Again, nonsense. Sitting back and profiting from the dwindling supply of fossil fuel is itself a risky strategy – as soon as one of the alternatives gets cheaper (either through inherent improvement in the alternatives or through increases in fossil fuel prices), anybody who relies on that strategy is boned.
Tell that to a car dealer who is sitting on a stock of SUVs and offering everything but a blowjob to a customer who will actually buy one. 
The other baffling part is the assumption that the US musts solve this energy problem. There are lots of countries in the world with very active governments. Governments that are much more involved in their economies than the US’s is. What great solutions have they come up with other than taxing the shit out of petroleum? With all the money the EU countries rake in from petroleum taxes, you’d think they could’ve figured how to make oil out of thin air by now.
Governments certainly have a role in infrastructure development. State and local governments certainly have a role in developing mass transit alternatives. But the market is going to be the best place to develop new technologies.
Meaningful investment in public transport, for one 
And not just within urban areas, but between them. They’ve got bullet trains; we don’t. (No, the Acela doesn’t count.) And they’ve got walkable cities and towns, so that when you get to somewhere on the bus or train, you don’t need a car to get around; your feet will do fine. Or you can rent a bike.
Well, close. 
Given the number of countries subsidizing gas prices (Venezuela - twelve cents a gallon!) we’re hardly the only culprit. However, given the impact of fears of a downturn in our economy on gas prices, we can do a lot.
OTOH, despite the precipitous drop in oil prices in 1986, gasoline consumption didn’t surpass Carter Administration levels until sometime in the Clinton era. Good job, Jimmy!
In Canada, how do you guys keep corporate interests from creating and expanding programs like this?
And your example is:
If the U.S. has a shortage of refinery capacity, it’s because oil companies have been closing and scrapping refineries.
Cite, please? My understanding was that it’s anything but to-each-his-own; that the only alternative formulation is that required by California and those states that piggyback on CA’s requirements.
Of course, Enron had to actually do some bona fide swindling to take advantage of that. The previous governor may have believed that the energy companies couldn’t get away with anything like that.
So you’re saying we need more government.
By the same token, the Federal and state highway programs have lost hundreds of billions - maybe trillions by now.
People seem to be getting a little confused here. “Invisible Hand” doesn’t mean “everything will always be super”. It means that in a free market economy, the combined decision making of individuals looking out for their own enlightened self interest will ultimately produce a benefit for society in the long term.
If higher gas prices leads to more fuel efficent automobiles or cars that do not run on gasoline, greater use of renewable energy, more public transportation and less of a dependence on foreign oil, then yes, the invisible hand is working.
Right, but believers in the free market shouldn’t be opposed to government help for those who get hurt in the short term, and they shouldn’t be surprised if things go to hell in the short term.
And come to think of it, doesn’t the invisible hand have something in common with social Darwinism?
Please do not slight the catastrophic efforts of our corrupt old women in Washington.
Thank you.
Sailboat
But, the market does look ahead. That’s what capital investment and futures markets are all about. Buying things now to plan for future occurrences.
Have you been following the recent debate over oil futures markets? The politicians want to limit the market’s ability to look ahead. They’re effectlively trading worse volatility later for slightly lower prices now. If the lesson from this oil shock is that the government should be able to look ahead and anticipate problems, they don’t seem to have learned it. That they didn’t learn it in the 70s, either.
Or maybe the lesson is that politicians are really bad at economics. Or that they’re good at pandering to people who are really bad at economics.
Did I miss the news story on the 50 lost legislators? Or are those just the do-nothing ones?
If by planning ahead you mean forecasting for the next year or two, then I agree. If it takes a year to get a piece of capital equipment, then you order a year before you need it. I work on multiyear projects, and the IC industry has multiyear timelines. But all this comes from the lag between the time you start something and finish it. But no one buys a piece of capital equipment today for a possible need in the future. You don’t let stuff sit idle.
Plus, the market beats up companies who try to really look into the future. My companies stock and CEO got badly punished by Wall Street for not laying off enough people in order to work on the products that were going to come out in a few years. When they came out, and were successes, all of a sudden he was smart.
The government certainly did screw up, no argument there. The problem with oil futures is that, first, too much money came into the market because everything else tanked, and second, people are betting on the price of the contracts in two weeks, not two years. But I agree that limiting the market is not a good idea. If we solved the underlying problems, the market would take care of itself. Limiting volatility is like treating a fever with ice, not antibiotics.
The gas tax holiday idea is good evidence of this. I don’t care if someone is a Communist or an extreme libertarian - anyone with the slightest understanding of economics who isn’t pandering should think it is a bad idea.
I support the left,
But I’m leaning to the right,
I support the left,
But I’m leaning to the right,
And I’m just not there,
When it’s coming to a fight.
*
Cream, Politician.
Actually no. Social Darwinism is a sort of economic survival of the fittest. Essentially that those who are unable to provide for themselves should starve.
The Invisible Hand is more positive. Through enlightened self interest, the sum of individual decisions will steer the economy into providing what is most needed and desired by the people far more efficiently than any central authority can.
Using high gas prices as an example:
Social Darwinism says those who can’t afford their homes because of higher energy costs should lose them to those who can, benefitting the rich and financially strong.
The Invisible Hand will encourage development in technologies and urban planning that use less fossil fuels, ultimately benefiting all of society.
Except that the result of social Darwinism is a stronger society. In the pure society of only an invisible hand, people suffer also. I don’t know if Smith explicitly talked about people losing (neither the concepts of survival of the fitness or even Lamarckism had been invented) but it is part of it.
It is not an exact match, of course, but there does seem to be some commonality.
Stonger maybe, in a sort of “survival of the fitest” Nazi eugenics program sense.
I love the invisible hand argument ,especially when it is argued wrongly. The invisible hand is to the benefit of consumers. a truly competitive marketplace would force corporations to compete. they would have to innovate,and cut prices and profits to stay alive. That would benefit the society as a whole. But it would not be to the benefit of the corporations. They would have to be lean and work too hard. So naturally they sought ways to change things. Oligarchies and monopolies were the answer. They could set prices and get rid ob that silly competitive thing that made them work hard.
So the government got into trust busting and monopoly breakups.,forcing the invisible hand to work. Of course corporations fought this. Claiming deregulation is a benefit to all instead of just a boon to business was a start. People were dumb enough to buy it, bringing on an era of insider trading,price gouging,union busting,graft ,political lobbying ,pollution,etc. None of these activities benefit the society. They enrichen and empower the few. That is where we are now. When Sen. Gramm pushed through energy dereg the energy corps looted California and other states giving us Enron type debacles. His wife was a government energy board employee who pushed dereg. She quit after the bill was passed to go on the board of Enron. Coincidence of course.
The function of the government is to fight the natural tendency of corps to swallow up competitors and control markets. It is in the interest of society to have vigilant pols doing their jobs. Otherwise we wind up with corps (oil Companies) that control industries and loot societies .
Eugenics is to real social Darwinism what picking the winner of marketplace competition is to capitalism. The proponents of eugenics always are sure that they are the very top of the evolutionary heap.
The problem with social Darwinism, even without eugenics, is the same as for pure capitalism. That supposedly the result will be optimal is no excuse for letting people be crushed under the wheels of progress.
One of the problems is that not all industries lend themselves to perfect competition. Especially capital intensive industries like steelmaking or automobile and aircraft manufacturers. Economies of scale tend to naturally force those industries to consolidate into fewer and fewer companies until there are only a handfull of large players.
As I’ve said in the past, just because pure capitalism is the most efficient at maximizing production does not mean that everyone’s wants and needs will be met. But I don’t think anyone ever argued that pure capitalism was desireable.
The problem with The Invisible Hand is that it doesn’t deal with the long term, technically esoteric problems very well. Global warming is a serious problem that will end up probably killing millions, maybe billions, and it may well be too late to stop it. Neither the consumers nor the manufacturers have the incentive from a short term economic view point to stop it, because there is no question that developing the new technologies and infrastructure to deal with the ultimate elimination of fossil fuels as energy sources will drive up both the manufacture cost and purchase price of goods. Sea levels will change, wide spread climate will change, and it’s questionable whether civilization as we know it will survive the next millenium. The market alone will not solve this, will probably not even slow it. An education campaign alone might. More likely, an education campaign in combination with heavy government regulation and subsidation of research will slow, and even begin to reverse the trend, as it did with other air and water polution since the 60s. But the damage has been done to the point where I believe pretty severe catastrophe is inevitable in decades or at least a few centuries, as the ice caps on Greenland and portions of Antarctica melt away entirely. The planet will survive just fine, as will large chunks of humanity, but many, many people will die, or be displaced by this and the climatic upheavals we will experience as storms and droughts increase. These are things beyond the power of the markets to solve, because the tragedy of the Commons almost always will come into play when it comes to stuff like this. My little contribution to the problem won’t make any difference, so what the hell? Only social pressure and the law can deal with situations like this, IMHO. And even then, it’s going to be an uphill battle. After all, we still see a lot of litter on the highways.