We have a diesel car so the green numbers are the ones I watch when we pass a gas station. My mom, although financially secure, still pinched her pennies. That rubbed off on me. For instance, Ernie Behn taught me that ridge-till garnered higher profits than tilling the entire field whether prices were high or low. Only a small strip every 30 inches was disturbed each year to plant our corn and beans.
However, being frugal can be detrimental if we are not seeing the whole picture. On some of our best, yet poorly drained land, we could always get through the wet spots without getting stuck because the unworked soil supported the tractor no matter how wet it was. After years of foolish ignorance and a slight build-up of savings, we had drainage tile installed. The improved yields showed that we were handicapping our potential for years by being cheap.
In the case of the diesel car, the expensive engine returns 30% better MPG. And diesel, being a lubricant, can make the engine last much longer. That is good no matter what fuel costs.
Diesel is taxed at a higher rate than gas because there are more voters who drive gas-powered cars than truckers and farmers. That’s what you get with democracy. If you can convince a majority, that is more important than logic or markets. Minorities should loath democracy.
Our representatives in government know that voters don’t make the connection between trucking costs and the cost of the things they buy, so they stick it to the truckers. Transportation costs are passed on to consumers much like the costs of the American Rescue Plan are paid stealthily by the people who think they are getting the free money. They are thankful for money that was extorted from them in the first place.
The $3.2 billion Iowa received from the federal government’s ARP came from the very people who had that money stolen from them through inflation. In other words, inflation is a regressive tax. The progressive tax Iowa is doing away with and will probably live forever federally, taxes high earners at a higher rate than low earners. People look at it as a way to make rich folks pay up. Inflation taxes us through lowering our purchasing power by increasing the quantity of dollars. The 62% who live paycheck to paycheck are actually paying a higher percentage of their disposable income than wealthy people.
As we watch this meteoric rise in prices, that is all we see. Government schools, funded in part through the Federal Reserve’s mandated 2% inflation, have incentive to indoctrinate us with the absence of a concept of dollar devaluation, in favor of the more visible “rising prices.” Then, seeing the higher prices we blame those greedy sellers instead of the government who we thank for giving our free money back.
The boom is great. The bust, not so much. As with the Gulf of Tonkin, the Roaring Twenties, and weapons of mass destruction in Iraq, we’ll find out when it’s too late that if our betters in DC had followed their job description; no boom, no bust. It’s good to be old, but I fear for the kids.