Carter's Energy Fascism

Mises Daily: Tuesday, June 22, 2010 by = Murray N.=20 Rothbard

=20

"The plea for sacrifice is always the = harbinger of=20 the despot."

[Libertarian Review, 1977]

Several months into his new administration, President Carter was = worried. Oh,=20 his image with the public was doing just fine: the cardigan sweater, the = phone-ins, the fireside chats, had raised his personal popularity to=20 stratospheric heights. Image is all well and good; but where the hell = was his=20 power, which after all is the point of the whole business of = politics?

Things were going badly in Congress. Curiously enough, the usual = six-months=20 honeymoon with Congress had evaporated even before the inauguration. = Labor was=20 feisty; women and blacks were complaining; businessmen were suspicious; = and a=20 powerful new right wing, formed out of the menacing interface of = right-wing=20 social democrats and liberal conservatives, had managed to force the = withdrawal=20 of Ted Sorensen as head of the CIA and had pushed Paul Warnke into = backtracking=20 on his propeace position in order to gain the appointment of SALT talks=20 negotiator. Carter's SALT proposals had collapsed; and he was looking = foolish=20 for withdrawing his cherished if substantively meaningless proposal for = a $50=20 tax rebate for every American. How was he going to get power, and how = was he to=20 establish himself as a forceful, commanding president?

Carter discovered his proposed route to power: his energy scheme. As = Hedrick=20 Smith reported in the New York Times (April 21), President Carter = "had=20 chosen energy as the issue on which to test and build his Presidential=20 leadership."

Smith went on that it is generally held in Washington that "much of = Mr.=20 Carter's ultimate authority as President and much of the effectiveness = of his=20 Administration would ultimately ride on whether he succeeded in = enacting" his=20 energy plan. What the State, what every would-be tyrant wants, of = course, is=20 war. War, especially a war that the State is in no danger of losing, = provides=20 the perfect milieu for all power to redound to the State, for siphoning = wealth=20 from private into governmental hands, for making the bastards = obey. War,=20 as Randolph Bourne so perceptively pointed out a half-century ago, "is = the=20 health of the State."

For, generally, in their private lives, people wish only to go about = their=20 business in freedom, to be left alone with the money they have earned to = run=20 their lives as they see fit. Throughout history, governments and their = rulers=20 have sought to pull the wool over the eyes of their subjects, to make = them like,=20 or at least be resigned to, the oppression and exploitation they suffer = at the=20 hands of the State. And War has always been the open sesame to this end: = the=20 specter of the enemy at the gates makes the public yield to the eternal = plea of=20 their State masters for discipline and sacrifice. The plea = for=20 sacrifice is always the harbinger of the despot. Few people stop to = ponder this=20 fact: in every sacrifice, of life and freedom and property, there is = always a=20 set of people to whom the sacrifices are made. In the old days of = superstition, the beneficiaries of sacrifice were the gods, and their = priestly=20 interpreters on earth; in the new days of "reason," the beneficiaries = are the=20 State.

But war in this nuclear age is dangerous, and, as Vietnam and Angola = have=20 clearly shown, the United States can no longer blithely assume that God = has=20 always ordained it to emerge the victor. And so the Carter = administration looked=20 frankly for the "moral equivalent of war" =E2=80=94 the peacetime = substitute for war=20 hysteria and war despotism, for the zeal for sacrifice.

President Franklin D. Roosevelt, frankly searching for the peacetime=20 equivalent of a war society and war economy, found it in the Great = Depression =E2=80=94=20 and later found it still more starkly in World War II itself. Carter's = energy=20 address to the nation on April 18 disclosed his objective frankly and=20 revealingly:

Our decision about energy will test the character of the American = people=20 and the ability of the President and the Congress to govern this = nation. This=20 difficult effort will be the "moral equivalent of war" =E2=80=94 = except that we will=20 be uniting our efforts to build and not to destroy. (New York = Times,=20 April 19)

As the draftsman of his route to power, Jimmy Carter found the ideal=20 candidate as his energy czar =E2=80=94 the very man who supplied him = with the phrase=20 "the moral equivalent of war" =E2=80=94 former Secretary of Defense = James Schlesinger, a=20 Republican and liberal conservative beloved by the new rightist = coalition for=20 his pro-interventionist foreign policy. That this veteran symbol of the=20 military-intellectual complex was all too ready is seen in Schlesinger's = interview with a fawning Time magazine, in one of Carter's = numerous=20 public-relations devices to soften up and prepare the American people.=20 Schlesinger, not unhappily, declared that America faces "constraint,=20 curtailment." Schlesinger added, in the veteran tones of the tyrant, = "That is=20 uncomfortable. Everybody will have to make some kind of sacrifice."

Most revealingly, Time added,

But even more than that, Schlesinger views the energy crisis as a = blessing=20 in disguise, a beneficial testing of the nation's spirit and ability = to cope.=20 In his estimation, the crisis, if handled properly, will provide the=20 opportunity for the American people to recapture the old virtues of = sacrifice=20 and a sense of shared destiny. (Time, April 25) =

In short, we are to obey their orders, and we are to sacrifice = =E2=80=94 to=20 them. For, make no mistake: despite the collectivist rhetoric of = "we," we=20 can rest assured that Carter, Schlesinger, and the rest are not going to = do any=20 of the "sacrificing"; that's the job of the rest of us, while = they=20 applaud our willingness to suffer. Of course, the one problem that = Carter &=20 Company may have is that many of us don't like to make = sacrifices; and so=20 there must also come the warning that we must forget our petty, narrow,=20 individual "selfish" interests in the rush to the common good. And sure = enough,=20 there is the warning in Carter's April 18 energy address: "We [the = collective,=20 obfuscating 'we' again] must not be selfish or timid=E2=80=A6."

All this was neatly calculated to appeal to the nation's = intellectuals,=20 liberals and conservatives alike, especially the well-fed in the seats = of power,=20 who are ever quick to call upon the American people to make sacrifices. = Nowhere=20 was this masochism-for-the-other-guy better expressed than in the column = of=20 everybody's favorite liberal conservative, George F. Will. Moving = inexorably toward his Pulitzer Prize for thoughtful political = commentary, Will=20 entitled his energy piece without apparent shame =E2=80=94 "Hit Us Hard, = Please, Mr.=20 Carter" (Newsweek, April 18). Jimmy, of course, proved happy to = oblige.=20 In true conservative spirit, Will called upon the American people to be=20 "mature"" by curbing their "appetites" and suppressing two of their = "cherished"=20 values: "comfort and convenience."

There is nothing that makes a conservative swell more with moral=20 righteousness than calling upon everyone else to abandon their appetites = and=20 their comfort. The "us" that Will wants to be hit hard by the government = is, one=20 must repeat, a convenient collective word that obscures exactly = who is=20 doing the hitting (Carter, Schlesinger, Will et al.) and who are = being=20 hit (you, me, and the rest of the American public outside the seats of=20 power).

And so Carter found energy as the moral equivalent of war. But where = was the=20 enemy? One reason why the State loves wars is that the enemy is = tangible,=20 visible, and easy to hate: the goose-stepping German, the grinning = little Jap,=20 the atheistic commie. At least, in the alleged energy crisis of 1973, we = had the=20 much-reviled Arab to hate. But where was the enemy now? Still more = important,=20 how were Carter et al. going to prove that a crisis existed at = all?

It was a toughie, but the Carter administration proved equal to the = task. The=20 means was a carefully and massively orchestrated propaganda campaign, to = pull=20 another FDR, to use the smile-cardigan-phone-in image and Carter's = numerous=20 flunkies in the media to light a fire under the American people, to use = the=20 public as a bludgeon against a possibly reluctant Congress. As columnist = Joseph=20 Kraft admiringly writes of the process, it was a "hard-sell" campaign = using the=20 press, TV addresses and press conferences, Congressional briefings, and = "mass=20 leaks" to the media (New York Post, April 18). As Kraft points = out, this=20 hard-sell was made necessary by the fact that the old 1973 "energy = crisis," made=20 visible by a massive shortage of gasoline, disappeared as soon as the = price of=20 gas was allowed to rise to its market level, which meant that "most of = us=20 drifted back to business as usual." (And why not?) Carter therefore had = "to=20 dispel the comfortable notion that the crisis is a cooked-up con job." = He must,=20 in Kraft's words, "generate a sense of urgency."

Is There a "Shortage"?

Is there an "energy shortage," and are Carter's draconian = measures=20 necessary to alleviate it? Here, we must point to a vital distinction = that lies=20 at the heart of economic science: between "scarcity" and a "shortage." = Not only=20 are all forms of energy scarce, but all goods and = services,=20 without exception, are scarce as well. That is, people could always use = more of=20 them if available. We have always lived in a world of scarcity for all = goods,=20 and we always will, short of the Garden of Eden; economic development = over the=20 centuries has consisted in making goods relatively less scarce = than=20 heretofore. The test of whether or not any good or service is scarce is = very=20 simple: is its price greater than zero? If it is, then it is scarce. = Happily,=20 air is not scarce, and so its price on the market is zero (although this = is not=20 true of conditioned air.)

Everything else is scarce. How, then, are these universally scarce = supplies=20 to be allocated, to be "rationed"? In the free market, such "rationing" = is done,=20 smoothly and harmoniously, by the free price system. The price of any = good on=20 the market equates its available supply with the demand for it =E2=80=94 = with the amount=20 that consumers are willing to purchase at the market price. The free = market=20 smoothly adjusts to differences in relative scarcity. Suppose, for = example, that=20 a frost kills much of the orange crop, and the supply of oranges on the = market=20 is reduced. The free market price then rises to equate supply and = demand. There=20 is no need for anyone, least of all government, to order everyone to = "conserve"=20 their purchases of oranges because supply has been reduced.

"In short, we are to obey their = orders, and=20 we are to sacrifice =E2=80=94 to them."

Each individual does whatever "conserving," whatever belt-tightening = of=20 oranges, that he wishes in accordance with his own values and = preferences. If he=20 is an orange enthusiast, he will buy only a bit less or as many oranges = as=20 before; but if he is only marginally interested in oranges, he will buy = far=20 less, and perhaps shift to grapefruit. The opposite will happen when the = orange=20 crop increases, as prices fall to equate supply and demand, and = different=20 individuals will vary in the greater number of oranges that they will = buy. There=20 will be no need for anyone to issue orders commanding a loosening of the = belt.=20 The smooth working of market prices means something else. It means that, = regardless of how scarce a product might be, there will never be = any=20 "shortage" of the product, that is, there will never be a situation = where=20 buyers will not be able to find the product at the market price. = There=20 can never be a shortage of any product on the free market, of energy or = of=20 anything else.

But we all know that shortages of goods have arisen. How, = then, could=20 such a thing happen? Simply, shortages always appear if the free = market=20 is prevented from working, in particular, if the coercive agency of = government=20 forces prices below the free-market price. If government orders = the price=20 of anything below the free-market price, the quantity people wish to buy = will=20 exceed the quantity available, and the goods will become hard to find. = The=20 bigger the gap between controlled price and free-market price, the = bigger the=20 shortage. Thus, shortages are anywhere and everywhere creatures of = government;=20 government can achieve as much of a shortage of anything as it wishes. =

Suppose, for example, that the government in its wisdom should = suddenly=20 decree that the price of new Cadillacs cannot be more than $200 per car. = The=20 consequence is predictable; a rush would be on at the automobile = showrooms, and=20 very quickly a grave "Cadillac shortage" would develop, a shortage that = would be=20 permanent until the price control is removed. Why should the government = do such=20 a kooky thing? For many reasons. One announced reason might be the = egalitarian=20 one that "everyone deserves a new Cadillac."

When a shortage of a good is created by government price control, = several=20 things happen. First, the price system is prevented from performing its=20 rationing function; therefore, something must take its place. = Usually, it=20 will be the government, the creator of the shortage in the first place, = which=20 will step in with a great parade of righteousness to announce that free=20 enterprise has failed in this instance, and that it must step in = to=20 assure fair shares for all. In short, the government sets up compulsory=20 allocations, a compulsory divvying up of the short supply. Despotism = arrives, as=20 the belt-tightening is no longer left to the preferences of each = individual; all=20 must suffer alike in a meat-axe approach, in the name of "fairness." = Tyranny=20 over the public has replaced individual freedom and choice. And, to make = matters=20 still worse, a second thing happens: the supply produced on the market = dries up=20 (who will make new Cadillacs to sell for $200?) after which the = government will=20 try to increase supply by further compulsion.

All the hysterical projections by energy technocrats of imminent or = future=20 energy shortages, from the Club of Rome to the Carter administration, = overlook a=20 crucial point: the workings of the free price system. "Demands" and = "supplies"=20 are projected without taking the automatic conserving or rationing, as = well as=20 the production incentive, functions of free prices into account. Thus, = if the=20 market perceives a future shortage of, say, copper, copper prices will = rise,=20 thus inducing individual copper buyers to "conserve" their own copper = purchases=20 sufficient to equate supply and demand, while the higher copper prices = give=20 greater incentives for producers to go out and look for more copper = mines to=20 increase future supply. Predictions of the imminent disappearance of oil = by=20 technocrats have literally abounded since the very beginning of the oil=20 industry. Oil was supposed to disappear by 1900. But the automatic = conserving=20 and incentive workings of the price system have repeatedly given the lie = to=20 these absurd projections.

Carter's Engery Package

Carter's energy package, as announced on April 20 after all the = preliminary=20 hoopla and fanfare would fasten a full-fledged energy despotism upon the = country. It would substitute government for the market across the = board.

First, the Carter package will intensify the shortage of natural gas = already=20 created by the federal government. For over twenty years, the Federal = Power=20 Commission has been holding the price of natural gas below the = free-market=20 price, a gap that has increased with inflation, and that has succeeded = in=20 stifling the incentive to discover new sources of natural gas. In = particular,=20 since FPC regulations have applied to interstate rather than intrastate=20 shipments, natural gas has become increasingly short in states outside = of such=20 producing areas as Texas. Recently, market prices within Texas for = natural gas=20 have been about $2 per thousand cubic feet, while the FPC has held the = price=20 down to $1.42 for shipments outside of Texas. In its wisdom, the Carter = energy=20 package proposes a meaningless price rise of interstate gas to $1.75 = while it=20 imposes a new controlled price intrastate of $1.75. In short, maximum = price=20 controls on natural gas are to be intensified rather than relieved, and = the=20 natural gas shortage created by government will become worse.

"There can never be a shortage of any = product on=20 the free market, of energy or of anything else. =E2=80=A6 government can = achieve as much=20 of a shortage of anything as it wishes"

On gasoline, the Carter package decides arbitrarily to order a = reduction in=20 consumption of 10 percent. As one way of achieving this goal, federal = gasoline=20 taxes are to increase, even up to 50 cents a gallon. Here, the Carter = plan dimly=20 recognized the rationing function of higher prices, but there is a huge=20 difference between this plan and allowing a rise of free-market prices. = For=20 first, the tax and price rise is wholly arbitrary, whereas free-market = increases=20 would be geared to actual scarcities of present and future supply. And, = second,=20 there is no incentive for any increase in supply, since higher prices = will=20 result not in higher profits but in higher taxes. Not higher profits = because, as=20 Carter said in his April 20 energy speech, "we do not want to give = producers=20 windfall profits." Higher taxes, of course, mean more federal = bureaucracy, more=20 redistribution of income and wealth, more socialization of the American = economy,=20 more siphoning of income and capital from the private to the = governmental=20 sector.

But much of the control of energy consumption will be through = despotic=20 orders, through compulsory "rationing" by government, and not simply by = higher=20 prices driven up by taxes. "Gas-guzzling" cars are to be especially = taxed,=20 insulation will be subsidized or mandated, "efficiency" will be = required, etc.=20 New boilers in industry will be prevented from burning natural gas or = oil;=20 instead coal will have to be used; and existing coal-burning boilers = will be=20 prohibited from shifting from coal to oil or gas. Prohibited, that is, = without=20 special permits from the federal bureaucracy.

As for crude oil prices, price controls will continue too at the same = levels,=20 for, in the words of the White House energy fact sheet (New York = Times,=20 April 21), "The President is committed to the retention of domestic oil = price=20 controls for the foreseeable future to prevent windfall profits for oil=20 producers."

There is no point in continuing the grisly details. Suffice it to say = that=20 the Carter energy plan is a plan for energy despotism. It replaces the = smooth,=20 harmonious workings of the market by the meat-axe compulsions of a = federal=20 bureaucracy, it intensifies socialization of the economy, and it will = make the=20 energy "shortage" created by the government itself far worse rather than = better.=20 Milton Friedman has well characterized the Carter energy package as a=20 "monstrosity" that would "introduce the hands of the bureaucrats into = every=20 stage of pricing, production and consumption," and which would move = toward=20 "nationalizing the production and distribution of energy" (Human = Events,=20 April 23).

The Choice before Us

Jimmy Carter's plan for energy socialism must be resisted and = defeated.=20 Libertarians are particularly well equipped to lead in this task, for, = unlike=20 conservatives, we have no enthusiasm for the alleged virtues of order,=20 discipline, and sacrifice. And unlike both conservatives and liberals, = we have=20 no enthusiasm either for war or for the moral equivalent of war; we = don't want a=20 healthy State and a sick country. One of the best symbols of the Carter = brand of=20 economic militarism has been dug up by that indefatigable muckraker = Alexander=20 Cockburn (Village Voice, April 11). Cockburn focused on that = living=20 symbol of right-wing social democracy cum liberal conservatism, = of the=20 military-intellectual complex, Harvard political scientist Samuel P. = Huntington.=20 Huntington, the inventor of strategic hamlets in the Vietnam War, = advocate of=20 winning the war by herding the Vietnamese peasantry into the cities, and = fellow=20 member with Carter and Mondale of the Trilateral Commission who has = deplored the=20 "excess of democracy" in the Western world, is now working for the = National=20 Security Council in the Carter administration.

In a book some years ago, a book that seems uncannily prophetic of = Carter's=20 "moral equivalent of war" in energy, Huntington contrasted the town of = West=20 Point with neighboring civilian town of Highland Falls. Of Highland = Falls, the=20 professor wrote of its "tiresome monotony and the incredible variety and = discordancy of small-town commercialism =E2=80=A6 lacking common unity = or purpose=E2=80=A6."=20

In contrast, for Huntington, was the nearby military academy of West=20 Point:

On the military reservation =E2=80=A6 there is ordered serenity. = The parts do not=20 exist on their own, but accept their subordination to the whole. = Beauty and=20 utility are merged in gray stone =E2=80=A6 The post is suffused with = rhythm and=20 harmony which comes when the collective will supplants individual whim = =E2=80=A6=20 behavior of men is governed by a code =E2=80=A6 The unity of the = community incites no=20 man to be more than he is. In order is found peace; discipline, = fulfillment;=20 in community, security=E2=80=A6.

$25 $15

"Oil was supposed to disappear by 1900. But the = automatic=20 conserving and incentive workings of the price system have repeatedly = given the=20 lie to these absurd projections."

And Huntington concluded,

Is it possible to deny that the military values =E2=80=94 loyalty, = duty, restraint,=20 dedication =E2=80=94 are the ones America most needs today? =E2=80=A6 = America can learn more=20 from West Point than West Point from America=E2=80=A6. If the = civilians permit the=20 soldiers to adhere to the military standard, the nations themselves = may=20 eventually find redemption and security in making that standard their=20 own.

And are we not seeing this drive for order, discipline, and sacrifice = now=20 imposed on us through energy fascism, albeit by a former graduate of = Annapolis=20 rather than West Point?

The choice before America is clear: it is abundant energy at a market = price,=20 or government-contrived shortages; it is free markets versus = bureaucracy, and=20 even above all that, it is individual freedom and diversity as against=20 socialization through economic militarism.

Murray N. Rothbard (1926=E2=80=931995) was dean of the Austrian = School. He was an=20 economist, economic historian, and libertarian political philosopher. = See Murray=20 N. Rothbard's article = archives.

This article was originally published in the Libertarian = Review, Vol 6=20 no. 3 (July 1977) pp. 12=E2=80=9313, 48.

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Murray N. Rothbard (1926=E2=80=931995) was dean of the Austrian = School. He was an=20 economist, economic historian, and libertarian political philosopher. =

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