Tuesday, May 06, 2008

On gas taxes and holidays

What the hell makes people think a gas tax holiday is a good idea? Against what any economist would recommend?

In essence, you're lowering the price, which increases demand.*

But the supply isn't increasing.

This is not a viable economic strategy. It's pretty much analogous to printing money for everyone.

...and fuck corn farmers too. I hate those guys.

*Yes, I know "oil is inelastic", whatever. The point stands: being a temporary drop in prices, people are encouraged to hoard it for the duration of the time. Demand still increases.

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