The Oil Drum

31 comments on That saying about a picture and 1000 words...

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DaveS on August 23, 2005 - 10:00am

On the topic of dying for lack of heating oil, MaxSpeak had a great response to Steve Levitt's comments on Peak Oil, the best nugget being:

Do markets really solve all problems? Most problems? Nothing ever goes wrong? I guess it depends on how you define "wrong." For instance, Amartya Sen wrote a book about poverty and famines which describes how markets solved the problems of people having no money to buy food: they die of starvation, the ultimate steady state.

If oil runs out, sure there will be substitutes. How fast will these come online, if they do? How much will they cost? What will be the costs of adjustment? Will that be fun? Who knows? Markets solve problems. Solutions do not exclude freezing in the dark, a new kind of equilbrium.

Also, MSNBC today has had quite a bit of Peak Oil talk. This morning Matt Simmons was on for a brief discussion of Saudi oil. And just now on Coast to Coast there was a discussion of Peak Oil and and the prospects and plans for reducing comsumption in the US particularly as it relates to transportation. It also involved one of the guests using the opportunity to bash Frank Gafney (the other guest and a leading neocon) and the administration's Iraq policy. Good times.

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Fernando on August 23, 2005 - 10:25am

Well that's the main point.

Markets will correct, of course. The problem is how that levelling is made.

But the counter argument from the freemarketeers is:

"Market IS the best solution. Government intervention of any kind would only worsen the outcome."

But government IS already "interfering" markets. In fact there's no place in the world where economy isn't regulated by governments. In practice free market paradises are not seen.

What I'm trying to say is that that counter argument is a fallacy, too.

Anyway, I'm affraid that if the government takes no action, and in the end, PO is a global disaster, they will blame government because it didn't let the markets solve the problem with all its regulations already in place, anyway.

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Anonymous on August 23, 2005 - 10:58am

Fernando, you nail it: There is no such thing as an uregulated market. The amount of Government subsidies that keep major corporations afloat --in direct contradiction to the trend of market forces (e.g., toward the extinction of United, Northwest, and Chrysler, for example)-- is staggering. And it isn't 'market forces' that are giving USA pharmaceuticals their immense profits, but the refusal of the government to use its bargaining power to bring down the cost of medicines for seniors, etc. And what about big agribusiness? The subsidies go to the big guys, not to the small farmers. Yet the market force advocates say that it's the market that is driving out small producers. Oh, and what about the defense industries. 'Scuse me. And the highway construction business? Duh! If the government isn't playing a MAJOR role in how this economy (and the world economy) operates, then why do corporation groups of every ilk spend so much time, money and effort lobbying Congress and ensuring that X candidate gets elected instead of Y candidate?
Cameron