1-2 Knockout: Welcome to the New Pigovian Era

Ok, big freaking deal, another few cents tax on a can of soda. We've already got ridiculous cigarette taxes, fat (unfortunately not fat people) taxes, this tax, that tax, everywhere a tax-tax.

Its not like this is anything new, Government has been taxing and subsidizing the constituency whenever they determine the "market" is not properly allocating resources to optimize the "greater good" to society.

As a non-crazy free-marketer I'm generally against Government intervention (and the always unintended consequences thereof), but when I put my Libertarian ideals aside for a minute, I can't really deny that Pigovian taxes/subsidies may be acceptable, especially in such tenuous times as these.

However, I say this with the uber-important caveat that "asymmetrical" and ad hoc taxes/subsidies will only further screw up an already screwed-up system. Let me explain:

Imagine if (when) the US Government instituted a gasoline tax similar to that in the UK - all $3.50/gallon of it - because as we all know cars and foreign oil are bad, or whatever. Now putting aside logistical issues like revenue/expense alignment, rolling implementation, lead times, etc, and this may not be such a bad idea, IFF the proceeds of the tax are used to incentivize the (approximate) opposite action the tax is used to punish.

In this case, perhaps funds would be used to build energy-efficient, low-pollution, convenient (this part always gets dropped in practice) high speed rail in and among our major metro centers. This is a (not great) example of "symetrical" pigovian tax/subsidy.

"Asymetrical" applications, unfortunately, seem to be go-to strategy our current Administration uses to get what they want (whatever that is). In order to save hundreds of thousands of union jobs (and Democratic votes), the administration is quick to effectively subsidize the purchase of Chryslers, GM's, and Fords (and/or their parent companies). Heaven forbid they subsidize cars built by non-US domiciled firms actually made IN the US, by (non-union) US workers, but I digress.

Now the Gov't has to fund these subsidies somehow, but as far as I can tell instead of finding an opposite (or other "matchable") externality to tax, money is just coming from anywhere and everywhere they can "find" it. Tax the "rich" (i.e. middle class). Tax future generations (don't get me started). Just Do It ^TM and worry about how the hell to pay for it later, much later.

So, in conclusion - and before this rant gets too out of control - I just want to clarify that for the 20th time I'm non-partisan and contrary to what the lefty/crazies will undoubtedly presume, I am not explicitly criticizing the Obama Administration. If you understand my point, as much as it pains me to admit, I'm saying increased Government involvement may, in some situations, not be as evil as many of us often presume. However, it seems to me that Newton's 3rd law should govern the application of Pigovian taxes and subsidies whenever practicable. At this point, its painfully apparent that the Government is going to get involved in everything one way or another. So, if we can't stop the Gov't from getting involved, perhaps we can at least try to affect what form said involvement takes.

Apologies for the myriad shortcuts and overgeneralizations.

Goodnight!