Sunday, May 04, 2008

What's Next, Slavery?

Mark Perry discusses House Resolution 5800, introduced by Rep. Paul Kanjorski (D-PA), the "Consumer Reasonable Energy Price Protection Act of 2008," which would:
  • Tax the oil industries’ "windfall profits."
  • Set up a "Reasonable Profits Board" to determine when the oil companies’ profits are in excess, and then tax them on those windfall profits.
  • As oil and gas companies’ windfall profits increase, so would the tax rate for those companies.
...Kanjorski said "his legislation will encourage oil companies to lower prices to prevent them from receiving higher tax rates."

A few Questions/Comments:

1. Oil companies don't set oil and gas prices, global market forces do. The fact that oil and gas prices change daily demonstrate very clearly that oil companies are at the mercy of market forces of supply and demand.

2. If you tax something (oil), you get less of it. If you get less of something (oil), prices go up, not down.

3. How does Rep. Kanjorski know what "reasonable profits" are?....
Well, Rep. Kanjorski is a typical member of Congress, whose members' economic views reflect their constituents' economic illiteracy.

Those constituents, I am sure, would reject slavery out of hand. But they favor measures like Kanjorski's because they want to buy a given amount of a good or service (gas, health care, etc.) at a lower price. But the only way to get the same amount of anything at a lower price is through greater productivity (which can't be legislated) or by forcing people to produce more of it, that is, by making slaves of them.

(For more about economic illiteracy, follow these links. Relatedly, some links about irrational voters are here.)