Oil Self-Sufficiency?
3 July 2008
Editor, USA Today
Dear Editor:
Several errors infect your assertion that "By importing nearly 60% of the oil we use, we ... leave ourselves vulnerable to higher prices and lower living standards" ("McCain + Obama = a valid energy plan,” July 3).
One error stems from your failure to recognize that oil is traded on a worldwide market. So even if Americans achieve the impossible and become - in an economically efficient manner - completely self-sufficient in oil, the price that Americans would pay for oil would remain a global one. Just as surely as happens now, higher demand for oil in India would inevitably raise the price of oil in Indianapolis, and supply disruptions in Venezuela would raise oil's price in Virginia. It's a mistake to suppose that importing less oil would reduce Americans' exposure to world oil prices.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Oily Speculations
2 July 2008
Editor, The New Yorker
Dear Editor:
After explaining that higher oil prices don't result from sinister behavior by speculators, James Surowiecki correctly notes that speculators nevertheless are "a perfect target" for politicians ("Oily Speculations," July 7). But he's not quite correct to say that "by going after [speculators], Congress can demonstrate to voters that it understands their pain, and at the same time avoid doing anything that might require real sacrifice from Americans."
Restricting investors' freedom to deal in oil futures weakens the market's ability to set prices that reflect conditions of supply and demand. Such Congressional scape-goating discourages investors with special knowledge of energy-industry conditions from conveying their knowledge in the form of the prices that emerge as a result of their "speculation." For example, someone with good information that oil supplies will further tighten will be less able, because of such regulation, to buy oil futures. Consequently, today's price will remain too low; it will inadequately reflect the tighter supply of oil. Consumers and producers (and regulators) will all then have less accurate information on which to plan their actions. The energy market will become less efficient and less responsive to the facts of reality.
So Americans will indeed make a "real sacrifice," but, unfortunately, one with no upside.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Enlightenment: How Quaint
2 July 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
James MacGregor Burns wants to "rebuild" America's "horse-and-buggy 18th-century constitutional system, with its divided powers and inevitable gridlock" (Letters, July 2). Disdain for institutional arrangements that limit government's powers is not, contrary to Mr. Burns's belief, progressive. It's regressive. Appreciation of the dignity of each individual and of the dangers of tribalism, superstition, and collectivism did not blossom into full flower until the 18th century, which is just yesterday in human history.
What is truly aboriginal and uncivilized is the belief that progress requires conscious direction by leaders, and the ancient faith - nowhere more evident than in Mr. Burns's own work - that these "leaders" can often be trusted with authority and command undiluted by such quaint innovations as checks-and-balances, separation of powers, and constitutional restrictions on government's scope.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
Happy Danes
Bruce Bawer's excellent essay is here:
http://www.nytimes.com/2005/04/17/weekinreview/17bawer.html?scp=3&sq=Bawer&st=cse
..............
1 July 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Perhaps Jonathan Carey is correct that Denmark is "the happiest country on earth, partly because of its residents' lack of worry about the cost of social services like health care and education" (Letters, July 1). But perhaps not. As Bruce Bawer wrote not long ago in your paper, "The received wisdom about economic life in the Nordic countries is easily summed up: people here are incomparably affluent, with all their needs met by an efficient welfare state. They believe it themselves. Yet the reality - as this Oslo-dwelling American can attest, and as some recent studies confirm - is not quite what it appears" ("We're Rich, You're Not. End of Story," April 17, 2005).
Mr. Bawer then gives details about everyday life in Norway - such as the relatively poor condition of Norwegians' automobiles - that belie that country's self-image as the wealthiest on earth.
Just as any New Yorker is skeptical of, say, a Mississippian's heartfelt insistence that the southern way of life is incomparably superior to all others, so, too, should Americans be skeptical of Europeans' claims to have created the finest society yet known to humankind.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
On Price Controls
30 June 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Sebastian Mallaby rightly calls the oil-price controls of the 1970s "a disaster" ("Nixonian Fallacy," June 30). The deepest problem with price controls is that they RAISE, not lower, the amounts that consumers spend to acquire the product. That these higher expenditures cannot lawfully take the form of monetary payments only masks the reality.
Preventing buyers from paying to sellers prices that the market will bear makes sellers less eager to supply the market. So sellers supply less, making each unit that IS supplied rarer and, hence, more precious and valuable. Buyers will then spend more resources in other ways - for example, they'll spend time waiting in long lines - to enhance their prospects of acquiring the product.
If you're doubtful, ask how much you think gasoline would cost if government were to cap its price at $0 per gallon. By dramatically reducing the quantities of gasoline supplied, such a policy would make gasoline more precious than gold. And gasoline would then be gotten only by persons wealthy enough to spend resources worth a king's ransom as they compete for a chance to get even a single gallon of it.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
No Free Lunch
29 June 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Given that America supplies the world's single largest share of manufacturing output, Gibert Kaplan's premise that American manufacturing is weak is questionable ("5 Myths About the Death Of the American Factory," June 29). Regardless of the soundness of his premise, though, Mr. Kaplan writes as if foreign governments possess magical powers to conjure resources from thin air. He insists that foreign-governments' subsidies to manufacturing firms give producers in those countries unalloyed advantages over private-sector producers in the U.S.
But every euro or yuan paid as a subsidy is a euro or yuan taken from somewhere else in the economy. No firm, industry, or sector can be artificially strengthened without artificially weakening some other firms, industries, or sectors. It's easy to see, for example, how subsidies might enable Airbus to sell more commercial jetliners. What's less visible but no less real is the reduced output and efficiency of those producers who pay higher taxes to finance these subsidies.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
One of Free Trade's Benefits
28 June 2008
Editor, Washington Times
Dear Editor:
I applaud John McCain's support for free trade ("McCain champions free trade," June 28). It's important, however, that the case for free trade be made properly lest some inevitable consequences of trade be used by protectionists to discredit free-trade's supporters.
Contrary to what some people might interpret as Mr. McCain's meaning, free trade is not justified because - or only so far as - American products and producers can compete "with anybody in any market in the world." With trade, some American producers will indeed compete successfully in foreign markets while many others will continue to serve only domestic consumers. Importantly, some other American producers will be bested by foreign rivals.
Economically, free trade is justified because it puts comparatively inefficient producers out of business and, in doing so, releases more resources to be used by comparatively efficient producers.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Guns and Deterrence
27 June 2008
Editor, New Orleans Times-Picayune
Dear Editor:
The usually thoughtful Eugene Robinson writes that "The practical benefits of effective gun control are obvious: If there are fewer guns, there are fewer shootings and fewer funerals" (June 27). But what's "obvious" at first glance isn't necessarily true.
Much research finds that more guns lead to LESS violent crime. The reason is that would-be violent offenders are less likely to attack persons who might be armed than to attack persons who probably aren't armed. While the relationship between the breadth of gun ownership and crime is an empirical one - this question cannot be answered purely by abstract reasoning - the "more guns, less crime" thesis is not far-fetched. Persons who doubt it should ask themselves if they believe it possible that crime would rise if guns were taken away from police officers. If they answer "yes," then they must concede the real possibility that denying guns to law-abiding private persons also raises the crime rate.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
Landfill Myth
26 June 2008
Editor, Washington Times
Dear Editor:
In his letter of June 26, Andy Arnold writes as if Americans are running out of space to use as garbage landfills.
Rubbish.
Clemson University economist Daniel Benjamin, in a 2004 paper prepared for the environmental research organization PERC, reports that "The United States today has more landfill capacity than ever before.... Given that the total land area needed to hold all of America’s garbage for the next century would be only about 10 miles on a side, it is safe to conclude that far more rubbish than is worth considering will fit into far less area than is worth worrying about."*
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* http://www.environnement-propriete.org/english/2004/2004download_pdf/Benjamin2004.pdf
I asked Dan Benjamin what landfill depth is assumed in the calculation, reported in his 2004 paper cited in my letter-to-the-editor earlier today, that "the total land area needed to hold all of America’s garbage for the next century would be only about 10 miles on a side." Here's his reply.
"That calculation assumed 300 feet, not unusual for modern landfills. Some are deeper, some shallower. It also assumed about 30 psi for pressures inside the landfill; trucks compress to 60 psi but there is relaxation when trash is dumped. Pressures are obviously higher at bottom than at top."
