KNOCKING DOWN STRAW-HEADED MEN (via Tom Corcoran)

Do-It-Yourself Legislation: A legislative disease the GOP is far from immune to. (Iain Murray, 11/16/05, National Review)

The aftermath of hurricanes Katrina and Rita have proved a massive breeding ground for what former OECD Chief Economist David Henderson has termed "Do-it-Yourself Economics" (DIYE), which he defines as "firmly held intuitive economic ideas and beliefs which owe little or nothing to textbooks, treatises or the evidence of economic history." The DIYE phenomenon is not restricted to the general public. Henderson points out that DIYE ideas are "sincerely held, and voiced with conviction, by political figures, top civil servants, CEOs, [labor unionists], well-known journalists and commentators, religious leaders, senior judges and eminent professors." Sadly, these ideas might do real harm to the U.S. economy.

A sterling example comes from the august pages of the New York Times, which recently editorialized in favor of a tax on gas to keep the price at $3. The reason for keeping the price high, the Times asserts, is twofold: to defund the paymasters of terrorism in the Middle East and to combat global warming. A moment's thought shows that the Times should realize that artificially raising the price of gas will not hurt rich Salafi ideologues but native communities in Alaska and oil-rich developing economies of the third world. In a world of falling demand caused by high gas prices, it is those who produce gas the cheapest — the Saudis and their friends — who will continue to sell it.

Hardly surprising that the Times would argue bad reasons for a good idea. Raising gas taxes -- and offsetting them -- would create disincentives for gas use and economic incentives for innovating alternatives and would begin transitioning us from income taxes to consumption taxes.

Posted by Orrin Judd at November 16, 2005 4:02 PM