Page 2 of 2 Fuel tax cut running on
empty By Julian Delasantellis
cut; in a
free-market world, all private interests are
automatically assumed to be eternally virtuous,
just as all government is eternally vicious.
In the manner of queens The
Clinton campaign does recognize the possibility
that the oil companies would act in this manner.
On her website, it is said that "Hillary [once
again, all by herself - welcome to this new age of
the return of the divine right of kings - or, more
accurately, of queens] will make it unlawful for
any supplier - wholesaler or retailer - to sell
crude oil or gasoline at an unconscionably
excessive price. Price gougers would face new
fines and criminal
penalties of up to $1 million
and five years in prison and civil penalties could
be assessed from $500,000 up to $5 million."
How will she do this? Well, she's going to
call up Bush's free-market appointees at the US
Federal Trade Commission (FTC) , give them a good
stiff talking to. From her website:
Hillary is calling on the FTC to
propose regulations under the new law within 60
days to prevent market manipulation in oil
markets. Recent cases show that market
manipulation is a concern in oil
markets.
I can image how that call
would go, when candidate Clinton calls the FTC.
"Good morning, US Federal Trade
Commission." "Hello, this is Hillary Clinton.
I'm calling to propose regulations under the new
law within 60 days to prevent market manipulation
in oil markets. Recent cases show that market
manipulation is a concern in - " - CLICK.
However many reasons there are to argue
that the gas tax cut won't work, there are even
better reasons to argue that it shouldn't work.
On February 13 of this year, in my Asia
Times Online article Physician heal thyself, I
wrote that the $160 billion economic stimulus bill
then racing through Congress was indicative of
just how resistant American society was showing
itself to the concept of bringing its consumption
into balance with its production.
In 2007,
the United States current account deficit, the
broadest measure of the difference between what
the American economy consumes over what it
produces, totaled $738.6 billion, 5.3% of US GDP.
For all their other deleterious effects,
recessions and economic slowdowns usually bring
current account deficits into better balance, as
the population cuts down on purchases of pricey
foreign imports. Instead of reacting to the
economic slowdown with frantic efforts to spur
consumption, many of the non-American economic
analysts cited in my article argued that the US
should use the malady as an opportunity to shift
from a consumption to more of a production based
economy.
As German Chancellor Angela
Merkel replied to then British prime minister Tony
Blair (whose economy is now also suffering from
following the recent American model of growth
through financial sector legerdemain), when asked
early in her term what the secret was of German
economic success, "Mr Blair, we still make
things."
For what is happening with gas
prices now is precisely how the system is supposed
to work. This the United States should well know;
it authored and implanted the current system.
By 1973, the old gold standard
international economic system had collapsed and
was replaced by the current system of floating
exchange rates. No longer would the problem of
countries running persistent current account
deficits be dealt with by shipping gold out of the
deficit country until their vaults ran dry but by
having the deficit country's currency depreciate
in value.
Free-market
worship This would make foreign imports
more expensive in the deficit country, leading to
either a decline in their consumption, or their
replacement with domestic sources of production.
Over the years many countries and observers,
particularly France and Yale University Professor
James Tobin, have proposed a return to a system of
less floating, and more fixed exchange rates, but
it has always been the US, where the free market
is worshipped in everything from child rearing to
old age dating, that has always held the line for
market determined exchange rates.
The US
called the tune to the dance but now appears leery
of paying the piper. Starting the week before the
2000 election of Bush (Wow! What a coincidence!)
the euro has risen over 90% against the US$, up
19% from just the start of the current Federal
Reserve interest rate easing cycle last August. On
the international oil markets, crude oil prices
are denominated in US dollars; in the same
nine-month period, crude oil is up over 70%, from
$70 to $120 a barrel.
Obviously, what the
currency markets are saying is that the US must
curtail its petroleum imports. The actual crisis
here is that it is gas consumption that is too
high, not prices.
It is interesting, and
hugely symbolic, that the gas tax cut will result
in funds being deducted from the Highway Trust
Fund, even if the proposal's advocates say that
the lost revenues will be replaced - someday.
If the United States is ever going to
shift from an import/consumption to an
export/production economy, a vast improvement in
the nation's transportation infrastructure must
occur. In the newly emergent export economies of
Asia, highways are smooth and shiny like bowling
allies; in the United States, agricultural
products being trucked from the country's interior
heartland to its coastal seaports regularly miss
connections and rot in kilometers-long traffic
jams on the nation's worn out and neglected
highways and bridges. Once again, like the hungry
orphan child (very much unlike little Travis Billy
Ray) begging for more porridge in Dickens'
Oliver Twist, public investment for the
future cries out "Please Sir, I want some more."
To which current private consumption, now
in the personage of the proponents of the gas tax
cut, sternly replies "No!"
And so, it is
this, the very idea of a cut in private
consumption, that is being met with such
tremendous pushback in American society, reflected
in the proposals by Clinton and McCain. "We're
gonna drive our big SUVs to kingdom come, and
there dammed better be plenty of free parking when
we get there."
On the New York Times
Freakonomics blog, Justin Wolfers put out a
challenge to find any reputable economist in
support of these proposals. Still no takers. In
response, continuing her populist tack, Clinton
contended that the proposal is only opposed by the
"elite opinion" of economists, leaving one to
wonder if this scion of Wellesley and the Ivy
League is now receiving her economic policy advice
from those who teach keyboarding at the nation's
secretarial schools.
On Tuesday, May 6,
Clinton and Obama will compete for votes in the
crucial (aren't they all these days?) North
Carolina and Indiana Democratic presidential
primaries. Pundits report that Clinton is
garnering support, is gaining, in political speak,
"traction" with her gas tax-cut proposal. If she
does well in these contests, if she wins or comes
close in North Carolina, and if she wins going
away in more alabaster Indiana, a clear message
will be sent that, no matter how the American
public tells pollsters that it wants to vote for
candidates who will tell them the truth, who will
soberly deal with the difficult challenges the
nation faces, in reality, the nation votes as if
life was but a never-ending shopping spree in a
candy store, and any consequences resultant on
this eternal carnival of consumption must
certainly be the politicians', never the people's
fault.
"Another triple burger meal and ice
cream sundae for little Travis Billy Ray? Didn't
the doctor say we shouldn't do that
anymore?" "Ahh, you can't believe the elite
opinion of those pediatricians."
From the
back seat of the car, from Travis Billy Ray's car
seat, wafts forward the unmistakable ambiance of
fermented methane, indicative of the excess
consumption of the boy. No one seems to notice.
Maybe they've all grown used to the fragrance
Julian Delasantellis is a
management consultant, private investor and
educator in international business in the US state
of Washington. He can be reached at
juliandelasantellis@yahoo.com.
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