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Responding to Iran, Thomas Friedman’s Controversial “Freedom Tax” on Oil

| Thursday June 25th, 2009 | 1 Comment

“Launching a real Green Revolution in America would be the best way to support the ‚ÄòGreen Revolution’ in Iran.”

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Thomas Friedman had an interesting idea in his op-ed yesterday morning: The US should impose an immediate “Freedom Tax” of $1 per gallon on all gasoline. By putting economic pressure on oil producing regions, the US could potentially gain leverage on key Middle Eastern regions, in particular Iran, where both the current unrest as well as its nuclear program pose concern for the Obama administration.
According to him, the tax will result in three large and quantifiable results:
1) It would stimulate more investment in renewable energy now.
2) It would stimulate more consumer demand for the energy-efficient vehicles that the reborn General Motors and Chrysler are supposed to make.
3) It would reduce our oil imports in a way that would surely affect the global price and weaken every petro-dictator.


The idea of Freedom Tax isn’t anything new. Back in 2003, BuildingGreen.com proposed the same idea, citing that it would “spur demand for fuel-efficient vehicles, would eliminate some nonessential driving, would increase use of public transit and carpools for commuting, and – by reducing demand for petroleum – might actually help limit long-term gasoline price increases.”
Not everyone, however, feels the same way. GreenHellBlog.com yesterday said the Freedom Tax would take away just that from Americans. By decentivizing car usage, “Americans unprecedented freedom of mobility” that we have cherished for more than 100 years would be limited and “would actually make us less free.”
GreenHellBlog goes on to say that aFraidman’s (that’s what they call him) tax would supplant control by foreign petro-dictators to domestic green-dictators. One reader even commented: “$4 Gasoline will have about the same effect on the environment and overall security as the self emmulation [sic] of Buddahist [sic] Monks had on the outcome of the Vietnam War.”
The legitimacy of criticism (or lack thereof) aside, Friedman’s idea is an interesting one. Although, the radicalism of it doesn’t mean it’s necessarily novel. He’s essentially advocating the use of market forces to inform policy, an idea that’s been around for quite some time now.
Friedman cites as a precedent the Soviet Union in the early 1990’s. According to Yegor Gaidar, the author of The Collapse of an Empire: Lessons from Modern Russia, the timeline of the collapse of the Soviet Union can be traced to one particular date: September 13, 1985 – the day when Saudi Arabia overhauled its oil policy. As a result of Saudi Arabia’s policy shift (price protection ended, production increased, and oil prices collapsed), the Soviet Union lost approximately $20 billion per year, an amount without which the country “simply could not survive.”
By adding the tax and limiting US consumption, Friedman contends, we could effectively alter global crude oil prices. “If we could bring down the price of oil, the Islamic Republic – which has been buying off its people with subsidies and jobs for years – would face the same pressures [as the Soviet Union],” wrote Friedman.
Though Friedman’s argument is couched in the rhetoric of green and the promotion alternative energies, it seems that the stimulation of renewable energy consumption is incidental in this plan. And if it’s ancillary, the green aspect of the Freedom Tax has the potential to be adulterated, if not outright lost.
Nonetheless, Friedman writes: “As the price of oil goes up, the pace of freedom goes down because leaders just have to stick a pipe in the ground to stay in power. As the price of oil goes down, the pace of freedom goes up because leaders have to educate and unleash their people to innovate and trade.”
Ultimately, if an economic policy that helps increase innovation and trade, reduce American independence on oil, and increase investment in renewable energy (albeit incidentally), it can’t be altogether off the mark, can it?


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  • Mike Overturf

    GreenHellBlog does not take into account American ingenuity – if transportation is a cherished value, would Americans not simply figure out a way? I think the Freedom Tax is a spectacular idea to transition out of oil. GreenHellBlog ought consider that the money he or she puts into her Suburban SUV finances schools that teach young boys that it’s ok to kill non-believers in the field of battle – which brought down the twin towers, and may do yet more.