Boone Pickens Illustrates Becker's Theory of Discrimination
In his latest TV ad for subsidies for wind-generated power, T. Boone Pickens states words to the effect:
Much of our oil is imported from countries that hate us.
Pickens uses this to argue that the U.S. government should subsidize a move away from oil and towards Boone Pickens, er, I mean wind power.
In fact, Pickens is unwittingly making the point Gary Becker made in his classic book, The Economics of Discrimination. Assume he’s right that people in those countries hate us. Notice that, as Bickens himself points out, they’re selling oil to us. Becker argued that markets cause people to bear costs of discriminating. In this case, if people in those countries refused to sell oil to us because they hate us, they would give up profitable exchanges. Which is why they don’t.
For more on this, see my “Do We Need to Go to War for Oil?”