May 31, 2007
Demagoguery Beats Data on Gas Prices
By Thomas Sowell

With gasoline prices rising, political rhetoric is rising even faster.
Liberals in Congress and in the media have launched a war of words,
whose net result may well be a demand for some form of price control.

May 31, 2007
Demagoguery Beats Data on Gas Prices
By Thomas Sowell

May 31, 2007
Demagoguery Beats Data on Gas Prices
By Thomas Sowell

With gasoline prices rising, political rhetoric is rising even faster.
Liberals in Congress and in the media have launched a war of words,
whose net result may well be a demand for some form of price control.

May 31, 2007
Demagoguery Beats Data on Gas Prices
By Thomas Sowell

With gasoline prices rising, political rhetoric is rising even faster.
Liberals in Congress and in the media have launched a war of words,
whose net result may well be a demand for some form of price control.

Price controls are not a new idea. There have been price controls in
countries around the world. There were price controls during ancient
times in Babylon and in the Roman Empire.

Whatever the hopes that may have inspired price controls, economists
have studied their actual consequences, which have been remarkably
similar from one place to another and from one time to another -- and
almost invariably bad.

That history has even included higher prices in places with price
controls. For example, New York and San Francisco have severe rent
control laws -- and some of the highest average rents in the country.

But those pushing for price controls on gasoline are not likely to go
into facts about the consequences of price controls, much less go into
the economics that explains why such bad consequences have repeatedly
followed price controls.

This issue, like so many others, is likely to be settled on the basis
of rhetoric. And, on that basis, the left has always had the
advantage.

As former House Majority Leader ***** Armey -- an economist by trade --
has put it: "Demagoguery beats data" in political battles.

The demagoguery in this case is that "price gouging" and "greed"
explain rising gasoline prices -- and that price controls will put a
stop to it.

It is an exercise in futility to try to refute words that are
meaningless. If a word has no concrete meaning, then there is nothing
that can be refuted. "Price gouging" is a classic example.

The phrase is used when prices are higher than most people are used
to. But there is nothing special or magic about what we happen to be
used to.

When the conditions that determined the old prices change, the new
prices are likely to be very different. That is not rocket science.

How have conditions changed in recent years? The biggest change is
that China and India -- with more than a billion people each -- have
had rapidly growing economies ever since they began relaxing
government controls and allowing markets to operate more freely.

When there are rising incomes in countries of this size, the demand
for more petroleum for both industry and consumers is huge. Increasing
the supply of oil to meet these escalating demands is not nearly as
easy.

In the United States, liberals have made it virtually impossible, by
banning drilling in all sorts of places and preventing any new
refinery from being built anywhere in the country in the last 30
years.

Prices are like messengers carrying the news of supply and demand.
Like other messengers carrying bad news, they face the danger that
some people think the answer is to kill the messenger, rather than
taking steps to change the news.

The strongest proponents of price controls are the strongest opponents
of producing more oil. They say the magic words "alternative energy
sources" and we are supposed to swoon -- and certainly not ask any
rude questions like "At what cost?"

Then there are the famous "obscene" profits of oil companies. Again,
there is no definition and no criterion by which you could tell
obscene profits from PG-13 profits or profits rated G.

There is not the slightest interest in how large the investments are
that produced those profits. Relative to the vast investments
involved, oil company profits do not begin to approach the rate of
return received by someone who bought a house in California ten years
ago and sells it today.

Oil company executives make big bucks incomes, almost as much as
liberal movie stars who are never criticized for "greed." And if Big
Oil CEOs worked for nothing, it is unlikely to be enough to bring the
price of a gallon of gas down by a nickel.

But facts are not nearly as exciting as rhetoric -- and the role of
most political rhetoric is to be a substitute for facts.


--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.

Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS

Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion

"Civilization is the interval between Ice Ages." -- Will Durant.

Joseph R. Darancette
daranc@NOSPAMcharter.net