There have been a number of posts, generally negative, on windfall profits taxes on the oil companies. This post from the always-informative Lynne Kiesling of Knowledge Problem is a good one. Kathy Hermann (alias Roaring Cat) of Big Cat Chronicles has posted an interesting poll on Americans’ opinions on the regulation of various industries including the oil industries, banking, healthcare, and supermarkets.
I don’t think any of them should be regulated but, then, I don’t think any of them should be subsidized, either. But it shouldn’t be too shocking for any industry to find that the degree of regulation increases with the level of the subsidies.
Banking and healthcare are enormously regulated. They’re also enormously subsidized. Subsidies to the oil industry include the oil depletion allowance, the Interstate Highway Defense Act, and the enormous web of local zoning ordinances that foster sprawl to name just a tiny fraction. These subsidies cause market distortions and we shouldn’t be shocked if the government steps in to remediate the effects of the distortions.
I’m all for keeping our hands off the oil industry. We should start by removing the subsidies. Go ahead and try.
It’s very tricky trying to sort out the subsidies from legitimate public use. Since colonial days, Americans have expected the community – later the government – to be responsible for roads. Did that mean Americans were subsidizing horse-carraiges at the expense of oxen and donkeys? Yet if roads are supported by public spending, shouldn’t railroads and canals be, too?