Anyway, yes, we can agree to disagree. I think you'd find that most economists would agree with my point of view though. It is straight out of econ 101.
That's fine if you're just a Freshman.. Lots of people take Econ 101, but never master Economics.
Because what we're really talking about here are Political Economy, and most 101 students never learn that..
Government subsidies of oil companies provide no return on investment, since they have all the incentive they need to drill more.
That's ridiculous. There is no return on investment if the resource is not exploited and brought into production. The driller earns no money, the refiners earn nothing from it, and the government collects NO tax revenue.
The government, being the "owner" and/or administrator of these lands, hopes to become a partner in the eventual production of the resources and its "dividend" comes in the form of taxes and royalties from the oil company(ies) holding the drilling lease.
Subsidies don't mean tax nullification. Just a reduced cut by the government in collecting their share when the resource is brought into production. But since they aren't collecting anything from it sitting in the ground (minus mineral rights), economic basics would suggest that both sides have a vested economic interest in bringing that resource into production.
Bottom line.. resources sitting in the ground add no economic value, nor do they add tax revenue. Thus, anything that provides incentive to make them productive is a non-zero sum game.. all sides win to some variable extent through cooperation:
en.wikipedia.org
That's Political Economy 101:
politicalhumor.about.com
Hawk |
