We have more to fear from a crisis than the crisis itself. For what are the politicians going to do?
Regarding economic policy, the answer is . . .
- In a crisis, if a major company fails, the government bails it out.
- But if a big company keeps making profits, then the company's managers get hauled before Congress and politicians start the drumbeat for a ritual lynching.
Can rewarding failure and persecuting success make for anything but disaster down the road? No.
But that's not stopping Congress. This week five executives from major oil companies were dragged into a congressional hearing room so that Senators could ask them stupid questions.
The Senate is pretending that there's some great mystery to the price spikes — and the recent (if somewhat slighter) price drops. But of course there isn't. Demand for oil has been rising steadily in recent years as the Chinese become major gasoline consumers. Further, a war in a major oil-producing region destabilized supplies and further increased demand, making planning more difficult. And then, of course, came Katrina.
Senator Barbara Boxer decided that the moment called not for learned discourse but class warfare. She hauled out a nice chart showing how much money the oil executives had made. "Working people struggle with high gas prices," she pointed out. "And your sacrifice, gentlemen, appears to be nothing."
Next she'll be quoting the classic apophthegms of socialist literature.
Of course, during the past five years a lot of people have struggled to rebuild their wealth. We are, after all, coming out of a recession. During that time, Senator, what sacrifices have you endured? Oh sure, you may boast with the rest of your Honorable Sirs and Madams that you declined the latest automatic pay raise; but you overpaid folk have taken raise after raise for years, good times and bad. And let's not forget your extravagant pensions that remain the envy of all those struggling people you regularly trot out as props.
So went the attacks. But think about it: the oil companies still delivered oil, even when surrounded by chaos, and did so with enough efficiency that prices have been able to fall back a bit from their impressive highs. The oil execs should have been applauded, not treated with suspicion and contempt.
You can't expect that from Democrats, of course, whose history of anti-capitalism is — even after the fall of Communism — just a wee bit too strong.
Weeks before the show trial — er, I mean public grilling — House Speaker Dennis Hastert stated that any oil company that "price gouges" will "be prosecuted." Prosecuted for what? Setting a price on their own products? Senate Majority Leader Bill Frist went on record with a sillier statement, saying "those who abuse the free enterprise system to advantage themselves and their businesses at the expense of all Americans, they ought to be exposed. . . ."
But wait: In markets (a) we sell things for our advantage; and (b) others buy them at their expense.
So why carp? Both parties gain. Consumers wouldn't buy if they didn't gain something better for each transaction. That's free enterprise. Expose that.
It's what makes America great. Not the grandstanding of Senators.
After the hearing, Bill Frist expressed some frustration. He still didn't get it. The executives, he charged, did not "adequately answer the question of whether the sky-high gas prices we saw earlier this fall were entirely justified." Oh, great. He thinks the Senate's job is to determine "the just price" of goods — a hoary economic chimera that begets gross folly such as wage and price controls. Which lead to shortages, sometimes quite catastrophic. Which lead to more government regulation. More catastrophe. And more government. We've been through this before. With each government-induced crisis, government grows . . . out of control of the citizenry. Beyond reason.
Haven't we learned anything from (to quote the title of a good little book) "forty centuries of wage and price controls"? Apparently not. The Republican Majority leader went on to wonder about whether the companies' "profit margins are appropriate given the hardships energy consumers are facing and will continue to face this winter."
What does this mean?
Frist is suggesting that success in the marketplace should only be tolerated in good times, not in war, not after hurricanes. The very meaning of a "fair-weather friend"!
If the oil companies — or grocers or car dealers, or anyone else — isn't offering their product or service for a price low enough to suit Congress, then I suggest congressmen do something practical: step down and start a business that will offer a lower price. It's called freedom.
We need that freedom, which means markets unhampered in bad times as well as in good. Price controls and witch hunts don't have the consequences we want. (Unless we are power-hungry politicians.)
What don't we need? Fair-weather friends, bad-weather enemies like Republican congressional leaders Frist and Hastert.