Phony Populism and Bad Economics: The Daily Commercial Opposes Five-Cent Gas Tax for Lake County

Displaying its typical courage and wisdom, the Leesburg Daily Commercial used its in-house editorial today to urge Lake County commissioners not to impose an additional five-cent gasoline tax on the motoring public. The Commission, quite rightly, is trying to figure out how to pay for necessary road repairs and improvements in this era of weak revenue. Having already Gas-Pumpshackled itself by extending a moratorium on new-construction impact fees (since the last thing it wants to do is impose a burden on property developers), the Commission is left with the politically toxic prospect of a tax hike. The Daily Commercial, as one would expect from an organ of Republican orthodoxy, has never seen a tax it didn’t hate and remains deliberately oblivious to any considerations that lie outside the confines of the elephant’s ideological cage.

Just as with their opposition to the proposed anti-tethering ordinance, the editors of the Daily Commercial contend that the five-cent gas tax would constitute a burden on people who are struggling to makes ends meet during a protracted recession. Such touching concern for the poor goes a long way to compensate for the newspaper’s plutocratic agenda – almost as far as the House Republicans’ new-found affection for the payroll-tax holiday, an issue which allows them to appeal to the common man while surreptitiously passing all manner of concessions to their corporate clients. Such sleight of hand – trumpeting the inch given while hiding the mile taken away – is par for the course among both parties, but has descended to truly abyssal depths on the right, matching the extent of their depravity and corruption in service of the elite.

That said, even if we naively grant the Daily Commercial a nickel’s worth of sincerity, their concerns are overblown and ignore important economic facts of life. An extra five cents on the price of gas is absolutely trivial. The market price fluctuates by that much and more on a daily basis, and the behavior of most drivers changes very little. Of course, one does have the option of driving less by combining errands when out, of altering one’s driving style to enhance fuel economy, or of trading in that gas guzzler for something more economical. But the reality is that an extra five cents is going to be invisible at the pump, and is microscopic in comparison to the taxes levied on European motorists. For Americans to complain about an extra five cents on the price of gas remains utterly ridiculous to those of us who have forked over seven dollars a gallon overseas. Americans have no idea how easy they have it, and a mere five cents does not represent the first move down the slippery slope to European “socialism,” as any sane observer knows very well.

The Unheard Case for Gas Taxes

But there is much more to gas prices than the Daily Commercial understands. If we really wanted to rein in gas prices – which do indeed impose a disproportionate burden on the poor – we might direct our attention to the functioning of that almighty market itself. Specifically, the role of speculators in influencing prices paid by end consumers is continually overlooked by national policy makers beholden to the financial services sector, and hoodwinked by bogus rationales that speculation provides necessary liquidity to the market. That argument ceased to be convincing years ago, as the advent of complex financial derivatives turned practically every commodity into an opportunity for profit-taking from cleverly-orchestrated price movements. The money being made by speculators is entirely parasitic, sucking wealth from society as a whole into the hands of the few “players” with the technology and wherewithal to take a seat in the casino. A small transaction tax on this speculative activity would be a wonderfully rational and fair way to help defray transportation expenses and investments. Naturally, it has no chance whatsoever of being enacted.

Now let’s address an economic concept that you will never see discussed in the Leesburg Daily Commercial, largely because the editors are intellectually incapable of, and philosophically predisposed against, recognizing it. The use of gasoline, just as with other fossil fuels, imposes costs on society that are not paid directly by the consumer in a “free” market. The cost of road construction and repair is an obvious one, but apparently we’re too cheap and selfish even to contribute an extra nickel towards that. Some of the other, less-obvious, costs include traffic congestion, Oil-Soaked-Pelicanindustrial pollution at every stage of oil production (anyone else still boycotting BP?), and the six-hundred pound gorilla that Republicans can’t see, climate change. It has become an article of faith among so-called conservatives that climate change is a hoax dreamed up by anti-American socialists intent on taxing us all to death in order to redistribute wealth to shiftless blacks. If a candidate has even acknowledged the existence of the phenomenon, much less admitted that human activity might actually be to blame, he is immediately blacklisted as not a true conservative. Mitt Romney is only one of several G.O.P. pols to have felt the need to recant, or should we say clarify, former statements that could be construed as agreement with the 95% of the scientific community that is deeply concerned about what we’re doing to our atmosphere. There is no place for such rationality in a party sponsored largely by the oil and gas industry.

These costs are known by economists as negative externalities – burdens imposed on society that are not reflected in the market price. Taxes on gasoline are a way to force the market to acknowledge these costs, bringing the price more into line with the true costs involved. We have to remember that price is supposed to be a signal – a mechanism for the allocation of resources. Failure to recognize the true costs of production and use amounts to a failure of the market to perform that basic function. That’s right, my dear, startled readers! Markets are not always perfect! But hush, now, don’t let anyone else know; they might think you’re un-American. Good Americans believe what that pretty lady in the oil company advert says, and take their bullshit fully leaded, thank you very much.

The Fallacy of Trickle-Down Economics at the Local Level

Let’s conclude by returning to the simplistic, unschooled level of economics in the Daily Commercial’s editorial. In their warped, supply-side fantasy land, the Lake County Commission can best invest “in the county’s long-term fiscal health” by “suspending the collection of impact fees and deciding against tax hikes.” The Commission should “[m]ake improving the economy the top priority; put improving roads lower down on the list.” This argument is worth parsing line by line, for it neatly encapsulates the typical, Republican trickle-down trope from which there seems to be no relief in sight.

First, we have the tired-old argument that tax increases are never the route to fiscal health; taxes should only be cut, no matter how basic the services they fund. Second, we have the highly revealing mention of impact fees, which were not really the subject at hand but remain uppermost in the thoughts of the Daily Commercial. Then we have the conclusion that tax cuts are the only way to improve the economy; public spending isn’t the right approach. Let’s put aside the glaringly obvious rejoinder that crumbling roads might actually be a disincentive to potential investors in Lake County, because that just makes too much sense to even get a mention. After all, businesses don’t pay any attention to the condition of public infrastructure; all “job creators” care about is the tax rate, right?

The Daily Commercial is holding the public interest hostage to its faith in economic miracles. If taxes on property developers – those very special people to whom we should be so profoundly grateful – are reduced, they will bring forth a surge of growth that will naturally result in higher government revenues, and there will be plenty of money for roads, parks, and apple pie for everyone. Isn’t it funny how that professed concern for the average Joe has morphed into advocacy for the very people who made out like bandits during the boom years? The inconvenient fact that property development is dead as a sustainable business model for Lake County – and should never have been allowed to convert the County into an Orlando exurb in the first place – is completely ignored. Lake County is in a recession because of macro-level factors that are utterly beyond the control of the County Commission. When liabilities exceed assets, for both would-be borrowers and lenders themselves, and outrageously loose monetary policy by the Federal Reserve isn’t making any difference, how on earth is Lake County supposed to return to the “good old days” of the 1990’s, fueled as they were by reckless lending and bubble-inflating speculation? That model is broken; get over it.

When private-sector activity is hamstrung by a liquidity crisis such as ours, which is likely to last for a decade or more, much as in Japan’s “lost decade,” the only realistic engine of economic growth is the public sector. Government spending – on roads or other projects – creates jobs (yes, really) and lays the groundwork for a better quality of life for all – investors and gas-buying public alike. We can all play our part by saving the price of the Leesburg Daily Commercial and putting those few extra cents in our gas tanks. Each daily edition covers the proposed surtax on ten gallons, while Sunday’s paper will pay for an outing to the Gulf Coast. I suggest you go before it’s too late.

Leave a Reply

Your email address will not be published. Required fields are marked *