Skip to comments.Gravity: Not Just a Good Idea, Itís the Law
Posted on 06/13/2008 6:25:35 AM PDT by Congressman Billybob
On TV this week was a senior Member of Congress whom I knew from way back when, talking about the gas crisis and what Congress should do about it. I recall him from when he was a member of the Baltimore Jaycees, a young lawyer hustling for clients. Now he was on TV saying things that your average child would know was balderdash, with minimal thought about it.
This gentleman thought that additional taxes on the oil industry would somehow lower the cost of gasoline. He also claimed that drilling for additional oil in the US in places where it exists, had nothing to do with the price of gas and would do no good.
He had the effrontery to say that if we drilled in ANWAR (in Alaska), the additional oil wouldnt come on line for ten years. This same gentleman voted, repeatedly, ten years ago to prevent the drilling of oil there, and in most coastal areas of the US.
There are laws of nature and laws of economics which are absolutes. No one - not even a high-fallutin politician who is surrounded by staff who tell him daily that he can walk on water - no one is immune from those laws. Thats why I began with the quip about gravity. Too few people realize that the law of supply and demand is equally inexorable.
I suggest strongly to anyone who hasnt read this book, that you get and read Thomas Sowells Basic Economics. Not only should citizens and teachers be familiar with this book, so should reporters, candidates, and even Members of Congress who talk about such things as prices.
Lets review some basics:
Whenever demand goes up faster than supply, prices go up. The world, not just the United States, is demanding more oil per month than suppliers are providing. So the price of oil, and of all products made from oil, MUST go up. This is before the influence of a weak dollar is cranked in. The dollar is tanking due to certain policies of the federal government. That makes everything we buy from other nations, cost more. Including oil.
The only way to force the price down is to subsidize it. Some of the oil-producing countries actually sell gas at home for 25 cents a gallon, or so. That doesnt mean that the value of a gallon of gas in Iran, for instance, is only a quarter. It just means the government is taking money from other people to subsidize gas prices and keep car and truck drivers happy.
That brings us to two more absolute rules of economics. If you raise the taxes on anything, you will get less of it. The higher prices on alcohol and tobacco have reduced consumption of those products, especially by those with the least money to spend. Yes, I know that both of those products are addictive. But all products are price elastic to some extent.
This is not a new concept. The Supreme Court said in the McCulloch decision in 1819 that the power to tax is the power to destroy. It is beyond me how a long term Member of Congress who is also a lawyer, and to my personal experience is not a stupid man, could fail to understand this point. By the way, I am not naming him because there are thousands like him, including some who are candidates for President or covering such candidates who are equally ignorant of economics.
The opposite rule to taxes, concerns subsidies. If you subsidize anything, you get more of it. Witness free health care. Whatever is free to the users will still have a cost to someone else who is actually paying the cost. That would be you and me, whom my sainted Uncle Charlie always called, the grateful taxpayers.
Whenever something is free, or close to it, demand will go through the roof. Then, the government which created the problem in the first place will have to engage in rationing. Thats why people are dying on waiting lists to get life-saving surgery or other treatment in places like Canada and England.
Any child who has ever run a lemonade stand or played the game of Monopoly better understands the economic laws of supply and demand than your average voter, or professor, or candidate, or Congressman, or reporter. And when all that economic ignorance by adults is brought to bear on high gas prices, nothing either positive or competent will result.
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About the Author: John Armor practiced law in the US Supreme Court for 33 years. He now lives in Highlands, NC, and is working on a book on Thomas Paine. John_Armor@aya.yale.edu
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John / Billybob
Then let's tax it till it's free!.............
I'm sorry you didn't win the Primary in North Carolina, I think you would have been a good Congressman.
That “Supply and Demand” thing is an Urban Legend. /S
I’d like to nominate this post for best title of 1998.
I maintain...Stupid people should not be allowed to vote; they just elect more stupid people. I have never in my life, all 63 years of it, met or heard anyone so consistently stupid as our elected officials. Present company (possibly) excepted. You do seem to get to the center of the ideas. Unfortunately, I have no idea of my own as to how to correct this malfunction other than previous military training. Humpf!
Me, I’m all for the “Starship Troopers” (and not the stupid movie) version of citizenship - no service? No vote.
I have long thought that freshman congress-critters ought to be required to take a good intro level college econ course. Even one from Fr. Guido Sarducci (In five years all you will remember about college economics is “supply and demand”) would significantly raise the level of understanding.
Funny thing...just the other day while my son and I were commuting to his job he mentioned that he thought people shouldn’t be allowed to vote unless they had performed at least 2 years of civil service, Military service or some such training and EARNED their citizenship! I was so proud!
OIL....Let's tax it till it's free.
and printed in little letters courtesy of your ignorant Representative in Wash DC
Two days ago, in a thread “Maureen Dowd: Mincing up Michelle”, I mentioned “Fr. Guido Sarducci” in a humorous context. This is too much of a coincidence to see him mentioned again.
According to Hamilton’s Federalist Paper no. 10 these factions will always be kept in check by a republic rather than a true democracy. It seems history may prove him wrong in his assuptions because he failed to include:
1. Stupid people?
2. Media bias propoganda?
3. Soros types?
4. Political correctness?
Does anybody know the answer? I’m thinking it might be the stupid people.
Thnak you, John. It is astonishing how many in Congress haven’t got a clue.
LOL! Great minds...
No that just changes who pays for it.
The opposite rule to taxes, concerns subsidies. If you subsidize anything, you get more of it. Witness free health care.
No you actually get less of whatever is subsidized. Bad money chases out good money. Health care availability actually decreases.
Whenever something is free, or close to it, demand will go through the roof.
Correct and that is also why the above points are also incorrect.
That would be too easy and put scientists and politicians out of business. You want them unemployed and getting in the way at home?
It seems like our civilization has gone back to a time before the Enlightenment. In those times all types of natural calamities were blamed on witches ...now it’s global warming. Magic and alchemy were thought to turn base metals to gold ...now it’s higher taxes will magically reduce prices. We seem to have abandoned the science and reasoning of the Enlightenment that brought us out of those times.
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