In this article from RealPolitic.com John Stossel gets it exactly right on this ridiculous push for “energy independence.” I particularly like his dissmisal of this truly silly idea that somehow we are “transferring wealth” to foreign countries by purchasing their oil. It harks back to a pre-Adam Smith view of econnomics known as mercantilism which believed countries should hoard money (gold at the time) and should eschew purchasing products from abroad because to do so shipped currency out of the country–i.e., money is wealth. As Stossel explains (picking on Obama and Pickens):
Barack Obama promising to “set America on path to energy independence,” is upset
that we send millions to other countries. “They get our money because
we need their oil”.
His concern that “they get our money” is echoed in commercials funded by Republican businessman T. Boone Pickens
who wants government subsidies for alternative energy. He tries to
scare us by saying, “$700 billion are leaving this country to foreign
nations every year — the largest transfer of wealth in the history of
mankind.”
Don’t Obama and Pickens realize that we get something useful for
that money? It’s not a “transfer”; it’s a win-win transaction, like all
voluntary trade. Who cares if the sellers live in a foreign country?
When two parties trade, each is better off — or the exchange would
never have been made. We want the oil more than the money. They want
the money more than the oil. They need us as much as we need them.
It appears that just because you’re a successful businessman or a presidential candidate doesn’t mean you have the foggiest idea what an economic exchange is all about. It should also be noted that during the mercantilist period businesses and the rich gained and maintained their wealth positions through large government subsidies and monopoly privileges from the state. I guess one can see now why the post-mercantilist free market views of Adam Smith might be best ignored by Picken’s right now.
