Several libertarian economic commentators have gotten caught up in a meme opposing drilling in the Outer Continental Shelf and other US locations. Somehow they’ve gotten the idea that the political rhetoric of “energy independence” somehow makes removing government regulations anti-freedom and inefficient. Maybe they’re under the misapprehension that when we talk about drilling here, what we really mean is removing anti-freedom, economically inefficient laws that prevent private companies from drilling here.
Much of this has been inspired by a particularly silly article comparing oil to bananas.
I’ve seen similar confusion when it comes to the Thatcherite “Ownership Society” of President Bush. Now, in a country that started with nearly 70% homeownership, applying Ownership Society principles to housing probably was, and is, a mistake, but the idea is still a good one. That doesn’t mean it’s an economically efficient one in the very short run, The Ownership Society isn’t an economic policy at all; it’s a political one. Its purpose isn’t to improve short run economic efficiency; it’s to relatively cheaply create a new constituency of owners who will be offended when Kelo threatens the home they own, who will vote when higher corporate income taxes threaten their retirement savings. In other words, it short circuits the class warfare exploited by Marxists and their fellow travellers by making the proletariat into bourgeoisie. The idea, that I think F.A. Hayek would have comprehended very well, is to put the country on an incremental Road to Freedom. That the program was largely designed to use tax cuts that should been unassailable economically and philosophically just couldn’t get past the idea in some minds that government shouldn’t even encourage any change in private behavior.
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Likewise, the slogan “energy independence” isn’t an economic policy, so it can’t be evaluated in purely economic terms. It is two things. First, a political slogan intended to achieve an end – deregulation – that is economically and philosophically unassailable. Case in point of what I’m writing, Lawrence Kudlow, definitely not an economic illiterate, wrote this today, “McCain Should Link Tsar Putin with Drill, Drill, Drill”. A combination of factors made now the time to improve domestic supply by getting government out of the way and the slogan helps with that. Second, it is a legitimate matter of national security. Certainly 100% energy independence isn’t necessary for national security, but anyone who thinks that improving oil production in the NAFTA zone isn’t good for national security has his head in the sand, especially the last week. The only economic question here is whether the most efficient way of assuring our national security is to remove regulations and get government out of the way or some undefined something else that apparently involves fueling our cars with bananas.