Sunday, June 10, 2007

government response to high gas prices

This article in Business Week really pissed me off. It lists five proposals that the US government is considering to address the high retail price of gas. They are all ridiculously naive about macroeconomics. What is wrong with our government these days? Are they really that ignorant, or are they pandering for votes - counting on the US population being ignorant? The problem with both of these, is that it encourages voters to remain ignorant, for the reasons described in earlier posts and in other places on the irrational voter.

There was also an article on North Korea that also showed the ignorance of US policy. With North Korea, there are justifiable competing objectives. We want to help their economy to prevent starvation and to encourage them to pursue an open economy. But we also don't want the hard currency to go to Kim Jong Il's nuclear weapons program or to his Swiss bank account. But the article says that South Korea has grown the Kaesong special economic development zone to provide jobs to 15000 N Korean workers but under the control of S Korean companies. This seems like a pretty good way to balance the objectives. But the US government places a 90% tariff and strict quotas on the products coming out.

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