by Steve Finefrock – [scriptwriter]

There was some niggling awareness as the election season concluded, in discussion with several political mutts on the right, of a key commentator disappointing me in early summer with an unfamiliar op-ed position, one which just didn’t “fit” with his normal free-market, freedom-rich enunciations. Then a new assertion jumped up this week, and I was reminded how tempting it is to play social engineer. It’s not easy being a conservative, amidst so much engineering energy around all those in the capitol.

Once I was similarly tempted, offering a scheme to a major GOPster, to adjust military retirement benefits to encourage retired drill instructors to join elementary school faculty. Bring the MSGT to the elementary grades, with Pentagon add-on dollars for those who joined those staffs who sorely needed – in such a desperate way – to have a ‘male role model’ for so many wayward inner city children with no such persona in their home or neighborhood. I’d succumbed to the political corollary to an old chestnut by that Irish wit and social rascal, Oscar Wilde:

I can resist anything at all – except temptation.

So with Charles Krauthammer, one of the brightest minds for classic Burkean liberty and Adam Smith economic freedom who has ever written in the English pen. Yet he has twice demonstrated a startling blind spot, which puzzles and frustrates this near-libertarian: he writes of a net-zero gas-tax scheme, with 4000 words in the Weekly Standard, with such depth and length and passion that me wonders, Is Oscar bouncing around inside Krauthammer’s head? Does all that engineering energy in the skies of the Potomac energize his otherwise good senses?

His scheme is to legislate a dollar tax per gallon of gas at the pump, and ‘refund’ it with a $14 per week rebate, via a credit in every worker’s social security payroll tax deductions. This supposedly is non-bureaucratic, non-mandatory, non-impactful on any economic behavior save consumption of fuel. He asserts: “My personal preference for a higher initial tax stems from my assumption that the more sharply and quickly the higher prices are imposed, the greater and more lasting the effect on consumption.”

In the next paragraph, he slams CAFE standards because they “simply impose” requirements on corporations. In one case, a mandate is ‘imposed’ and branded evil, yet he uses the same verb for his own proposal. Krauthammer labels his scheme as an ‘unvarnished good’ and extols the “advantage of keeping [prices] artificially high by means of a tax.” And does concede that “Yes, a high tax constitutes a very serious government intervention. But it has the virtue of simplicity.”

Oh, Dream On, Oscar Wilde’s Cousin!

Branding government as a ‘mere transfer agent’ reveals the temptation of ages old mercantilism – the target of Adam Smith’s 1776 stinging critique in the famed “The Wealth of Nations” in which he deconstructed 18th century British government as winner-picker. Now, the temptation to manipulate the marketplace has infected this current wise mind. Better my scheme to subsidize master sergeants into taking second-career pathways in public schools, than this far grander, ambitious manipulation of the marketplace.

Krauthammer commends the market forces of late: “Better a gas tax that activates free market mechanisms rather than regulation that causes cascading market distortions” assumes that the dollar hike in gas has no ‘unintended consequences’ – the bane of social planners since well before Parliament’s grant of monopoly to the East India Company led to that little dustup known as the Boston Tea Party.

Among the ‘blindingly obvious’ elements which escape Krauthammer’s easy-as-pie [or, easy-as-decree] analysis is the impact on the gas retailers. Nearly every major intersection of our major cities hosts a gasoline pump outlet. If gas consumption dives with the ‘free lunch’ Krauthammer ‘net-zero’ gas tax, jobs are lost. Revenue declines – even the tales of “Oil On The Brain” documentation of gas station convenience stores’ survival methods will pale – and a sector of our economy will find closed stations, and others struggling to pump enough fuel to make payroll.

At heart of the error of this Wildean scheme is the submission to the temptation to manipulate. As Parliament gave a protectionist preference to the East India Company – which thereby became the Enron of that colonial era, needing a bailout that led to a heightened revolutionary fever – so Krauthammer’s commissariat confabulation of the free market would distort in ways not yet foreseeable. One Nobel prize laureate in economics proved, by complicated computer modeling, that taxes change folks’ behavior!

Imagine that!

It took a massive computer program and millions of data points input to prove what Adam Smith documented in 1776: in any system, a few sharpies will beat the rest of us. And even less sharpie ordinary folks find ways to get around the maneuvering by gummint burrocrats. Krauthammer is dreaming the fantasies of an Obama commissar [Obamaczar?] if he thinks artificially raising gas prices has no consequences. He can’t see it, yet – but it’s there, lurking in the unseen corners of every tax-as-behaviorism scheme. Ask those who foresaw all the ‘blindingly obvious’ good, and no downside outcomes, while composing the ethanol tax-subsidy schemes of two decades ago.

Among the many flaws in this proposal is its already-noted failure to acknowledge that key economic law so repeated by Milton Friedman: THERE AIN’T NO SUCH THING AS A FREE LUNCH. And the Law of Unintended Consequences.

Plus the blind-spot to anything involving FICA deductions: as LBJ put Social Security ‘on budget’ to save his ass from a massive deficit in his last fiscal year, all Congresses since have thus taken that ‘permission slip’ issued first to LBJ as a right, rather than an option in desperate times. Any dipping into FICA will empower liberals to steal even more from this Ponzi-scheme bank account. You thought Madoff made off with a few billions? Try Congress, full of eager liberals anxious to not waste a juicy, opportune crisis, to thus manipulate FICA funds for their schemes.

There will be no ‘net-zero’ effect – Barney Frank and Nancy Pelosi and Obama The One [OTO] will find the money ‘freed’ by this scheme to be general-revenue money, not transfer-back-to-FICA funds. Once there is more cash entering the liberals’ cache of free-funds, it will go to social programs, leaving social security bereft at some future date. And that future crisis will require another bailout, upgrading of deductions, and thus the merry-go-round goes faster and faster to the left.

This surrender to Oscar Wilde’s weakness will be another undoing of government restraint. Krauthammer seems to be pursuing an answer to a national highschool debate question, designated by the U.S. Senate in a briefing book made available for national debates on the issue, in 1978: “What Should Be The Energy Policy Of The U.S.?”

Here’s a thought: we don’t need no stinkin’ “policy” on energy.

A ‘policy’ means government is picking winners, a la the East India Company exclusive access to American colonists’ tea-purchasing options. The tea was offered at half-price, to generate cash-flow to the strapped monopoly; so, we American colonists should appreciate the good deal offered, eh? No, was our response to King George III, as we dumped the tea in the harbor, and switched to coffee. And as with that rigged ‘good deal’ on tea, it is now proven again with ethanol. After 200-plus years, you’d think we’d have absorbed Adam Smith’s lessons.

Especially the rare gems of conservative intellectual brilliance represented by Krauthammer. But it goes to show, that the joy of spending other peoples’ money [OPM, pronounced by Palin as ‘opium’], and telling them how to spend it, and deciding all that so involved, illustrates my First Rule of Politics, or what is the basic ‘definition’ of the political process: That method by which a society decides WHO GETS WHAT, and also WHO PAYS, and of course, WHO DECIDES both those first two processes.

Monarchy, autocracy, totalitarianism, republicanism, anarchy – in whatever system or century, those three functions work every day, every hour, every minute, in the minds of those seeking to fill one or two or three of those critical functions. Including thinking, brilliant minds on the right. But we all have our flaws – and the eagerness to protect Israel, wean ourselves from foreign oil dependency, and keep capital on our own shores is commendable. But so were the motives of Parliament in the eighteenth century mercantile policies. They were wrong then, in their mercantilist manipulations of the free market, and Adam Smith was right and righteous in lampooning such ‘good motives’ to do good things thru lawmakers making laws to manipulate the marketplace.

Krauthammer’s commissar mindset is a form of manipulation, mandate and imposition – not so severe as CAFE mandates, but a social-engineering mindset nonetheless. Neither Adam Smith nor Milton Friedman, nor Hayek or von Mises, are smiling in their spiritual armchairs at hearing this proposal.

But OTO is smiling at this scheme, as are Pelosi, Hilary, Summers, Krugman, Frank and Biden—sounds like a really nasty law firm. Cheering for a seemingly decent idea that could lead to many nasty, if unintended, consequences, which would be bad news for any who call themselves free-market CONSERVATIVES.

Unlike Oscar Wilde, Charles Krauthammer must learn to resist temptations to use the tax code to manipulate human behavior – a Nobel prize was won for proving that such schemes usually don’t work anyway, and much is lost along the way. Remember the New Deal? Great Society?

It doesn’t seem so. Or look at a more recent evidence of manipulating the marketplace: TVA’s coal-sludge gift to its neighborhood. The net-zero tax could, in future years, under liberal tutelage, become another quagmire of economic and energy sludge, far more comprehensive in its damage than that TVA catastrophe. All with good intentions, of course. ExileStreet

copyright 2008 Steve Finefrock Finefrock is founder of Hollywood Forum, a speaker-bureau and panel-discussion vehicle to “Bring the Potomac to the Palisades” on issues that overlap politics and culture with the Hollywood film-TV influence on such national concerns. His scripts have addressed politics [including a TV series pilot/bible package about state political combat, called “A State of the Union”], hazardous materials [from twelve years in emergency management, including six years managing FEMA’s Superfund curriculum for hazmat], terrorism, equestrian reincarnation, serial murderer killing journalists in the nation’s capitol, and fantasy about time-wasters. Finefrock is proprietor of PhoneBooth: The Smallest Space in Hollywood…

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