Monday, May 01, 2006

$5 Gasoline vs the Riff Raff

Given a choice of $5 gasoline and a 25% reduction in traffic, as compared to $2 gasoline and a slighe increase in traffic, my natural thought is to take the convenience. After all, the increase in gasoline price doesn't really affect me. It would at $10 I suppose, but pretty much anything short of $5 or $6 won't make much difference either in how much I drive, or my standard of living.

Given the wailing I read, I suspect that there are people who would drive less given $5 gasoline. With them gone, more space on the highway for those of us remaining. Good.

But back to the core of economics. Prosperity, ultimately the prosperity of all of us, is derived from ongoing transactions. Traffic is, to a huge extent, people travelling to those transactions. Fewer transactions, less prosperity.

$5 gasoline AND a loss of prosperity, that's not what we need.

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