Kevin Drum writes about the possibility that American growth is now constrained by the growth in the oil supply. That may be true in practice, but I would argue that there’s no reason to believe it should be true in theory.This doesn't make sense. One way to see this is to note that a rise in oil prices inevitably removes purchasing power from the pockets of American consumers and instead gives it to people in OPEC countries (and Texas!). Coupling a shift in the tax burden from payroll tax to gas tax to this, doesn't change that fact one whit. If anything it's likely to worsen the problem since the gas tax is more regressive than the payroll tax and thus will differentially hurt poor consumers who have a higher preference to consume versus save.
After all, consider the gasoline tax. Right now, we levy a flat per gallon fee, and that fee is too low to meet our infrastructure needs. We ought to raise it. But instead of raising the flat per gallon fee, would could change it to a percentage tax like a regular sales tax. That way, an increase in the price of oil would lead to an increase in the price of gasoline which would lead to an increase in the gas tax. On its own, that would make the situation even worse. But the increase in tax revenue could be used to offset something else. For example, the payroll tax could be set to fall automatically any time high oil prices led to “extra” gas tax revenue. That way oil price spikes would generate an automatic subsidy to production and employment.
That’s wonky and not going to happen, but it would work!
Or look at it another way: the real problem with an oil price spike is a physical one - there's simply less energy than is needed to power all the economic activity that would otherwise occur. All economic activity requires some energy - and many critical ones can only be done with oil given current capital stock - and if there isn't enough then something will have to not happen that otherwise would have been done. And again, fooling around with the tax structure won't create a single extra joule of energy supply.
That said, this part:
The technology to create less gasoline-intensive communities is available to us but right now we do very little to deploy it.I wholeheartedly agree - with the caveat that turnover in the built infrastructure is very slow so that one cannot plausibly make large changes in it quickly. But certainly we could be doing far more than we are.