It's city election time in Flagstaff, AZ right now. In addition to choosing a new figurehead mayor and several marginally useful council members, the good citizens of Flagstaff are being asked to vote on several propositions concerning our city bus system, Mountain Line Transit. In exchange for more frequent buses, the addition of new routes, and the switch to hybrid buses, Flagstaff voters are being asked to increase sales taxes approximately 12 cents per hundred dollars spent. This is a paltry amount for such a beneficial service, but it got me to thinking.
Folks who can afford to buy certain hybrid vehicles are given a federal and, often, state tax credit to offset the high purchase cost. (Unfortunately, for the most commonly purchased hybrids, the credit has been phased out.) A tax credit is a nice perk for those trying to reduce their carbon footprint. Herein lies the irony. Public transportation is undoubtedly the best way for Americans to reduce carbon emissions. The purchase of a Ford Escape Hybrid will earn the buyer approximately an 11% tax credit on his federal taxes while bus service will cost each tax payer (in Flagstaff) a 12% increase in sales tax plus the cost of actually riding the bus. Shouldn't we be offering some kind of tax credit to those who ride the bus? Wouldn't it be a nice incentive for those who cannot afford the price of a new hybrid? The only conclusion I can possibly jump to after spending no time researching the topic is that the powers that be don't REALLY want to reduce the number of cars on the road. We have to keep the legacy of Henry Ford alive I guess.
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The Price of Tea in China
Economists use this phrase to describe something that has no relevant effect on the situation at hand. Well, I am here to say, the price of tea in China now affects each and every American. The actual tea may not be the issue but China’s consumption of commodities like tea, or more precisely “Texas Tea,” plays a role in the price of just about every product or service we Americans buy. Take, for instance, the cost of lumber used to build a home. Not only do we have to outbid foreign consumers for the lumber itself, the cost of the transportation of the trees to the mill then to the warehouse or store and then to the job site has increased so the consumer is paying even more for the house. SNAP! Alter Ego, “But that’s not true; housing prices have come down.” SNAP! Back to me. Perhaps what has really happened is the sellers are not making as much profit on the houses because it is costing more to build them. This, in turn, leads to construction workers making less, retailers making less, real estate agents making less and all the other service providers from coast to coast making less on the sale of a home. And, let’s face it, our economy is based on the added value of our service, so if commodity prices rise and service prices fall our economy can spiral out of control. Don’t get me wrong. No one should pay more than the market price for a home. But the impact of the price of ”tea” in China has affected the pocketbook of just about every American.
Now, what would I do if I were President Bush? I would commission a study on the environmental impact on drilling in the Arctic National Wildlife Refuge (ANWR). It may cost a few million, but this would spook the oil commodities traders and save Americans billions, perhaps tens of billions, and free up capital that we are spending on gas to spend on homes. On a side note, it would also save the Chinese tens of billions of yuans to produce products for us less expensively all while depriving Hugo Chavez and Mahmoud Ahmadinejad of billions in oil revenue.
The long-term solution is energy independence. But that doesn’t mean we should let billions of dollars go to OPEC, today.
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