coal for the pollution it imposes, set prices, and let consumers choose accordingly.
Also, I was greatly surprised to see the manner in which you glossed over the call for more ethanol. Surely you agree that ethanol is terribly damaging, a political payoff to the Midwest that contributes to higher food prices and is tremendously wasteful of water resources (requiring about 3 gallons to produce 1 gallon of ethanol). When the government sets about picking winners it is more apt to attempt to score political points -- such as gaining traction in Iowa -- than actually doing what is the best for the country, if indeed it had the power to accurately prognosticate what source of energy is best.
I have little sympathy for the oil companies losing a tax deduction (yet another reason we should use a flat tax to eliminate all such loopholes and distortions) but I also refuse to grieve for the Senate's inability to pass the energy bill. Seems to me this is an example of doing the right thing for the wrong reasons.
Regards,
Colin
Update: Steve responds: "Thanks for your note. Sorry we don't seem to see eye to eye on this one."
I have to say that I found your column on the energy bill pretty disappointing. You wrote:
There was plenty in that version of the energy bill that had strong support from most Americans and, I suspect, most business executives. Higher fuel economy standards for cars. More ethanol in gasoline. Tougher efficiency standards for appliances. Modest subsidies for conservation and alternative fuels.Perhaps that is true although I haven't seen a poll on the subject. In any case I think it is your responsibility as a columnist not to write about whether Americans do support something, but whether they should.
Would you not agree that taxing bad behavior is preferable to the government subsidizing perceived good behavior and picking winners? Rather than demand higher efficiency in cars and appliances, shouldn't we just tax the energy source to the point that captures the externalities that its consumption imposes on society? After all, is not an efficient appliance powered by a utility that uses coal is arguably less preferable than a less efficient appliance that uses solar cell power? Tax the coal for the pollution it imposes, set prices, and let consumers choose accordingly.
Also, I was greatly surprised to see the manner in which you glossed over the call for more ethanol. Surely you agree that ethanol is terribly damaging, a political payoff to the Midwest that contributes to higher food prices and is tremendously wasteful of water resources (requiring about 3 gallons to produce 1 gallon of ethanol). When the government sets about picking winners it is more apt to attempt to score political points -- such as gaining traction in Iowa -- than actually doing what is the best for the country, if indeed it had the power to accurately prognosticate what source of energy is best.
I have little sympathy for the oil companies losing a tax deduction (yet another reason we should use a flat tax to eliminate all such loopholes and distortions) but I also refuse to grieve for the Senate's inability to pass the energy bill. Seems to me this is an example of doing the right thing for the wrong reasons.
Regards,
Colin
Update: Steve responds: "Thanks for your note. Sorry we don't seem to see eye to eye on this one."
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