When the going gets tough, politicians very quickly lose faith in markets.
This is especially true when the cost of basic necessities for the people who keep politicians in power, things such as food and energy, keep going up and up in price with no end in sight.
This is especially true when there is more than a notion that market participants themselves have something significant to do with that price spiral that goes beyond real-world fundamentals.
This is when the worst word in the politician's lexicon becomes speculation, usually used alongside the word rampant. This is especially true now. So witness the talk among government types in various parts of the world about restricting or ending trading in various commodities.
Witness the spectacle in the U.S. of energy company chief executives hauled up to Capitol Hill to take a public flogging about high gasoline prices at the pump and their sizable compensation packages. It's easy to be cynical about this often reprised drama. Now these elected officials can go to their home districts and say we're as angry as you are and didn't you see us hold those executives accountable.
Everyone loves markets when values are going up and inflation is staying down. Then there are plenty of political speeches about the wisdom of the marketplace to best allocate capital to where it's most productive. There's even then some faint praise for speculators for their ability to add liquidity to markets, greasing the wheels of buying and selling, and for their willingness to take on risk that producing entities would like to fob off.
No one in government loves a speculator now and that is a dangerous thing. As imperfect and as in need of smart regulation as markets always are, they also, to paraphrase the line about democracy, represent the least bad system yet devised. And political decisions made in these circumstances stick around to retard the ability of markets to do the things officials like to crow about in good times.
Even in oil, where major producers work together to alter the pure give and take of supply and demand, one can see basic benefits in leaving prices to find their own level. Without minimizing the pain skyrocketing energy costs mean for individual families and whole nations, it is also worth recognizing that people won't in large numbers give up comfortable lifestyles without a compelling economic kick in the pants.
Given that fossil fuels are a finite entity and the general rise in incomes for a larger percentage of the world will inexorably increase demand for those finite supplies, something at some point has to give. The rocketing up of energy prices, even if not justified by today's fundamentals, will accelerate that necessary shift. The impetus to find, invent and use alternative fuels, alternative means of transportation, even alternative societal structures, has been kicked into high gear.
The decision announced Thursday by Ford Motor Co. to cut back on pickup truck and sports utility vehicle production because of increased demand for smaller, more fuel-efficient vehicles is just one small example. There will be so much more, especially if the perception globally sticks that high energy prices are here to stay.
Markets will help push along the "creative destruction" that will cripple some industries, and launch new ones. There will be real pain, but also real change. Markets can make that happen. Governments can try by fiat to change people's behavior, but it never has the same hold as decisions made en masse by people confronting new market realities.
This is especially true when the cost of basic necessities for the people who keep politicians in power, things such as food and energy, keep going up and up in price with no end in sight.
This is especially true when there is more than a notion that market participants themselves have something significant to do with that price spiral that goes beyond real-world fundamentals.
This is when the worst word in the politician's lexicon becomes speculation, usually used alongside the word rampant. This is especially true now. So witness the talk among government types in various parts of the world about restricting or ending trading in various commodities.
Witness the spectacle in the U.S. of energy company chief executives hauled up to Capitol Hill to take a public flogging about high gasoline prices at the pump and their sizable compensation packages. It's easy to be cynical about this often reprised drama. Now these elected officials can go to their home districts and say we're as angry as you are and didn't you see us hold those executives accountable.
Everyone loves markets when values are going up and inflation is staying down. Then there are plenty of political speeches about the wisdom of the marketplace to best allocate capital to where it's most productive. There's even then some faint praise for speculators for their ability to add liquidity to markets, greasing the wheels of buying and selling, and for their willingness to take on risk that producing entities would like to fob off.
No one in government loves a speculator now and that is a dangerous thing. As imperfect and as in need of smart regulation as markets always are, they also, to paraphrase the line about democracy, represent the least bad system yet devised. And political decisions made in these circumstances stick around to retard the ability of markets to do the things officials like to crow about in good times.
Even in oil, where major producers work together to alter the pure give and take of supply and demand, one can see basic benefits in leaving prices to find their own level. Without minimizing the pain skyrocketing energy costs mean for individual families and whole nations, it is also worth recognizing that people won't in large numbers give up comfortable lifestyles without a compelling economic kick in the pants.
Given that fossil fuels are a finite entity and the general rise in incomes for a larger percentage of the world will inexorably increase demand for those finite supplies, something at some point has to give. The rocketing up of energy prices, even if not justified by today's fundamentals, will accelerate that necessary shift. The impetus to find, invent and use alternative fuels, alternative means of transportation, even alternative societal structures, has been kicked into high gear.
The decision announced Thursday by Ford Motor Co. to cut back on pickup truck and sports utility vehicle production because of increased demand for smaller, more fuel-efficient vehicles is just one small example. There will be so much more, especially if the perception globally sticks that high energy prices are here to stay.
Markets will help push along the "creative destruction" that will cripple some industries, and launch new ones. There will be real pain, but also real change. Markets can make that happen. Governments can try by fiat to change people's behavior, but it never has the same hold as decisions made en masse by people confronting new market realities.
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