This One Sentence Can Create Millions of Green Jobs Overnight Without Spending Any Taxpayer Dollars

You are about to read one sentence that has the ability to create millions of green jobs overnight without the government spending any money. After you read the sentence I will explain why this sentence would be so effective.

The government should implement a gradually increasing revenue neutral tax on all crude oil consumed in the US such that within ten years it is guaranteed to cost a consumer more to consume oil than to consume green alternatives.

For example let's suppose it costs $5 to produce a gallon of biofuel made from algae. If people know that gasoline would slowly ramp up in cost to be $7 in ten years then jobs would sprout up in the algae biofuel industry overnight. Similarly, if electric car manufacturers know they would be extremely competitive against $7 gasoline then jobs would sprout up in the electric car industry overnight as well. Anything that can compete with $7 gasoline would flourish and jobs would be created. You would be crazy not to invest in a company that will be profitable filling the void created by $7 per gallon gasoline.

Don't be fooled by the word "tax" but instead focus on the "revenue neutral" part of it. With the revenue neutral tax all the additional tax revenue collected from oil consumption will go directly back to people in the form of credits. If you consume less oil than average you come out ahead. If you consume more oil than average then you just have to pay a bit more for your consumption habits.

The revenue neutral tax would be ramped up over time. This ramping up of taxes could be delayed a couple years to give certain industries some time to plan how to address the imminent changes. This delay wouldn't really hinder the investments in alternatives as these projects will take years before anything significant comes to market anyway. The key is a long term trajectory that clearly guarantees that alternatives to oil will win and dependence on oil will lose.

In reality the price of oil will naturally go up over time because it is a finite resource that keeps getting more and more costly to extract from the ground. In ten years gasoline will probably be more expensive than alternatives regardless of this revenue neutral tax idea. However, it sure would be tremendously beneficial to our country if it were extremely clear to everybody that this will happen soon. It is better to come up with a methodical plan to deal with this inevitability now than to be in a mad scramble when oil rockets up to $200+ per barrel.

I am calling "cash for clunkers" a failure!

I have heard many people claim the cash for clunkers was a huge success, but it troubles me when I hear this because cash for clunkers was flawed in many ways. In fact I think cash for clunkers was a huge failure and I will tell you why.

A big giveaway to the programs intrinsic flaw is it involves a physical destruction of value. In theory there is incentive for a car valued at $4,499 to be destroyed. This is even worse than digging ditches and filling them to create jobs.

Another giveaway to the intrinsic flaws is that government is stepping in and picking winners and losers. It is worth pointing out that since the net result is a destruction of value, there will actually be more losers than winners.

One obvious loser is the taxpayer. The program was $3 billion so each taxpayer had to pay $20 on average for this program. The person getting $4,500 for scraping their car is essentially receiving this privilege because the government is basically making 225 people each give this person a twenty dollar bill.

Those 225 people would have surely spent their $20 on something better for the economic welfare of our society than what amounts to providing someone incentive to scrap something of value.

Very poor people were actually hurt by the cash for clunkers program. Think of a mother who needs a car to get to the grocery store, Wal-Mart, and the clinic. A $4,000 car that got 10 miles per gallon car would be very effective at taking her a mile down the road and back. Unfortunately, taxpayers had to pay $4,500 to scrap a car like that.

There will be winners and losers with every government decision. Whenever the government picks winners and losers I get worried because the government tends to be extremely inefficient and illogical. Please don't be fooled into thinking it is a success when taxpayer dollars are used to benefit certain groups by paying them to destroy something of value.

For those who are interested I had a plan that would be far more effective and efficient at increasing the fuel efficiency of cars in America. You can read about it here.