Mr. President, Mind Your Own Business

By Kevin

I do not appreciate the President telling me how or how much to sacrifice in response to a regional natural disaster. I will not play a game of "pretend" so that he may play "good steward" in front of the national press:

Two other points I want to make is, one, we can all pitch in by using -- by being better conservers of energy. I mean, people just need to recognize that the storms have caused disruption and that if they're able to maybe not drive when they -- on a trip that's not essential, that would helpful. The federal government can help, and I've directed the federal agencies nationwide -- and here's some ways we can help. We can curtail nonessential travel. If it makes sense for the citizen out there to curtail nonessential travel, it darn sure makes sense for federal employees. We can encourage employees to carpool or use mass transit. And we can shift peak electricity use to off-peak hours. There's ways for the federal government to lead when it comes to conservation.
Mr. President, I'm glad you're temporarily easing regulatory restrictions to reduce bottlenecks, and show a desire for greater refining capacity. But I have a few questions:

First, I'd like to know why it takes a disaster for politicians to realize that protecting existing refineries from competition has a real cost. If we need refining capacity now, then we needed it last year. Why isn't that capacity in place today?

Second, I'd like to know just why I should conserve. We supposedly live in a capitalist society based on property-rights and free-trade; why, all of a sudden, do you ask that I not trust that the price of fuel incorporates all the scarcities at every level of production? What economic lever broke in the past month? Why do you think the price system is failing so bad that we need to "conserve" more than the price signal warrants?

I won't pretend that market prices don't exist, or that markets have suddenly stopped working; I won't pretend that prices are inefficient allocators of resources; I won't pretend that I cannot buy as much gasoline as I can afford at current prices.

Furthermore, Mr. President, I will not pretend that you have legal or moral authority to tell me how much gasoline I may purchase. I will not pretend that your feeble call to use less has any impact whatsoever on my psyche. I will not pretend that the Federal Government knows better than me how much gasoline I should purchase.

In addition, you will be horrified to note that I will not pretend that $3 a gallon gasoline affects my personal driving habits. That's because at my personal margin, it doesn't. I drive 5000 miles a year, and my car gets 30 mpg, meaning I now pay about 10 cents a mile for gasoline to drive, for a total of $500 a year. This is not too much higher than the 6.7 cents ($333) I was paying when gasoline was $2 a gallon. That's about 50 cents a day more than before. I will not change my driving habits for 50 cents a day. I will not pretend that I am driving a Hummer.

I will buy as much gasoline as Sunoco and Exxon and Coastal are willing to supply me at market rates; and there's no reason for me to conserve any more than their prices tell me I should. It doesn't make sense for this citizen to curtail travel, so maybe it doesn't make sense for federal employees to curtail travel either...

A few more questions: How much gasoline do your advisors think will be saved by your plea to conserve? How will that affect prices? How many votes will you gain from a conservation stance? Do you really believe this stuff?

I'd say that it's time your government got out of my gas tank, and kept to minding its own business.


Outlandish Josh wrote:

I won't pretend that market prices don't exist, or that markets have suddenly stopped working; I won't pretend that prices are inefficient allocators of resources; I won't pretend that I cannot buy as much gasoline as I can afford at current prices.

I don't believe I've ever actually read a combination of market-fundimentalism and shrillness before. What a combo.

For an alternative take, maybe you can pretend (or allow) that Markets are an imperfect means of regulating all aspects of a society, and that an aspect that's as structurally integral to the functioning of our civilization as gasoline has as such has been regulated by the State in various ways.

Or maybe you're the type that thinks the interstate highway system is an exercise in demonic socialism. In which case, mahalo.

-- October 2, 2005 5:02 PM

Kevin Brancato wrote:


I think your inference to a set of wider beliefs is unhelpful, unfortunate, and flawed. "Market fundamentalism" is irrelevant to this discussion; the term is both strawman and scarecrow, and I'll shunt it aside to proceed.

I'm opposed to the vision of President as wise patriarch and to the bombastic regulatory state. At first glance, Mr. Bush appears to think, without presenting any evidence, that gasoline prices did not rise enough to forestall shortages. Where did this come from?

I'm all in favor of a well-functioning collective order, but in such an order, the bureaucrats regulating markets need to be watched closely by the people, and they need to justify their inverventions using hard evidence. None was provided.

Politicians use economic regulation as PR, and this is a classic case. Contrast Mr. Bush's speech with his lack of actual action. Does he really want to remedy implicitly alleged market failure? No. He wants to score points, and he did.

My discussion is is about gasoline prices and quantities, in the context of the President telling us that we should lower gas consumption. Mr. Bush did not tell us why prices, which have done the job of allocating available supplies of gasoline for the entire time he's been President, are now inefficient allocators. Why are the segmented and tightly regulated wholesale and retail markets broken? Are taxes all of a sudden far less than they should be? In my view, the markets aren't any more broken than last year, so why pretend otherwise? I'd welcome serious regulatory reform proposals -- specifically the desirability of more non-subsidized refining capacity.

The President made a speech, in part pretending to have authority to tell us how much gasoline to purchase in a time of regional crisis. But the President doesn't really think we need to lower gas consumption at all. Because if he did, he would either try to forcibly ration gasoline purchases or propose hiher taxes on gasoline -- both of which will effectively raise the total (time and money) price of gasoline and lower consumption.

For an economist, the President is making a fool of himself by pretending that asking people to cut down gasoline consumption is an effective regulatory tool. Mr. Bush deserves to be mocked; he called for ineffective policy, tried to score easy political points, and undercut his own alleged principles. And nobody called him on it.

I decided to take personally and seiously Mr. Bush's call for conservation. His call is not based on economics, environmentalism, or anything really; iit's just political PR. Hence, I will not conserve. If not obeying the economically unsound dictates of the President is considered by you to be a form of "market fundamentalism", then so be it.

UPDATE: By the way, the new initiative begun today continues on the same path of conservation at an unknown cost:

President Bush has called on all Americans to conserve and be more energy efficient in light of expected high energy prices this winter due to increasing energy demand and energy infrastructure damage from Hurricanes Katrina and Rita.

Energy efficiency and conservation are key components of the Department of Energy’s mission. And in conjunction with Energy Awareness Month, Secretary of Energy Samuel Bodman is answering President Bush’s call by launching a comprehensive, national campaign to educate American families, businesses and government agencies about “Easy Ways to Save Energy” that will help them save money, too.

I'm glad the ED is taking saving money seriously, but it seems that in many cases, they seem to be promoting energy conservation that can lower economic efficiency.

For instance, the standard house in the "Home Energy Saver" website (IE only), costs $500 more annually to run than an energy efficient house. But nowhere does it list the cost of making your home energy efficient.

(Elsewhere the Energy Department insists that an energy efficient home costs less overall, but then hedges its bet).

This is serious policy?

Sometimes energy efficiency makes fiscal sense, other times it doesn't. A serious policy would help people make informed choices reflecting that fact.

-- October 3, 2005 11:30 AM

Outlandish Josh wrote:

Wellsir, I tend to have the same reaction to your bolded "bombastic regulatory state" as you do to my "market fundimentalism." Tone and buzzwords aside, thanks for the substantive reply.

In spite of potential differences in outlook, I'm afraid we're both in the political wilderness as people who see a real, actual problem and are demoralized by a response that consists mostly of PR. I would say, this is a hallmark of the Bush administration and of our current consumer-driven economy, but it's not really all that different from the Soviet system, where propaganda was a first (and often only) response to a lot of real social and economic problems.

Which isn't to discount the value and necessity of building popular consnsus around policy. But you have to, you know, really have a solution for that to mean very much.

I think my overarching point is that markets have proven themselves ineffective when it comes to regulating our consumption of energy. You'r'e right that they're no "more broke" now than last year, but the consequences of their brokenness are mounting. Some may argue this is essentially because they haven't been lessez faire enough. I would say corrupt regulation -- a cozy relationship between the subzidizers and the subzidized -- plays a part, but relying on markets to distribute energy will always be problematic because of the difficulty in determining total costs.

Also, the pervasiveness of energy use into daily living makes it hard to see how rational-choice theory can be trusted to guide our use of resources. It's already flawed -- people are not actually rational in how they spend their money, witness the size of the advertizing industry -- and it becomes even more suspect when the critical choices wrt energy are actually embedded in decisions as complex as where to buy a home.

FWIW -- efficient design that starts from the ground up can make an enormous difference, both decreasing the cost of construction and operation, but this means more than having good insulation and a new fridge. Check out Green Ground Zero for some interesting independent ideas in that realm.

The big problem as I see it is that a civilization who's economic organizing principle is consumption will never truly do much to conserve, let alone make itself efficient. We may be able to build houses that cost less to build and own, but at the moment this means the GDP goes down. The odds are we're going to have to get used to having fewer kelvins of energy per capita to play with. This doesn't necessarily mean a decreasing standard of living, but without some means of driving efficient design and renewal that's what's going to happen.

And if it does the political kicking and screaming will make our current theatrics appear sage and somber. It could be a pretty dark future if we don't get smarter soon.

-- October 6, 2005 4:21 PM

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Lynne Kiesling I've been so busy that I'm late to the game, but Kevin Brancato's reponse to President Bush's inveighing us to drive less is bang on. Furthermore, Mr. President, I will not pretend that you have legal or moral... [Read More]