What a gas! Professor Greg Mankiw (Harvard economist) nails both The Geezer and The Hillster on the gas-tax holiday scam. He finds them (1) ignorant, (2) arrogant, and (3) dishonest. That is a trifecta of repudiation. A plague on both their houses! If this is (fair & honest) debunking, so be it.
[x Greg Mankiw's Blog: Random Observations for Students of Economics]
In Praise of Gas Tax Hysterics
By Greg Mankiw
Paul Krugman (on today's NY Fishwrap Opinion page) thinks all of the fuss about the gas tax holiday has become a bit hysterical. He agrees that the policy is a bad idea, but it is no big deal, so let's not focus on it.
Paul is right that the issue is, quantitatively, small potatoes, but I am nonetheless pleased to see it get so much attention. This issue is like the canary in the coal mine: No one really cares about the canary, but its condition tells us about deeper problems that lie below.
Many economic issues (e.g., health care, corporate taxation, the trade deficit) are vastly complicated, with experts holding a variety of opinions. When candidates disagree, it simply means that each is siding with a different set of experts, and it is hard for laymen to figure out which set of experts is right. By contrast, the gas tax holiday is not nearly as complicated, and the experts speak with one voice.
Why, then, are candidates proposing the holiday? I can think of three hypotheses:
Ignorance: They don't know that the consensus of experts is opposed.
Hubris: They know the experts are opposed, but they think they know better.
Mendacity with a dash of condescension: They know the experts are opposed, and they secretly agree, but they think they can win some votes by pulling the wool over the eyes of an ill-informed electorate.
So which of these three hypotheses is right? I don't know, but whichever it is, it says a lot about the character of the candidates.
[Professor Mankiw's Blogger(!) Profile: I am a professor of economics at Harvard University, where I teach introductory economics (ec 10) among other courses. I use this blog to keep in touch with my current and former students. Teachers and students at other schools, as well as others interested in economic issues, are welcome to use this resource.]
Copyright © 2008 Greg Mankiw
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