On Saturday, September 10 I will be participating in the Mises Institute of Canada’s conference, “Liberty and Oil: the Foundations of Modern Civilization.” As the official description says, we will discuss questions such as the following: “Is resource richness a blessing or a curse? Are Alberta’s oil reserves the source of the relative freedom and opportunity in Alberta, or do they represent a harbinger of future tyranny?”
Liberty and Energy, Intertwined
Rob Bradley, founder of the free-market Institute for Energy Research, knows all too well that liberty and energy issues go hand in hand. Bradley is one of the world’s leading experts on government intervention into energy markets, and he also happens to be an Austrian economist—he picked Murray Rothbard as his dissertation advisor.
Bradley’s career has been devoted to studying the economics and politics behind government intervention in energy markets. His doctoral dissertation, Oil, Gas and Government, is the definitive history of U.S. government meddling in this arena.
Why does Bradley devote so much time to energy issues? The name of his blog, MasterResource, gives a hint. Julian Simon famously christened the creativity of the human mind as the ultimate resource. Rather than viewing people as bellies who would overburden a straining planet, Simon instead looked at people as wonderfully powerful brains who would solve the technical problems of food supply and traffic congestion.
It was Julian Simon who made the famous bet with arch-Malthusian Simon Ehrlich (of Population Bomb notoriety). In 1980, Simon let Ehrlich and his pessimistic colleagues pick five commodity metals. Simon was wagering that their (price-inflation-adjusted) price would go down during the 1980s, while Ehrlich et al. thought that growing population strains would drive their prices up. In October, 1990 Ehrlich mailed Simon a check for $576.07, in accordance with the terms of the wager. Even though the world’s population had grown by more than 800 million people in the interim, nonetheless entrepreneurship had managed to render the five commodities less scarce in an economically relevant sense.
Rob Bradley is therefore paying homage to Julian Simon with the title of his blog. Simon recognized the human mind’s creativity as the ultimate resource. Bradley, however, realized that it takes energy in order for modern man to implement his bold ideas.
“The Left’s War on Terror”
In the summer of 2006 I began working for the Institute for Energy Research. I focused primarily on climate change economics, and in particular the case for a carbon tax (and cap-and-trade). (This research eventually led to a publication in The Independent Review.)
When Rob Bradley asked me to join IER and focus on climate change, he and I knew that this would be a major battleground in the struggle for liberty over the coming decades. When I mentioned my career path to the (U.S.) Mises Institute’s Jeff Tucker, he remarked, “Global warming is the Left’s War on Terror.”
As I thought about it, Tucker’s remark was quite insightful. Just as a war on “terror” by definition could never be won, so too the issue of global warming (or what is now called climate change) was open-ended, and could always provide a bogeyman around the corner to justify some new intervention.
There are other similarities. The War on Terror provides the interventionists on the “right wing” excuses to invade all manner of liberties, from bank transactions (because people might be laundering money) to web browsing (people might be reading jihad recruitment sites). By the same token, the crusade against climate change provides the interventionists on the “left wing” an opportunity to regulate smokestacks, tailpipe emissions, impose compensating “carbon tariffs” on certain imports, and even to tell people what type of light bulbs and insulation they need in their homes.
Furthermore, the issue of climate change gave a huge emotional and moral advantage to those wishing to intervene in the free market. Just as nobody wants to seem “soft” on terrorism, by the same token those who protest against carbon taxes or other regulations “to save the planet” are demonized as heartless monsters and/or hired guns for the big oil companies.
Liberty and Oil
The Mises Circle Calgary recognizes that at this point in the development of capitalism, oil still represents the backbone of Western economies and way of life. In another century this will presumably no longer be the case, but for right now, a relatively free market in oil (and natural gas) is essential for the everyday liberties that Americans and Canadians enjoy.
In the United States, federal intervention in oil markets reached its zenith in the 1970s, with explicit price controls and other bureaucratic micromanagement of the drilling and refining industries. The controls were partially rolled back under Jimmy Carter and then more completely under the Reagan Administration. It was not until recently, with the massive push for regulating carbon emissions, that such heavy-handed intervention seemed politically possible once again.
Canada too has flirted with outright socialization of the oil industry. The National Energy Program (NEP) was introduced in 1980 in the House of Commons by Marc Lalonde.
The Liberals’ NEP publicly sought energy self-sufficiency and conservation, two goals that are always popular among those wishing to interfere with producer and consumer choices in energy markets. The NEP created tax incentives and prohibitions to favor locally-owned oil firms, including a “back-in” provision through which Ottawa took an automatic fourth of the revenues from any oil or gas discovery made on lands controlled by Ottawa.
It turns out that Canada’s efforts at central planning in the oil market were as disastrous as all such attempts. In 1980 there were 9,188 wells drilled in Canada, but that had dropped to 7,186 the following year. The number of drilling rigs in operation likewise fell quickly from 650 to 450. Needless to say, thousands of jobs disappeared from the industry.
In more modern times, Canada’s huge deposits of oil sands are coming under political fire. Business groups, potential workers, and consumers who understand the benefits of lower energy prices are clamoring for the development of this bountiful resource, while environmental groups and other, competing energy interests stand in opposition.
The new Mises Institute of Canada is an ally in the intellectual battle for liberty. Their upcoming conference in Calgary will explore the intersection of liberty and unfettered energy markets. Join us in Calgary this Saturday, September 10th to celebrate the launching of the Ludwig von Mises Institute of Canada and the natural resources that fuel the Alberta economy.