Gregg is no doubt correct when he states that “economic truth is not sufficient to settle these questions.” But it sure would help if teachers and communicators stressed to the young sound economics: the logic of choice against given constraints, the beauty and complexity of modern economic life, the hope of human betterment through mutually beneficial exchange and entrepreneurial ingenuity that discovers cost-saving techniques in production and distribution, creating new goods and services. And it would also help if our teachers and communicators of economic truth stressed the consequences of economic freedom for the least advantaged and most vulnerable. In 2015, it was recorded that for the first time in human history, less that 10% of the world’s population was living in extreme poverty. When I was a college student learning economics, that number hovered around 37%. Think about that for a second. The Age of Milton Friedman produced that! It wasn’t an Age of Chaos, but an Age of a Great Escape from the misery of the Malthusian trap for billions. Our college students today need to understand that. They don’t. Or at least they don’t understand the full meaning and implications of that number.
Let me end where I started. Samuel Gregg has produced a fantastic book that should be on the shelf of all citizens who care about our future as a self-governing political community. As he argues, we must embrace the American experiment and fulfill its promise of freedom and prosperity for a new generation. With The Next American Economy, Gregg has made a significant contribution to the political economy of our times. He has effectively countered the arguments on right and left that agitate for protectionism and industrial planning and against free enterprise and free trade. He has also given us a vision of a creative, competitive, and peaceful America for the 21st century. It is my sincere hope that his book gets a wide readership and that it impacts the public discourse in this country, which desperately needs Samuel Gregg’s calm voice and deliberate and scholarly demeanor to counter the poisonous and odious rhetoric that defines our current political culture.
Superabundance is the kind of book that needs to be written, that needs to be read widely, and that will likely not move the needle for the people who most need to read it. “We are running out of resources” is a fundamental tenet of secular environmental religion; it is not a hypothesis open to testing and possible falsification. Many people who most need Tupy and Pooley’s message, therefore, have neither ears to hear nor eyes to see. That’s both sad and frustrating. For people who aren’t yet on a steady diet of green Kool-Aid, Superabundance brings a message of hope and deliverance, one that might make them cancel their next appointment with their “eco-anxiety” counselor.
The main problem is that oil demand has outstripped supply amid the post-pandemic economic recovery owing to a lack of investment, especially in the U.S., which had been the world’s swing producer. U.S. production has been flat since May. Now the swing producers are Saudi Arabia and the United Arab Emirates. OPEC countries and their allies, which account for 45% of global oil production, accounted for 85% of new supply in September.
Really, there are widely accepted reasons why prices in markets such as gasoline don’t go down as quickly as they go up. It’s called asymmetric price transmission, or “rockets and feathers.” I wrote about it in Julywhen Biden was blaming gas-station owners for high prices. Economists debate the causes of asymmetric price transmission, but empirical research finds that it occurs in competitive markets where firms do not have much pricing power. That means it’s not a consequence of a few powerful corporations holding prices up. The gasoline industry is extremely competitive. Most stations are independently owned and operated, and prices are based on a wide variety of factors that vary by region, even town-to-town.
No serious free marketer believes that markets are perfect. We aren’t utopians. Unfortunately, perfect markets and perfect competition are often the starting point of economic textbooks. This rosy starting point leads many to conclude that when conditions are less than perfect, the best course of action for a correction is government intervention. It’s wrong.
Not only is government itself imperfect, as anyone can plainly see, but the market is a process to find and fix errors. A market imperfection is an opportunity for entrepreneurs to profit. As Arnold Kling recently wrote, “Markets fail. Use markets.” That’s because, Kling adds, “entrepreneurial innovation and creative destruction tends to solve economic problems, including market failures.”
This isn’t to say that the government plays no role aside from protecting property rights. But it means that faith in government intervention should be tempered with an acknowledgment of government’s own flaws, including a tendency to favor one group of people over another and an inability to adapt when policies fail or circumstances change.
There is no contradiction between freedom and public health. Freedom is a requisite for good public health.