It's a media problem - if it's framed as governments stealing tax money, more subtle points about transport options and policy are going to be lost in the noise.
There's a four fuel delivery strike planned in the UK for Friday. Which is going to be - interesting.
Economically, if truckers really are losing money on haulage, I'm not sure that bankrupting them is an entirely good idea.
What we're seeing now is what happens when infrastructure demand reduction happens quickly when there's no other infrastructure option available to replace it.
Demand reduction is fine in theory, but bankruptcy and possible food riots aren't a good way to manage it.
Why would you want to manage it? I thought the prevailing wisdom here was that laissez-faire was the way to go?
Don't like it? Buy a horse. Or a bike. Or magic trains out of your butt overnight. It's all your own fault anyway.
Welcome to the new European Libertarian Tribune.
Compensatory measures always distort prices, don't they?
Like Marek said above about education and health care.
I mean, come on, we're talking about roads here, without which you can't bike from A to B. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
This why I don't like 'markets should...' arguments. There's no clean definition of social necessity.
What markets really do is act as amplifiers of political positions. They're not designed to set prices rationally, they're designed to make some people rich and powerful and other people poor and irrelevant.
Is there anything at all which markets do which can't be done better in other ways?
As Sassafras said, reality isn't quite that tidy.
And if there's no other capacity on alternative modes of transport, trucking isn't key infrastructure?
What should also be done is looking at how the transport infrastructure should be shaped for the future. I think it is plausible that we will see a scenario with much more rail transport, with the final leg being performed by relatively small electric trucks with a limited autonomous range (but also by for instance coopting tramways in cities).
Building big new highways (as Zapatero is doing) will mainly favour mule power...
The demand destruction of higher fuel prices is of the sort we want - changing transport, production, and consumption patterns in the direction of less use of a scarce resource and lower CO2 output. Spain and other wealthy countries are fortunate enough that the immediate pain of demand destruction is in the form of eating something else and spending a bit more for food and other items, rather than starvation. So as you say, help out the small number of people badly hit by the change, and otherwise step back and let things happen. This is really no different than, say, regulations banning logging in old-growth forests where a small group of people end up losing their livelihood and way of life, while the rest of society adapts.
Peak Oil doesn't mean that there will be no road transport, but there will be less volume of it. Some drivers will go out of business or leave the business. It's probably unfortunate it's the self-employed drivers that lose out to large conglomerates.
The Spanish government has offered early retirement to hauliers from age 58, as well as other adaptation measures, in response to the strike. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
Zapatero might be a Socialist but he doesn't know much about economics: he's a lawyer by training.
In fact, looking at this list of measures it seems that they use the same kinds of tools that were deployed to deal with the slump in the construction industry and the popping of the property bubble: delayed tax collection, accelerated tax reimbursements, and in the current case tax cuts on everything except fuel, and ICO loans. Is Zapatero's economic team a one-trick pony, or is the Spanish state limited in its options?
Note the bit about the creation of a separate "professional diesel" fuel category (presumably for tax purposes). This is a key demand of the truckers which ZP is punting to the EU. I suspect Spain cannot introduce a new category with a different tax rate unilaterally without running afoul of the EU's rules on "illegal state support".
I'm a little unsure what you mean by some sort of publicly financed buy-out of redundant capital goods could be a relatively inexpensive way to do this. The rigs are likely to be a drug on the market just now: what can the State do with a bunch of new rigs?
There was a recent comment by kcurie on some sort of report on freight and rail transport in Spain...
The spanish comission of infraestructure gathered yesterday and we no know the plans for the spanish train network. given the high price oil one would guess it should be first page.. je jeejj keep dreaming. Still, this is why it is so important: oil price moves to food price inflation if food transport is made using roads.
what can the State do with a bunch of new rigs?
Give them to the Spanish Army? Sell them abroad? Compensate the owners for a portion of their losses? I have no idea who would be hurt most if an owner-operator walked away from his loan and sent the keys to the holder of the loan. If it were large corporations that needed bailing out I'm sure the solution would be much more obvious. I have no idea how many owner-operators might respond. In the US this would fly in the face of usual practice which is to cover the losses of the big boys, who don't really need it and where the aid won't really accomplish the objective--capacity reduction. It is, perhaps, a whimsical idea to try to help small businessmen through a painful transition. I just wondered if in Spain it might actually be possible and even helpful. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Nationalising an independent sector would be a neat trick. I'm not sure it's been attempted before. It's probably illegal too, but it's still a fun idea.
If you nationalise the whole industry, you would simply have to ensure that the domestic industry is not treated better than foreign (European) trucking companies. In the long run, we're all dead. John Maynard Keynes
Demand for truck transport is about as inelastic as possible. If you bankrupt independent truckers, someone else will have to fill those routes. There won't be less truck traffic. Unless...
An alternative scheme for moving goods around is built. This requires new forms of infrastructure. This does not happen overnight. And there is certainly NO historical reason to believe the marketeers will build it.
And now I return you to your wonderful debate on how markets respond. Have fun, gentlemen. "Remember the I35W bridge--who needs terrorists when there are Republicans"
So there might well be a 25% oversupply of drivers right now. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
No it isn't for three reasons. First of all the truck haulage costs represent part of the final consumer cost, and they vary by good - certain ones will go up more, others less because of things like distance, compactness and weight. Consumers will respond to differential price changes by favoring those goods which cost less in the same general category. So will producers by shifting production location - just as they do with labour costs. Secondly, unless the rails are running at full capacity you can always shift to rail transport for everything except the final stage. The truckers themselves will respond with different patterns (idling less, being more careful about routes, decreasing the amount of non-full loads).
Secondly, unless the rails are running at full capacity
Bingo. I don't know what the situation is in Spain, but rail freight in the UK has very little spare capacity.
Rather than believing in a market utopia, which is the best of all possible worlds and everything balances out in the end, it's more likely that stuff will stop appearing in shops, and when it does appear it will be less affordable.
This will be called 'markets providing lower prices and increased consumer choice', and therefore everyone will be happy.
Those goods which require more oil to produce and get to the consumer will see an increase in their price relative to those that require less. In the short term that will shift consumption patterns, in the medium term it will shift production patterns, and in the long term it will shift infrastructure investment patterns. All good things.
That's not believing in a market utopia, but that we do live in a world where costs affect consumption and production decisions. If you don't believe they do, I suggest you wander over to all those thriving British textile factories.
we do live in a world where costs affect consumption and production decisions.
No, we live in a world where politics decides costs and patterns of consuumption and production on the basis of short term returns.
If those textiles are now going to become too expensive to import from China and India again, would it have been smarter to keep prices higher, but industry and distribution sustainable and local, or to throw away the old industries so that a tiny minority could benefit by making an easy buck?
I realise it's not easy to think outside of the ideology, but the first step is realising that is just an ideology, and all of the supposed explanations it offers aren't inevitable, definitive, complete, or even particularly useful.
Right now, we see a concentration process...plus a libertarain strike of the "autonomos"
they want a minimum price plus no tax for oil.
I am afraid the governemnt has to stand by his offer and move on....and probably use the police to save the big boys.
they'd better have those trains ready soon in any case.
A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
Well, these are people who are already getting a partial free ride asking for a total free ride just because large sections of their industry are in the process of going obsolete.
"This demonstrates how critical it is to create an integrated EU freight rail system that is able to deliver essential food and material across the European Union, so that we can no longer be held to ransom by truckers demanding a free ride, leaving everyone else in society to pay the bill for the damage they cause to the road, the air, and all the rest". I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
So true... People already started complaining. What´s "funny" is that they´re complaining that´s there´s lack of certainn products in supermarkets that, so far, are lacking because people got crazy and alarmed and bought too much. For example, people buying cooking oil and conserves... "If you don't want a man unhappy politically, don't give him two sides to a question to worry him; give him one. Better yet, give him none." (Fahrenheit 451)
Funny how they don't seem to have learned that much, though, isn't it. <sigh>
What we're seeing now is what happens when infrastructure demand reduction happens quickly when there's no other infrastructure option available to replace it. Demand reduction is fine in theory, but bankruptcy and possible food riots aren't a good way to manage it.
Sigh... You'll get no disagreement from me there. I've been saying for a while now that we had to plan for the transition or it would be imposed on us in the most painful way. Seems we're getting there, unfortunately.
I'm not sure what can be done in the short term, but we should get cracking on those infrastructure plans with a bit more urgency whatever else is done. In the long run, we're all dead. John Maynard Keynes
