Tuesday, May 06, 2008

How to characterize Hillary?

I’ve been away for a bit, and this will continue for another week or two, owing to various contingencies, foreseen and otherwise. With the end of the semester I’m really too busy to be writing this, but Hillary is crowing victory in Indiana (here’s hoping she’s wrong) and going on with her federal gas tax plan.

What are we to say of this plan, and what does it tell us about Hillary?

The plan: stop placing the tax on consumers, and put it on the producers (you know, those nasty people who do us the disservice of working to provide us with gasoline). This will give consumers a break, and punish the producers, for... umm, doing us the disservice of working to provide us with gasoline? Well, anyway...

This is a textbook example - literally. What happens when a per unit tax is shifted from buyer to seller, from demand curve to supply curve? Answer: nothing. These are identical in their effects on raising prices to consumers, reducing prices to sellers, and reducing quantity sold.

As I walked into my last class of the term, my students were discussing this among themselves and making fun of the plan; they mentioned it to me and asked my opinion.

"Look, anyone who has had Econ 101 knows this is nonsense. Rest assured that Hillary’s advisors are familiar with Econ 101, and I am pretty sure Hillary herself understands that this is nonsense."

"So you’re saying Hillary is evil?"

Good question.

Well, let’s look at it. The Econ 101 analysis isn’t the full story. Frankly, Hillary’s "plan" is more idiotic than it might seem from the blackboard econ perspective, because it is proposing the status quo! The federal gasoline excise tax is already levied on producers, not consumers. As the Congressional Research Service puts it, "the gasoline excise tax [i]s a ‘manufacturer's excise tax’ because the government imposes it at production (i.e., the producer, refiner, or importer)." People who are impressed with her plan are simply ignorant. The "Hillary plan" is already in effect.

In other words, Hillary is knowingly, cynically playing on voters’ ignorance. My students are right, and have Hillary pegged.

So here’s the correct characterization: Hillary = Evil.

Signing off for now,, but back soon!

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