21 Mar 2012

Tax Breaks and Gas Prices

ECON MOMENT, Economics, Oil, Shameless Self-Promotion 27 Comments

Oh boy, you kids are in for a treat. John Connolly (the author of the recent guest post on being a Ron Paul delegate) spent some time setting up my YouTube capabilities. I’ll post a new video at least once a week, maybe more.

27 Responses to “Tax Breaks and Gas Prices”

  1. Daniel Kuehn says:

    Dude – have you lost weight? You look trim.

    • Bob Murphy says:

      Thanks. I’m not sure what your baseline is; it’s sort of like global warming… I am definitely in way better shape than a year ago, but I’m probably not that much lighter.

      • Sandre says:

        Still in training for Krugman debate?

    • Matthew Murphy says:

      My first thought too, Daniel.

  2. Ken B says:

    I’ve never seen Bob before. A bit grayer, add a beard, he’d be darned good looking …

    I hear the arguments Bob refutes here fairly often.

    • Bob Murphy says:

      You’ve never seen me before, Ken B.? Ahh, now I understand your lack of respect. If I may.

  3. Randy Jackson says:

    yo dawg, check it out. i think the main argument is that obama should tax the oil companies, and give those taxes directly to the ppl. The theory is that the government would tax away more money than the oil companies will raise prices. Then on net, depending on how much gas you buy, a lot of ppl would see free money coming their way. On top of all the economic problems with this, why these ppl even think they would see the money in reality is beyond me.


    • Richard Moss says:

      …i think the main argument is that obama should tax the oil companies, and give those taxes directly to the ppl. The theory is that the government would tax away more money than the oil companies will raise prices…

      I think Bob handled that argument as his “last point” – from about 7:05 to 8:30…

  4. Matthew Murphy says:

    A video blog? You made my day Bob. Let’s see, I predict a radio show in a few years (as with Schiff and Woods).

  5. Bharat says:

    Another econ moment? This is your first one right? (Just clarifying in case there are actually other videos out there)

    Great video though. I always get annoyed at the common argument that supply and demand doesn’t matter because the firms can just charge whatever price they want blahblah. Nice to see a common-sensical destruction of it.

  6. DH says:

    Hey, great first video!

    A couple of things:

    1) if you could upgrade the equipment a bit (ala Tom Woods) that would be great. The hissing background noise is especially off putting.

    2) covering slightly more tricky/substantive/fundamental issues would also be pretty cool. Any fule kno businesspeople pass their costs on to consumers, so you’re really preaching to the converted.

    • Bob Murphy says:

      1) I’m going to see how this goes first, before plunking down for a new camera. (The one I have doesn’t accept a mic, unfortunately, and I don’t want to mess with synching up audio and video.)

      2) I’m going to keep these pretty basic. The whole point of a video is that it’s for people who can’t be bothered to read.

  7. David R. Henderson says:

    Well done, Bob. Especially, the bit about flicking the bully’s ear.

  8. Joseph says:

    A very simple question – why is always said that the supply curve shifts to the LEFT when supply decreases? It makes more sense to say that it shifts UP. The supply curve at a given quantity is the minimum that a particular potential supplier will sell the good for. Taxes increase this minimum. To see the effects of a tax, shift the points upwards on each point on the curve by the appropriate amount, and then reorder the points on the curve so that it is increasing. Am I thinking about this wrong?

    • Bob Murphy says:

      Joseph, I’ve wondered about that too. The only reason I can think of–but it’s a pretty good reason, in my book–is that it would be weird to refer to a reduction in supply as a shift UP of the supply curve.

      • Philippe says:

        I think it shifts left, because quantity is on the x-axis; so for a given price Qdemanded is reduced.

        My question to you Prof. Murphy is this: could you make the argument that the current tax credits favor large oil companies, and therefore they favor monopoly prices, so that a benefit of closing the loophole would be to have a more competitive market. I know that benefit would have to be measured against the costs you pointed out and also it wouldn’t change the fact that the best option would be simply not to tax any oil company, but can that argument still be made?

        • Philippe says:

          I meant Qsupplied, sorry.

        • StraT says:

          I think Salerno was going to write a paper on it, but not sure if he did.

          More or less he said that supply and demand should both shift up and down.

          People don’t react to changes in preferences by changing their quantity demanded, instead they revise their valuation of that good.

          An easy way to see it, is if there’s only 1 good in the economy, say a piece of art. and that the artist dies, people wont say “well now I want 1.5x!,” instead they will be like “wow that changes my valuation, im willing to sacrifice more money to attain it!”

          Not that its very important, generally in large markets the difference is small. and if were talking about a straight line, then a shift up and a shift right is the same excluding the extreme points, (although the numerical figures are different.)

          For a curve, there is no shift right, that would match a shift up (and vice versa.)

          If your a university student (and/or) someone with access to JSTOR there is many old books that concern themselves strictly with this.

          Here’s one, that goes through some of the quibbling:

          Note on Shifts in Demand and Supply Curves
          Harry Pelle Hartkemeier
          Vol. 3, No. 4 (Oct., 1935), pp. 428-434

          • StraT says:

            The purpose of the shit right shift left, is to mathematically force a situation
            where the law of demand and supply mean:

            An increase in the “valuation/utility” of a good must lead to an increase in quantity demanded.

            Which is true 99% of the time for a market, and true 50% for an individual.

    • marris says:

      I think the basic reason is that “decrease means left shift” will be true for both supply and demand curves… it’s easier to remember both as left-for-decrease rather than remembering up-for-supply-decrease, down-for-demand-decrease.

      But it makes complete sense either way. The up/down difference comes from the fact that sellers prefer a higher price while buyers prefer a lower price. And down-for-decrease is consistently true if you think in terms of exchange demand and reservation demand.

  9. KP says:

    I see two Politically Incorrect Guides sandwiched between Human Action and Capital and Interest, putting yourself up there with giants eh, Bob?

  10. Max says:

    I prefer text. Reading is 10x faster than listening, so unless I’m *really* interested I can’t be bothered.

  11. John James says:

    Am I really the first person to notice the classic freeze frame? Tell me Bob, did you have to choose that one or are you just that good with your video timing?

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