NEW MATH

Posted in Rants on February 29th, 2012 by Ed

Whenever gas prices spike (for reasons having more to do with speculation than "supply and demand", as we are so often and so condescendingly told) it is only a matter of time until someone points out that we shouldn't complain because gas is far more expensive in Europe. CNN helpfully offers an editorial entitled "America, quit whining about gas" to encourage you to be stoic about the impending $4.50/gal summer. The author points out that Norwegians currently pay a staggering $11.54/gal for petrol/gas. Wow! That sure is expensive.

Right?

Well, maybe. Indulge me in some napkin math. For the sake of argument, let's briefly overlook the fact that European cities actually have functional public transit systems (compared to, say, Miami, Atlanta, Los Angeles, Houston, Phoenix…) so driving is not quite as integral to daily life. And bear in mind that European gas is so much more expensive because it is taxed to hell and back.

I drive an elderly Nissan Sentra that gets approximately 30 mpg. I fill its 12-gallon tank twice monthly. Let's round up from the current prices and say gas is $4/gal, as it will be soon. It costs me (12 gal x $4 x 2 fill-ups) $96 per month to fuel my car.

Assume Sven drives the same car and fills up with the same frequency. He's paying (12 gal x $11.50 x 2 fill-ups) $276 per month. Jeez. If we had Norway Prices in the USA, I'd be out an additional $180 per month. Gas in Europe sure is expensive!

Except it isn't. With Norway's high tax burden comes a 36 hour work week (with a mandatory month of paid vacation), free health care, and a public pension system that is likely to actually exist when Sven gets older. Time for more math. According to my pay stub, I pay $140/month to Social Security and $200/month to a state-run pension system. Then I pay $130/month (single) for lousy HMO health insurance, $49/month for Medicare, and another $50 to a Health Savings Account that I use every month for prescription co-pays. That adds up to $569 every month to provide myself with health insurance and retirement benefits that Norwegians don't have to buy. I'm not so sure that Sven is jealous of the $180/month I save thanks to low American gas prices.

Yes, this comparison is off-the-cuff and imperfect. Sven's income taxes are also higher than mine, but the point is that the American system does a good job of creating the illusion of cheap commodities. We point and laugh at Europeans' large tax burden because it makes us feel better. However, when we consider the cost we pay out-of-pocket for things most Europeans have provided for them by their Oppressive Socialist governments, the question of who's getting the better deal becomes more complicated to answer.