Monday, March 26, 2012

Greg Mankiw Admits a Political Operative Into the Pigou Club

Via Greg comes some odd piece by Jim McTague:

President Obama habitually made the superhero boast, especially in regard to his energy policies. Consequently, now that pump prices have topped $4 in many parts of the country, he finds himself tangled in his cape, with his approval ratings several points below the crucial 50% deemed necessary for re-election. This is a campaign crisis for the president, which is why he is focusing so much of his time on it, including two solid days last week. Obama's mistake was to advertise himself as a hi-tech guru with the added, superhuman ability to manipulate market forces to create a green-energy utopia where batteries, algae and solar cells would replace climate unfriendly fossil fuels like coal and gasoline. His lengthy litany of powers included the ability to raise the cost of these dirty fuels to reduce their pricing advantage over renewable energy. He harped that this was desirable and necessary. The political imprinting worked better than our president ever imagined. Now that gasoline prices are pinching pocketbooks, the public expects Obama to exercise his superpowers and manipulate prices lower. Protestations by Obama that market forces beyond his control are setting the prices are greeted with disdain rather than sympathy.

McTague does go onto to praise Greg:

Harvard University economist Greg Mankiw, currently an advisor to GOP presidential hopeful Mitt Romney, has long been an advocate of a $1-per-gallon gas-tax hike phased in over 10 years (Romney won't countenance the tax). Absent the tax, politicians resort to crazy, Obama-like schemes to achieve the same end of reducing our dependence on foreign oil supplies. MANKIW PRESCIENTLY STATED during a 2006 interview conducted by CNBC's Larry Kudlow that the alternative to a simple gas tax is "an energy policy that looks like it was created in the Kremlin." "An alternative in Washington to gas taxes," he said, "is very heavy-handed regulation that's extraordinarily intrusive and not particularly effective. Things like CAFE standards"—the fuel-efficiency rules that auto manufacturers are required to follow—"and biofuel mandates are tremendously regulatory. The gas tax is really the least invasive way of getting toward our energy goals." In an Oct. 20, 2006, op-ed piece in The Wall Street Journal, Mankiw said higher gasoline taxes would be the least invasive way to reduce pollution and highway congestion. The tax would encourage manufacturers to make fuel-efficient cars and eliminate the need for bureaucratic mandates. Mankiw estimated in his 2006 article that tax revenue would amount to $100 billion a year, which could be used to lower the deficit.

OK – a little credit may have been due this silly op-ed for noting that Romney has not endorsed Mankiw’s tax except for the claim by McTague that “oil men don't have a knee-jerk opposition to such a tax”. McTague also seems to have missed this account of how Romney used to support the same eco-friendly positions that McTague ridicules.

To be honest – I had no idea who Jim McTague was until I found this:

I have little respect for journalists like Larry Kudlow and Jim Mctague who are merely right wing, Republican, political operatives masquerading as financial journalists. Since they are mere mouth pieces for industry groups, and self interested big business, who knows what financial incentives they receive? I have more respect for prostitutes, at least they’re upfront about what they do.

My only problem with this last blog post is that it claimed Kudlow used to be an economist.

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