The hard road ahead

In 1980 at the tender age 23, I voted for John B. Anderson for President. Anderson was an independent candidate. Anderson was full of great ideas that were politically non-starters. One of his ideas was to increase the federal gasoline taxes by fifty cents per gallon. This was at a time when you could buy a gallon of gasoline for under a dollar a gallon. His rationalization was that the tax would serve three purposes: reduce our dependence on foreign oil (we had already been through two oil shocks during the 1970s), give us incentive to practice conservation and provide the funds needed to achieve energy independence. This great idea killed his campaign. He started his campaign at above 25% support in polls and ended up with 7% of the vote.

John B. Anderson, Independent for President in 1980

In one of life’s little ironies, just a month after the tragic events of September 11th, John Anderson showed up at my church and gave a talk. (See picture.) He was then about to retire as president of the World Federalist Society (now Citizens for Global Solutions). There was time for questions and answers after his lecture. I went to the podium, looked him in the eye and told him I proudly voted for him in 1980. I mentioned his gas tax proposal and opined that events had sure proven him right. Had we taken the unpopular steps he suggested in 1980 and imposed on ourselves a fifty cent a gallon gasoline tax, the events of September 11th likely could have been avoided. It was President Reagan after all who strategically aligned us with Saudi Arabia, providing a compact of military arms for a dictatorial state for the assurance of low oil prices. It was our support of this oppressive state that provided the animus for Osama bin Laden, a citizen of Saudi Arabia to target the United States on September 11th. If only we had the courage to follow through on Anderson’s courageous idea, three thousand Americans who died that day would still be alive and we might also be energy independent today.

Change is never fun and serious change is usually resisted. Those who embrace inevitable changes though often end up ahead in the end. Why has the Euro been doing so well while the U.S. dollar has been in the toilet? It is because in Europe they were prepared for a changing world. Gasoline has been highly taxed for decades in Europe specifically to discourage the automobile and to encourage public transportation. If you have been to Western Europe, you know that it has phenomenal public transportation. Right now, Europe is also leading the way on global climate change. Among many initiatives, it is markedly reducing its carbon footprint through fuel efficiency standards in place today that we will not have in ten years. Not surprisingly, the European economy is doing rather well in shaky economic times. Its currency is so valuable because Europe as it is configured and managed is very well matched for our changing times.

What has the United States done? It would be polite to say we have been dragging our feet. In reality, we have largely ignored the environment and concentrated on glorious selfishness instead. We started an unnecessary and foolish war in Iraq that is bankrupting us. We have pretended to care about global climate change while doing almost nothing to address it. We have blithely ignored the consequences of our increased oil dependency. Public transportation, which is still inadequately funded, remains focused on highways and bridges. We have thrown mostly chump change at mass transit solutions.

It’s karmic payback time. In the years to come, we are going to get sticker shock at the cost of having ignoring these problems for so many decades. We may come to resemble Haiti in the sense that we will ask our leaders to deliver the impossible: address climate change, keep our taxes low but not allow our standard of living to change. If the 1980 election is any guide, when we discover our current leader cannot do it, we will elect someone else who will claim they can, but who will also fail.

Whether we like it or not, the times, they are a changing. We can choose to adapt to this new reality or, more likely, continue to try to have the same selfish lifestyle we always have had and take half measures. However, more of the same will only result in additional unnecessary pain. It is time to acknowledge that our future lives will be markedly more downscale than our current lives are. This transition is unlikely to be much fun. As a nation, we are in the initial phase of an extended high colonic.

Here are some likely outcomes that I see. Traditionally, the cost of living out in the country has been cheap. That is going to change. Life in the country may become a privilege for the rich. To live in the country you will have to pay the freight: ever-higher gas prices. As those living further out feel the gas squeeze, they will naturally choose to live closer in. By doing so, they will be less affected by the cost of oil. They will also be closer to jobs. By living closer in, they will have access to public transportation so they can get by with one or no cars. This will allow them to have a comparatively higher standard of living and more job security than if they live in the country or in a far-flung exurb.

This will work for a while. Of course, economic factors will make most who do not live around a city also want to move in closer too. This means land prices will rise the closer you are to urban areas. Which means the cost of living will go up around cities too. You will feel damned either way. As I suggested in a recent post, people watching these mega-trends are already making the smart choices. They are moving in now while housing prices and interest rates are down. Their houses are going to be smaller than they envisioned, but they will gladly pay this price for convenient access to jobs and transportation.

Energy costs will continue to rise, which will drive everything toward energy efficiency. Energy efficiency though will not come cheap. New houses will probably need more than just better insulation and highly energy efficient windows. They will need solar panels on the roof. It will be built into the building codes. Houses will be required to be built with LEED Silver or better standards. This will raise the cost of housing making it that much harder to afford to buy a house in the first place. Older houses are probably too hard to retrofit to be LEED compliant. Eventually they will become too expensive to inhabit, so they will have to be replaced with energy efficient houses. More likely, they will be replaced with condos and apartment communities. Demand will require it.

We will require readily accessible public transportation. This will mean heavy rail, light rail, trains, buses and bike trails everywhere and maybe even the return of trolleys. This cannot be done for free. It will require substantial tax increases. In short, we are all going to feel very squeezed which will have the consequence of us having lifestyles that will seem markedly poorer than our parents. We will probably resent this new reality.

What I have outlined is something of a best case. What actually happens is likely to be quite different and probably worse. Certain trends like people migrating from far-flung areas to closer in areas are inevitable. Most likely, we will try incentives like tax credits to ease the pain. Yet tax credits still have to be paid from somewhere. In short, to reinvent society takes incredible amounts of money. We will pay it one-way or the other. It can be intelligently accomplished through taxes and careful planning, or unintelligently through reaction to market forces. It is a road that we will have no choice but to traverse. However, we do have a choice on how painful it will be. As with most things, the sooner you start and the more intelligently it is accomplished, the less painful it will probably be.

I suspect that if a candidate today proposed a fifty cent a gallon tax on gasoline, he would get the same response at the voting booth that John Anderson received in 1980. Unfortunately, because we have dragged our feet for thirty years, the cost of procrastination has gone up dramatically.

So get ready. Our economic foundations are starting a seismic shift that will affect every one of us. Are you going to work with these natural forces? Or are you going to resist them? We all need to realize that to adjust to these new realities will require extraordinary sacrifice, akin to what our parents went through during World War II, but unfortunately lasting much longer. Over the next fifty years, we will have to reinvent ourselves as a society and as a world. I hope that this time we find the determination to do it intelligently. If government of the people, by the people and for the people is not to perish, we the people are going to have to come to terms with these costly changes that are already unfolding all around us.

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