It’s typical that so few have pointed out another way to bring the oil price down would be to simply make developing countries charge what the price is for oil. Many of them, including Indonesia, China and Venezuela charge a thimble’s worth of the real price of oil to its people. The result is that they use far more of it than they should. The use of oil would go down if the real price was charged. In turn, demand would go down and the price would fall. Supply would become greater than demand rather than tightly higher.
We don’t hear our politicians talk about this at all. Venezuela is charging $5.00 a barrel for domestic use. It’s a small country, but when you see China and Indonesia subsidizing oil, it becomes a massive spur on demand that is created artificially by a government and unwelcome at this time.
Other ways to downsize the oil price: drill and explore more. Announce that you’re doing it. Go for coal and develop technologies to make it ever cleaner. Go to alternatives and announce the building of more nuclear reactors. Bring in tougher mileage standards. Insist that governments of emerging economies not bring in carbon taxes but make their people pay the real price of oil.
The best way to control inflation is not to loose monetarily. Friedman said that real inflation can only come from looser monetary policy. If that is still tight, strict and has good targets, then even a commodity shock like this will not create inflation of any real level like what we saw in the 1970s. Inflation remains barely 3% when we know that in the 1970s inflation was 10-15% in any given year. Unemployment was also in the double digits then. They called the whole mess stagflation.
Most governments get this. We’re not close to that. The misery index is barely at 9%. In the 1970s it was usually in the 20% range.
The dirty secret of the carbon tax the Liberals are proposing is that it will not see its revenues drop after being added because of reduced use of carbon. In fact, it will go up and there will be more revenues from it. It will not regulate or restrict emissions. Heating oil and gas, which it will tax, are things people need. People don’t have a choice about using some of these things, especially if the weather is extreme or they need to go on a business trip. Look at the GST. It was not only considered to be revenue neutral but no one believed it would become the staple for revenue generation that it is now. That’s probably why it’s such a good idea. It will switch us over to consumption taxes in a real way. But will the income tax reduction be similar?
A clue to the Liberal intentions on this lies in the fact that except for an auditor-general’s slap on the wrist, if it does gather in more revenue than it actually returned in tax cuts, there would be no sanction or punishment for the government. Much like the GST, it could be a money spinner. No one holds the federal government (even the Liberals who promised to get rid of it) now that the GST is spinning so much revenue that it balances our budgets.
ZIMBABWE: It’s not colonialism to invade this country. Are we willing to sacrifice this entire country because we feel guilty about what we did or didn’t do in Africa in the past? Why is this different from Sierra Leone? Such hypocrisy. It’s just murder now. I guess at least Zimbabwe isn’t a "failed" state. There is a government, of sorts, that is evidently strong enough to beat the crap out of its own people.
Look at Burma and North Korea. Expect Zimbabwe to imitate the model. Expect others if we don’t intervene there.
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