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Memo
to the NTU
DIGG THIS
From time
to time, I am asked to sign petitions, mostly of a free market orientation
(those that oppose economic freedom are quickly consigned by me
to the delete file). Whenever I can, I do sign them; I am convinced
that they do no harm, may do some good, and take very little time
to read and add my name to them in any case. So, the opportunity
costs are small.
But, every
once in a while I decline, because while I need not enthusiastically
support each and every word in a given petition, I am uncomfortable
signing my name to any that violate what I take to be libertarian
or (Austrian) economic principles.
The most
recent one to cross my desk, well, be sent to me via e-mail, was
from the National Taxpayers Union. This is almost always a group
that can be reliably counted upon to support capitalism. However,
this petition unfortunately, had several problems with it. I suggested
a few changes that would allow me to hop aboard, but, usually, it
is far too late in the process to make any changes after it is widely
circulated, and many people have already signed on.
In what
follows, please see the following: I. A letter to me from the NTU;
II. The petition they had asked me to sign in this particular instance;
and III, my response. See if you can pick out the problems I might
have had with this missive before looking at my critique of it.
(No peeking, now.)
I. The letter
From:
NTU
Sent: Mon 8/20/2007 4:21 PM
To: NTU
Subject: Sign-on to NTU Economist Letter on Opposing Energy
Legislation
Sign on
to NTU letter opposing anti-market energy legislation
Dear Economist:
You recently
received an email from the National Taxpayers Union (NTU) asking
you to sign on to the following statement on energy policy (see
pasted copy below). The statement, which will be signed by economists
throughout the nation, argues that the energy legislation currently
before Congress contains yet another package of harmful taxes, regulations,
and subsidies that will further distort energy markets in this country.
Over 130 economists have already signed on in support. The statement
will be released to the media and on our website later this month.
We have yet
to receive a response from you and hope that you will consider signing
on. If you would like to sign, all you need to do is send a brief
reply email to NTU's Keith Capp
indicating your title, name, organization, and your desire to sign
on. (Note: Affiliations will be listed for identification purposes
only.)
Thank you very
much for your consideration of this important request.
Sincerely,
John Berthoud,
Ph.D.
President, National Taxpayers Union
II. The
Petition
An Open Letter
to the United States Congress:
We, the undersigned
economists,* write to strongly advise against the inclusion
of damaging anti-market provisions in the energy legislation now
moving through Congress. History has shown that attempts by the
federal government to tax, regulate, and subsidize our way to more
plentiful and secure energy have failed miserably. This Congress
ought not to repeat those expensive mistakes when considering energy
policy.
If Congress
seeks a reduction in America’s dependence on foreign oil, the tax
increases found in the House’s energy bill won’t achieve the goal.
Vengeful tax hikes on so-called "Big Oil" serve no economic
purpose. In 1980, Congress instituted a windfall profits tax to
punish the industry. The result, according to a Congressional Research
Service study, was a drop in domestic oil production of 3 to 6 percent
and an increase in oil imports of 8 to 16 percent.
But instead
of simplifying and equalizing tax treatment across all industries,
current proposals attempt to bestow favors upon certain sectors
at the expense of others. The energy bills propose dozens of new
tax credits for so-called "alternative energy" programs,
many of which are expensive and not commercially viable.
The House and
Senate bills also propose harmful mandates on fuel usage and energy
production. Forced consumption of 36 billion gallons of heavily-subsidized
ethanol by the year 2022 will significantly raise fuel prices, taxes,
and food costs for millions of consumers. Furthermore, requiring
that electricity producers derive 15 percent of their power from
alternative sources will artificially increase utility bills for
American families.
Finally, the
legislation purports to let government lead the way to energy independence
by creating a slush fund from which alternative energy programs
will be funded. Unfortunately, Congress cannot consistently identify
and nurture emerging technologies because it distributes funding
based on political concerns rather than sound science or economics.
Just one example is the $2 billion Carter-era, feel-good boondoggle
called the "Synfuels" program, which sought (and utterly
failed) to produce alternatives to petroleum. The lesson from this
and other experiences is that political forces cannot replicate
the results of market forces.
If Congress
wants to pursue a sound energy policy, it ought to reduce government
interference in the markets that are capable of delivering innovative
energy solutions to consumers. By easing regulatory burdens, ending
distortions that divert productive capacity, and allowing the price
mechanism to do its job, Congress would be providing American consumers
and taxpayers with far more plentiful energy at a lower cost than
any package of taxes, regulations, and subsidies could ever hope
to do.
Sincerely,
The Undersigned
(*Affiliations listed for identification purposes only)
III. My
response
Dear NTU:
Sorry, I can't
sign your otherwise very good petition, due to these three problems:
1. You say:
"If Congress seeks a reduction in America’s dependence on foreign
oil,"
But this implies
it is a reasonable goal for Congress to aim at, and that this bill
just goes about attaining it in the wrong way. I don't see this
as a reasonable goal. Why should Congress or anyone else for that
matter have a say in the freely made decisions of the American people
in determining the proportion of foreign and domestic oil they wish
to consume?
However, the
argument is made in some quarters that Americans purchasing foreign
oil helps support dictatorships abroad. Why is this wrong?
It is wrong
on several accounts.
First of all
and perhaps most important, the U.S. is the world's biggest "dictator,"
not domestically but certainly in a foreign context. That is, the
U.S. is a dictator to the peoples of numerous other nations. This
being the case, following this principle, we should not be purchasing
domestic oil. But if we cannot buy oil from either foreign or domestic
sources, we are in dire straits. Only the most fervant anti human
environmentalists would welcome such a scenario (even though they
do not act consistently with it in their own lives).
Second, it
implies that the best way to promote liberty in those countries
that are ruled by dictators is by boycotting them. This has not
worked out too well in Cuba, has it? No, a more reasonable and efficacious
way to deal with people in these nations is through commercial interaction.
When we get to know them, and they, us, when bonds are forged between
countries, dictatorship lessens. Free trade, full free trade, is
not only economically beneficial, it helps with these sorts of challenges
as well.
Third, a boycott
hurts not so much the dictators of these countries, but the average
citizen. Remember, the people who live in these foreign dictatorships
are for the most part victims, not perpetrators of evil. How does
an attempt to starve them help them? The hope is that this will
encourage them to overthrow their overlords, but this rarely has
rarely if ever taken place in history. Revolutions are typically
waged by the middle or upper classes, not by starving people. If
there is to be hope of change, leaders of places like Cuba most
see the U.S. up close and personally. They must witness how much
better their lives would be under our economic system than theirs.
But this can only occur if barriers to trade, investment and travel
are reduced, not increased.
2. In the petition,
the following words appear: "Unfortunately, Congress cannot consistently
identify and nurture emerging technologies because it distributes
funding based on political concerns rather than sound science or
economics."
First, it is
impossible for congress to identify any such thing. Have
we learned nothing from the fall of the USSR? I suggest the authors
of this petition read Mises on the socialist calculation debate
on this matter.
Second, suppose
that we ignore this point. It would still be incompatible
with libertarianism for congress to engage in central planning even
if it could.
Third, I think
it is "fortunate" not "unfortunate" that congress can not do this.
3. The NTU
petition also contains the following: "By easing regulatory burdens,
ending distortions that divert productive capacity, and allowing
the price mechanism to do its job, Congress would be providing American
consumers and taxpayers with far more plentiful energy at a lower
cost than any package of taxes, regulations, and subsidies could
ever hope to do."
No, under these
conditions, it wouldn't be congress that would be providing
all these great things; rather, it would be the free enterprise
system that would be doing so.
Rectify these
three problems, and I'll gladly sign on.
Best regards,
Walter Block,
Ph. D.
Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics
Joseph A. Butt, S.J. College of Business Administration
Loyola University New Orleans
6363 St. Charles Avenue, Box 15, Miller Hall 318
New Orleans, LA 70118
c.v.: http://www.cba.loyno.edu/faculty.html
tel: (504) 864-7934
fax: (504) 864-7970
wblock@loyno.edu
August
22, 2007
Dr.
Block [send him mail] is a
professor of economics at Loyola University New Orleans, and a senior
fellow of the Ludwig von Mises Institute. He is the author of Defending
the Undefendable.
Copyright
© 2007 LewRockwell.com
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