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Another lefty economist who thinks cars and oil are bad for us
Gerard Jackson
Rising petrol prices are good for us is the title of an article by Ross Gittins of the Sydney Morning Herald, 3 May 2006. The title and thinking behind it neatly sums up just how bad economic commentary is in Australia. According to this genius the Treasurer shouldn’t cut petrol taxes “because we must learn to live with high petrol prices, not find ways to duck them”.
In short, scarcity (meaning poverty) is good for us while abundance is bad. And for this kind of nonsense he gets paid about $3,000 per week. Mr Gittins argues that it would be wrong to cut petrol taxes “the conventional economists’ argument that the best response to higher prices is higher prices”. Actually, the conventional response to higher prices is increased supply. Or perhaps he hasn’t noticed that supply curves slope upwards.
Gittins is sufficiently intelligent to know that the “underlying increase in demand is coming from the rapid growth in the economies of China, India and other developing countries”. He also realizes that the market response to an increase in demand for oil is an increase in exploration, the developments of substitutes and innovations in oil extraction. It is equally true, as he admits, that higher prices lead to greater conservation of the resource. Eventually this leads falling prices as supply increases.
However, and with the dreary likes of the unimaginative Mr Gittins there is always a ‘however’, because we “need to limit our use of petrol and other fossil fuels in the interests of the environment”. And what does he mean by the “environment? Global warming, of course. Despite the fact that global warming, now changed to “climate change”, is pretty shonky science, man’s contribution can only be negligible.
Sallie Baliunas, an astrophysicist and senior scientist at the George Marshall Institute said: “Most of the gases have been added to the air in the last half-century, so they cannot have driven most of the warming trend observed in the early 20th century”. Moreover, there is mounting evidence that there has been no warming since 1998. As Steven Milloy pointed out: “About 95 percent of the greenhouse effect — the atmospheric warming due to the trapping of solar energy that makes life possible on Earth — is due to water vapour, 99.999 percent of which is of natural origin”.
But at the Fairfax stable where Gittins ‘works’ global warming is an act of faith that is heresy to question, along with those bloody stupid windmills they support.
And what is Mr Gittins’ brilliant solution to save the world from humanity? Public transport. Roads and cars are complementary goods. If we have cars we need roads to drive on. Now Gittins’ has it that no matter how many road improvements are made “the reduction in congestion is always temporary. Why? Because congestion is the only thing restraining our deep-seated preference for driving”.
No it isn’t. the real reason is that the state, which is in control of the road system does not build enough roads to satisfy demand. (I am aware that city roads present a particular problem). He therefore concludes that when road conditions improve congestion returns to its former level, which merely means that supply (roads) have failed to meet demand from car owners.
Naturally all of this is rather pointless, a bit like farmers trying to increase output to meet a rise in the demand for food. Unfortunately Gittins is not bright enough to see the analogy. He figures that current conditions cannot continue because, apart from the Great God called Global Warming, of the “inexorable rise in the cost of private motoring”. But if the increasing cost of motoring is going to choke off the demand for more roads what the hell is he complaining about?
We now come to “happiness”, and I kid you not. The socially aware Gittins tells us that research reveals that “ happiness shows that the aspect of people’s daily lives they least enjoy is commuting”. I’m shocked! Truly shocked! Some genius has discovered that most people don’t like travelling to work. What next I wonder? The discovery that people hate standing in the rain waiting for buses that never come?
But driving to work is even worse. Why? Because “... much research by psychologists shows that people find driving through heavy commuter traffic particularly stressful. In extreme cases it can cause gastrointestinal problems, headaches and anxiety. Elevated blood pressure is common”. These jokers should try Flinders Street in the peak hour.
He finishes off with this brilliant insight”
But if driving through heavy traffic is so bad for us, why do so many of us want to do it? Because human nature is full of contradictions. The state pollie who wakes up to this one will do wonders for our health and happiness.
That’s right, Rossie thinks the state will save us, as usual. But let me finish with this trite observation: There ain’t no such thing as a free lunch. This means that people put up with the stress and inconvenience of driving because it beats the inconvenience and stress of public transport.
Of course, as Michael Lipton has pointed out, now that roads are no longer reserved to the wealthier classes and tend to become occasionally congested by the slower-moving and badly maintained cars of the poorer members of society, the former complain. (Professor Wilfred Beckerman, Two Cheers for the Affluent Society, Saint Martin’s Press, New York, 1974).
See Minimum wages and capital accumulation: lefty economists fail again for another example of Gittins’ brilliant grasp of economics.
Gittins and the Lowy Institute get it badly wrong about China and economic growth
Gerard Jackson is Brookes’ economics editor
BrookesNews.Com
Monday 8 May 2006