dagblog - Comments for "Real Gasoline Prices have fallen over the past 60 years"

HiThis is a wonderful

Thomas — Tue, 28 Apr 2009 06:12:25 +0000

In reply to Real Gasoline Prices have fallen over the past 60 years

Hi

This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone

scott

<a href=http://www.officepoliticsuk.com>office politics uk</a>

Okay. Thanks guys.

HSG — Sun, 26 Apr 2009 16:12:05 +0000

In reply to I'm befuddled as to why you

Okay. Thanks guys.

I'm befuddled as to why you

DF — Sun, 26 Apr 2009 15:29:00 +0000

In reply to Though it pains me to admit

I'm befuddled as to why you think I disagree with you generally. I tried several times in the last thread to impress upon you that I do not disagree with raising the top marginal tax rates. In fact, I even linked to a Jeff Sachs essay that explains quite plainly the arguments for doing this from a public economics perspective. "Intelligent trade" is a bit of a loaded phrase, but I'm sure we would find at least some agreement there as well, as I think there is plenty of room for criticism of the policies that have thus far flown under the banner of "free trade".

Where I've disagreed with you is some of the nuance and detail surrounding tax policy. One of these nuances, supported by Jeff Sachs and other sympathetic economists, is that raising the top marginal tax rates alone will not provide us with the means to pay for all of these initiatives, particularly health care. That does not mean that I'm saying we shouldn't do it. Far from it. There are a plethora of compelling reasons to do it, if even only to bring the cost down to be competitive with what other industrialized nations are paying.

Though it pains me to admit

HSG — Sun, 26 Apr 2009 14:48:36 +0000

In reply to Real Gasoline Prices have fallen over the past 60 years

Though it pains me to admit it, the gasoline price line does support DF's argument that it was low and stable gas prices that drove the strong American economy of the 50s and 60s. It is especially painful because DF uses this fact to dispute my broader point that high marginal taxes and intelligent trade policy as opposed to "free trade" are essential if we are going to move America forward. In fact, the gyrating and generally upward trend in relative energy prices since the early-70s make it all the more essential that we improve the environment in American for manufacturers by 1) redistributing wealth from those who would save and invest it to those who will spend it and 2) incentivizing the purchase of domestic goods by hiking the price of imports through tariffs. Moreover, I am completely befuddled as to why DF would dispute this.

While interesting, this

DF — Sun, 26 Apr 2009 00:56:00 +0000

In reply to Real Gasoline Prices have fallen over the past 60 years

While interesting, this analysis has little to do with what we were discussing. First, you claimed that raising the top marginal tax rates will make for better economic outcomes and that the higher tax rates of the immediate post-war era were the reason for the economic conditions of the day, which you imply were favorable to today's conditions. My rejoinder had two parts:

Raising the top marginal tax rates will not make the economy grow and were not responsible for the economic conditions of the 50s and 60s. Raising these rates could conceivably raise government revenues (though this isn't always the case), but taxes create a downward pressure on economic growth, a concept that you seemed to understand in your last post.
If you want to identify factors that are key to the economic growth in America during the 20th century, look at cheap, abundant petroleum energy for a start.

These two statements:

Over the past 60 years, the price of a gallon of gasoline adjusted for inflation has actually fallen significantly. Thus, any argument that our country's economic strength in the 50s and 60s was due to cheap energy should be reconsidered.

Have little to do with each other. That the real price of oil hasn't not changed drastically over the last half-century or so has nothing to do with the fundmental influence of energy inputs on economic growth. Furthermore, we can see here that the real price has most certainly increased. However, what is more to the point is exactly how well spikes in the real price correspond to economic downturns. This is what we would expect to see if petroleum energy is a key input, which, as I argued, it is.

The one thing that is significant in the time that you can chosen, namely 60 years ago or around 1950, is that this is when oil overtook coal at the world's foremost source of energy. This is no coincidence and goes directly to support my argument. This graphical view shows a nice flat period in the price of oil during the 50s and 60s.

Cheap oil made possible the rapidly expanding auto industry, agribusiness, plastics and the suburban infrastructure model. To misundestand this is to misunderstand one of the chief aspects of economics in the last half-century.

Interesting and, to me,

Michael Wolraich — Sat, 25 Apr 2009 03:44:00 +0000

In reply to Real Gasoline Prices have fallen over the past 60 years

Interesting and, to me, unexpected. Here's another article about it. This one doesn't get into per capita GDP but notes that taxes are a lot higher now, approx. 20% vs. 1.5% in 1950. So the pre-tax cost of gasoline is even cheaper today.