GM recently announced the closing of several auto plants in North America, primarily those that make large, gas inefficient vehicles. The news anchor began the segment with "Due to high gas prices..." Since everyone's blaming high gas prices for our woes these days, it begs the question "Whose fault are high gas prices?"
Your driveway is the first place to look for answers. If your car gets bad mileage, that's probably your fault. Some luck, huh?
After that, I blame "the invisible hand." This is the idea that when everyone follows their own self-interest in a free market, everyone ends up better off. Everyone is motivated to work hard and be efficient and produce goods that others want to trade for.
Free markets do a fine job of producing wealth and prosperity, but they've really botched the energy situation. For all it's glory, the invisible hand has little strategic foresight.
In the 1970s, we learned that America was vulnerable to high energy prices. People bought smaller, more efficient cars, and the national speed limit was 55 mph. The invisible hand forgot that vulnerability as soon as gas prices dropped. Despite 20 years of amazing technological advances, the mileage achieved by the average vehicle in the US got worse between 1980 & 2000. As long as gas was cheap, the self-interest of each individual failed to create adequate energy efficiency or energy independence. The invisible hand played tiddlywinks as our national energy habits drove us right into a crisis.
The invisible hand itself is a powerful technology. It is a tool that excels in a free market environment and can produce miraculous results. But it is not intelligent like a person is intelligent. It is not benevolent like the God most Americans worship. It is not patriotic. There are a number of technologies and ideas we must consider in the pursuit of intelligent, benevolent, patriotic outcomes.
When oil prices dropped after the energy crisis of the late 70s, the market was blind to the risk of higher prices in the future. It was blind to the risk of dependence on foreign oil. It had no balance sheet that accounted for the environmental impact of cheap energy. It saw only the price, and the price was just fine.
We must continue to respect the invisible hand of the market and give it room to operate. I hope economic conservatives will also allow room for other tools, like intelligence, benevolence, and patriotism. The complex problems of our world will not fall away for one tool--even a tool that makes many of us wealthy.
Your driveway is the first place to look for answers. If your car gets bad mileage, that's probably your fault. Some luck, huh?
After that, I blame "the invisible hand." This is the idea that when everyone follows their own self-interest in a free market, everyone ends up better off. Everyone is motivated to work hard and be efficient and produce goods that others want to trade for.
Free markets do a fine job of producing wealth and prosperity, but they've really botched the energy situation. For all it's glory, the invisible hand has little strategic foresight.
In the 1970s, we learned that America was vulnerable to high energy prices. People bought smaller, more efficient cars, and the national speed limit was 55 mph. The invisible hand forgot that vulnerability as soon as gas prices dropped. Despite 20 years of amazing technological advances, the mileage achieved by the average vehicle in the US got worse between 1980 & 2000. As long as gas was cheap, the self-interest of each individual failed to create adequate energy efficiency or energy independence. The invisible hand played tiddlywinks as our national energy habits drove us right into a crisis.
The invisible hand itself is a powerful technology. It is a tool that excels in a free market environment and can produce miraculous results. But it is not intelligent like a person is intelligent. It is not benevolent like the God most Americans worship. It is not patriotic. There are a number of technologies and ideas we must consider in the pursuit of intelligent, benevolent, patriotic outcomes.
When oil prices dropped after the energy crisis of the late 70s, the market was blind to the risk of higher prices in the future. It was blind to the risk of dependence on foreign oil. It had no balance sheet that accounted for the environmental impact of cheap energy. It saw only the price, and the price was just fine.
We must continue to respect the invisible hand of the market and give it room to operate. I hope economic conservatives will also allow room for other tools, like intelligence, benevolence, and patriotism. The complex problems of our world will not fall away for one tool--even a tool that makes many of us wealthy.
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