Markets or Edicts; E. W. Dykes

E.W.Oykes EDICTS? utter futility of such a course. If there is no real shortage of energy producing fuels, we are far along to ward being regulated into one. I am not as critical of our leaders as I am of the rest of us for creating the climate attractive to those who would apply political measures to problems much better solved by the market. We create such leadership by retreating from responsibility in a mad rush for security. In other words, we are continuing the course which indicates a lack of faith in free men. Free men made this coun try great, and they did so through their own decision making. Once again, we must make our own deci sions. So dramatic are the results of that process that I have come to see it as a law of the Cosmos. Individual freedom invariably is the condition in the society which shows real progress. Individual freedom may be de fined as the unassailable, God-given right for each individual to act as he wishes so long as he does not inter fere with the equal rights of others to act as they wish. Note that in this 733 734 THE FREEMAN December definition no one is given license to interfere with his neighbor under the guise of freedom.

A couple ofdecades or so ago, when the welfare state was still debat able, its proponents would say to an advocate of freedom, ((Yes, but you can't eat freedom." Today, the same idea would be stated, ((Yes, but you can't put freedom in the gas tank." Such an argument tends to be con vincing until one realizes, from a careful study of history, that it is only in those nations where freedom has had a large measure of accep tance that people have eaten well. Turning the same idea to gasoline a part of the energy problem-it can be shown that an exorbitant price per gallon of gasoline in Russia would be unlikely to stir up a revo lution because so few Russians own cars. And if you have paid attention to the pictures coming out of China, why are all those people on bicycles? Only through a change in atti tudes at the grass roots in America is it likely that any substantial change in policy will occur. Time may yet remain to reverse our present course before the next big crisis-whatever that may be comes to lop away another portion of our remaining freedom.

I have served recently in a lecture series on the so-called energy crisis. More than half of those who pre~ ceded me spoke disparagingly of regulation. One speaker said he believed our problem started with the 1954 decision by the Supreme Court which permitted the regulation of the price of natural gas delivered through interstate pipelines. Al though I think our problem started much earlier than that (I like the year 1913) I am willing to start with 1954. As soon as the regulated price of natural gas was below the price a free market would have set, two things-at least two things-began to happen. First, more and more gas was consumed than would have been the case with unregulated prices. Second, fewer and fewer people were interested in risking their money to find more gas. Whatever else one might say for price fixing, it is a sure formula for a shortage. I do not know to what extent· our tax laws, our depreciation allow ances, our control of prices, and the like led to imported oil, but I do know that at least we had oil. The Saudis and the other OPEC nations cannot use all their oil-they must trade it for things they don't have.

Speaking from a purely selfish standpoint, it makes more sense for us to use their oil than our own. For years we bought their low-priced oil for dollars which were depreciating in value in response to our domestic inflationary process. It is no sur prise that OPEC suppliers should react, albeit over-react perhaps, to our policies of inflation.

1980 MARKETSOR EDICTS? 735 We responded by continuing price controls on our own petroleum products, by reducing the depletion allowance, and by following a phased relaxation of price controls on petro leum with what is euphemistically called, ((a windfall profits tax." In addition, it is now reported that seven states are planning to enact taxes specifically on petroleum pro duction. These only can do harm. We have enacted laws making it more difficult to drill, have discouraged the building of refineries wherever and whenever they have been pro posed and, in general, have treated these prospective producers as if they were scabs and scoundrels. None of these seem like the things we should be doing to increase pro duction. The process which made this country great and rich and powerful is not a deep mystery. It started with a spiritual idea-that men should be free to exercise their own powers of decision so long as they did not interfere with the equal rights of others. Our Constitution and Bill of Rights were a guarantee of such lib erty. With such freedom to try, men set about producing and building as never before on the face of the earth.

Innovation and invention were ev erywhere apparent. In the market place, if a product became much higher in price because of short sup ply, then substitutes-usually bet ter methods and products-were found to take its place. And in those times government was largely. re stricted to keeping the peace. Then, we set about making· true the dire prophecy of Alexis de Toc queville that democracy would fail in America. In effect, he said that when politicians found ways to promise things to some voters at the expense of others, this great and noble experiment would fail. The politicians have found a way; we have been going the route of trans fer payments and our future does not look as rosy as it once did. But it does not have to end that way. So long as we can still express our opin ions, there is the opportunity to re store freedom and accept individual responsibility for our lives. For whatever reason,we do seem to face an energy. shortage. It has come about by edicts, unnatural processes which interfere with the free flow of energy-in this case, human energy. We must again em brace the time-tested process: follow the natural law of individual free dom, and these other things shall be added. So let us remove controls, cut taxes which inhibit enterprise, stop inflation, reduce regulation. When such restrictions are lifted or greatly eased, then prices will ration scarce resources, profits will direct invest ments and losses will eliminate the inefficient producers. The free mar ket must replace edicts. This is the formula for abundance. , Eric Brodin SWEDEN'S WELFARE STATE: A Paradise Lost THE SWEDISH WELFARE STATE was initiated in 1932 and has long been heralded the model of the middle way. Seldom has there been so unique an opportunity to judge whether a vast socio-economic ex periment' developed uninterrupt edly for five decades under optimum conditions, will work or not.