When I saw Martin Feldstein’s name on this article I read it with some interest — after all, Mr. Feldstein is a famous and well-respected economist, and professor at Harvard…
From today’s WSJ ($), by Martin Feldstein:
The rapid rise in the price of gasoline has produced calls for tougher fuel economy standards on new cars and trucks. Although reduced gasoline consumption would be good for the environment and for national security, such a regulatory change would be a mistake. A far better approach would be a system of tradeable gasoline rights, or TGRs. These could be distributed in a way that actually raises the income of a majority of households while giving everyone an incentive to reduce gasoline consumption.
In a system of tradeable gasoline rights, the government would give each adult a TGR debit card. The gasoline pumps at service stations that now read credit cards and debit cards would be modified to read these new TGR debit cards as well. Buying a gallon of gasoline would require using up one tradeable gasoline right as well as paying money.
The government would decide how many gallons of gasoline should be consumed per year and would give out that total number of TGRs. In 2006, Americans will buy about 110 billion gallons of gasoline. To keep that total unchanged in 2007, the government would distribute 110 billion TGRs. To reduce total gasoline consumption by 5%, it would cut the number of TGRs to 104.5 billion.
Mr. Feldstein has gone off the deep end.
The key indicator is this sentence fragment: “The government would decide how many gallons of gasoline should be consumed per year…"
Where, pray tell, did our founding fathers envision that role of government included limiting our consumption of a freely available resource?
And how in the world did an economist manage to talk himself out of letting the free market handle the job all by itself, by allowing higher prices from scarcity to throttle demand?
I am so surprised by Mr. Feldstein’s piece that I’m wondering if it might be an elaborate satire on his part, published with the complicity of the WSJ.
But the simpler explanation is that he’s simply nuts.
