| Energy independence |
 |
 |
| Written by Tim Worstall | |
| Saturday, 30 August 2008 | |
|
Brian Wilson tells us that the big new buzz in American politics is energy independence: Before the big guns started firing this week in Denver, by far the most successful speech to the Democratic National Convention came from governor Brian Schweitzer of Montana, which has become a shining example of energy innovation. He found a novel way of bringing the Pepsi Centre to its feet by calling on them, section by section, to "stand up for American energy independence". They did so with enthusiasm, since the message that the folksy governor delivered is absolutely central to Barack Obama's programme - that the US must become energy self-sufficient by 2020. Yes, I know that it's election season and that any number of inanities get promoted at such times but does it really have to be something quite so insane? Energy independence? Why not beer independence, or turnips, aircraft engines, hockey players or bananas? We've known absolutely since Ricardo and Smith (and there were those who suspected it before) that trade increases wealth. By buying from others what they produce more efficiently than we do with the proceeds of our own talents we all become richer, both they and we. There is absolutely nothing that makes energy different from anything else in this regard. Further, why should the US become energy self-sufficient? Why not California? Or Rhode Island, or Scranton, that house on the left over there? What is it that people find so difficult to understand? Once we've accepted the principle of voluntary exchange at all, the only natural limitation to the area over which we practice it is the globe: and if we find that the Clangers really do have a soup mine on the Moon then heck, trade with them will make us richer too. As Billy Shakes told us some centuries ago, the fault lies not with the political stars up on the stage but in ourselves, that we applaud such idiocies and vote for the cynics who propose them. Comments (8)
...
written by Arthur, August 30, 2008
Of course, you are right about economics: trade increases wealth. But you are not so right about politics. People do strange things and if some reports are to be believed then Russia is embarking on a policy of extending international power through the control of their energy resources. What is the point of one country playing by free market rules when the other country does not?
I love the ASI but nearly every post crowds out all other factors except those found in the economics text books. The world is a little more complex than that. The question is simple. If a country is entirely dependent on another country for an essential resource then what does that country do if the supplying country distorts the market by using that resource as a tool of power politics? In an ideal world it might be desirable to adopt complete free market economics but in a real world this is just naive.
Damn Straight!
written by Vindico, August 30, 2008
Well said Mr Worstall. (Is it sad that I got excited over this post?! Also is it wrong to chuckle at the irony of so called 'progessives' actually being luddites?)
Deja Vu
written by Steve Giess, August 30, 2008
First ,I agree with the points made above by Arthur.
Second, I can remember other US politicians saying the 'energy independence' mantra - "not one further barrel of oil" etc - back in the 1970s during the aftermath of the 1973 Middle East War - so these words are not exactly new.
...
written by Current, August 30, 2008
Arthur, I think the political situation backs up Tim's comments.
If things continue as they are then due to their oil wealth the middle east and Russia will remain dependent on the rest of the world for other goods. They are currently huge importers of almost everything except petroleum products. They may be able to control oil supplies, the rest of the world can control those imports though. If they target the rest of the world economically, or politically then the rest can retaliate. So we have peacemaking stalemate. If the "oil independence" push is successful then those countries must become more self-sufficient themselves. This will mean they will be no longer any stalemate. The middle eastern countries that would dearly love to support anti-american terrorism will be able to freely do so, it will not longer be the murder of customers. Read Ludvig Von Mises on The Economic causes of War http://mises.org/story/2949
...
written by Gavin Kennedy, August 30, 2008
Tim
Your question about subsidising prune production to cut imports of bananas is discussed, hypothetically, in a piece I quote on Lost legaacy: Matthew Hisrich writes in Pal-item.com: ‘From bananas and prunes, lessons for an election year’ (30 August) Of course, it's nonsense. It's what politicians do. Including using trade sanctions as a weapon of pressure.
...
written by Craig, August 30, 2008
I'm quite sure that Mr. Worstall also understands how government can distort a market. That's the situation here in the U.S. We can produce more energy over here very efficiently -- silly environmental hysteria (and millions of dollars in environmental campaign contributions) has prevented that. If energy "independence" is the fig leaf that allows the left to row back on their no-drilling pledge, then I'm happy to sign on.
... written by Arthur, September 01, 2008
Current (strange name),
You make some valid points in paragraph 2 but although trade interdependence does, indeed, help achieve a sort of 'peacemaking stalemate', it does not follow that just because a country has vast oil or gas wealth, it means that they will necessarily be dependent on "the rest of the world for other goods". The Middle East is, indeed a classic example of a petro-economy but it does not produce much else because it is politically unstable and lacks the resources to produce much else. Who was it that welcomed the day we no longer needed their oil as that would be the day the Middle East returned to the sand? It may well be that Russia imports a lot but as it is China and the East that produces most consumer products, it is entirely feasible that Russia will keep the East on side whilst screwing the West. And wealthy states that are also intelligent use their wealth to build up their domestic economies. The problem with your argument is not that it is entirely wrong, because in principle it is right, but that it does not allow for political and economic realities. The fact remains that there is an imbalance in the balance of power when it comes to energy. At the moment, we need Eastern energy more than they need our markets, and as they get richer, they will develop their own trade alliances, leaving us in the cold. We need to wise up. Global market economics should remain an objective but it must be tempered by intelligent analysis of Global politics. As Professor Niall Ferguson said: 'the story of the 20th Century was not one of Western triumph but Eastern resurgence and the decline of the West', or words to that effect. Write comment
This content has been locked. You can no longer post any comment.
|
Subscribe to this comment's feed
About the ASI
The Adam Smith Institute is the UK's leading innovator of free-market economic and social policies. Politically independent and non-profit, the Institute promotes its ideas through reports, briefings, events, media appearances, and its website and blog. For further information, click here.Join our email list
Keep up-to-date with the latest events, reports and information from the Adam Smith Institute by joining our fortnightly email list. It's free and you can unsubscribe at any point. Just enter your email address here:
When you can't see the folly of it and you can see advantages, then it makes sense.
The other issue is the behaviour of the Governer for suggesting this. Either he doesn't understand economics, in which case he is not qualified for his position, or he does but he's saying this anyway to be popular, in which case he should not be in his position.