CONSULTANTS TO THE AFTERMARKET

Bill Wade

 

Congress, meet Chicken Little.
Chicken Little, meet Congress.

By Bill Wade

As Published in the September 2008 Truck Parts and Service

Has a larger collection of negative, arrogant and out-of-touch politicians ever been in charge of an asset as dear as this country and its citizens?

We are not talking ‘glass half empty’ pessimism. Rather, our elected representatives don’t even trust us to know how to drink from the damn glass.

The energy shortage is a prime example of bureaucrats trying to lead at a macro level while blind to the complexities at the micro level.

Like earlier prophets of doom, they fail to appreciate capitalism’s ability to adjust and innovate. In 1798, British economist Thomas Malthus predicted that the imbalance between population growth and food production would cause the world to starve to death. Doomsayers called it Malthus’ “Iron Law”.

It was neither iron nor law.

Malthus fell into the old trap of underestimating everyone’s intelligence but his own. He was incapable of imagining combines, tractors, insecticides and fertilizers (or foolish governments that would pay farmers not to farm).

Today, the Luddites of both parties in Washington are proposing regulations that cling to the belief that they can define absolutes, even in a world of rapidly changing technologies. It’s not the first time. Some examples:

A Presidential commission appointed by Hoover in 1929 later reported to Roosevelt on how to plot our course through 1952. The 1,600 page report was 13 volumes prepared by 500 “researchers.” There was not a word about atomic energy, jet propulsion, mass communication, antibiotics, transistors, or computers.

The World’s Fair of 1939, dedicated to the World of Tomorrow, not only failed to suggest any of these advances, but did not even entertain the idea of space exploration.

Futurist Herman Kahn’s world renowned opus on the year 2000 never mentioned pollution, water conflicts ... nor was there any real emphasis on the energy shortage.

Those who have come closest to anticipating the future are science fiction writers, unencumbered by extensive research or blowhard committees, armed only with the courage to dream. Gene Roddenberry, Arthur Clarke and Jules Verne have proven more prophetic than all the government ‘futurists’ put together.

Ronald Reagan’s key economic advisor, Walter Wriston, said it well: “Our latter-day Malthusians, whose forecasts are often dignified with computer print-outs (which must substitute for ox entrails) appear oblivious to the fact that free markets, given the proper incentive and freedom to act, have repeatedly found substitutes for dwindling resources.”

More examples:

The United States was denied 90 percent of its natural rubber during World War II, but technological ingenuity created synthetic rubber, now more widely used than the natural product.

One of the most common substances in the world is bauxite, but it was not regarded as much of an asset until the way to make aluminum was perfected.

Coal was not even considered a resource before the Steam Age.

Uranium was considered worthless prior to the Atomic Age.

From the Pilgrims until the Civil War, a major source of artificial lighting was whale oil.

The Civil War disrupted whaling. Alcohol (its substitute) was taxed heavily and its price nearly doubled to $2.55 a gallon. Naturally there were cries of profiteering and demands for Congress to “do something.” The government, to its credit, made no move to ration whale oil or to freeze its price... or to tax the “excess profits” of the whalers.

Prices were permitted to rise. Consumers began to use less whale oil and the whalers invested in new ways to increase productivity. Meanwhile men with vision and capital began to develop kerosene and other petroleum products. By 1896, the price of whale oil had dropped to 40 cents a gallon.

OPEC, take note.

Shortages, then and now, can be eliminated when prices are allowed to exercise their age-old functions of ‘market clearance’.

Shortages, then and now, become a crisis when government intervenes. A free market is not chaos but a continuous economic referendum. Government intervention destroys that path to a democratic decision.

The result is non-economic. The current energy crisis furnishes another fork in the road.

We can create a new ICC for oil and gas with the predictable result that current market dislocations will become institutionalized and temporary scarcity will be regulated into permanent shortages.

Or we can permit the innovative talents of the American people to function. Our current energy problem will be solved, probably in ways that no one here can now foresee.

And the sky won’t fall!

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