Tuesday, April 23, 2024
Miles from the Mainstream
D. R. ZUKERMAN, proprietor
Madison's First Law of Economics

AUGUST 28, 2005 --

Last week, LPR heard a radio news report blaming the latest rise in crude oil prices on anxiety about a hurricane. How often are crude oil prices blamed on anxieties and worries about one event or another -- that has yet to occur.

(In addition, of course, blaming occasional refinery fires for price spikes.)

This writer doesn't think he has heard a report declaring, of the latest oil price hike: "there they go again, out to squeeze the driving public."

Now, if anxiety and worry are truly the reason oil prices are now higher than oil rigs, let's prescribe anti-anxiety medication for all oil traders.

From here, oil prices seems a current example of the observation attributed in Federalist 57 to James Madison that there are people seeking the "ambitious sacrifice of the many to the aggrandizement of the few."

Perhaps it is time Mr. Madison was awarded the Nobel Prize in Economics for his insightful observation which points to a law of economics: When a relatively few individuals use their position in the economic cycle to increase, by a significant percentage, their prices - with no commensurate monetary gain to the
people -- general purchasing power declines, along with the economy, thus harming the general welfare and the national interest the Constitution drafted by Madison sought to protect.

LPR calls this Madison's First Law of Economics.

Thus far, the Washington community, which, alas, is a bit too far removed from the people these days, has shown no interest in helping us resist the aggrandizement of the oil traders.

" Aggrandizement" not "anxiety" is, for LPR, the word that better describes the
motivation of the traders.

An observation by William F. Weld, in his novel, Stillwater, about the flooding of five towns in western Massachusetts to create a reservoir, also seems to describe the oil-trading mindset: "America is grand and full, but people can be hard." (Simon & Schuster, p. 17.)

When the hardness of aggrandizers injures economic stability, that hardness has risen to a matter of the national interest. Thus far, the Washington community, which seems to have more in common with each other than with the rest of us, apparently sees no national interest issue in oil prices.

NYC Mobil sign.

This, of course, violates Madison's First Law of Politics: In a constitutional republic leaders should be close to the people -- or
government becomes tyrannical. (See Federalist 57.)

(Some on the left have, in recent years, accused people of whining and being anti-government for, apparently, electing Republicans to office. Would the left, then, make the same accusations toward the leaders of the American Revolution?)

LPR noted last week that Mr. Weld is thinking about running for governor of New York. LPR would like to know how he would deal with the hardness of oil traders and the inability of the Bush Administration to see a threat, here, to our economic security -- and general prosperity.

Frankly, we really don't need Alan Greenspan to tell us things are not as great as some would claim. Or is the stagnant Dow Jones of the past four years of no significance to plain citizens?

LPR would like to see the matter of the impact of oil on the common good bloggered a lot. There was at least one report that a motorist said he was not going to travel on Labor Day because of oil prices. If we have to deal with the hard oil people ourselves, there just might be a plan in that non-travel statement.