Comment 28097

By A Smith (anonymous) | Posted January 09, 2009 at 17:07:24

Ryan, I have no doubt that human beings will come up with alternatives to oil if and when it runs out, but until it does, why should we make life harder on ourselves than we have to? You mention that Sweden and other European countries have managed to grow their economies while cutting back on oil consumption, that's true, but not as fast as North America. Furthermore, most of the economic growth European countries have shown in recent years has been because of the low corporate tax model introduced by Ireland. This development has led to increased capital investment in Europe and is one of the reasons why the Euro has been as strong as it has been in recent years.

Currently, North America has corporate tax rates about 10% higher than European countries. If you brought these rates down to European levels, we would be growing much faster than they currently are.

I am not arguing that carbon taxes would drive us back into caves, but neither would allowing the market to function. If we just let people choose what the market gives us, things will work out automatically. If oil jumps over $100 again and stays there for a few years, alternative energy will compete quite successfully, without the need for any government intervention. If it doesn't, then people will benefit from cheap inputs, thereby increasing their disposable income.

However, by setting a floor on the price of oil, you guarantee that people will suffer from high oil prices. At least by letting the market work freely, you increase the possibility that this may not be the case.

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