Friday, October 20, 2006

Economic miracles for only $1 a gallon

The Mankiw plan to raise gasoline taxes may be dead, but it's proponents just won't quit. One of his Pigou Club members, Mike Moffat at the Ivey business school at the University of Western Ontario, says the Pigou Club is like the 1975 Cincinnati Reds--with Greg Mankiw as the club's Johnny Bench. Sorry, Mike, no World Series for the Pigou Club. Did you see the faces on the Mets fans last night? That's the prospect for Pigou Club members. But still, we've posted Mike's missive on the NoPigou Clubhouse wall for all to read.
But there's more from this diehard club. Johnny Bench himself has a short item in The Wall Street Journal this morning. He lists the Seven Economic Miracles that would occur of the United Stastes raised gas taxes by $1 a gallon. Less pollution, less road congestion, less regualtion, improved social security, lower world oil prices, more growth and greater national security. Gosh economics is easy. Each miracle deserves a review, but one question: What's the evidence that high gas prices curb road congestion? London's gas taxes of $4US a gallon did nothing to curb traffic--so the city has a congestion tax. And that doesn't seem to work much either!

5 Comments:

Anonymous Anonymous said...

Preliminary Results of the London Congestion Charging Scheme
Public Works Management & Policy, Vol. 9, No. 2, 164-181 (2004)

Abstract: On February 17, 2003, the London Congestion Charging Scheme came into effect. Preliminary results show a significant response to the £5 (U.S. $8) charge. Congestion over the first year decreased by 30%. Overall traffic levels within the charging zone fell by 16%. Speeds for car travel increased by more than 20%, and bus travel became more reliable. Elasticities of demand for trips by car with respect to generalized costs are estimated to be between –1.32 and –2.10. The average marginal congestion cost within the central zone is estimated at £1.65/vehicle-km (approximatelyU.S. $2.58/vehicle-km). The net economic benefits of the Scheme for the first year were £50 million (U.S. $78 million) and the net revenues, £68 million (U.S. $106 million). Net revenues are mainly being used to improve public transport.

7:29 PM  
Blogger Paul Cox said...

The U.S. economy can bank on the lowest gasoline taxes. Lower gasoline taxes provide key competitive advantages in a globalized economy.

To reduce the cost of horsepower in an industrialized, connected world would be a good thing.

10:18 AM  
Anonymous Anonymous said...

Amazing. How did those boffins who determined the net economic benefits of the socialization of London streets manage to calculate the amount of revenues lost due to meetings that didn't take place, or which had to be conducted by telephone instead of face-to-face, resulting in less than optimal deals, delays, frustration and relocation of business meetings to less communistic locales? I say, the Nobel Prize of Economics is insufficient to reward such ingenuity and diligence - let's reward them with an entire former British colony of their own!

5:39 PM  
Anonymous Anonymous said...

calculate the amount of revenues lost due to meetings that didn't take place, or which had to be conducted by telephone instead of face-to-face, resulting in less than optimal deals, delays, frustration and relocation of business meetings to less communistic locales?

Any meeting not worth 5 bloody quid isn't worth having.

Ridiculous on its face.

12:03 AM  
Anonymous Anonymous said...

Isn't the London congestion charge almost universally viewed as a success? Hmm, high journalistic standards here.

Now I remember why I don't read the Post - too much ideology, not enough insight. And that's coming from a conservative.

10:05 PM  

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