Posted on 04/30/2006 11:19:14 AM PDT by kellynla
Republicans from George Bush on down caved last week to the latest round of hysteria by agreeing, among other ideas, to yet another investigation of gasoline prices. Never mind that every time the matter has been reviewed, the verdict has been the same: market forces account for virtually all of the supposed "gouging."
Not that one need have warm fuzzy feelings towards the oil companies and their extremely well paid executives. As the founder of economics, Adam Smith, observed in 1776, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."
But Smith went on to point out that the best antidote to such tendencies is competition, not regulation - which, he noted, usually winds up making government part of the conspiracy. And in any case evidence is strong that competition is not lacking, at least in that part of the oil business that hasn't been nationalized by foreign governments
(Excerpt) Read more at realclearpolitics.com ...
>>As the founder of economics, Adam Smith, observed in 1776, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."<<
With respect to Mr. Smith he had only seen seen British capitalism under a monarch. Modern American capitalism together with technology has a substantially different outlook.
"With daily global demand roughly 85 million barrels per day, the world's oil producers have less than 2 million barrels per day of spare production capacity, and most of that is for Saudi blends of oil that are less ideal for manufacturing transportation fuels.
Oil traders are nervous about geopolitical tensions ranging from violence in Nigeria to the West's nuclear standoff with Iran to the move toward greater nationalization of natural resources in energy-rich Venezuela.
The global economy is expanding, and that means the thirst for oil is only going to grow.
Speculative investors are piling into energy markets as a way to profit from soaring prices and geopolitical turmoil that could potentially be bad for equities prices."
http://www.chron.com/cs/CDA/printstory.mpl/business/energy/3817761
With respect to Mr. Smith he had only seen seen British capitalism under a monarch. Modern American capitalism together with technology has a substantially different outlook.
If you mean that "Modern American capitalism" has made Smiths comment even more apropos, I agree.
Lets face it, - without government/corporate controls, we would have true free markets.
No doubt this freedom would be too chaotic for most, but what price can be put on liberty?
You nailed it. Check the weekly open interest summary. Two weeks ago it was one million contracts.
CA, NY and many other states put sales taxes on the dollar amount. This is usually in addition to other taxes that are on a per gallon basis.
Talk about about a windfall.............
>> If you mean that "Modern American capitalism" has made Smiths comment even more apropos, I agree.
Lets face it, - without government/corporate controls, we would have true free markets.
No doubt this freedom would be too chaotic for most, but what price can be put on liberty?<<
Yes. But that's not the way I read Smith's comment - it sounded to me like he feared unrestrained capitalism because of collusion. That is less of a concern today as the barriers for entry are lower.
Lets face it, - without government/corporate controls, we would have true free markets.
No doubt this freedom would be too chaotic for most, but what price can be put on liberty?
Yes. But that's not the way I read Smith's comment - it sounded to me like he feared unrestrained capitalism because of collusion.
Government/business collusion [regulation] is a restraint on free market capitalism. -- Smith didn't fear unregulated markets, he wanted them.
That is less of a concern today as the barriers for entry are lower.
"Barriers for entry [to markets?] are lower"? -- Where?
>>"Barriers for entry [to markets?] are lower"? -- Where?<<
Maybe they aren't lower than in 1776. But they are lower inthe information age than in the industrial age. Of my 10 closest friends from high school at least 7 have started at least one business - I don't think any previous generation has had that kind of business formation.
Our western expansion after the civil war probably had more percentage of self-employed people than any era since.
Does anyone know how much tax money the gov. takes in compared to what the oil co. profit is? Would interesting
the numbers came out last week, if you do a little googling; you'll probably find it...since 1970 the oil companies profited in the tens of billions while the government profited in the hundreds of billions
http://www.taxfoundation.org/news/show/1139.html
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