Thursday, July 03, 2008

Time gives us the low-down on high gas prices!

I think I'm starting to get Justin's zest for Time.

Here they tell us about 10 good things about gas being $4 per gallon.

#1 - Cost of production goes up. How is it good that, due to increased transportation costs, firms are forced to use higher cost suppliers? This is a plus?

#2 - Urban sprawl slows. Why does urban sprawl get everyone so upset? If you don't like it, go live in West Virginia. No good jobs there? Concindence, maybe? Further, why do we need to stop urban sprawl right now, or five years ago, or ten years ago? Why is that level of sprawl the ideal level? You could make the same argument when people talk about the Americanization of foreign countries.

#3 - Four day work weeks. Not sure you can completely attribute this phenomenon to gas prices, but why is four better than five? Is three even better? Two? Zero?

#4 - Less pollution. If higher gas substitutes people into modes of transportation that produce less pollution, then this could be seen as a positive. Externalities are the problem, and increased prices reduces consumption of the good producing the negative externality-- again, so long as they don't substitute into something else equally or more polluting (which doesn't seem to be the case). Don't mistake this as a similar outcome to a carbon tax, though.

#5 - More frugality. Is this some virtue we all need to strive for? It's good that drivers are incurring the costs of checking tires twice a day now as compared to before? "We're all wasting less." Wasting less of what? It's not a waste to check tires twice a day? If it's so waste minimizing, why not check them every 30 minutes?

#6 - Fewer Traffic Deaths. True, assuming people drive less, less people will die while driving. Of course, less people are getting to where they would like to go, too, in a manner they would prefer.

#7 - Cheaper Insurance. True, if you're driving less, ceteris paribus, you should be paying less in insurance. Though if you're just driving less than before due to cost, this is a negative to be counted, and if you're substituting to public transit, go ahead and ratchet up the tax bill.

#8 - Less Traffic. If less people drive, there will be less traffic. Though, as that page notes, there are effects elsewhere in the transportation realm.

#9 - More cops on the beat. They actually mean less cops driving around, not a change in the number of cops-- but then they imply that they'll be walking more and we'd have "slimmer police." Ha! That was my favorite one. Higher gas prices: Less Pollution, Less Traffic Deaths, Less Fat Cops. Keep it up, Time!

#10 - Less Obesity. What if higher gas prices substitute more people into unhealthier food? Would that cut down obesity?

Is Time familiar with the concepts of substitution or secondary effects?

Higher gas prices are neither good nor bad; they are what they are. Relative prices and endowments change frequently. I'll say what I say anytime a student or anyone else asks if gas prices are too high: Everyone wants gas prices to be lower. Everyone wants all prices lower. That's a demand curve. Is there anything in your life that you wouldn't prefer to cost less?

No comments: