Monday, June 30, 2008

Greg Mankiw's Blog: Sunstein-Wolfers on Capital Punishment - Kill or Not to Kill that is Questions

Greg Mankiw's Blog: Sunstein-Wolfers on Capital Punishment - NO!

...Why is the Supreme Court debating deterrence? A prominent line of reasoning, endorsed by several justices, holds that if capital punishment fails to deter crime, it serves no useful purpose and hence is cruel and unusual, violating the Eighth Amendment. This reasoning tracks public debate as well. While some favor the death penalty on retributive grounds, many others (including President Bush) argue that the only sound reason for capital punishment is to deter murder.


My Question: “killing”, what is difference between executioner(Law) and murderer? --

The death row - last talking point the executioner and the killer:

Executioner; “I kill you mate because you have sinned.
Murders; No, I don’t want to die if you kill me I wouldn’t have a chance to repent myself from the sin.
Executioner; Nob, you don’t have another chance, no proven statistics say you can repent your sin. And also costs too much for keep you alive.
Murders; I was born sinless you screwed up the system as I am the product. You are the sinner so you must die, not me.

  • Criminal Offenders Statistics
  • Wiki-Recidivism
  • Furman_v._Georgia
  • The Deterrent Effect of Capital Punishment: Evidence from a “Judicial Experiment”* Hashem Dezhbakhsh** - Joanna M. Shepherd
  • Gregg v. Georgia (428 U.S. 153),
  • Crime personality
  • Unemployment and property crime: not a simple relationship

  • Ethics - Punishment and the Death Penalty
  • Punishment
  • Greg Mankiw's Blog: Summers on the Economy -- USA Groom Doom and its Solutions

    Greg Mankiw's Blog: Summers on the Economy

    Relate Read:
  • Left Behind: Less-Educated Young Black Men in the Economic Boom of the 1990s
  • Subprime mortgage crisis
  • Using Municipal Development Municipal bond
  • Ethanol Makes Gasoline Costlier, Dirtier -by Jerry Taylor and Peter Van Doren
  • Sunday, June 29, 2008

    Talking Governance

    Talking Governance

    Corporate responsibility in Australia: rhetoric or reality?
    Disclosure of Corporate Governance Practices by Australian Listed Companies

    Disruptive technology

    Disruptive technology
    "low-end disruption" which targets customers who do not need the full performance valued by customers at the high-end of the market and "new-market disruption" which targets customers who have needs that were previously unserved by existing incumbents.

    "Low-end disruption" occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.

    Relate Reading
    Clayton M.Christensen

    Greg Mankiw's Blog: Real interest rates are now negative

    Greg Mankiw's Blog: Real interest rates are now negative

    Relate Reading:
    Ten Myths About the Bush Tax Cuts - Brian M. Riedl

    Greg Mankiw's Blog: Shiller on Fiscal Stimulus

    Greg Mankiw's Blog: Shiller on Fiscal Stimulus

    Relate readings:
  • Spending multiplier
  • Greg Mankiw's Blog: Proposed Fiscal Stimulus: My View
  • Wealth effect
  • Keynesian Cross
  • Yale School of Management Stock Market Confidence Indexes™
  • The Fair simulation model

  • Friday, June 27, 2008

    Greg Mankiw's Blog: Wanted: More Beautiful Workers

    Greg Mankiw's Blog: Wanted: More Beautiful Workers

    ...“Weiner wants Congress to amend current visa rules to allow 1,000 foreign models into the United States each year under their own immigrant classification.”
    Economics is ALL about allocation of scarce resources to the production of the goods and services in order to satisfy unlimited want. If USA doesn't have the models to satisfy the industry demand then why not.--“demand and supply”.

    Relate articles:
    Spillover effect
    The models young healthy and have reasonable educations, reasonable earring power so they spend; rent food etc… pay taxes, increase trade between USA and models countries, no cost of tax payer from they stay and if they marry USA citizen etc.

    Relate articl H-1B visa
    …Wage depression is a complaint critics have about the H-1B program: some studies have found that H-1B workers are paid significantly less than U.S. workers. It is claimed that the H-1B program is primarily used as a source of cheap labor. However the sources of these studies are normally conducted and reported by special interest groups that oppose the H-1B program. No definitive governmental study, either by the GAO or the Congressional Research Agency has proven these statistics to be true. A paper by Harvard Professor George J. Borjas for the National Bureau of Economic Research found that "a 10 percent immigration-induced increase in the supply of doctorates lowers the wage of competing workers by about 3 to 4 percent." It also states that this phenomenon makes Americans to pay less for their online and software services and most of the times it is free…
    I think Human “Endeavor” one of most exulting thing, regardless where you from, have a college degree or not, we find our place one or another way. We should all have given the chance to try. Anyone who wants to venture other counties they are courageous frontiers. The sprit of frontiers we went to the moon.

    By the way, a forbidden fruit is much tasty and challenge, single is not a premium!

    Greg Mankiw's Blog: How to Write Well

    Greg Mankiw's Blog: How to Write Well -- How to write a mind boggling hot streamy economic paper

    The Elements of Style - William Strunk, Jr.

    A Guide to Writing Well -- This guide was mainly distilled from On Writing Well by William Zinsser and The Elements of Style by Strunk and White

    Greg Mankiw's Blog: Creative Capitalism

    Greg Mankiw's Blog: Creative Capitalism

    The end justified mean, the glory of Capitalism is where the heaven is never disowned you because of your greedy sins; sinners, drug barons, murders, gangsters, whores and pimps all Welcome! – The Money is the Glorious God – any religions can shot AID/HIV, hunger in Africa? no. Money only can shot the hunger and diseases, so the money is the God, it can save millions of people, it can make millions people out of misery their hopeless life -- that is the beauty about the Capitalism.

    Greg Mankiw's Blog: Karl Rove channels Schumpeter -- Destructively Creative

    Phillips Curve - Disequilibrium Economy

    Wiki - Phillips curve

    The Phillips curve is a historical inverse relation between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of increase in wages paid to labor in that economy...

    1. Low unemployment encourages high inflation, as with the simple Phillips curve. But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate. (This is with shift B in the diagram.)

    2. High unemployment encourages low inflation, again as with a simple Phillips curve. But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price/wage spiral slow. This shifts the short-run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate.

    THOUGHTS ABOUT THE PHILLIPS CURVE- Paul A. Samuelson, 3 June 2008

    AND also EconLib
    Phillips Curve - by Kevin D. Hoover

    Thursday, June 26, 2008

    How to be a genius

    Wow - We all become IQ 180 + --- Practice Practice, this Mean anything you do more then 15 years you become Genius; sexgenius, foodgenius, and showergenius etc...

    ...So what do elite performers attain through all that deliberate practice and sensitive mentoring? What makes a genius? The crème de la crème appear to develop several important cognitive skills. The first, called "chunking", is the ability to group details and concepts into easily remembered patterns. Chess provides the classic illustration. Show a chess master a game in progress for just 5 seconds and they will memorise the board so well that they can recreate most of it - 20 pieces or more - an hour later. A novice will be able to place just four or five pieces...

    Apart from chunking, the elite also learn to identify quickly which bits of information in a changing situation to store in working memory so that they can use them later. This lets them create a continually updated mental model far more complex than that used by someone less practised, allowing them to see subtler dynamics and deeper relationships. Again, this is something skilled readers do with good novels. However, it appears more striking - more suggestive of "genius" - when we see these skills used by Garry Kasparov to simultaneously beat 30 grandmasters or Zinedine Zidane to spot a killer through-ball that no one else saw.

    Greg Mankiw's Blog: Wanted: More skilled workers

    Greg Mankiw's Blog: Wanted: More skilled workers --- Mr Think Lilke BrainDrain, if brain direct people to have better life, we would able to chew over our choice of Nut v Shell or both-- and Mr. SealYourLips – Silence is the beauty of speaking, Stinking beauty is to clean

    Human Capital- by Gary S. Becker

    ...Education and training are the most important investments in human capital. Many studies have shown that high school and college education in the United States greatly raise a person's income, even after netting out direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated and richer parents. Similar evidence is now available for many years from over a hundred countries with different cultures and economic systems. The earnings of more educated people are almost always well above average, although the gains are generally larger in less developed countries...

    Also Read
    Solow growth model

    Greg Mankiw's Blog: The Pigou Club in a Nutshell

    Greg Mankiw's Blog: The Pigou Club in a Nutshell --

    we should aim to tax the bad things (noise, gasoline, trash, violent crime, evil foreign dictators) and untax the good things (homegrown profits, employment, innovation).

    Greg Mankiw's Blog: Don't trust anyone who can't see into the future

    Greg Mankiw's Blog: Don't trust anyone who can't see into the future -- To future, his crystal ball is his sermons, he entreated himself “retire run off me until my entombment” his dowry is the glistering atonement

    "You know the economists?'' McCain said June 12 at Federal Hall, near the New York Stock Exchange. "They're the same ones that didn't predict this housing crisis we're in. They're the same ones that didn't predict the dot-com meltdown. They're the same ones that didn't predict the inflation that's staring us in the face today.''

    Wednesday, June 25, 2008

    C. Ford Runge and Benjamin Senauer - How Biofuels Could Starve the Poor

    How Biofuels Could Starve the Poor - We all have to change our diet - fuelCola fuelPepsi fuelMac fuelChicken fuelWater -- Yeah simple solution! Living efficiently ; save heaps of time for doing other things -- feed your lover lines. E.g.

    ...Should corn and soybeans be used as fuel crops at all? Soybeans and especially corn are row crops that contribute to soil erosion and water pollution and require large amounts of fertilizer, pesticides, and fuel to grow, harvest, and dry. They are the major cause of nitrogen runoff -- the harmful leakage of nitrogen from fields when it rains -- of the type that has created the so-called dead zone in the Gulf of Mexico, an ocean area the size of New Jersey that has so little oxygen it can barely support life. In the United States, corn and soybeans are typically planted in rotation, because soybeans add nitrogen to the soil, which corn needs to grow. But as corn increasingly displaces soybeans as a main source of ethanol, it will be cropped continuously, which will require major increases in nitrogen fertilizer and aggravate the nitrogen runoff problem....

    ...The benefits of biofuels are greater when plants other than corn or oils from sources other than soybeans are used. Ethanol made entirely from cellulose (which is found in trees, grasses, and other plants) has an energy ratio between 5 and 6 and emits 82 to 85 percent less greenhouse gases than does gasoline. As corn grows scarcer and more expensive, many are betting that the ethanol industry will increasingly turn to grasses, trees, and residues from field crops, such as wheat and rice straw and cornstalks. Grasses and trees can be grown on land poorly suited to food crops or in climates hostile to corn and soybeans. Recent breakthroughs in enzyme and gasification technologies have made it easier to break down cellulose in woody plants and straw. Field experiments suggest that grassland perennials could become a promising source of biofuel in the future.

    For now, however, the costs of harvesting, transporting, and converting such plant matters are high, which means that cellulose-based ethanol is not yet commercially viable when compared with the economies of scale of current corn-based production. One ethanol-plant manager in the Midwest has calculated that fueling an ethanol plant with switchgrass, a much-discussed alternative, would require delivering a semitrailer truckload of the grass every six minutes, 24 hours a day. The logistical difficulties and the costs of converting cellulose into fuel, combined with the subsidies and politics currently favoring the use of corn and soybeans, make it unrealistic to expect cellulose-based ethanol to become a solution within the next decade. Until it is, relying more on sugar cane to produce ethanol in tropical countries would be more efficient than using corn and would not involve using a staple food.

    The future can be brighter if the right steps are taken now. Limiting U.S. dependence on fossil fuels requires a comprehensive energy-conservation program. Rather than promoting more mandates, tax breaks, and subsidies for biofuels, the U.S. government should make a major commitment to substantially increasing energy efficiency in vehicles, homes, and factories; promoting alternative sources of energy, such as solar and wind power; and investing in research to improve agricultural productivity and raise the efficiency of fuels derived from cellulose. Washington's fixation on corn-based ethanol has distorted the national agenda and diverted its attention from developing a broad and balanced strategy. In March, the U.S. Energy Department announced that it would invest up to $385 million in six biorefineries designed to convert cellulose into ethanol. That is a promising step in the right direction.

    C. Ford Runge
    Agricultural policy, natural resources policy, welfare economics

    the Center for International Food and Agricultural Policy

    International Food Policy Research Institute

    Wolfgang Kasper -- Rudd's summit misses the point of policy

    Rudd's summit misses the point of policy -- 1000 unelected ego-trippers, pet project promoters, and seekers... This mean 1000 peoples are not the "Best and Brightest?" or gumbo mambo?

    ...And there are major challenges ahead that require a co-ordinated and strategically balanced approach. For example: how will inflation be controlled, when labour-market re-regulation makes economic structures more rigid when more health and education efforts are collectivised, and when the costs of Kyoto compliance are imposed on Australian households (each having to bear estimated extra annual costs of a few thousand dollars)? What number and quality of immigrants should we envisage in the interest of prosperity, but also long-term social cohesion? How do we cope with the growing brain drain? What are the best policies to improve the living conditions of Australia's indigenous population? How will we uphold national sovereignty when more collective decisions are delegated to UN bodies?

    Greg Mankiw's Blog: McCain vs Obama: Ethanol

    Greg Mankiw's Blog: McCain vs Obama: Ethanol

    Mr. McCain advocates eliminating the multibillion-dollar annual government subsidies that domestic ethanol has long enjoyed.... Mr. Obama, in contrast, favors the subsidies....

    ...“If you want to take some of the pressure off this market, the obvious thing to do is lower that tariff and let some Brazilian ethanol come in,” said C. Ford Runge, an economist specializing in commodities and trade policy at the Center for International Food and Agricultural Policy at the University of Minnesota. “But one of the fundamental reasons biofuels policy is so out of whack with markets and reality is that interest group politics have been so dominant in the construction of the subsidies that support it.”

    Corn ethanol generates less than two units of energy for every unit of energy used to produce it, while the energy ratio for sugar cane is more than 8 to 1. With lower production costs and cheaper land prices in the tropical countries where it is grown, sugar cane is a more efficient source.


    Here is another side of --Ethanol's Failed Promise -- Ethanol V Food -- Do we need Energy or Food – Bit of Humpy Dumpy Necrophilia Question?

    ...It is now abundantly clear that food-to-fuel mandates are leading to increased environmental damage. First, producing ethanol requires huge amounts of energy -- most of which comes from coal. Second, the production process creates a number of hazardous byproducts, and some production facilities are reportedly dumping these in local water sources.

    Tuesday, June 24, 2008

    Greg Mankiw's Blog: A Reading for the Pigou Club

    Greg Mankiw's Blog: A Reading for the Pigou Club
    McCain should spend ten minutes with his adviser Douglas Holtz-Eakin, who I would guess is still recovering from his embarrassment at McCain's call for a cut in gasoline taxes, to discuss the opposite: a tax on oil products, especially gasoline and heating oil. This doesn't mean abandoning his opposition to higher taxes. Indeed, the point is not to raise federal revenues. Every dollar that comes in should be rebated, perhaps by reducing the payroll taxes of everyone earning less than, say, $50,000 per year, the group Obama intends to benefit by raising taxes on those energetic small-business owners. The beneficiaries of the McCain shift in taxes from work to polluting, imported gasoline would see the reduction in taxes immediately--when they received their first salary check after the new regime was in place. But the main point is this: The money that the Saudis and other supporters of jihadists would otherwise get would be reducing the taxes of hard-pressed Middle America. Take that, Barack Obama. It's called straight talk.

    Public Goods and Externalities - by Tyler Cowen --
    Externalities occur when one person's actions affect another person's well-being and the relevant costs and benefits are not reflected in market prices. A positive externality arises when my neighbors benefit from my cleaning up my yard. If I cannot charge them for these benefits, I will not clean the yard as often as they would like. (Note that the free-rider problem and positive externalities are two sides of the same coin.) A negative externality arises when one person's actions harm another. When polluting, factory owners may not consider the costs that pollution imposes on others. Policy debates usually focus on free-rider and externalities problems, which are considered more serious problems than nonrivalrous consumption.

    ...Well-defined property rights can solve public goods problems in other environmental areas, such as land use and species preservation. The buffalo neared extinction and the cow did not because cows could be privately owned and husbanded for profit. Today, private property rights in elephants, whales, and other species could solve the tragedy of their near extinction. In Africa, for instance, elephant populations are growing in Zimbabwe, Malawi, Namibia, and Botswana, all of which allow commercial harvesting of elephants. Since 1979 Zimbabwe's elephant population rose from 30,000 to almost 70,000 today, and Botswana's went from 20,000 to 68,000. On the other hand, in countries that ban elephant hunting—Kenya, Tanzania, and Uganda, for example—there is little incentive to breed elephants but great incentive to poach them. In those countries elephants are disappearing. The result is that Kenya has only 16,000 elephants today versus 140,000 when its government banned hunting. Since 1970, Tanzania's elephant herd has shrunk from 250,000 to 61,000; Uganda's from 20,000 to only 1,600...

    Check it out Tyler Cowen's Website, heap of things you can dig in here! --

    Greg Mankiw's Blog: Department of Strange Bedfellows

    Greg Mankiw's Blog: Department of Strange Bedfellows --Wow, they had a crude slippery tongue kiss during the night!

    Hot Oily Topic:Sizzling Pillow Talk --Petroleum Price Data & Analysis

    Monday, June 23, 2008

    Greg Mankiw's Blog: Karl Rove channels Schumpeter

    Greg Mankiw's Blog: Karl Rove channels Schumpeter -- Destructively Creative

    ...Mr. McCain's angry statement shows a lack of understanding of the insights of Joseph Schumpeter, the 20th century economist who explained that capitalism is inherently unstable because a "perennial gale of creative destruction" is brought on by entrepreneurs who create new goods, markets and processes. The entrepreneur is "the pivot on which everything turns," Schumpeter argued, and "proceeds by competitively destroying old businesses."

    Most dramatic change comes from new businesses, not old ones. Buggy whip makers did not create the auto industry. Railroads didn't create the airplane. Even when established industries help create new ones, old-line firms are often not as nimble as new ones. IBM helped give rise to personal computers, but didn't see the importance of software and ceded that part of the business to young upstarts who founded Microsoft.

    So why should Mr. McCain expect oil and gas companies to lead the way in developing alternative energy? As with past technological change, new enterprises will likely be the drivers of alternative energy innovation.

    ----Read More
    Rediscovering Schumpeter: The Power of Capitalism
    "Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion...

    the absolute relentlessness of creative destruction and entrepreneurship. In a free economy, they never stop—never. Schumpeter wrote that all firms must try, all the time, "to keep on their feet, on ground that is slipping away from under them." So, no serious businessperson can ever completely relax. Someone, somewhere, is always trying to think of a way to do the job better, at every point along the value chain. Whatever has been built is going to be destroyed by a better product or a better method or a better organization or a better strategy.

    And also --
    Read more -- -- Joseph Alois Schumpeter (1883-1950)

    Read more -- -- Creative destruction

    Saturday, June 21, 2008

    Greg Mankiw's Blog: Heckman on Ability Gaps

    Greg Mankiw's Blog: Heckman on Ability Gaps: "Cognitive abilities are important determinants of socioeconomic success."

    Saturday, June 14, 2008

    Professor Robert M. Solow's Growth Theory and After

    ...We know now that endogenous growth theory led to an avalanche of papers that has recently slowed a little, but only a little. It is easy to see why the idea was so popular. The models offered the possibility of having a theory of the steady-state growth rate itself, instead of treating it as an exogenously given, if sometimes changing, fact of life. But there was an even more important attraction, I think. The nature of the theory was such that one could easily find feasible, even fairly traditional, policies that would influence the long-term growth rate. Adding a couple of tenths of a percentage point to the growth rate is an achievement that eventually dwarfs in welfare significance any of the standard goals of economic policy. Who would not be excited?

    It is important to understand how it was that endogenous growth theory could offer this prospect. The earliest models simply assumed constant returns to capital, or to the set of factors of production that can be accumulated, like capital. (They were called "AK models" for this reason.) Thus, for example, if output is just proportional to capital and saving-and-investment is proportional to output, then investment is proportional to capital and the saving?investment rate enters the factor of proportionality. So a higher saving-investment rate means a higher ratio of investment to capital, i.e. a higher growth rate of capital, and therefore a higher growth rate of output. But we think we know policies that will increase the level of saving-investment from given output. This easy passage from influencing a level to influencing a growth rate is what makes the theory so powerful. The trouble is that constant returns to capital is a highly special, pinpoint assumption. This is one of those cases where "approximately" will not do. But exactly constant returns to capital is not very plausible empirically, and has no convincing theoretical foundation either.

    Deeper and more interesting models soon emerged in the endogenous growth tradition. Some of them focus on the creation and accumulation of human capital, others on the process of technological invention and innovation (and the temporary monopolies that go with it). There is also a flourishing group of "Schumpeterian" models that emphasize the rivalry (or occasional complementarity) between an innovation and its predecessors. It seems to me that work along these lines might eventually tell us something interesting and useful about the role of knowledge in the economy and society. We have always realized that there is an important endogenous element in the development of new technology; all those businesses investing millions in research are not suffering from a mass delusion... Read more Professor Robert M. Solow's Growth Theory and After
    Read more - Exogenous growth model(Solow growth model)
    Solow growth model-by Fiona Maclachlan,
    The Solow model - interactive Java applet

    Sunday, June 8, 2008

    Raise the Gas Tax

    An eminent economist tells us how the Gas Tax makes us less use of the petrol, read more his blog "Friday, October 20, 2006" Pigou-club-manifesto

    Friday, October 20, 2006
    The Pigou Club Manifesto
    In today's Wall Street Journal, I offer a manifesto for the Pigou Club, the elite group of pundits and policy wonks with the good sense to advocate higher Pigovian taxes. (Click here for a partial membership list.)

    Raise the Gas Tax
    By N. Gregory Mankiw

    With the midterm election around the corner, here's a wacky idea you won't often hear from our elected leaders: We should raise the tax on gasoline. Not quickly, but substantially. I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade. Campaign consultants aren't fond of this kind of proposal, but policy wonks keep pushing for it. Here's why:

    The environment. The burning of gasoline emits several pollutants. These include carbon dioxide, a cause of global warming. Higher gasoline taxes, perhaps as part of a broader carbon tax, would be the most direct and least invasive policy to address environmental concerns.

    Road congestion. Every time I am stuck in traffic, I wish my fellow motorists would drive less, perhaps by living closer to where they work or by taking public transport. A higher gas tax would give all of us the incentive to do just that, reducing congestion on streets and highways.

    Regulatory relief. Congress has tried to reduce energy dependence with corporate average fuel economy standards. These CAFE rules are heavy-handed government regulations replete with unintended consequences: They are partly responsible for the growth of SUVs, because light trucks have laxer standards than cars. In addition, by making the car fleet more fuel-efficient, the regulations encourage people to drive more, offsetting some of the conservation benefits and exacerbating road congestion. A higher gas tax would accomplish everything CAFE standards do, but without the adverse side effects.

    The budget. Everyone who has studied the numbers knows that the federal budget is on an unsustainable path. When baby-boomers retire and become eligible for Social Security and Medicare, either benefits for the elderly will have to be cut or taxes raised. The most likely political compromise will include some of each. A $1 per gallon hike in gas tax would bring in $100 billion a year in government revenue and make a dent in the looming fiscal gap.

    Tax incidence. A basic principle of tax analysis -- taught in most freshman economics courses -- is that the burden of a tax is shared by consumer and producer. In this case, as a higher gas tax discouraged oil consumption, the price of oil would fall in world markets. As a result, the price of gas to consumers would rise by less than the increase in the tax. Some of the tax would in effect be paid by Saudi Arabia and Venezuela.

    Economic growth. Public finance experts have long preached that consumption taxes are better than income taxes for long-run economic growth, because income taxes discourage saving and investment. 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.

    National security. Alan Greenspan called for higher gas taxes recently. "It's a national security issue," he said. It is hard to judge how much high oil consumption drives U.S. involvement in Middle Eastern politics. But Mr. Greenspan may well be right that the gas tax is an economic policy with positive spillovers to foreign affairs.

    Is it conceivable that the policy wonks will ever win the battle with the campaign consultants? I think it is. Even after a $1 hike, the U.S. gas tax would still be less than half the level in, say, Great Britain, which last I checked is still a democracy. But don't expect those vying for office to come around until the American people recognize that while higher gas taxes are unattractive, the alternatives are even worse.
    Read more Pigovian Tax