Gorging on the common menu

Oil prices are going down and will continue to. This is mostly due to a combination of inflation and cut in production. However, lulled by this, people are back to splurging on road travel and buying cars, not only in India but also in ‘depressed’ US!

This is where we need farsighted leaders to act in unpopular ways and impose bigger taxes on oil and automobiles. Not only will this reduce oil consumption but also help slowdown global warming. Oil is a fast depleting resource and making it cheap will only see it vanish faster. Do we leave some for the future generations or drink it all up?

As Daryl Siry, former marketing officer with Tesla Motors, puts it, ‘Global warming and concern about CO2 emissions is a global, social problem that has extraordinary long term impacts but when you look at it on an individual level, the marginal returns that a selfish individual can gain by ignoring the greater good far exceeds the marginal cost to that individual in the short run. In the long run, though, everyone pays more.’

He gives a very apt analogy that hits the hammer on the nail! ‘For those not familiar with this concept of economics, an example that everyone has experienced is the group dinner where everyone agrees to split the bill. Relieved of their individual accountability to pay for only what they use, each person orders more than what they would normally order, knowing that the additional costs will be borne by the group. The individual also reasons that if they alone behave responsibly, they will not be rewarded with a lower bill but rather will still have to bear the higher cost of the average bill.

‘The predictable result is that the average bill is much higher than if each paid their own way. A nasty side effect is paranoia and suspicion, as people watch what their friends are ordering and get angry at the irresponsibility of each other.’

He goes on to conclude on a pessimistic (but realistic) note why the coming months will see environmentalism buckling under popular pressures, as every one proceeds to gorge on the planet’s resources.

There is no dearth of climate science nay-sayers even today. Petitions by scientists and their following are passé.

Somehow these people seem to be missing a bigger point. The path of unrestrained consumption they promote is just not sustainable, climate included or not! It simply will not be enough for too long unless we cut down our consumption and waste.

On the subject of tax, and why consumption taxes are better than income taxes, read what a professor of economics at Harvard University has to say in his blog. ‘Gas is a component of consumption. An increased reliance on gas taxes over income taxes would make the tax code more favorable to growth. It would also encourage firms to devote more R&D spending to the search for gasoline substitutes.’

Should the price on petrol and diesel be slashed or taxed further? Would it not be a good idea to slash personal income taxes and up the consumption gas on fuel? Let us know what you think.