Surprise!
I go onto Yahoo News, and I see an alarmist headline. What do we have to worry about on this fine day? Well, according to two MIT researchers, “global economic collapse” is predicted by the year 2030. The cause? In the same vein as the much-discussed academic report “The Limits to Growth” written in 1972, overconsumption and natural resource depletion is the demon at hand. Rapid population expansion isn’t much of a help either; we’re too-familiar with the pain at the pump exacerbated by the emerging demand markets of China and India.
What many researchers and slacktivists of the environmental variety often fail to understand, though, is that natural resource discoveries and efficiency gains keep on driving the fateful doomsday back a couple of decades. If you look at the historical record, predictions about the depletion of oil resources have been proven wrong time and time again. Who could forget Standard Oil geologist Wallace Pratt’s 1943 prediction that only 600 billion barrels of oil will be produced before the world runs out? Or the U.S. Geological Survey’s 1919 finding that oil would be a thing of the past in nine year’s time? While geologists argue about when oil will go the way of the truffula tree, we can agree that political stability, proper utilization of existing oil wells, and reducing burdensome regulation can enable us to service the growing needs of the world’s developing nations.
The traditional conservative/libertarian response to old-school environmentalism, though, is in desperate need of a re-working. You see, the current tax system we have is stacked against us; opposing both gasoline taxes and alternative energy subsidies leads to some nasty snipping from the left. If we moved toward a consumption tax, however, the debate would be profoundly altered. Oil and other fossil fuels would have a consumption tax slapped onto them, and the focus would be on exempting alternative energy from those fees. Since fossil-fuel-based energy (and virtually all other products) would have a sales tax, the few items that were not taxed would be greeted with a generous flow of capital from consumers and investors.
Libertarians and conservatives alike could advocate for tax-free alternative energy as a boon to commerce, and an eco-friendly twist to their platforms. There would be no more hand-wringing over specific subsidies to faulty companies (*cough* solyndra *cough*) and we would not need to feel pigeonholed on the issue of climate change. While many libertarian purists might feel uneasy about supporting certain types of fuel over others, the market can still decide between a vast array of competing alternative energies. It would be wonderful to have a tax system with zero loopholes (or no taxes at all), but it is imperative to undo the damage caused by governments subsidizing global oil production for decades. In 2010 alone, the IEA estimates that countries collectively spent $409 billion in fossil fuel production; a global agreement to reduce these subsidies, coupled with the transition to a consumption tax should go a long way.
In addition to questions about energy usage, the sales tax has natural appeal to many libertarians. Its enjoyed much support among analysts and economists, since it expands the base of taxation, is less prone to abuse, and less negatively impacts taxpayer behavior. The current system, complete with a plethora of special-interest deductions, comes with an enormous cost; working and other productive behaviors are penalized, and leisure comes at less of a cost. This kind of thinking isn’t even limited to the right; Al Gore, notorious man of the left, embraced the idea of replacing the distortionary payroll tax with a consumption-based carbon tax. If libertarianism 2.0 could build coalitions with the environmental left, move toward a less distortionary tax code, and remove harmful subsidies, the liberty movement will be in a far better place.
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