Re: Petrol protests are "anti-market", not "anti-tax"

["ÁÎ×Ó¹â Henry C.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxxxxxx>]

Typical of Krugman, his analysis is accurate but his conclusion is not correct.
$35 oil need not be damaging to the global economy, as many studies have shown,
it nevertheless forces a restructuring of the global economy.  To begin with, 
$35
oil will stimulate more exploration and production, and reactivate idle wells
that are uneconomic at $10/barrel.  Also the global economy is growing more
energy efficient with new technology and the effect of oil price on the economy
is much less than the 1970s.  And $35 oil prevents a return to the era of 
abusive
waste of energy caused by excessively low oil price.  Like low wages encourages
misuse of labor, unreasonably low oil cost creates incentives for misuse of
energy and for discourages the search for alternative erengy  sources.  The only
trouble is that $35 oil takes money from the pocket of consumers and delivers it
to the oil propducers (not just Arabs), who then reinvest it in Wall Street.  
The
net result is a transfer of wealth from the "working families" of the world to
the capitalist of the world.  Consumer demand will shift, with more money spent
on fuel and utilities and less for othertypes of consumption, but equity prices
will rise because there would be more dollars chasing the same amount of shares.
A reduction of oil taxes will leave more money in consumers' pockets.
Governments should make up the gas tax shortfall by increasing tax ratea on 
asset
appreciation.
Governments resistence to fuel tax reduction because of the bogus ideology that
moves that hurt capitalists hurt the poor also, if not more.  This ideological
fixation is increasing inoperative in a world saddled with overcapacity.  Any
development that reduces demand is deadly for the current global economic
structure.  Therein lies the key issue of the coming oil crisis.  The world has
been enjoying a boom from $10 oil for a decade.  During this boom, income
disparaty has increased both domestically and globally.   Now, a return to 
normal
market price for oil should not be allowed to continue this trend on widening
income disparity.

Henry C.K. Liu

Louis Proyect wrote:

> [Paul Krugman is a top ideologist for 'neoliberalism'.]
>
> NY Times, Sept. 17, 2000
>
> RECKONINGS
>
> Britain's Stormy Petrol
>
> By PAUL KRUGMAN
>
> Tony Blair showed real backbone last week. Faced with a stunningly
> effective blockade by truckers protesting high fuel prices, the British
> prime minister flatly refused to give in to demands for tax cuts. The
> initial result was extensive disruption ? not just closed gas stations but
> shortages of bread and milk in supermarkets, delays in medical procedures
> and in general a state of chaos all too reminiscent of the U.S. gasoline
> shortage of 1979. By the end of the week, however, the protests seemed to
> be subsiding in Britain (though similar protests were still growing
> elsewhere in Europe). So for the time being Mr. Blair has won ? though no
> good deed goes unpunished, and he is likely to pay a heavy political cost
> for his stand on principle.
>
> But Britain's fuel crisis ? and even more important, the public reaction ?
> may have implications that reach far beyond the political prospects for Mr.
> Blair and his party.
>
> There is little question that Mr. Blair was right to be so intransigent.
> It's true that because of the high taxes the British government levies on
> petroleum products, gasoline and diesel fuel are very expensive, even
> compared with prices in other European countries. (Gasoline currently costs
> about $4.25 per gallon.) But the overall tax take of the British
> government, while high by U.S. standards, is actually low by European
> standards. Basically, high taxes on fuel are more than offset by lower
> general sales taxes and income taxes ? and any reduction in fuel taxes
> would eventually have to be matched by increases in other taxes.
>
> And there are good reasons why fuel should be singled out for high
> taxation. Among other things, traffic congestion is, believe it or not, a
> much worse problem in Britain than in the United States. A tax that
> discourages motorists from getting on the road and hence getting in the way
> of other motorists serves a social purpose over and above the revenue it
> raises.
>
> Even if Britain should eventually decide to tax fuel less and other things
> more, there's a question of timing: reducing fuel taxes in the face of a
> world oil shortage would be a terrible idea. There's the question of
> precedent: if Mr. Blair had given in to the protest on fuel prices, he
> would in effect have signaled every other interest group with a plausible
> grievance that disruptive protests were an effective political tool.
>
> Also, cutting taxes on oil when oil prices rise gives exactly the wrong
> signal to the oil cartel. It tells the Organization of Petroleum Exporting
> Countries not to worry ? higher oil prices won't reduce sales because
> importing nations will make sure that those higher prices aren't passed on
> to consumers.
>
> So Mr. Blair has the theory of the case on his side. Yet according to polls
> the vast majority of Britons sided with the protesters. And the same is
> apparently true in the rest of Europe.
>
> Why do fuel-price protests command such wide support? American
> conservatives ? and Britain's hapless Conservative opposition ? would like
> to think of this as an anti- tax movement. After all, don't truckers want a
> cut in fuel taxes? But while the letter of the protesters' demands may
> involve tax cuts, the spirit of the protest is quite different. This isn't
> a rebellion against taxes per se: it's a rebellion against markets. In
> effect, European truckers have been saying that it isn't right that they
> should suffer just because the world price of the fuel they need has gone up.
>
> It is a telling detail that the wave of European fuel-price protests began
> in France, the Western nation that has been most reluctant to let market
> forces rip. Of course the government of France, true to form, quickly caved
> in to the protesters' demands ? to the fury of other European governments
> that are trying to make a stand on principle. But it turns out that the
> French are not that exceptional ? even in post-Thatcherite Britain most
> people support the truckers.
>
> What this says is that what seems to be the defining feature of Western
> political economy at the turn of the millennium ? the triumph of
> free-market ideology ? is far less complete than some would imagine.
> Ordinary people, when push comes to shove, feel that sometimes the market
> just isn't fair ? and have sympathy for those who protest that unfairness,
> even if those protests adversely affect the population at large.
>
> Louis Proyect
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