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Oil, the employment tax

August 3, 2010

The negative effects of our oil addiction on our economy is pretty well documented. Paying for oil imports is resulting in the largest transfer of wealth in history and the inflating bill from oil and emission-related increase in health problems, national security costs, and environmental degradation demonstrates that oil consumption is at the root of  negative (and expensive) economic “externalities”.

But hey, you know all of this. It’s not like there isn’t a lot of recent talk on the true cost of oil.

But what about oil as effectively being a tax on employment? Whoa… I hadn’t thought of that before! But consider the argument posited by Better Place CEO Shai Agassi:

‘The only thing that reduces the amount of oil we consume in the US in unemployment. If you’re employed you got to drive… if employment comes back, the price of oil is going to go up.”

Which basically means that the relation between an increase in employment and the increase in the cost of oil effectively results in oil putting a tax on employment.

To draw an analogy to the common critique of income tax (uttered by economist Frank Chodorov), with income tax “you come up with the fact that it gives the government a prior lien on all the property produced by its subjects.” To draw the analogy, with oil consumption “you come up with the fact that the cost of oil is a prior lien on all the employment produced by an economy.”

The economy improves, employment improves and the cost of oil (the tax of oil) goes up. So maybe I’m reaching a little with the analogy… but not that far.

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From → Economy, Environment

One Comment
  1. Jeff Phillips permalink

    Very interesting point on oil acting as a tax on employment. Two other aspects of the whole oil story that I would really like to hear your thoughts on are: 1) Subsidies to the fossil fuel industry and 2)the BP oil spill.

    For the former, the G20 Summit in Pittsburg resulted in an agreement to phase out inefficient subsidies but progress in Canada has been slow and those subsidies have been estimated in the area of $2 billion per year. Seems counterproductive to subsidize wind/solar with one hand and fossil fuels with the other.

    As for the BP oil spill, the spill is not only the consequence of a society addicted to oil, but it reflects a dogmatic belief that technology will be our saviour (both in terms allowing us to drill for the resource we so love to consume and also for cleaning up the diaster after we create it). In many respects, technology has become the new religion.

    Finally, I’ve been wanting to start a blog and seeing yours is inspiration to go out and make it happen.

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