Now when demand is that damned inelastic, you can tax it to the moon, and still not cause consumption to drop. Which of course means that it's an excellent revenue source for the government.
When the government finally realized this about cigarettes, state governments started to ramp up taxes on them to create a new revenue source.
This is important to remember in US energy debates. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
If you gasoline consumption indeed doesn't drop, cet. par. you still end up with less money to spend. Should we expect a backlash from other actors of the car industry if taxes were to be raised? The other thing may be that cars allows for the creation of a constituency.. and so any attempt at raising gas taxes may allow you to be undercut electorally. Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
Smokers are a minority in American society, and political cost of sticking it to them on taxes is fairly low. The thing about people who complain about taxes is that they are most often the least engaged in politics, and the least likely to vote. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
I think that the degree to which energy demand in the US is inelastic, specifically with reference to home electric and gasoline for transportation has just begun to dawn on US policymakers.
Well at some point it's going to have to become a lot more elastic Any idiot can face a crisis - it's day to day living that wears you out.
Of course, maybe standard economics is bunk because it supposes that consumers have a choice in the short term about how much they spend on gas. It's not like buying a new car, or moving to another house closer to work is something that can be done overnight. These sorts of repsonses to the market occur only in the long term.
And the problem isn't just one of creating demand, it's one of supply. It's much more difficult to purchase a fuel efficient car in the United States than in Europe. Now that's going to change as Detroit retools and the GM Volt plug in hybrid and other vehicles come out. But those cars aren't going to start coming off the factory line until 2009 or later.
Secondly, the patter of urban sprawl in America means that walking or taking the bus simply isn't a choice in most American cities. And in larger cities, older urban neighborhoods that are walkable often have little or nothing in the way of grocery stores and other basic commerical services. Tesco has announced that it's going to enter the US market, and try to establish itself in the small store urban market. However, the other big problem is that many of these urban neighborhoods are desprately poor and have horrendous crime rates.
Do you really think that families with small children are going to move to neighborhoods where there are open air crack markets and drive by shootings because the price of gasoline has gone up? Of course not, you'd have to be on crack to believe that.
But then orthodox economists seem to believe that this is the way that the world works. I'll let you draw your conclusions from that. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
Crack neighborhoods turn into regentrified neighborhoods when the value of the housing changes. This certainly doesn't happen overnight, but it can happen in, say, a couple of years.
In the 1970s there was a huge push for energy-efficient houses and cars, and if the adjusted price of energy goes up again, there will be another such push. The technology for off-grid or nearly off-grid housing is available and not tremendously expensive.
From a technical viewpoint, this is not an impossible problem to solve. From a political viewpoint, it probably is impossible, though.
you are the media you consume.
