A writer for MarketWatch.com, which is part of the Dow Jones-Wall Street Journal group — has penned one of the most smugly ignorant articles about our economy I could imagine. The article is titled Eight Reasons You’ll Rejoice When We Hit $8 a Gallon Gasoline.
His reasons include:
1. RIP for the internal combustion engine
2. Economic stimulus
3. Whither the Middle East’s clout
4. Deflating oil potentates
5. Mass transit development
6. An antidote to sprawl
7. Restoration of financial discipline
8. Easing global tensions
Is this satire, or did he write this to prove how stupid he is? Let’s take these reasons one by one.
1. The internal combustion engine has been an incredibly valuable piece of technology, one that is far more energy-efficient than its external combustion predecessor (i.e., the steam engine). Yes, it had some externalities (mainly noise and air pollution), but most of those have been eliminated (mufflers and catalytic converters). Wishing the internal combustion engine away is like wishing away 10 percent of your economy.
2. It is a classic economic fallacy to imagine that tragedy is an economic stimulus. Yes, hurricanes and tornados are followed by an increase in construction, but that doesn’t mean they are positive things. If they were, the government might as well go bomb one city a month just to promote the economy. In reality, the money spent recovering from an earthquake, high fuel prices, or other destructive event is money that otherwise would have been spent on something far more productive.
3. If people are willing to pay $8 for something that cost $1 just a few years ago, then the Middle East, where much of that substance comes from, is only going to be more important, not less. This writer is confusing quantity demand with demand. Though high prices may lead to lower quantities, the demand hasn’t changed.
4. That goes double for oil potentates. If the Saud family and Hugo Chavez were raking it in at $50 a barrel, can anyone really think they will be worse off at $150 a barrel?
5. Our dear writer holds the popular (among journalists, at least) that mass transit equals good, automobiles equal bad. Just what is so virtuous about a transportation system that doesn’t go where you need to go and takes twice as long to get to where it does go? After the automobile replaced mass transit, personal incomes hextupled — and at least half that increase was due to automobility. Anyone who thinks we can go back to mass transit without giving up much of that income is deluding themselves.
6. Again, the writer has fallen for anti-suburb sloganeering. Think of this: Before World War II, American homeownership rates never rose above 45 percent. After the war, they quickly rose to 65 percent. That’s one fifth of the population that owns its own home thanks to sprawl — that is, thanks to low-density suburbs enabled by the automobile. Homeownership means better living conditions, better education for children (yes, children in owned homes do better in school than children in rented homes), and equity to start small businesses. Wishing for an end to sprawl means wishing to put 20 percent of Americans back in poverty.
7. Did that sound extreme? Well, in wishing a “restoration of financial discipline,” our dear writer is effectively wishing that everyone be poorer. Apparently, to him, there is something wrong with a society in which people are so well off that they can afford to spend $20,000 on a car. We will be much better off when we are all too poor (present company excepted, of course) to make such foolish purchases.
Yes, depressions do force people to be more disciplined, but that doesn’t mean you want to live through one. Of course, our dear writer probably doesn’t imagine that a depression will hurt him, only other people who probably deserve it because they drive $20,000 vehicles.
8. What kind of fantasy world does this writer live in where poverty and resource shortages translate to “easing global tensions”? He is clearly ignorant about history as well as economics.
I am not saying the government should take any particular actions to reduce gas prices, like drill the Arctic Wildlife Refuge or start another subsidized synfuel program like the one during the Carter administration. If fuel prices go up, we will deal with it — and probably not in the ways this writer imagines. But to be happy about it reveals an powerful insensitivity to other people’s misery.