How Do You Give The Middle Finger In Semaphore?
(posted by Daniel Koffler)
Richard Posner writes:
Expanded drilling in U.S. territory (including our territorial waters) will reduce both U.S. dependence on foreign oil and the wealth of foreign oil-producing countries, many of which are hostile or potentially hostile to the United States. These are important benefits.
A friend of mine tweets, “this is simply untrue…Dependence would not be reduced in any meaningful sense.” He’s correct of course, but there’s more wrong with this claim than just the factual inaccuracy of the idea that offshore drilling can meaningfully reduce our dependence on foreign oil. It also cannot meaningfully reduce the wealth of foreign oil-producing countries, not just because offshore drilling won’t reduce our dependence on foreign oil, but also because there is a buyer for every available unit of oil, and if by some local suspension of the laws of economics (as they pertain to fungible commodities) we stopped buying oil from targeted foreign sources, somebody else would buy that oil, ensuring that the wealth of oil-producing countries is maintained. Note further that if on some protectionist fiat we only consumed oil produced in US territory and sold no oil abroad on the international market, and that by some global suspension of economic laws (this time supply-and-demand) we succeeded in reducing the wealth of oil-producing nations, we would not only reduce the wealth of nations governed by frightening dark-skinned sheiks, but also, e.g., Canada. Now why would we ever want to do a thing like that?
In other words, putting aside the crackpot economics, I fail to see how Posner can claim with a straight face that reducing the wealth of oil-producing nations is a goal we should strive for. First of all, notice Posner’s elision of the difference between “hostile” and “potentially hostile” countries. If what makes a country potentially hostile is that it has the potential to be hostile — and I’m not sure how else to understand the term — every country on earth is potentially hostile. Secondly, “hostile” is vague to the point of uselessness. Should we be boycotting important trading partners if, say, they veto UN resolutions we propose? So then should we be ready to boycott France and Germany, and prepared to serve America patties with freedom fries and top our hot dogs with liberty cabbage? That seems unlikely to be what Posner is driving at; what he means, presumably, is that we should aim to reduce the wealth of whatever the membership of the axis of evil is this week.
In which case, where does Saudi Arabia figure into the framework? On the one hand, the Saudis do promote Sunni fundamentalism that directs its militant aims at external targets, as a means of relieving internal pressure on the regime. On the other hand, the Saudis are a crucial strategic partner without whose cooperation our middle East policy, whatever it may be, is bound to fail. (The most salient difference between the regime in Riyadh and the regime in Tehran, incidentally, is obviously not that one sponsors terrorism and the other doesn’t, but that one has built up a mutually antagonistic relationship with the US over decades and the other has cultivated a friendly relationship. Fundamentally, though, the argument for strategic cooperation with one is nearly equivalent to the argument for strategic cooperation with the other. But that’s a story for another time.) Likewise, what sense are we to make of a wealth-reduction policy with respect to Iraq? Certainly, there are powerful elements of the Iraqi polity hostile to the US, and the Iraqi government itself is an Iranian quasi-satellite, so if hostility to the United States is a transitive property among countries and their allies and dependencies, Iraq must count as hostile, too. But unless we want to utterly vitiate whatever on earth it is we’re striving for in Iraq, we will not embark on a policy of bankrupting Iraq.
Thus, “reducing the wealth of hostile (i.e. not merely ‘potentially hostile’) oil-producing nations” isn’t a rationally consistent policy goal on its own terms. But even worse than that, there is no benefit — to us, to the target country, to the world — of a policy of reducing targeted countries’ wealth. That’s not an abstract logical axiom, but it is a proposition that has been empirically tested and borne out. What Posner is advocating is the economic deprivation of countries like Venezuela and Iran. And we know who suffers under such circumstances, and it’s not the regimes in Caracas and Tehran. On the contrary, the best thing we can do for the Venezuelans and the Iranians, and for our own security vis-a-vis whatever American interests the Venezuelans or the Iranians threaten (I’m going to stop laughing about the former eventually), is to incorporate them in a global market. It is fairly well-established that economic liberalization tends to lead to political liberalization, and in case of a trend-bucker like China, US interests and the world, not to mention the Iranians and Venezuelans, are better off with a relatively high standard of living under anti-democratic rule than a bare (or sub-) subsistence level standard of living under anti-democratic rule. Which means, as long as we’re buying oil, it is thoroughly counterproductive not to buy their oil, and downright, dare I say it, un-American (because it’s anti-freedom, of course).
All that said, the rest of the Posner post is quite good, more sensitive to the environmental consequences of continued oil consumption than I would have expected, and includes a very handy explanation of the difference between carbon taxing and/or cap-and-trade schemes (probably good) versus “windfall profit taxing” (bad, bad, bad). That’s why it’s so jarring to see such a smart guy pack so much wrong into one sentence.
June 25th, 2008 at 8:15 am
I looked at the Becker-Posner sewer shortly after it opened, and read a post by Posner. I can’t remember the topic, but his arguments were 100% BS. As far as I’m concerned, Posner is simply a hack whose career has consisted of supporting the wealthy and powerful.
June 25th, 2008 at 8:53 am
All the talk about ANWR, offshore drilling, etc., is just an exercise in denial. ANWR’s total reserves amount to a month’s current consumption. In the race between depletion of existing reserves and development of new ones, development simply won’t keep up.
June 25th, 2008 at 11:38 am
As a regular reader of Kevin Carson’s and Jim Henley’s blogs, I’ve had to add this blog to my reading list. Just to add a comment here.
Regarding Kevin’s comments about ANWR and offshore drilling ,I’ve heard the same arguments made by Rush Limbaugh dittoheads that I work with about the Bakken oil formation in the Upper Midwest; that by drilling there with current technology the U.S. can completely reduce its dependence on foriegn oil and meet all of our energy needs . How can one increase the supply of oil in the world market and not have the price of oil drop ,barring some protectionist scheme that Daniel discussed above? And if the price for something decreases doesn’t that increase demand for it? IOW , people suddenly find more “need” for something once that something gets cheaper. My dittohead coworkers can’t seem to comprehend this.
Is there any other articles like this I can point these guys to that can articulate this better then I can?
June 25th, 2008 at 12:15 pm
Walt, the other point I would make (maybe it would get through to the dittoheads given their nativism) is that oil consumption in China, India, Brazil, and other big rising powers is increasing monotonically and will drastically outweigh whatever new supply we extract out of the North American coastline.
June 25th, 2008 at 12:34 pm
Dan, I agree with you that in most cases the best practice with a rogue nation is to INVOLVE them in the global market not to shun them. The lowest standards of living in the world are in the most isolated places- see Korea, North.
My only minor point of complaint is that certain countries suffer from the “curse of Oil” (or some other resource curse like diamonds) and those countries’ success allows kleptocracies to remain in power instead of encoruaging normal market economies with non-resource products that are desirable on the world market. Of course, Posner’s uncharactheristically ill-reasoned post doesn’t mention this concept anyway.
June 27th, 2008 at 10:00 pm
One of my coworkers is a smart guy (MS in applied physics) who is also conservative, but not a dittohead, so far as I know. Yet he seems to have arrived at the same conclusion:
1) Something ***must*** be done about oil prices. So much for the free market, eh?
2) “They” must immediately start drilling - ANWR, offshore, my neighbor’s backyard, whatever. It doesn’t seem to matter that drilling ANWR today won’t yield anything substantive until 2020 or so. Or that it won’t make a dent if current consumption levels remain on their present course.
3) “They” must immediately build more refineries. As far as I know, we don’t currently have a shortage of refinery capacity (for one thing, feedstock gasoline can be and is imported at less cost than importing unprocessed oil, which carries lots of extra stuff (”waste”) like sulfur, etc.),
4) The government must immediately fund alternative energy. It seems to escaped his attention that higher costs have brought private investors out of the woodwork. Huh, funny that. Of course, that’s the mantra one hears from the press, and he doesn’t rely on non-mainstream news sources, as far as I can tell. Meanwhile, the Dept of Energy has been wasting money on supercomputers to study traffic flow and energies of the future like fusion for decades with nothing to show for it. They want this same government to use my money to bet on the energy of the future?
It is simply bizarre, and no facts can persuade them that perhaps a different approach is in order. They have a God-given right to drive BFSUVs, and they will exercise that right if they have to pull down heaven to do so.