I know we spend an inordinate amount of time discussing Michele Bachmann. The problem is, she’s everywhere and she’s frightening. Some of her statements can be excused as mere pandering to the base and that’s understandable. Some of them may be sincerely held beliefs. But some of them betray a fundamental lack of understanding of economics, policy and the world.
For instance, this past week Bachmann promised a crowd that during her presidency, she would ensure the return of $2 gas. Now, leaving aside the fact that $2 gas is no longer possible without a sustained subsidy regime that would add to the national debt, what is even more frightening is her obvious inability to understand how global commodity markets work and how important world partners determine pricing. Maybe this isn’t important to the base but it is important if you want to be President of the United States. Let me try to explain through an analogy.
This would be like me promising that if you elect me baseball commissioner, I will bring back $3 beers at the ballpark. Sure, you’ll love me for it and you’ll cheer because who really wants to pay $7 or $8 for a small cup of crappy beer. You’ll also quickly realize that my promise is impossible to keep.
See, the first problem is that as commissioner, I don’t have the ability to set prices at independent ballparks. I could ask the owners nicely if they would be willing to do it. I could even threaten to levy huge fines against them if they don’t. But, they have to cover the costs and as commissioner, I don’t have the power to set their prices.
Now, my second option would be to try to uncover stores of previously untapped beer being hoarded at the ballpark in an effort to increase the supply and drive the price down. However, the unit price is set by an external force, the big corporate brewer, and I have no control over them. If the cost to the brewer to produce the beer is $2 a beer and he then sells the product to the park at $3 a beer, the park has to then mark it up in order to pay the salaries of the person selling the beer, take care of upkeep for the concession stand and even put a little money back into the park.
Granted, beer is not a commodity like oil but gasoline, which we’re actually talking about here, is a refined form of a commodity much like beer is a refined form of commodities like wheat and hops. The same rules work on both and economics governs all.
Ultimately, Bachmann’s promise is all the more ironic because the only way to return to $2 gas is for some pretty heavy-handed government intervention. Correct me if I’m wrong but isn’t that what the Tea Party is supposedly dead set against? Logically, it makes no sense. However, when you consider her education and her inspiration, it’s pretty obvious that logic isn’t necessarily a strong suit.