From: Lee Corbin (lcorbin@tsoft.com)
Date: Mon Feb 03 2003 - 03:28:28 MST
Matt writes
> I was thinking of a windfall as being something good that
> comes through chance... I don't have a problem with such
> profits. However I do tend to think that the price of oil
> reflects a very short sighted view. It seems likely that my
> children's children will live in a time of very expensive oil
> and it also seems somewhat likely that their lives will be of
> lower quality because of that. I see this as a threat to long
> term progress.
Not so great a faith in the future, eh? ;-) Many of us
are quite sanguine about the prospect of eventually running
out of oil. I've even gathered that the Greens don't harp
on it much anymore, actually conceding that "we'll never
run out of oil". Presumably, they were talking about its
gradual price increase when it does start to threaten to
become more scarce.
I daresay that most people on this list suppose that other
sources of energy will become available long before the
demise of oil. And I'm sure that I'm not alone in noting
the tremendous material progress of the past centuries, and
it's almost certain likelihood of accelerating at an even
greater rate. Have you read any of the very Extropian
literature around, like Damien Broderick's "The Spike" or
"The Last Mortal Generation" (my favorite)?
Few hear will join you in feeling sorry for your children's
children; rather, extreme envy is the norm for most of us.
> - what if not only did a small group of people control
> all the oil reserves but all the land, mineral and water
> resources of the world. That group of people then
> effectively enslaves the remaining people. I think
> that from the perspective of taking mankind to the
> next level, however you envision that process, the
> aforementioned situation is harmful.
Yes. But to me it's only harmful because they will
perhaps not choose to freely trade to their best
advantage. It really doesn't matter how rich they
get. What do they do with the money? It's the same
paradox that afflicts Japanese, Chinese, and Europeans
that horde American dollars: the best they can do with
it, pretty near, is invest it in the U.S. or some other
quite profitable Western country.
> However the person who controls a resource (perhaps keeping
> it out of the market and preventing someone else from making
> economic use of it) contributes nothing.
That would be so, I think, if it were really possible.
Right now, I'm too tired to be able to imagine such a
thing.
> The land speculator, the oil magnate, generally these folks
> are not doing anything for the economy
Oh, but they are. You may be falling into what is called
the "Physical Fallacy". I will post something on that
right now.
> > > iv. Some consumption shifts away from oil to alternatives
> > > v. Demand for oil decreases slightly
> > > vi. To maintain revenues oil producers drop prices a little (*)
> >
> > Yes, say that the tax increases were infinitesimal, and so your
> > price drop here is infinitesimal (by looking at the derivatives,
> > we might see the cause/effect relationship more easily). But
> > did you say what happened to the consuming economy? Does (vi)
> > result in as much oil as used previously or not? I guess that
> > either way, your point is that the oil producing countries get
> > less money.
>
> There would no doubt be unintended consequences. Are those unintended
> consequences greater than the unintended consequences of a tax on income?
It's beyond me. But I think that someone opined on this not
long ago in this very thread. Perhaps he or she will answer.
> Why must the consumption of oil return to its previous level for economic
> harm to be prevented? What if I replace my aged boiler with a more efficient
> model since oil "feels" more expensive (it really isn't under my scenario)?
I think of an economy as a natural ecosystem. I realize
that there is a little bit of Rousseau here, but bear with
me. It's almost as though an ecosystem maximizes complexity
with respect to the available energy in some sense. (Kauffman
in his books, "Investigations" is a recent one, is always going
on about this.) Well, a freely working Western type economy is
very much the same way: it naturally maximizes total wealth,
save for the (a) disinclination of its members to engage in
trade and honest work (b) meddling of governments with taxes
and regulations. Now, to be sure, both (a) and (b) are highly
culture dependent, so much so that there has yet to be a
culture that is capable of working with zero such interference
from the government. Western societies are advanced primarily
for the reason that they *can* do quite nicely with only a
minimum amount of taxation and government regulation. So
*any* taxation and regulation beyond this minimum is quite
harmful, taking us from one exponential growth curve to a
lower one.
> I'm using less oil and now I have more money for the movies
> and a US boiler making company just made a healthy sale to me.
Yes, but it all comes down to *WHO* decides. Who decides
that it's time for you to replace your old boiler? Optimally,
the answer should be that you do, when and only when you really
need to. Pushing you into a replacement that is *too early*
only destroys wealth. It cannot create wealth.
For example, all these stupid tax incentives to get people or
businesses to do something, only destroy wealth. They provide
artificial incentives to get people to make intrinsically
uneconomic decisions.
> I don't remember Le Chatelier's principle, I'll have to go look it up! I
> think taxing income is far more harmful to the economy than taxing oil
> imports.
That principle in chemistry suggests that when a system is
in equilibrium, it kind of resists any change that you try
to make to it. It's just a crazy intuition I have, that
somehow the economy is like that. But it is true, as you
noted, that we always have to watch out for the unintended
side-effects.
> Thanks Lee, and to the other contributors to this thread,
Oh, that goes without saying! Thank you!
> I apologize for not addressing all your comments directly
> but I must revert to lurking for a few days.
Not at all. We probably ought not to see our contributions
here being any kind of obligation ;-) but rather just as
occasional creative exchanges when time and energy permit.
> (*) I have been developing a wood fired steam engine co-generation system in
> my spare time over the past too-many-to-count years and I suppose I must come
> clean and admit that I might have a selfish reason to see oil imports taxed!
Great! Your inventiveness may make all of us a tad bit richer.
Even if the odds are a hundred to one, the presence of hundreds
of people like you really does increase world wealth.
> But hey! It would mean more jobs if I could turn the blinking thing into a
> product. :) With heating oil at $1.50 a gallon its only another .50 to go to
> economic viability. Time to get back to work on the prototype...
Yes, and don't forget it's your duty to get rich!
(By judicious economic exchanges with everyone
else, of course.) Good luck!
Lee
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