There are good Ludwigs and bad ones.
Ed Ludwig's recent foray into the oil debate is a ludicrous example of the authoritarian mentality and its relation to real economics. When asking the question as to why oil shouldn't be a public utility he states:
A public utility has been defined as a 'business that provides an everyday necessity to the public at large' - such as water, electricity, natural gas, telephone service, transportation, cable TV and other essentials.
While the logical, historical and practical examples and results of such thinking would make any Austrian based economist cringe, apparently editors and publishers suffer nothing of the sort when they decide to publish such tripe.
According to Mr. Ludwig's loose definition, one might consider food, housing and clothing to be functions of a public utility. Indeed, even the local mechanic who provides a service such as fixing your car is vitally involved with 'transportation'. While I don't receive public water, land telephone service or cable TV, apparently these are necessities that I'm forced to pay for so others can enjoy their necessity.
Aside from the distracting arguments of price gouging, proper regulation or the entitlement to 'reasonable profit', Mr. Ludwig bases his entire case on the evil of oil companies and their need for salacious profit. During the course of the argument he makes spurious statements;
Oil energy fits squarely into the criteria for a public utility. How can it be distinguished from electricity and natural gas? It can't be.
He never even seeks to answer his own question as any undergraduate student would be required to do if they made such an assertion. It can be distinguished simply based on delivery. Electricity and natural gas have traditionally been given special privileges based on the need (the perceived one) to deliver the product to individual homes and businesses. Often times eminent domain is employed in order to create a public space or area that is regulated in order to insure delivery of said service. Regardless of the merits of such a monopoly, the delivery of oil can be attained by the oil guy or a quick stop at the local gas station. One wonders if his vision would include expensive public works in order to insure such delivery.
While Exxon Mobil's sales may exceed the gross revenues of 120 countries, it is not based on involuntary association or order. As Senator Schumer spouts;
"Congratulations to Exxon Mobil and Chevron -- for reminding Americans why they cringe every time they pull into a gas station."
No mention of the greedy tax mongers ever surfaces in such rhetoric. If there is one political untouchable in this scheme surely it is legislators whose own coffers are filled simply by decreeing a tax on others hard fought utilization of resources and effort in order to deliver a product. Mr. Ludwig goes on to lament the role of the consumer without ever considering the tax payer. Lowering costs has nothing to do with proper regulation.
Of course his conclusion is that law makers are influenced too heavily by this industry and any effort to reduce prices will fall on deaf ears unless we create this big public utility based on oil. HIs monumental failure in logic, economics and lack of seperation of values is appalling. Unfortunately it may be a result of being a judge who can execute judicial fiat whenever these other things (logic and economics) come into play.
Oil energy fits squarely into the criteria for a public utility. How can it be distinguished from electricity and natural gas? It can't be.
He never even seeks to answer his own question as any undergraduate student would be required to do if they made such an assertion. It can be distinguished simply based on delivery. Electricity and natural gas have traditionally been given special privileges based on the need (the perceived one) to deliver the product to individual homes and businesses. Often times eminent domain is employed in order to create a public space or area that is regulated in order to insure delivery of said service. Regardless of the merits of such a monopoly, the delivery of oil can be attained by the oil guy or a quick stop at the local gas station. One wonders if his vision would include expensive public works in order to insure such delivery.
While Exxon Mobil's sales may exceed the gross revenues of 120 countries, it is not based on involuntary association or order. As Senator Schumer spouts;
"Congratulations to Exxon Mobil and Chevron -- for reminding Americans why they cringe every time they pull into a gas station."
No mention of the greedy tax mongers ever surfaces in such rhetoric. If there is one political untouchable in this scheme surely it is legislators whose own coffers are filled simply by decreeing a tax on others hard fought utilization of resources and effort in order to deliver a product. Mr. Ludwig goes on to lament the role of the consumer without ever considering the tax payer. Lowering costs has nothing to do with proper regulation.
Of course his conclusion is that law makers are influenced too heavily by this industry and any effort to reduce prices will fall on deaf ears unless we create this big public utility based on oil. HIs monumental failure in logic, economics and lack of seperation of values is appalling. Unfortunately it may be a result of being a judge who can execute judicial fiat whenever these other things (logic and economics) come into play.
This month's carnival I think is hosted at Democracysucks.com
More info:
http://blogcarnival.com/bc/cprof_1229.html
This was also published here:
http://www.commondreams.org/archive/2008/03/24/7863/
John F. Butterfield ( http://www.johnfbutterfield.com/ ) finds this entry incoherent.
It's not delivery that constitutes a utility, it's need. If there were no petroleum on planet earth, and we used wood instead, and therefore wood growth and delivery would be a utility. Food is a quasi-utility, because it's tax free. Gasoline is as essential to the common good as water, electricity or phone service. The only reason we don't count gasoline among our utilities is because starting with Standard Oil, politicians have been bought and paid for by the oil industry they would regulate.
The point about delivery is that it is what distinguishes it from electricity and natural gas in terms of what traditional utilities have been accepted for or as. This is a refutation of the notion that nothing (as Mr. Ludwig asserts) distinguishes oil in this regard. I certainly disagree about the nature of these monopolies which is the subject of the first link.
If there were no oil, the market would be perfectly suited to deliver needs without the need for the force of a public monopoly. The assertion that food is a quasi-utility because it is tax free is absurd on its face and requires a better assertion.
Your 'common good' is a fallacy that the Austrian economists have been dealing with for a while. Simply stating that politicians are in the pocket of big oil is not a sufficient argument to call for nationalization of a product or service. Scarcity of resources induces the idea of profit and distribution.
Certainly the idea that certain corporations receive subsidies and tax incentives at the expense of individuals is repugnant to those who advocate free markets. This is the definition of corporatism, which is to be admonished.
"HIs monumental failure in logic, economics and lack of seperation of values is appalling."
You misspelled "separation."
Any undergraduate would be required to spell well, too.
You forgot the capital I in 'his' too.
You might consider this:
http://www.yourdictionary.com/library/misspelled.html
One argument for having public utilities which I have not seen above is that without some form of price regulation prices may fluctuate to levels that make purchase difficult for some users. Fine, you might say, as it should be.
When the price of a necessary product changes enough, a change of behavior on the part of the consumer may be forced. Maybe some truck driver can no longer justify maintaining some delivery routes, or some service industry worker can no longer justify driving 30 min to his/her job. Economists may see such market-driven adjustments as efficient corrections, not something to be shocked by.
Yet! Yet! The market has no conscience. The market does not mind displacing workers, does not mind when the staple item for a family becomes Kraft Mac & Cheese, does not mind when auto workers spend sleepless nights pondering how they are going to keep their wife and pay their morgage.
If the market gets us "good" outcomes then the market works. If the outcomes are not "good" then we want to soften them. Because a person's value is not derived simply by the size of his or her bank account the market does not always find "good" outcomes. Are you willing to say that a product is "worth" only what a person is willing to pay for it? What if I havn't a penny to my name and we're bidding on a loaf of bread? I guess the bread isn't worth very much to me.
Eric,
Meatball copied your own text with the "I". The typo belongs to you along with the misspelled word "separation." And then you post a url to some dictionary website? Quite a unique response.
"The point about delivery is that it is what distinguishes it from electricity and natural gas in terms of what traditional utilities have been accepted for or as. This is a refutation of the notion that nothing (as Mr. Ludwig asserts) distinguishes oil in this regard."
I do not understand how you can differentiate between resources as a function of their delivery system. Natural gas is supplied through pipelines. India and many other asian countries hand deliver natural gas cylinders. There is nothing traditional about it because some places have natural gas delivered through pipelines which makes it cheaper since the middle man no longer makes his cut. One can change the vehicle of delivery as and when it seems feasible.
The government of Saudi Arabia provides oil to their population. Iran does the same. Venezuela recently reset their share of oil revenues which was lopsided in favor of foreign oil companies which is why we want Chavez' head in this country.
Oil can easily be converted into a public utility and one need not go the way of natural gas delivery. The only question is whether Americans will be able to accept government administration of oil in a society which is already brainwashed against government control as a socialist principle. Too many market factors (extremely strong lobbyists) will not allow this change to take place unless there is no profit in oil anymore.
The same thing can be done with drugs. Government regulation will definitely reduce prices just like other countries around the world control their markets to make things affordable for their populations.
But who's listening?
Ken
My response to this would be that a government subsidized conscience would be no better. It would simply be a monopoly of force whose hand in things would only increase costs. Witness the result of the HMO Act of 1973.
I guess 'Meatball' would rather obsess about a typo than the point. This article was a quick response to what I considered an absurd proposition from an Austrian School perspective. That is, that the efficiency of the market will outweigh any effort to regulate and control pricing.
Perhaps they do deliver commodities (as utilities?) differently in Asia. The point being that traditional utility creation in the States revolves around notions as outlined in the first link. Delivery is certainly a feature of electricity and natural gas and can in fact be distinguished from the market delivery of oil.
The greater point is that centralized planning will always fail in comparison to market mechanisms and are not desirable for numerous reasons. The point about delivery is that it is one of perhaps many things that Mr. Ludwig utterly fails to address.
"My response to this would be that a government subsidized conscience would be no better. It would simply be a monopoly of force whose hand in things would only increase costs. Witness the result of the HMO Act of 1973."
Fine, if you are really prepared to say that markets always 'work' better without any sort of regulation, then you may certainly prefer that markets are never regulated. I think you would be a fool to believe such a thing, however, and doubt you truly do. For one, even if you think the particular school of economics to which you ascribe is infallible in its dictates, the market concerns itself with money, not well being. Private charity would be the only form of wealth transfer permissible under such a strict philosophy of government, which means swaths of humanity would be despondent, dependent, or dead. Also, you're going to have to build alot of prisons and gated communities, alot of bombs and missiles; you're going to have to rebuild alot of buildings. Are those costs your favored economic system is considering? If you want some buzzwords I could mention that the tradegy of the commons problem very much applies to private charitable givings, so in effect most people living in such a society would tend to feel that society as a whole provides less charity then they believe it should. The people could all get together and decide upon a level of charitable giving (collective agreement), but hey, unless they're going to force people who object to the majority decision to contribute to the pool ("subsidize conscience"?) the level of charitable givings will still fall short of the optimal, or utility maximizing quantity.
This is a little to the side, but do you ever believe in the right of a democratic majority to exercise emminent domain, should they so decide? If so this would be a kind of "monopoly of force" in which the supposed "rights" of the minority get trampled.
Out of curiousity, what is a "government subsidized conscience"? Sounds like tax dollars going to build Frankenstein's monster a kinder, gentler brain.
Finaly, on the HMO act of 1973 (I had to look it up since that happened well before I was born), just about the first thing I found was this:
http://www.hpolicy.duke.edu/cyberexchange/Regulate/CHSR/PDFs/I-1-HMO%20Act%20of%201973.pdf
Rationale. This Act was part of a major Nixon administration cost containment initiative. The Act was intended to be pro-competitive, pre-empting, for example, all state laws or regulations that posed a barrier to HMO formation (even if there was no direct conflict with the federal regulations).1
I don't know much about this thing, but I had heard that Nixon only began to like the idea after being assured that it was a "free market solution". I'm also sure I hate it, since the answer to health care was universal single payer then and remains so today.
One last thing: you wrote that "It would simply be a monopoly of force whose hand in things would only increase costs", strongly condemning "subsidizing conscience". This monopoly of force talk is nebulous. Doesn't the way in which a decision is reached contribute to the legitimacy of the decision? Doesn't the way in which power is derived contribute to the legitimacy of the empowered? Should a dictatorship decide to "subsidize conscience", would that be on par with a democracy's doing so? By the way, all governments always claim to justly have a monopoly on use of force. Do you believe that is OK, or somehow for the best? I think if Ayn Rand and Thomas Hobbes had a baby and failed to subsidize its conscience they would have had you.
You're a live one Mike and I thank you for commenting on what is a little commented site anyway. I'll get a detailed response out later on today.
Churchill's famous dictum: "Democracy is the worst form of government, except for all those other forms that have been tried from time to time." (from a House of Commons speech on Nov. 11, 1947)
Yes, I would much prefer an unregulated economy like we enjoy on the Internet. I do believe that and would refer you to a nice piece written by Francois Tremblay entitled 'But Who Will Build the Roads ?'. Its a great introductory book about Market Anarchy and answers many of the questions you raise. It is self-published through Xlibris.
Never said the Austrian School was infallible or I an unthinking adherent of it. Not much into dictates or dogma, nor do I think the Austrian School is victim to that mentality. It simply points to what is in fact the case and lets the reader/thinker decide.
You say, " Private charity would be the only form of wealth transfer permissible under such a strict philosophy of government, which means swaths of humanity would be despondent, dependent, or dead. Also, you're going to have to build a lot of prisons and gated communities, alot of bombs and missiles; you're going to have to rebuild alot of buildings."
My philosophy is no government. Swaths of humanity are despondent and dependent on government right now. Many dead ones tend to come from wars and police protection. Therefore I reject your doomsday scenario without further reference or assertion. I am very familiar with the concept of the Tragedy of the Commons and recall fondly its utilization in Barrington Moore's Jr.'s reference to it in 'Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World'.
Again I'd prefer a world of voluntary giving then coerced one. I have distinct problems with democratic majorities and their capacity to force their 'good' on others. Some say the Founders had similar reservation when establishing a representative Republic with established rights that have nothing to do with the redistribution of wealth or the perceived rights of publicly provided 'services'.
Gov't subsidized conscience is any program or effort that seeks to alleviate human suffering by appropriating others property in the pursuit of others needs. It will always fail and do less good.
The HMO Act granted special privilege to a dying model (the HMO). It has done more to distort the market and expectation for health care than anything else with the exception of the expansion of the tenuous legal theory of tort liability.
Yes, all governments tend to justify their force. It is wrong.
I've never been a big fan of Rand or Hobbes.
The market, when unmolested by government, does always work better than regulated corporatism. Of course those of us who understand that government is an unnecessary evil would prefer completely unregulated markets. Bad business practices will still be punished. Probably a lot more efficiently than currently happens while the corporate heads hide behind their pet govgoons.
Emminent domain is just a fancy way of saying "theft-by-government".
These arguments get rehashed every day. It just comes down to whether or not one believes that coercion is a legitimate way of living. I don't.
Hey Kent ! Nice to see the cavalry ride in . . .