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AARRRGGGHHH! More Tom Friedman…And why he is wrong on the way forward for Green Technology December 28, 2008

Posted by neoavatara in Politics, Random.
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Pretty soon, Mr. Friedman is going to think he has a blogger stalker.

http://www.nytimes.com/2008/12/28/opinion/28friedman.html?_r=1&adxnnl=1&ref=opinion&adxnnlx=1230465700-tsjISvsigZiZ21sTyzC0Ug

Friedman’s Op-Ed today basically extolls the greatness of incresing the gas tax.  Now, I understand, and actually agree with Friedman’s premise; that you have to alter the economic benefits of green technology versus gas technology in order to get the public to choose green.  O.K., that is simple market economics, and something that I totally support.

What I don’t support is a gast tax.

Here is why:  if you support a gas tax today, you should have supported a gas tax in July, when gas was $149 a barrel and $4.50 a gallon.  Um, where were the gas taxers then?  Hiding in their caves, that is where.  You can’t have it both ways.

What is wrong with a gas tax?  Let me count the ways.  It is the most regressive tax imaginable.  Studies show that poorer people travel farther to work in general; and they also own older, less efficient cars; and they also tend to own homes that are heated with fossil fuels.  Get my drift?  The poor would get asymmetrically harmed by this.  Of course, Friedman is not stupid; this is exactly what he wants.  No, of course he doesn’t want to harm the poor, but he wants to entice the greatest number of people he can to give up dirty fossil fuels.  The problem is, the poor don’t have that ability even with the gas tax; where exactly are they going to plug in a electric car?  Most don’t have their own garage.  And other than the Prius, there are almost no choices for the low end hybrid car.  So basically, if you are poor, Tom Friedman has no answers for you.

I, on the other hand, have a much better solution:  Remove all taxes on green technologies. No income tax, no corporate tax, no dividend tax, no sales tax.  Then, watch what happens. This is frankly the only we have to really get people moving to more efficient energy sources.  Sure, go ahead and slowly increase the gas tax.  If you do it slowly, it won’t harm as many people, and I am not against it in principle.

But you really want to narrow the affordability gap, give a green technology tax concession.  First, watch the investment dollars flood the market.  People love tax avoidance vehicles, and this would be the king of the tax dodgers.  Second, with the increased investment, you are going to see increase production, because the producers will want to draw more capital investment, and for that, you have show a real product.  Third, this will be a very competetive market place, one that doesn’t exist today.  Instantly, you can get numerous companies getting involved in this field because of the potential benefits.  Ultimately, this will benefit the consumer.

I think this is a no brainer.  Frankly, I don’t know why others haven’t proposed this before.  To me, what is the downside?  That we get a few less tax dollars for a few years?  That is nothing, especially when we are running trillion dollar deficits.

Friedman again is right in principle, but his solutions won’t work.  It is as simple as that.

Here is a corollary:  http://news.cnet.com/8301-11128_3-10122072-54.html?tag=TOCmoreStories.0

This story on CNET.com details all the different vendors and utilities that it will take to be successful with electric cars in the longterm.  A pretty good overview of the large hurdles and difficulties that exist.  Now, what if you made each of these new industries TAX FREE!  Yes, it would cost us some tax dollars, but you would see the biggest capital investment in new technology in history.

Another corollary:  this is also related to the concept that economists Richard Thaler and Cass Sunstein use in their excllent book, Nudge:  Improving Decisions About Health, Wealth, and Happiness, which can be purchased from Amazon.  In this book, Thaler and Sunstein suggest using common behavioral tendencies and choices to improve health care choices.  I believe these tactics are very similar to choices we make regarding the environment.  Many choices are ones we know is good for us, but often we cannot seen the end result (i.e. excercising so we can live longer…).  But if we give small incentives in the short term to get long term benefit, more people will be willing to make the right choices.

This is the way forward.  This is the way to use the market to benefit everyone, including the planet, without mandating it by Government decree.  This is the way a free country answers it questions; not by limiting freedom of choice, but giving them better reasons to choose well.  Government mandates don’t work in the long run; but allowing people to make choices that will benefit them (i.e. allow them to be a little selfish) often will succeed.

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Comments»

1. Mat Nayie - December 30, 2008

Lithium battery is the best choice today..hope another technology will develop soon
Cheer
Hybrid Car Technology


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