[Note: Last summer, philosophy professor Stephen Hicks (website here) interviewed MasterResource founder Rob Bradley. “The Robert L. Bradley Jr. Interview, ‘Enron and Political Entrepreneurship'” covers Bradley’s intellectual career and worldview regarding the market order and energy.
This series (in four parts: Part II, Part III, Part IV) is the full interview (with some elaboration), from which an abbreviated version was published in KAIZEN magazine (Issue 13: August 2010) and a longer version was posted online.]
Rob Bradley worked at Enron for 16 years. As director of public policy analysis for his last seven years there, he wrote speeches for the late Ken Lay, Enron’s CEO, who was convicted in 2005 of fraud and conspiracy.
Bradley is also founder and CEO of the Institute for Energy Research of Houston, Texas, and Washington, D.C. He frequently writes and lectures on energy, political economy, and corporate governance. He is currently completing his seventh book, Edison to Enron: Energy Markets and Political Strategies, the second volume of a trilogy on political capitalism that he was inspired to write by the rise and fall of Enron.
We met with Rob in his hometown of Houston to explore his thoughts on Enron, political capitalism, and the future of energy [SH].
Evolution of a Libertarian Scholar
Kaizen: Tell us about yourself—your background and political philosophy.
Bradley: I am a lifelong Houstonian who grew up around the energy business. I became interested in Objectivism and free-market economics in high school. One thing led to another—and resulted in my present position.
Kaizen: You are busy writing books and are the head of an energy-related nonprofit.
Bradley: There always seems to be a book hanging over my head! And I founded an organization that has grown from basically a “think bucket” (as one journalist put it) to a bona fide Washington, D.C.-based think-and-do tank. The Institute for Energy Research (IER), a 501(c)3 educational nonprofit, used to be just me working out of my house, but now also has a 501(c)4 advocacy affiliate, the American Energy Alliance. I am still CEO, but the main operation is now in Washington under the direction of our president Tom Pyle.
Kaizen: That is something to be proud of.
Bradley: In one sense, yes. But remember that spiraling energy intervention, almost all of which I’m against, is behind IER’s growth. Our funding comes from the productive sector to try to neutralize the forces of coercive energy transformation. So in a nonpoliticized, ideal world, IER would be smaller and I less relevant. But the general economy would be stronger, so we would all be happier, right?
Kaizen: And that is where your criticism of political capitalism comes into play.
Bradley: Yes. Most government intervention in the energy market (as elsewhere) has been the result of well-defined business interests either unilaterally pushing for special government favors—a particular tax provision, subsidy, or regulation—or working hand-in-hand with so-called reformers. The latter is the “Bootleggers and Baptists” formulation of Clemson economist Bruce Yandle.
Kaizen: So what would you be doing in the absence of the mixed economy?
Bradley: There is research and teaching about energy and about best-business practices—these are my current research areas. But if I had had to make a different living, maybe I would have been a banker. I am not an engineer, and I am not an academician, in the sense of really being book clever.
Kaizen: A banker?
Bradley: I was actually in a bank training program when I took a leave-of-absence to write a history of oil and gas regulation for the Cato Institute in the early 1980s. The bank asked me to figure out why it was making so much money from letter-of-credit business from oil resellers. This was a new industry segment that grew up in the 1970s under federal price and allocation controls on crude oil and oil products.
That study, which turned out to be my big break, got me very interested in energy regulation and led to my book proposal to Cato.
Kaizen: And that was the beginning of a new career, as it turned out.
Bradley: Yes, I was out of banking for good, although I would get to return to business in 1985 by joining HNG-InterNorth, which was renamed Enron the next year. I was at Enron until late 2001 when the bankruptcy and mass layoff occurred.
Let me mention one more energy influence. I went through the gasoline lines personally in Houston in the summer of 1979 with my Torino Cobra, a gas-guzzling muscle car. I cut in line to get enough gas to pick up my Saturday night date. As all free market types, I was on my high horse against price controls that were responsible for all of that chaos. I got into energy that much, as would any public-policy generalist.
Kaizen: How would you describe yourself professionally?
Bradley: My specialization, government intervention in energy, has made me a political economist. It has given me a niche. But maybe my niche is having done so much archival research, more than my peers and intellectual opponents. I refer to myself as a ‘blue-collar scholar’ in this regard.
But my worldview, which I believe is largely correct, has made all the difference. It has made me ‘smart’ compared to a lot of brainy and clever applied economists and analysts who have less reliable and even quite faulty worldviews.
Kaizen: Where did your worldview come from?
Bradley: It began at the dinner table. My parents were very conservative—National Review Republicans. They dispensed with the TV when I was young because the nightly news was too liberal in their view. They wanted me to read books. But I was too impatient to read, so I played tennis all the time and competed in this sport through college. But my worldview started with my parents.
Kaizen: Then what?
Bradley: I became a libertarian by my junior year in high school. That had to do with Ayn Rand.
By libertarian, I mean that I was pursuaded that voluntary solutions were to be prefered to coercion on moral grounds, and that, in fact, there was a natural market order that did not need central government planning.
Kaizen: How did your worldview get its start?
Bradley: It began, interestingly, with Ayn Rand (and my story is hardly unique).
I had required summer reading during high school, and there was this fat book on the list that I sort of dreaded. One night I cracked open the thing. I remember exactly where I was. The first sentence was, “Howard Roark laughed.” It was about this guy sitting on a rock–naked no less–above the water basking in the sunshine. He was totally at peace with himself despite a very complicated, even hostile, world.
As an innate individualist, I loved Roark and the whole book, and I became a Ayn Rand fan in short order.
Kaizen: What came next?
Bradley: At the same time, there were a group of really smart students at my high school, Kinkaid in Houston. Robert Campbell, an Objectivist who now teaches psychology at Clemson, was the smartest. These fine fellows were reading a lot of Murray Rothbard and challenging the history teacher on a lot of things, including the textbook interpretation of the Great Depression and the New Deal. I thought they were so neat that I emulated them.
Kaizen: And in college?
Bradley: I branched out from Ayn Rand to free market economics, beginning with the writings of Henry Hazlitt. That got me to the great Ludwig von Mises. Later, I figured out F. A. Hayek.
My sophomore year, I was taking a macro-economic course using Paul Samuelson’s Economics (9th edition: 1973) when the stagflation hit—this was 1974.
Remember the Phillips Curve, the tradeoff between inflation and unemployment? One was supposed to cure the other, but both were never supposed to occur at the same time.
So Keynesian economics was refuted right before my eyes! I was raising my hand a lot during class and scoring heavily, which was a confidence builder for me.
At about the same time, I read a moving tribute to Mises by Robert Bidinotto, “Von Mises: A Final Salute,” in an old Objectivist rag, UNBOUND! published by Individuals for a Rational Society. Mises had just died in 1973 at age 92. Robert’s short piece just captivated me.
And maybe best of all, I was able to attend a summer seminar at the Foundation for Economic Education (FEE) where Leonard Read, the founder, by then very old, closed the week by darkening the room and lighting a candle. This was his motif moment for all the seminars.
His point was that if you learn the freedom philosophy really well and conduct yourself properly, you will be a beacon for others who want to learn about the free society. You don’t have to actively recruit—people will seek you out.
After FEE, I attended summer seminars on Austrian-School economics held by the Institute for Humane Studies (IHS), the group that is now affiliated with George Mason University. One summer-long seminar in Menlo Park, California, had F. A. Hayek in residence, who had been awarded the Nobel Prize in economics just a few years before. I was one of the youngest and probably the shyest of the 30 participants, which was just about the whole Austrian-School movement at the time.
Just being there was wonderful! I got to know a lot of interesting people, including Don Lavoie who was maybe my first friend-in-a-high-place in the intellectual movement.
What good fortune I had! What if FEE and IHS weren’t around? A decade before I would have been very alone. This is why I always want to return the favor. I am always looking for talent where the person has passion and some support of one kind or another. That was me back in the 1970s, and I received it in many ways from many different people.
Kaizen: How did your Rollins College professors like your views?
Bradley: They respected me. There wasn’t the arrogance that I would later find in academia. Several of my economics professors let me do independent studies with them, and in the end they awarded me their prize as top economics student. One professor, Ken Taylor, who is still teaching there, taught an Austrian-school economics class while I was there in response to my activism.
Kaizen: So you got a BA in economics and went on to get a MA in economics and a Ph.D. in political economy—all at different schools.
Bradley: I returned home from four years at Rollins in central Florida and got my masters in economics at the University of Houston. I was their top student when it came to everything but mathematical economics, which I was not intuitive with. But humans do not act mathematically, so economics does not strictly need mathematics. I was not a good fit with where some new professors were taking the department, which was a very narrow, formalistic view of economics.
Kaizen: So you left the University of Houston after receiving your Masters.
Bradley: Correct. I left UH before the Ph.D. stage. It was a sad moment when I left and joined a Houston bank. I thought I was done with my dream of an economics, libertarian career. I wrote an apologetic letter to Walter Grinder of IHS explaining my change of plans. I felt I had let them down. They had invested so much in my development.
Little did I know what was ahead, a path that began with my chance oil-reseller study at the old Capital Bank.
But I sort of reconciled with some of my old UH professors who were anti-Austrian economics. We laugh about the fact that I have probably turned out to be their department’s most prolific graduate—but with no Ph.D. from there.
Kaizen: But you ended up getting your doctorate.
Bradley: Yes, but the degree was in political economy, not economics. What I did was to turn my proposed history of U.S. oil and gas regulation into a dissertation proposal for a Ph.D. in political economy at International College, Los Angeles.
I got Murray Rothbard, who was interested in the application of political economy to energy, to chair my committee. The others committee members were Dom Armentano, professor of economics at the University of Hartford, and Don Lavoie, professor of economics at George Mason University.
Kaizen: Tell us more about International College, Los Angeles.
Bradley: International College (1970–89) was a non-resident tutorial program that awarded degrees upon the recommendation of a “distinguished” dissertation committee (“tutors”) if the dissertation was of “publishable quality.” It was certified by the California State Department of Education but not accredited. The New York Times (September 7, 1980) reported, “39 colleges, including Harvard and Johns Hopkins, now accept International College degrees.”
Another libertarian who got his degree at International College was Alex Chaufen, the head of the Atlas Economic Research Foundation. It was a very good alternative for some of us who were interested in real-world economics and political economy but not mathematically inclined.
A Treatise: Oil, Gas, and Government: The U.S. Experience
Kaizen: So you got interested in energy by accident, and that led to the dissertation/book proposal and then completion.
Bradley: It was by accident. Figuring out 1970s oil regulation for my bank led to the idea that I could chronicle and interpret the whole history of U.S. oil and gas regulation—local, state, and federal. That had never been done before, and I got Cato to give me a shot.
My Cato book ended up as a two-volume, 2,000-page treatise published in 1996 by Rowman & Littlefield. There were 15,000 references and some 6,600 footnotes. Ed Crane at Cato will tell you it was the longest and most elaborate book project they have ever been involved with. I spent four-and-a-half years of full-time research and writing with little distraction. More years followed with editing and finding the right publisher….
Kaizen: You had to have had a lot of motivation to do all that.
Bradley: I was motivated by the fear of failure, I latter realized. I was in my mid-twenties, the glorious third decade as Joseph Schumpeter would say about being in one’s intellectual prime. I had never written a book and had just a few short pieces to my name. I had so much to prove.
The fact that my book doubled as my dissertation was extremely motivating. In his final report after my oral defense in Houston, Rothbard wrote: “In the scope of its research, its command of the facts, and its unusual grasp of the theoretical issues, this is one of the best and most significant doctoral dissertations I have ever seen in the area of economic history and contemporary political economy.”
That was really gratifying because this degree was outside of the mainstream.
Kaizen: You were your own man.
Bradley: It was my Howard Roark [The Fountainhead] moment, I guess. And I didn’t have to blow up anything as he did. But the reviews were positive, including in the peer-reviewed journals. Tyler Cowen, a big name these days, wrote a positive review in the Southern Economic Journal.
[Editor note: Cowen’s review began: “The increasing professionalization of economics has largely concentrated first-rate research in the hands of professional academics, and in a few cases, government researchers and think tank employees. Gone are the days, continuing up through Keynes, when most top economists were either amateurs or part-time workers at the craft. Rob Bradley’s Oil, Gas & Government: The U.S. Experience, however, resurrects the vitality of this tradition. While working outside adademic circles, Bradley offers a treatise on economic regulation that is likely to remain definitive work in numerous areas.”
And ended: “These are nonetheless nits about a book that serves as a major contribution. Energy economists, energy lawyers, regulators, and industry participants will find this work a necessity. The length will scare off many readers, but the style is clear and agreeable. Even individuals who will not read every page will find that this book offers a nearly inexhaustible supply of browsing material. Bradley’s work reads as a labor of love, a paean to the virtues of the market, and a testament to the tragedies of foolish intervention.” [April 1997, pp. 1124–25).]
So the whole nonacademic academic experience ended up quite kosher.
Kaizen: And treatises are rare.
Bradley: Old-style treatises just fascinated me, the ones where the author builds up his case and carefully considers opposing viewpoints. I had meticulously read Ludwig von Mises’s Human Action, even preparing my own index. To me his was the greatest single achievement of economics and political economy of the twentieth century. I was also captivated by Rothbard’s treatise, Man, Economy, and State.
So I wanted to write a treatise, in order to be a serious scholar. I am no Mises or Rothbard, but my book as a history treatise was doable. It just required blue-collar scholarship and a sound worldview—and a lot of support from others to allow me to take the time to do it. I am reminded of the Victorian-era moralist Samuel Smiles’s point about “perseverance, not genius or luck.”
So I began my career by writing a tome that most scholars would write at the end of their career, if at all. That book was a competitive advantage that I have tried to build on subsequently.
Kaizen: Writing a treatise must give you a unique perspective compared to a regular-sized, more piecemeal book.
Bradley: By examining such a large mass of intervention, I began to see patterns that I otherwise would have missed. The patterns brought to life the Mises Interventionist Thesis, or the propensity of one intervention to lead to another and yet another.
The dynamics of intervention is a major theme of political economy. I was able to associate and categorize interventions across time, sectors, and jurisdictions. I had to come up with terms to describe the typology. The pattern of long strings of related intervention confirmed the insight of the instability of intervention.
There was another advantage from having written a treatise: I could write the shorter stuff because so much of the research had been done. During the wait with Oil, Gas, and Government, I actually published my first book. The Mirage of Oil Protection (1989) was written during nights and weekends while working full-time at Enron.
Kaizen: When did you discover you were a writer?
Bradley: It wasn’t automatic! I got a grade of “D” in English during my senior year of high school and had to take a remedial writing course my first semester at Rollins College. I still have one of my essays from that class. My content was better than the penmanship for sure!
But I worked at it. I wrote political pieces for the school paper, the Sandspur. And in sophomore or my junior year, a history teacher surprised me by saying how well I had summarized the source material in an essay. Actually, the teacher told someone else who told me.
I was stunned. That was the first inkling that I could synthesize information effectively in written form. Remember: I was no academic star. I got into Rollins because the tennis coach lobbied the admissions office until they just gave in.
Now, I’m just an academic writer who footnotes extensively. I do not write best sellers, even public-policy sellers like, say, my friend Robert Bryce, who has also written books on Enron and on energy. But being passionate about the subject, I write fairly well for the academic market. And not being too brainy, by the time I can understand something I think I can get others to understand it too.
My mother, however, says that five or six pages of my writing will put her right to sleep! Her side of the family has professional writers, if that has anything to do with it, including a great, great, great grandfather who established the first daily newspaper in the South.
Part II: Four phases of intellectual development