Arnold Kling  

Economic Policy, Energy and Otherwise

PRINT
Tyler Gets Shocking... More on Journalists...

Megan McArdle points to Scott Adams


At the risk of oversimplifying, our current energy policy in The United States involves shooting bearded people.

At the risk of stepping on a funny line, I would say that our energy policy is quite the opposite. We have this deluded idea that a confrontation with bearded people can be avoided if we subsidize ethanol instead of oil. (Adams does not seem to be aware that in our infinite wisdom we tax sugar from Brazil, which otherwise might make ethanol cheaper. Our ethanol strategy is a farm subsidy, not an energy policy.)

Look, I hope that the bearded people simmer down, so that we do not have so many confrontations with them. But of all the factors affecting the likelihood of more violent confrontations, I would say that our level of oil usage is pretty low on the list (and in fact the sign of the effect may be indeterminate).

I would describe our energy policy, including Adams', as shooting ourselves in the foot.

On another policy note, one of Megan's favorite professors, Austan Goolsbee, gets some love from George Will. Did Barack Obama, for whom Goolsbee is an adviser, encourage this column in order to enhance his chances for the nomination? Or did Goolsbee take the initiative himself?

In general, I think that the best thing that an economist can do for a Presidential candidate is to stay out of the public eye, and advise the candidate quietly. I mean, it's fine to let other economists know who you're working for, because it might affect our vote. But otherwise...

I can't imagine that Greg Mankiw thinks his greatest value added has come when he was prominent in the news.


Comments and Sharing





COMMENTS (11 to date)
TGGP writes:

Shooting bearded people does not help our energy problem. It does the opposite. The reason we shoot bearded people is because the people who make the decision to do that do not directly bear the costs of it to our energy problem.

tim writes:

Scott Adams is notorious for blog entries on a wide variety of topics that he has no clue about. He already has ticked off the science community - it was only a matter of time before before he ticks off others. But Adams walks a fine line between complete stupidity and purposely ticking off his audience. Frankly I've stopped paying attention as he adds nothing to the debate.

Robert writes:

If you are a presidential candidate with little experience (Obama) or are perceived as intellectually lightweight (gw), then you hope to be known by the company you keep. "See," you say, "I have good advisors." You don't hope to be *liked* for this -- you are already liked for reasons that are not your experience or intellectual gravitas. You hope to keep someone from voting for one of your opponents by raising their comfort level on one of your negatives.

Eliot W. writes:

A more charitable overview would be that as CEA chairman, Mankiw said what he thought to be true, but his comments inadvertently provoked a backlash that got picked up by the media.

It's also possible that he believed some good could be accomplished by giving the president and other non-protectionist Republicans ammunition to hold the line against rising demands to curb outsourcing and to halt additional trade deals.

Paul Zrimsek writes:

Our energy policy should be to impoverish bearded people by taking their market away. Then they'll like us better.

Buzzcut writes:

Our energy policy should be to impoverish bearded people by taking their market away. Then they'll like us better.

You and Scott Adams are both nut jobs. FYI, most "bearded people" who wish to do us harm come from countries that have no oil (Palestine, Syria, Afghanistan, Pakistan).

Obama Bin Laden made his fortune from construction, not oil.

If we didn't take a drop of oil from the Persian Gulf, we would still have trouble with these people. They have historical grievances going back to the Crusades! They're pissed off about things that happened 1000 years ago.

Mr. Econotarian writes:

The high price of oil subsidizes tyranical people, who cause oppression & lack of economic freedom in their countries leading to terrorism, while simultaneously subsidizing their people who then pass on that money to: the terrorists.

From a pure energy perspective, "shooting the bearded" seems only to drive up oil prices, not lower them.

Even the 1973 oil embargo against the US barely changed world oil supply, because oil can be purchased by any country and traded to the US. The worst effects on American supply of the '73 embargo came from US government "energy rationing" schemes.

The greatest threat to oil production is slowly decaying oil-producer socialist economies, not active decisions by oil-producing government.

Terrorism is another matter.

General Specific writes:

Kling: " We have this deluded idea that a confrontation with bearded people can be avoided if we subsidize ethanol instead of oil"

I have a different take. We--including most economists, including those here--have a deluded idea that a source of energy as rich as light sweet oil exists on the other side of oil depletion. Good research--and money--says not. The big picture: resource wars. Let's call 'em as they are. It's not about subsidies. It's not about "bearded people" (a term I find derogatory and beneath constructive conversation). It's about the last reserves of an easy source of energy (last reserves that are depleting according to the best research).

Econotarian: " The greatest threat to oil production is slowly decaying oil-producer socialist economies, not active decisions by oil-producing government."

Inefficient socialist oil economies are not a threat to oil production. They're simply drawing out the production curve. The greatest threat is depletion, which is happening now (as James Hamilton, for example, points out). Depletion is real and the market knows it as well--hence the rising price.

Tim: " Frankly I've stopped paying attention as he adds nothing to the debate."

I agree. I didn't know he had a blog till Caplan pointed to it. And then I quickly turned away because it's clear he often hasn't a clue what he's talking about.

Buzzcut: " They have historical grievances going back to the Crusades! They're pissed off about things that happened 1000 years ago."

I'm just not sure if that's true or not. I think they're probably ticked off about a lot of things. Poverty, polygamy (which creates an imbalance), Israel (a western thorn in their side), western manipulation of their political systems (directly or indirectly through the support of wealthy elites--let's face it, the Saudi royal family is a subsidiary of the United States, with a mind of its own to a degree, but still with a relatively high Hoop-jumping Quotient (HQ)). I suspect the west has never stepped back to let the middle east get its house in order since WWI. Not blaming us, but I think this is a source of their ire as well.

another bob writes:

Oil matters, but, Norway has oil too (and beards), so what's the difference?

There is a fascinating professor at UCLA named Robert Boyd who might argue that the tendency toward violence of the bearded people in question is actually higher than the tendency toward violence of others because they faced certain environmental challenges over the course of the past thousand or more years (challenges having nothing to do with the crusades)and their cultural/behavioral response to those challenges gave an breeding advantage to the most violent males. Consequently, the most violent had the most children which were in turn increasingly violent.

Boyd does make this point about other populations, some from Europe, (though not the bearded population in question) in his book 'Not by Genes Alone'. He might point to competition for water, lack of an agrarian revolution because of lack of advantages to agriculture and greater breeding success for the most violent. But, without analysis that I've never seen before, any explanation based on the idea of 'Cultural Evolution affects Genetic Evolution' is nothing more than a 'just so story'.

However, the consequences of this explanation are interesting:

Governments in that part of the world are oppressive because they have to oppress violent tendencies of the population. Of course there is collateral oppression of lots of non-violent, potentially useful behavior too.

Oil (or gold or diamonds or gas or something else) is the dominant aspect of the economies of these countries because violence and non-cooperative behavior and government oppression prevent the rise of more sophisticated trust mechanisms and economic entities. (Drs. Caplan and Kling have both written about the Resource Trap.)

As can be observed in multiple locations, when the external enemy withdraws, the tendency in those populations is to fractionate into smaller and smaller bands perpetrating violence against each other. This would be self limiting except for external support and indulgence. Eventually you get back to a single oppressor who can make the extraction economy work.

It makes less sense to ask "Why do they hate us?" and more sense to ask "Why do they hate?" They hate western civilizations because of the crusades and they hate their neighbor because he believes in the hidden imam (or doesn't believe). There is no limit to the number of reasons for hatred.

They're in an 'In-group/Out-group' trap?

The US policy (to the extent there is a coherent policy) is to trade for oil rather than conquer for oil. In the case of Norway then, we trade. In the case of land with the population in question, we can't trade for oil until there is sufficient repression of the violent tendencies of the population in question to allow for it. The US is not working out very well as the necessary oppressive force. The population in question will be better off with someone who knows how to do the job. Then the cultural/genetic evolution of the population will take a different path. But, it will take several generations to change behavior and genetics.

Barkley Rosser writes:

Buzzcut,

Osama bin Laden did not make money from construction, even though he built some of those tunnels and caves he has been using recently. It was his father, Mohammed bin Laden, who made money from construction, including building the Grand Mosque in Mecca. That Saudi Arabia had lots of oil money meant that Mohammed bin Laden got paid much better, leaving more for Osama to play with.

Mr. Econotarian,

You are right that "shooting bearded people" is more likely to drive the price of oil up than to lower it. Look at Iraq, although Saddam did not have a beard. But production has been down since we went in, and it has largely been due to bearded people blowing up production and pipeline facilities. Would probably have a lower price of oil today if we had stayed out of Iraq.

However, US production mattered little to what happened after Saudi embargoed oil in 1973. The market has been global for a long time, and it was the global price that quadrupled, as it did again in 1979 after the fall of the Shah of Iran caused Iranian production to tank from 6 million barrels per day to 600,000. Now, where your issue was important was that in 1979 we got lines outside of gas stations in the US because of price controls. But this had doodley-squat to do with the bigger picture, some loudly and longly repeated propaganda to the contrary.

Jenny WCU 7470 writes:

I agree with some of the previous comments. I do not think that going to war is a solution to solve the problem of our gas prices. However, it seems to be more of a distraction or giving us someone else to blame. I think that if anything could be done, like lowering taxes on certain products to help decrease the cost of alternative fuels then they should be at least considered as an option. I belive that even a slight decrease in gas prices at this point would help to stimulate the economy.

Comments for this entry have been closed
Return to top