Wednesday, July 07, 2004

Orson Scott Card, the Free Market, and Me

Of the big-time, professional journalist-types currently on the scene (you know - the ones who get paid for it), the two I consider the very best are James Lileks and Mark Steyn.

Interestingly, a dark horse currently pulling into the "show" position is Orson Scott Card, with his "World Watch" column in the Ornery American. The latest caught my attention this morning: World Watch - June 27, 2004 - Optimism, Pessimism, War, and Oil - The Ornery American

The part that was most thought provoking was the section on oil. He begins:

Speaking of foolish optimism ...

There is only a finite amount of oil in the world.

Everybody knows this.

Someday, we'll run out.

It will be gone.

Well... maybe. See there is this Abiotic Theory of Oil Formation which would tend to refute this. Nontheless, even as little as I know about the merits of that debate, it seems safe to say this is a theory pretty far off the mainstream, so Card's basic thesis stands. We need to plan as if oil is finite.

Now we come to some of the more thought provoking items.

"Optimists tell us that the free market will eventually deal with the problem. Their theory is that as oil gets harder to extract cheaply, the price will go up; then other forms of energy will become economically attractive and we'll switch over to them.

Therefore, they say, government should stay out of the business of trying to limit the use of oil or encourage alternate energy sources.

Here's why their optimism is nothing short of suicidal.

First, there's no guarantee that without intense government-funded research and financial incentives now, the new energy sources will be available in quantities large enough to replace oil when it does run out.

In other words, if we wait until it's an emergency, our economy could easily crash and burn for lack of energy sources sufficient to drive it. "

Two problems I have with the above. The first is the ought-to-be-more-famous wager between the late economist Juilan Simon, and the always-wrong-but-never-discredited doomsayer Paul Erlich. There is no doubt that every commodity that was part of this wager is finite. And Julian Simon had no special knowledge of the unknown. He just knew the way the market worked and the historical trends. His optimism turned out to be realism.

The second problem is with the line, "there's no guarantee that without intense government-funded research and financial incentives now, the new energy sources will be available in quantities large enough to replace oil when it does run out." There's also no guarentee that we'll have this with government intervention. And we can be certain we'll waste a lot of money by removing market discipline from this research.

Moving on to another interesting point...

..." ... market forces don't do anything for our national defense, our national security. We had a clear warning back in the 1970s with the first oil embargo. What if terrorism in the Middle East specifically targets all oil exports, from many countries?

And even if they keep the oil flowing, why are we pumping money into the pockets of militant extremists who want to destroy us? Why are we subsidizing our enemies, when instead we could be subsidizing the research that might set us free from our addiction to oil?"

Here, Card is moving into an area where I deeply fault free trade absolutists. Control of resources is one of the major causes of war in history. The flower children who scream "No blood for oil!" are living in fantasy. Blood will continue to be shed for oil. And iron. And tungsten. And Boxite. And anything else that becomes critical to the economy of a specific nation, but which they are not self-sufficient in.

Some people seem to think the spread of Democracy has solved this problem. I disagree. If anything, it has made war for these reasons more likely for a very simple reason: politics.

The dominant party in democratic governments is held responsible for the performance of the economy, whether they can truly effect it or not. While in a macro-economic sense, an oil embargo causing a price spike is easily overcome, in a political sense it may cause anything from tossing out the government in power to literal revolution. Political people don't like being tossed out of office, and will generally take serious measures to prevent it if they can.

The vulnerability of the United States oil supply to foreign manipulation is a danger to the security of the United States especially because it is a danger to the security of whichever party holds office. That makes it more than an economic or strategic interest of the nation. That makes it a matter of political concern in the most powerful political circles, regardless of ideology. This is underappreciated, and likely to blow up in our faces sometime during the War on Terror.

Anyway, the Card article is interesting and thought provoking. I 50 percent strongly disagree, and 50 percent enthusiastically endorse his argument. But he's one of the few writers out there who shows original thought about this stuff, and is willing to speak his mind regardless of party lines.

Check out the article, and remember to bookmark him. He's worth reading regularly.


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