Thursday, November 8, 2012

This Obsession With the Europeans

There are many people, especially in the Democratic Party, who want to make energy prices more expensive. Steven Chu, Secretary of Energy, once remarked "Somehow, we have to figure out how to boost the price of gasoline to the levels in Europe." He has since recanted that statement, likely at the behest of the White House, which was concerned about the political fallout that resulted.

But this is the private goal of many people in the United States. They want us to live like the Europeans in dense urban areas with extensive public transportation. This is not necessarily a bad thing. But, as a libertarian, I resent other people trying to use the power of the state to force me to live in a manner that pleases them. It is the height of arrogance and condescension, and precisely why I hate both the Democratic and the Republican parties, who each want to use the government to force people to live according to their own ideology. But I digress.

Average gasoline prices in Europe is well over 9 dollars a gallon. The reason for this is taxes. A general Value Added Tax (Eurozone average of 20%) is levied on gasoline in addition to an excise specifically for gasoline, of which the average in Europe is about 3 dollars per gallon. The result is what you currently see in Europe: a heavily urbanized population that has a heavy reliance on public transportation.

If gas prices even went up to 8 dollars a gallon, it would result in a revolutionary change in the automotive culture of the US. People would buy smaller, more fuel efficient cars. They would live closer to where they worked. And they would use more public transportation. Of course, Americans have a much greater aversion to taxes than Europeans, and we have a more prosperous economy. The modern American family can afford to live anywhere from 15-50 miles away from the breadwinners' workplace and own a single family home in the suburbs. That is a luxury enjoyed only by the economic elite in Europe.

That still hasn't discouraged certain elements in American politics from pushing up the price of energy in other areas. The environmental lobby and their allies hates fossil fuel of all stripes. It's not just gasoline, but also coal and natural gas. The latter two generates approximately 70% of all electricity in the United States. Through regulation and taxes, some politicians want to make coal and natural gas economically unfeasible.

I don't like life in Europe. The vast majority of households don't have air conditioning. They pay too much for basic commodities like food and utilities. They live in cramped apartments. They are, in every objective measure, poorer than Americans. And I bet most Americans, given a conscious choice, would reject a European lifestyle. I find it hard to comprehend why so many American "liberals" want us to be more like Europe.

Actually, it's not that hard to understand. They have universal health care. They have lower per capita carbon footprints (because they're poorer). And they are still living in a post-industrial (read: fabulously wealthy) economy. It's this environmental and human rights thing that they have where they look at the US and our crass consumerism and wonder why we place a greater importance on buying frivolous things on than providing health care to poor people or reducing our impact on the environment.

There are many things wrong with our country. But there are many things wrong with any country. There is a great deal of ruin in a nation (Adam Smith). It's always important to keep perspective, because it's so easy to become preoccupied with things that are wrong and terrible. We have to be careful when we use the government as a behavior modification apparatus, both from an ethical and a practical standpoint.


  1. Most libertarian minded economists I know support both carbon taxes and a VAT so you coming out against them is interesting to say the least.

    I think you get the narrative wrong however. Americans are richer precisely because more of us live in large cities than they do.

    We should be doing everything we can to promote more density.

    1. That's a bit misleading. America's population is heavily suburbanized while Europe's population is heavily urbanized. The difference between living in the city as opposed to around it is an important distinction.

      I'm not necessarily opposed to a value added tax, but the way Europe implements it makes me uneasy about using it here. Carbon taxes, on the other hand, are absurd. I don't think the science out there has proven that carbon output costs nearly as much as the green lobby thinks that it does.

  2. Libertarian minded economist supporting carbon taxes? Really? Which ones? VAT is more understandable.

    Americans are not richer because we live in large cities. Having lots of big cities doesn't hurt, but there are many places around the world with plenty of big cities, and yet they are not as prosperous as the US. That economist article made some interesting correlations, but was ultimately unconvincing.