Gas Tax Holidays and the Pathologies of Democracy

FindLaw's Michael C. Dorf has an interesting column up discussing how the proposed gas tax holiday points up a few of democracy's flaws. It sounds downright elitist in places:

More generally, the mere fact that Senator McCain would propose, and that Senator Clinton would then endorse, an idea that makes such poor policy sense raises a more fundamental question about democracy: Can rule by the people generate wise policy? In this column, I address the gas tax holiday proposal and then the broader question about democracy.

Yowsa! In one short column, he proposes to resolve the question that has nagged democracy since its inception. Ambitious bastard, innit he?

And a smart bugger to boot. If you need to explain to a very dense person why the gas tax holiday won't save them any money, you could use this column to hone your arguments:

Accordingly, the temporary elimination of the federal gas tax will both decrease federal revenue—an impact that would be offset under the Clinton windfall-profits tax proposal—and increase demand for gasoline. Increasing demand for gasoline is utterly irresponsible. It will lead to greater CO2 emissions and other pollution as well as greater dependence on oil imported from unstable or hostile regimes. The gas tax holiday will not even lower prices at the pump by very much: The greater demand stimulated by lower prices (because of the temporary elimination of the tax) will in turn tighten supplies, leading suppliers to raise prices. A new equilibrium price will arise, and drivers will may pay nearly as much for gasoline without the tax as they did with the tax, except that the oil companies and their foreign suppliers will pocket much of the revenue that formerly went to the federal government as a tax.

I think this is information any average moron, including IDiots, could potentially understand: If you start buying more gas, the oil companies will scream "Bonanza!" and raise the prices on you. You end up with as much pain at the pump, but with more potholes.

But what about the "windfall tax"? Won't that solve the pothole problem? Isn't it better for the oil companies to pay rather than the people?

In a perfect world, yes. Meanwhile, back in reality:

Economists talk about the "incidence" of a tax, namely, who feels it, and the incidence of a given tax may be very different from its nominal object. Even a tax called a "windfall" tax on oil companies can be felt by drivers, if the companies pass on the cost of the tax to their customers in the form of higher prices—much as they would pass on other costs, such as those associated with higher oil prices on world markets.

I work for a corporation. I can assure you they don't pay the federal taxes imposed upon them: you do. Look at your phone bill. See those regulatory fees? Those taxes? Those strangely inflated prices? Yup. That's the corporation handing you the taxes your government handed them. Oil companies won't behave any differently. No company addicted to profit will.

And yet, there are people stupid enough to fall for this sort of bullshit hook, line, sinker and fisherman.

On many issues, the people's interests are heterogeneous. Then, democracy can become a tool for deciding which private interest to serve rather than for simply serving the interest of the undifferentiated public.

Worse, in many of these circumstances, the distributional principle chosen is not simply the greatest good for the greatest number. Instead, political scientists have shown that where a policy creates concentrated benefits for a small but well-organized group, it will often be selected even though the net costs outweigh those benefits. Because the costs are distributed over a much larger group, the people who pay the costs do not have nearly as strong an incentive to organize and oppose the policy that the people who benefit from the policy have to exert political pressure in its favor.

In other words, when we bend over with no more than a whimper, the special interests are likely to keep dropping the soap. And they have plenty of politicians pocketing their money that'll be more than happy to deceive the public into thinking picking up the soap is good for them:

The proposed gas-tax holiday is not a response to rent-seeking but an exercise in demagoguery. It appeals to people's misunderstanding of their own self-interest. When faced with what appears to be a choice between paying more for gasoline or paying less for gasoline, people can naturally be expected to opt to pay less. Likewise for the Clinton variation, when faced with the apparent choice of a tax on individual drivers struggling to make ends meet, or a tax on the fat cats who run the oil companies, Senator Clinton assumes that people will choose to tax the fat cats.

As we saw above, these choices are false, but explaining why requires more than a sound bite. Moreover, it is easy to portray anyone who opposes a populist measure such as the gas tax holiday as doubly elitist: first, for the apparent failure to appreciate that even a few extra dollars can make a difference to a struggling family; and second, for suggesting (even if correctly) that the people do not understand what is best for them.

Ooo, double elitist whammy! And we all know that in this country, trying to educate people so that they know just why they should stop bending over to pick up the soap is a horrible elitist thing to do. After all, what they don't know won't hurt the corporations, special interests, and everyone else with a bar of soap to drop.

Dorf closes with Churchill's description of "democracy as the worst form of government, except for all the others." And he makes excellent points that democracy has treated people a lot less shabbily than dictatorships, theocracies, and other assorted totalitarian fuckers. But it's hard not to walk away with a sense that if we don't rescue democracy from the hands of the deluded, we're all in deep shit.

Good thing we're holding a Carnival of the Elitist Bastards, eh?