Tom Friedman, the noted New York Times columnist and author, spoke on “This Is Not Your Parents’ Energy crisis.” I came to his talk with a lot of skepticism, for Friedman helped mightily to gin up support for our attack on Iraq. Indeed, after the Bush administration’s lies and evasions were exposed, Friedman still supported the war. So I was not a particularly sympathetic member of the audience.

I was pleasantly surprised. His talk was insightful and level headed, cleansed of the millenarian utopianism that had helped contribute to so many needless deaths. Perhaps his Iraqi experience has taught him to think more deeply before indulging in punditry. Whatever. His was a talk I wish all Americans could have heard.

A Poisonous Net

Friedman’s thesis was that the energy crisis of our time is not simply whether or not we are reaching “peak oil,” or should be concerned about Arab oil embargoes. He penetrated more deeply, to make four inter-connected points.

First, we are funding both sides of the battle against terrorists. (He called it a “War on Terrorism, but that is the old Friedman aping Republican framing.) Not only do we pay for our troops in Iraq and Afghanistan, the profits accrued in the Middle East pay for weapons and political support for the other side. The higher the profits, the worse it gets. Good point.

Second, some 3 billion new consumers principally located in China and India are beginning to reach out for their own version of the American dream. And that dream includes having a car. But despite all the talk of worldwide flatness, in the Middle East farmers are prevented from competing on an even playing field with agribusiness in the US and Europe, leaving them in poverty. Public education is rudimentary at best. So their kids go to madrassas, learn about the Great Satan, and dream of becoming martyrs. Prosperity, among the greatest enemies of religious fanaticism, remains far away.

Third, the price of oil and the pace of freedom vary inversely. Authoritarian and corrupt regimes in Iran, the Middle East, Russia, Latin America and North Africa use their enormous petroleum profits to shelter them from having to deal with the problems their rule inflicts on their own people. Using the Freedom House world freedom index, Friedman showed how it rises with the fall of oil prices, and falls when they rise. While I had heard, and been convinced, by this argument before, Freidman’s case was exceptionally well made. I learned for example that Bahrain was the first Arab state to begin running out of oil, and were also the first to allow women to vote. Not a coincidence, he argued.

Fourth, green power is the growth industry of the 21st century, and given our current behavior, the US is going to be paying licensing fees and royalties to the societies that, unlike us, were smart enough to pioneer the technology. That will principally be China, Friedman thinks. I suspect it will more likely be Japan and Europe. But whoever it is, it is unlikely to be us.

Friedman ended his address with an appeal to grab the label “green” for ourselves, making it patriotic, or as he put it. “Green, my friends, is the new red, white, and blue.”

Well said. Of course green never was unpatriotic except in the minds of the corporate hacks and Republican imbeciles who preferred to equate the well-being of Enron, Exxon, and Halliburton with the well-being of the United States. But Friedman is right: in this age of mass media, framing is vital.

This allows me to make a patriotic proposal that meshes Green with red, white, and blue in a way any thinking American can understand.

We know that high oil prices are bad for our country. Conceivably terminally bad. We also know that rising petroleum use is almost certainly bad for our home, the earth. We would be better off on both fronts to reduce oil use. But how do we get there? The more we can link these issues with other issues of concern to Americans, the more successful we will be at solving them.

Honest Prices

As any honest free market economist will acknowledge – and there are a few – the price we pay for gas at the pump is not well coordinated to its genuine price in dollar terms. To be sure, much of the price we pay when we fill up the tank is taxes – but largely taxes used to pay for roads used by cars and trucks running on that gas. Most opf us would prefer that to incessant tolls. But the cost of that portion of our defense establishment organized to protect the country’s access to petroleum is not included. Nor is petroleum’s ecological damage included. Nor are many other hidden costs.

Some estimates suggest if they were added to the cost paid for gasoline at the pump, it might rise to $15.14 a gallon. A more modest estimate would place gasoline at $5.28 per gallon. The variation reflects the difficulties in computing prices in the absence of a genuine market.

One thing we can be sure of is that the price at the pump grossly understates the petroleum’s genuine costs, and therefore sends misleading signals encouraging over-use and discouraging investment in alternatives. People who drive Hummers are objectively enemies of their country and their fellow citizens , no matter how many flag decals they place on their behemoths. But most do not know it because they are misled by the price.
The most direct solution is a carbon tax. But our country mood has been
decisively anti-tax. While many Americans do support restoring tax levels to a point where we pay our way rather than taxing future generations without the vote, a simple carbon tax would generate a lot of mindless opposition concerned about a “tax hike.”

There is a solution other than battling with such morons. Here it is.

PEG PRICES ON OIL TO VARY INVERSELY WITH SOCIAL SECURITY TAXES.

As taxes on gasoline and other uses of petroleum rise, taxes on individual social security payments fall, once any short fall is covered to protect future generations. The tax should also rise slowly, predictably, and steadily. It should also rise significantly. Perhaps it could grow the equivalent of 50 cents per gallon of gas, every six months, over and above normal price fluctuations. If price per barrel falls because petroleum producers temporarily flood the market in order to discourage investment in alternatives, the tax would rise to cover the difference, providing a predictable environment for research and development of petroleum alternatives. But all this added income would be subtracted from Social security paycheck and Self-Employment Tax deductions.

Poorer Americans are disproportionately impacted by high fuel prices. But they are also disproportionately impacted by Social Security taxes. They will also be the first to be able to seriously benefit by the establishment of decent mass transit throughout the country because in general they live in more densely populated regions. Those who do not so benefit can be assisted in other ways, such as being issued transportation vouchers for mass transit and heating and insulation vouchers for winter. The stakes are high enough on many levels to require us to wean ourselves from subsidized gas prices while helping the weakest of those most injured in the short run. We can afford it bertter than we can afford the Iraq War.

Here are the pay offs:

First, we begin shifting incentives towards developing low carbon technologies.
Second, we begin taking money away from some of the most corrupt and oppressive regimes on earth.

Third, we begin genuinely addressing global warming.

Fourth, we solve the Social Security crisis.

Fifth, we begin freeing ourselves from the need to be involved militarily with the Islamic world, Both we and they will be grateful.

I can think of no down side.

Other Discussions of Friedman’s Talk

See Ethan Zuckerman’s blog here.