Short Debate with Jane Orient, M.D.
I have long been a fan, at a distance, of Jane Orient, who has carried on a years-long battle against government regulation of health care. (I note, though, that I have never seen her state her opposition to government licensing of doctors, which, as Milton Friedman noted decades ago, keeps the price of doctors’ services higher than otherwise.)
Given that she and I share a passionate belief in economic freedom, I was surprised by her letter to the April issue of The Freeman. In it, she took issue with my case against energy independence but on the way, showed her own ambivalence about foreign investment in the United States. Check out her letter and my answer.
On rereading her letter, I realize that I let something pass that I shouldn’t have. She seems to be saying that those who use dollars to buy goods are defrauding people. I use dollars every day. I bet many of you do too. Is she really saying that we’re frauds?
Apr 3 2009 at 3:07pm
I wish the idea of energy independence was attacked more on the level of the fundamental definition. It seems to me that there is only one functionally meaningful state of energy independence, and that is complete state control of the resource, with price controls & no imports or exports. I doubt that this could happen in our country.
All definitions that involve some level of freedom to contract are simply meaningless. For the American consumer, there is no difference between a world where America produces 10%, 50%, 90% or 150% of its energy, whether that energy is from oil, wind, solar, or corn. If we produced 150% of our energy needs, what significant difference would it have made to the recent shocks in the oil market, with respect to American consumers?
Even accepting the premise of energy independence, or peak oil for that matter, is as useful as discussing the effect of evil spirits on our health.
Apr 3 2009 at 3:19pm
Energy independence? An accomplishment devoutly to be wished, of course!
We will achieve energy independence right after we achieve sleep, shelter, food and drink independence.
Its hardly a problem, and definitely not worth worrying about.
Apr 3 2009 at 3:21pm
Good point, Kebko. Saudi oil would have to become like Cuban cigars.
Apr 3 2009 at 5:14pm
How about banana independence…
Apr 3 2009 at 8:25pm
I was listening to a podcast some time ago by some guy (whose name I forget) who was introduced as some kind of oil expert (I think it was an Independent Institute podcast). In it, he gave a short run down of the ways in which oil-producing nations might and do respond to the [American] politicians’ threat to their livelihood. One method of response that he mentioned was the retooling of the economies [of oil-producing nations by their governments] for the production of petroleum-based products, which could be anything from plastics to petro-chemicals, so that they could, in the event of us drastically cutting our consumption of their wares in the form of gas and oil, flood our market with other goods made from the same stuff. He gave a few examples of how countries like Saudi Arabia and Iran are already doing this.
The idea that we are ever going to be “energy independent” is, in my opinion, laughable. Whether we’re buying oil in the form of gasoline, plastic bottles, or Vaseline, we’re still buying oil, and the politicians know it (if they don’t, I would say that they deserve all of the epithets thrown their way). An appropriate question to ask, then, is what are the politicians really saying? Who’s pulling their strings? What rent-seekers are trying to get our money?
Apr 4 2009 at 2:08pm
I think she is saying that dollars, or perhaps all fiat currencies, are fradulent. I didn’t think the letter was very clear though.
While I don’t think spending dollars is fraud, I do think some people who are accepting dollars now for harder assets will come to regret it.
I don’t like the term “foreign investment” when what we are talking about is foreigners buying up already-existing capital located in the U.S. To me, “foreign investment” implies the creation of new capital in the target country.
If we are in effect selling off our existing capital assets to the rest of the world in order to finance greater government spending today, I don’t think we should be proud of that or pleased about it.
David R. Henderson
Apr 4 2009 at 2:36pm
For good or ill, the term that’s used for what you want to call “foreign investment” is “foreign direct investment.” It is true that the terms used reflect more of a financial way of thinking than an economic of thinking. We see this on the domestic side also. When I buy a stock, I think of myself as investing. But of course, in economic terms, I’m not.
Apr 4 2009 at 8:12pm
Thanks for the clarification, David.
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