Category — Public Choice Economics
[Editor note: Six regulatory personalities related to government intervention in the U.S. oil and gas market (through the mid-1980s) are identified by the author. The reader is invited to add categories or examples of regulators to this list.]
The classical tyrant that has frequented other countries has not been a factor in the U.S. oil and gas experience (or the U.S. economy).  The existence of private property and democratic institutions is the major reason; the moderating influence of the industry over intervention is another reason. Huey Long of Louisiana, who as governor and U.S. Senator, left a controversial mark on oil and gas politics, probably is the closest to being an exception.
Instead of tyrants, hundreds of legislators and regulators have shaped oil and gas intervention at all levels of government. Shades of difference have marked major figures, but one premise has been shared by all — the efficacy of government intervention to achieve economic and social objectives. This can be called the constructivist mentality: government planners substituting their knowledge for that of the decentralized market.
Six categories of the constructivist mentality can be delineated. There is the professional regulator who sees intervention as a way of life and a public duty. Financial well being is secondary to the call of state, and when regulation beckons he is ready. The outstanding example in the petroleum field is Harold Ickes who presided over the industry during the New Deal and in World War II. Mark Requa was in a class with Ickes but got his chance only in World War I.
Next there is the naive idealist [Read more →]
November 15, 2013 4 Comments
“Even in flush economic times, carbon taxes would be bad policy. When economies are already laboring under too much spending and are at diminishing-return levels of taxation, implementing a carbon tax would be a mistake.”
- Kenneth Green, Dissecting the Carbon Tax, The American, July 13, 2012.
Open-mindedness is a mark of scholarship. And some great lights of classical-liberal social thought in the 20th century changed their minds for theoretical/empirical reasons from a utilitarian perspective.
F. A. Hayek began as a democratic socialist. Milton Friedman started as a FDR New Dealer and Keynesian.  Friedman later in life even moved away from his (naive) view of a fixed-monetary rule where, as he once put it, a computer program could manage the money supply.  Turns out that ‘money supply’ is not a fixed, known quantity; turns out that money is a government monopoly subject to politics.
In resource thought, Julian Simon began as a Malthusian. But the data told a different story. The number of human beings and progress measures were positively, not negatively, correlated. The Malthusians, and now neo-Malthusians, were wrong, so Simon changed his mind.
‘Revenue Neutral’ … Really?
In 1977, James Buchanan and Richard Wagner published a classic book in what became known as ‘Public Choice’ economics, Democracy in Deficit: The Political Legacy of Lord Keynes (1977). Taxation in the name of Keynesian economics, whereby it was believed that public dollars could do what private dollars (caught in a ‘liquidity trap’) could not do, was the rationale and political rage of the day. Yet, such macroeconomic policy was not implemented by angels but man, namely political men and women.
July 19, 2012 9 Comments
A recent opinion-page editorial by a Ray Hankamer Jr. in the Houston Chronicle, Government as Referee for Society, espoused big government to promote basic protection in a modern society.
Such is the romantic view of government; the Good Government and We the People view of democracy where the body politic is all of us (not us versus them). But the real world is different from this all-to-common textbook view.
“Leave the market alone and it will self-regulate just fine.” “Stop taxing the people and let them spend their own money instead of letting the government take it and waste it on ‘meddlesome bureaucrats and business-stifling regulators.’” This is the viewpoint of the tea party and many Republicans. But wait a minute: How would such a philosophy really work if implemented?
He then invokes the sports metaphor to conclude that we need federal regulators in an alphabet soup of agencies to do the necessary and sometimes dirty work to achieve fairness:
They are the public’s referees and umpires, such as the Securities and Exchange Commission, the Environmental Protection Agency and the Fish and Game Commission. They are there to enforce the rules for the good of all the people.
But when they are reined in, the public suffers. Remember Enron, WorldCom, Bernie Madoff, Stanford Financial, Lehman Brothers and all the other examples of the market being left alone to self-regulate?
One caveat, Hankhamer adds: “Overzealous referees and umpires can stifle an athletic contest, and overzealous regulators can do the same for an economy. But the suggestion that we can play the game with no supervision is preposterous.”
October 14, 2011 6 Comments