Posted on 06/07/2008 7:28:48 AM PDT by SeekAndFind
Read this and I think you will agree the oil industry has already been Nationalized in the US;
It was common in those days, as it is in ours, to identify the Communists as leftist and the Nazis as rightists, as if they stood on opposite ends of the ideological spectrum. But Mises knew differently. They both sported the same ideological pedigree of socialism. “The German and Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer’s goods for his consumption.”
The difference between the systems, wrote Mises, is that the German pattern “maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets.” But in fact the government directs production decisions, curbs entrepreneurship and the labor market, and determines wages and interest rates by central authority. “Market exchange,” says Mises, “is only a sham.”
Mises’s account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the “monster machine” of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.
“Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found,” explains Reimann. “The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error.”
Reimann quotes from a businessman’s letter: “You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.’ Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.
“While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer’ or ‘saboteur,’ followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.
“There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews’ (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen.”
As Mises says, “independent” only in a decorous sense. Under fascism, explains this businessman, the capitalist “must be servile to the representatives of the state” and “must not insist on rights, and must not behave as if his private property rights were still sacred.” It’s the businessman, characteristically independent, who is “most likely to get into trouble with the Gestapo for having grumbled incautiously.”
“Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party,” recounts Reimann. “The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz’s bakery and Herr Schmidt’s butcher shop. He would regard these men as ‘enemies of the state’ if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble.”
“Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations,” Reimann explains. “The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling.”
Says another businessman: “Each business move has become very complicated and is full of legal traps which the average businessman cannot determine because there are so many new decrees. All of us in business are constantly in fear of being penalized for the violation of some decree or law.”
Business owners, explains another entrepreneur, cannot exist without a “collaborator,” i.e., a “lawyer” with good contacts in the Nazi bureaucracy, one who “knows exactly how far you can circumvent the law.” Nazi officials, explains Reimann, “obtain money for themselves by merely taking it from capitalists who have funds available with which to purchase influence and protection,” paying for their protection “as did the helpless peasants of feudal days.”
“It has gotten to the point where I cannot talk even in my own factory,” laments a factory owner. “Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office.”
Reports another factory owner: “The greater part of the week I don’t see my factory at all. All this time I spend in visiting dozens of government commissions and offices in order to get raw materials I need. Then there are various tax problems to settle and I must have continual conferences and negotiations with the Price Commission. It sometimes seems as if I do nothing but that, and everywhere I go there are more leaders, party secretaries, and commissars to see.”
In this totalitarian paradigm, a businessman, declares a Nazi decree, “practices his functions primarily as a representative of the State, only secondarily for his own sake.” Complain, warns a Nazi directive, and “we shall take away the freedom still left you.”
In 1933, six years before Reimann’s book, Victor Klemperer, a Jewish academic in Dresden, made the following entry in his diary on February 21: “It is a disgrace that gets worse with every day that passes. And there’s not a sound from anyone. Everyone’s keeping his head down.”
It is impossible to escape the parallels between Guenter Reimann’s account of doing business under the Nazis and the “compassionate,” “responsible,” and regulated “capitalism” of today’s U.S. economy today. At least the German government was frank enough to give the right name to its system of economic control.
Here is the link for this article:
LOL This was published before the $10 one day jump in oil and most likely written before the cumulative $16 jump of the last two days
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There are some major differences between now and the 1970's/1980's:
1. The USA (the world's largest oil consumer) produced over 85% of its own oil until 1986. We now only produce 33% of our own oil.
2. Two "new" major oil fields were opened up in the 1970'/1980's...the North Sea and the North Slope of Alaska. They helped to create an oil glut in the late 1980's. Both of those oil fields are now in decline.
3. China and India were not industrializing rapidly in the 1970's/1980's...they are now. In 1992 China produced more oil than they consumed. Now they are the world's #2 oil consumer and the world's #3 oil importer. There is no sign of their demand growth slowing.
4. OPEC got caught with excess capacity in the 1980's and the cartel weakened because they competed against each other. I'm sure they've learned from that experience and aren't going to let that happen again.
5. The global warming movement is telling most of the world that they must reduce their consumption of oil because it is a fossil fuel. So, oil producing entities are very cautious about bringing on additional drilling capacity. Even if the world continues to use more oil in the post-Kyoto environment the oil producers will simply let the price go up.
I envision a somewhat more circular motion, accompanied by the sound of rushing water.
Just nonsense. The writer is entirely correct about the economics of it.
Oil is in a bubble, those always go much farther than rational economists expect, but they also always end, just as they expect.
In the present case, speculation over war with Iran is the real non-economic driver that will determine scale and timing. But that the bubble will pop, is a foregone conclusion.
And this from the Bear Sterns who need rescued by the Feds. I wouldn't put a lot of stock into what they say but for some reason these *&%(&%$()& jerks seem to know just how to jack up the price of oil futures.
What do you think of Arabs Iranians Russians and other investing in our oil futures markets to jack up the price? That this is some of the speculation you hear about that if the speculative bubble gets pricked then oil goes for $60/barrel
There's a lot of wisdom in that observation.
Ironically, a (D) administration facing imminent loss of political power when the catastrophic economic or geopolitical consequences of Liberal economic policies come home to roost is most likely to "take what we want" . After all, the Media will be on their side and they could justify it by merely claiming that it's "for or the environment.
Morgan Stanley analyst sees oil at $150/barrel by July 4th:
http://money.cnn.com/news/newsfeeds/articles/djf500/200806061147DOWJONESDJONLINE000700_FORTUNE5.htm
ditto.
Well said.
The more capital is thrown at energy as a whole, the more energy supply there is. It really doesn't matter a tuppenny darn whether it is coal or oil or oil from coal or nukes or hydro or alcohols...
It is all fungible at one price or another. High enough prices will draw capital from the rest of the economy and eliminate the bottleneck.
This has been delayed somewhat in the case of oil by the unwillingness of large existing producers (largely state owned, but also western majors) to invest to raise output, when instead they can just ride a scarity train. But that only operates until prices cut demand on the one hand, and make substitutes profitable on the other.
There are no absolute scarities. There is only general scarcity. Economics is all about shifting efficiently to see to that.
When all of the cars are parked, we won't care what the price of crude oil is because our economy, and way of life, will be in shambles. The reality is that if oil prices continue to rise, there will eventually be massive economic and social consequences.
The price wont tank. You know it. Getting it down to reality is the main concern.
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