Frog boiling politics
Posted by aogTuesday, 13 March 2007 at 11:13 TrackBack Ping URL

I have been meaning to comment on this article about possible gasoline rationing in Iran (via Brothers Judd). It is always amazing to me how people can dig themselves in to such holes and then decide that, instead of a ladder, the solution requires a bigger shovel.

In this case, I understand why an unsteady regime wouldn’t want to be perceived as responsible for a massive increase in gas prices.

BUT it seems that there are several other approaches that would work better than rationing, which seems likely to cause almost as much anger as high prices. I will further presume that the real solution, economic liberty and the rule of law, is just right out.

  • What about a slow but inexorably set of increases? A cent or two a gallon per week (or the equivalent in dinar / liter).
  • What about the American approach, big increases followed by almost but not quite as big decreases? This has the effect of wearing out the anger button while providing subjects with a false senses of being important while being an excellent distraction from other economic problems. In the long term, it has the same properties as option 1.
  • Cheap, rationed gas along with expensive unrationed gas. Pitch it as a paen to the common man, that he can get the gas he needs at a reasonable price but the “rich” get soaked.

I hope none of the mullahs read this.

Comments — Formatting by Textile
Michael Herdegen Tuesday, 13 March 2007 at 11:53

Whomever is in charge of Iranian oil policy is an idiot, as outlined by Business Week, via The Daily Duck.

Essentially, nearly all of their oil woes can be traced back to them not wanting to pay foreign oil companies a decent cut to get them to explore for, and run, oil fields, and to the Iranians making life hard for those who do agree to their poor terms.

All stick, no carrot isn’t a rational approach, but it’s the one that they most love.

Annoying Old Guy Tuesday, 13 March 2007 at 11:57

Is there a difference between being short sighted and an idiot? I think their oil policy makes sense if you have a short enough time horizon (or, equivalently, you don’t have a good understanding of cause and effect, but I suppose that’s what you really mean by “idiot”).

cjm Tuesday, 13 March 2007 at 12:18

i love it, having lived through the gas lines here in the 70’s. hopefully there will be pics of iranians standing in long lines trying to get their rations. oh, and they bumped prices a bunch at the same time they instituted rationing. and all of this is going on right before we lay the smack down on their economy and infrastructure. sucks to be them…

Michael Herdegen Wednesday, 14 March 2007 at 11:00
Is there a difference between being short sighted and an idiot?

Only if there’s some reason why being short-sighted makes sense.

For instance, I don’t have any money in tax-deferred savings accounts, such as IRAs, which from a conventional retirement-savings perspective is short-sighted, or even stupid. However, I have 100% confidence that Congress will find ways to tax the supposedly tax-free growth in such accounts, for my age cohort. Roth IRAs, for my generation, are a HUGE mistake - (if I’m right).

Other, older people may still find quite a bit of value in tax-deferred accounts.

So the question is, what advantage does Iran gain by having a falling output of crude oil, having to import gasoline, and having a malcontent populace ?

My amateur analysis is, none, thus: “Idiot”. I welcome any more-sophisticated theories.

Annoying Old Guy Wednesday, 14 March 2007 at 11:52

I think your error is starting your analysis with the advantages to Iran. As public choice theory tells us, it’s not about Iran, it’s about the personal interests of the ruling class. If, in their view, having done something to avoid the bad outcomes you list would have cost them power earlier (even if it was better for Iran), then they made the correct choice. Better to lose power later than earlier, after all.

cjm Wednesday, 14 March 2007 at 11:54

sounds like they are trying to manufacture a cover story for their needing nuclear power.

Annoying Old Guy Wednesday, 14 March 2007 at 14:28

If they could plan that far aheah, they wouldn’t be in this much trouble.

cjm Wednesday, 14 March 2007 at 17:02

admittedly the cover story would be more plausible, if the head nut job didn’t go around bragging about wiping israel off the map.

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