Economics if I Was in Congress, I

Economics

If I was in Congress, I would not vote for such a tax. From an ethical perspective, such a tax is simply punitive. The oil companies are not strictly to blame if the price elasticity of demand for oil is low and they take advantage of that. Consumers have no inherent right to dirt cheap oil. The argument could be made that there are benefits to monopolistic profits such as further exploration, but that argument is actually a bit soft. First, drilling is already included on the income statement -- these are profits above and beyond what the companies need to sustain their business. And that is why they drill -- to sustain their business, so they're going to do it anyway. The reason you don't vote for such a bill has nothing to do with finding ways to make oil companies more profitable or less profitable; it is because the tax is punitive, singles out one industry, and distorts the market needlessly. Let the free market work out the oil market for itself -- consumers will make different choices if they don't like gas prices and oil company profits.

2. There is a logical fallacy at play in the argument of the Georgists. Having access to more money at the state level does not equate to spending far beyond its means. A state government can spend beyond its means no matter what its sources and amounts of revenue are. So the problem is strictly one-sided, and that means the solution should be, too. This is one of those situations where either a draconian line-by-line budget purge is needed or a law curtailing state government spending is required. It is probably related to things like rising health care costs and state employee entitlements. But whatever the cause, this is a spending problem and not a problem of having too much revenue. The argument that having too much revenue causes budget deficits does not make any sense whatsoever.

3. Schumpeter was wrong about that. Corporations like growth. While some have eschewed growth in favor of stability, most still seek growth. External influences force companies to innovate or perish, so risk-taking continues in most corporations today. Competition -- there are new markets and new technologies all the time -- has forced managers to adopt risk-taking strategies to meet these challenges. If one wishes to characterize corporate managers as being more risk-averse than entrepreneurs, that may well be true. But corporate managers still take risk, as well as preserve assets.

4. Now this is a loaded question, ignoring the distinction between goods that exist in highly competitive markets with low barriers to entry and exit and no inherent public value (household appliances) with those goods that are characterized by the opposite traits. So I don't specifically agree with Friedman simply because there is a comparison here between apples and oranges, using cherry-picked examples. It's a fruit salad of an argument, as opposed to something coherent. The U.S. military is, last I checked, the most innovative military in the world today. That's all government spending. Airlines are private enterprises and in the U.S. they are basically the worst in the world, with the lowest amount of innovation, and when they do innovate it is to the detriment of consumers (if you want me to smile, that's $5). But here's the thing. Schools have vast stacks of literature produced each year with respect to studies of how to improve schools, so lack of innovation in education is a straw man. The post office will innovate or perish -- government is just keeping it on life support for now, but that's not sustainable. The military is in a competitive environment, so it does innovate. Innovation is something that occurs where there is a need for innovation. Some industries stagnate, usually due to high entry barriers that reduce competitive threat. The rules of economics don't change just because one dislikes government.

5. Elected officials use their political power to get re-elected. This is a poor use of political power, but validity is in the hands of the voters, and in this case the voters are too apathetic to challenge it. This does not really impact business. While we'd all prefer the government does its job, businesses seems pretty good at having their interests taken care of. We might not have a budget or a coherent immigration strategy, but we've sure signed a lot of trade agreements. So a government cycle might cause problems for non-business interests, but business has no worries.