Lost Legacy Monthly Prize for April 2006

Here is some good sense on panics about so-called ‘gouging’ (an American term for ‘profiteering’) in the oil and gas industry that counters the almost mindless ignorance of some senators and congressmen about how the market economy works, which if they had their way (and they might still) would undermine the very system that has produced their country’s prosperity.

Thomas Bray, a columnist, writes brilliantly about how the ‘Government remains biggest oil profiteer’, in Detroit News/Detroit Free Press, 30 April:

“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 needs to have warm fuzzy feelings toward 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."

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 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.”

Comment
Thomas Bray also uses a quotation from Wealth of Nations correctly. I think his article deserves to win the April Lost Legacy Monthly Prize for Smithian economics.

[Read it at: http://www.detnews.com/apps/pbcs.dll/article?AID=/20060430/OPINION03/604300323/1267]