Oil prices: Laissez faire, morbleu!
By Pierre Lemieux
In a benevolent or romantic conception of the state, it must be impossible to understand why politicians and bureaucrats hold official opinions on the price of oil, let alone intervene to control it. It must be utterly difficult to make sense of why Trump, Putin, and bin Salman want to push up oil prices. This suggests a very different theory of the state.
A story in today’s Wall Street Journal gives a hint at the alternative, non-romantic conception of the state (“Trump, Putin, Saudi Crows Prince Scramble to Fix Oil Markets,” April 10, 2020):
President Donald Trump, Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin lead the world’s top three oil producers, respectively. Mr. Trump is counting on support from the country’s now-vast oil patch in his re-election bid. Mr. Putin is trying to extend his rule amid a weak economy, and the crown prince needs to consolidate power and keep funding his ambitious reform efforts.
In America, some 250 million adult consumers put gasoline in their cars and many of them use fuel oil to heat their houses. For lots of them, the drop of oil prices by two-thirds since January has been a godsend in this time of crisis. Compared to the 250 million consumers, about 150,000 Americans work in the oil and gas industry, besides owners and shareholders. The numbers don’t matter as much as the fundamental question: Why does the state take sides between these two groups of citizens?
Anthony de Jasay built a formal theory, in many ways close to public-choice theory, to answer this question. (Public choice analysis is, James Buchanan wrote, “politics without romance.”) His answer is that, in the absence of public goods, the state cannot but take sides among its subjects; it is necessarily a discriminatory and adversarial state. Because interpersonal comparison of utility are impossible, government interventions must always favor some citizens and harm others. Of course, state rulers will decide to favor their supporters and clients. The state just cannot please everybody and, as de Jasay put it in his book The State:
When the state cannot please everybody, it will choose whom it had better please.
The fact that Trump himself understands little about the world except for an intuitive view of his own immediate interests, which can change on a dime, does not make the US government more benevolent, loving, and rational. He tweeted earlier this year:
Do you think it’s just luck that gas prices are so low, and falling? Low gas prices are like another Tax Cut!
From the vantage point of a non-romantic conception of the state, the best government decision on oil prices, as on so many other things, must be the Marquis d’Argenson’s injunction: “Laissez faire, morbleu! Laissez faire!” (“Morbleu” is a French swear word, derived from “death of God.”)