03 August 2008

Obama Tests the Waters for Nationalizing the Oil Industry

On the way home from work Friday, I heard something on a radio news summary that I thought I must have misunderstood.  When I got home (Note 1), I looked for it online at The New York Times... and there it was, buried innocuously in the fourth paragraph of an article called “Obama and McCain Confront Troubled Economy”:

Addressing a crowd gathered at a high school gymnasium, Mr. Obama unveiled what he called his emergency economic plan to address the nation’s economic woes, including a $500 energy rebate for individual workers and $1,000 for families... and a surtax on oil profits to pay for $50 billion in new spending, half of which would go to state governments that are also hurting and the rest to the depleted highway trust fund. (Note 2.)

The essence of Barack Obama’s message is: “I declare a state of economic emergency.  I shall seize the profits from greedy oil companies and return this money to my people, who need it.” 

What sort of a man issues such proclamations?  A dictator.

Who uttered it?  A man who wants to be the President of the United States.

Why did this catch my attention?  After all, there is nothing new about the redistribution of wealth in this country.  Legislators for the last century or so have spent most of their time doing just that.  The population is largely inured to it, to the point where many or most Americans hold the vague notion that it is the governments’ very raison d’etre to provide stuff for the citizens.  The “public debate,” such as it is, has descended to the level of arguing about who should get the loot, not whether or not it is proper to seize it in the first place. 

But in this instance, Barack Obama’s declaration is a remarkably distilled application of his worldview.  It is unusually clear.  The mainstream American politician will generally take more care to conceal the true meaning of his words.  He may not even know that he does so - he may do it subconsciously, instinctively sensing the limits of what he can get away with.  Perhaps he even couches his words out of a sense of decency, and to evade in his own mind the horrors, consequences, and betrayals of his policy.  Barack Obama evidently has no such decency and knows he can get away with anything.

I wonder: what policy would not be acceptable to the masses if it were uttered by this charismatic, undenouncable Messiah?  How does Mr. Obama’s “emergency economic plan” differ from say, Hugo Chavez’s nationalization of Venezuela’s oil industry?  It differs only in degree, not in kind: he plans to use government force to seize the assets of private citizens in one particular industry, for the purpose of advancing his socialist agenda (an agenda opposed by almost nobody today).  If Mr. Obama becomes our next president, what is to stop him from wielding the entire executive branch to implement a de facto, if not de jure, nationalization of the oil industry?  Then, after oil, how about steel?  Pharmaceutical drugs?  Automobiles?  Insurance?  Corn?  Wheat?

Notice the precision of Mr. Obama’s policy.  It specifically targets not merely oil companies but the profits of oil companies, which he characterizes (as any Marxist worth his intrinsically-valued salt would) as “excess profits” and “windfall profits.”  Incidentally, these outrageous profits that Mr. Obama laments happened to be, on average, only 8% return on sales in 2007 (Note 4), but that is not the point.  Even if the oil companies had made an 800% return on sales, there is no justification for seizing their profits.  There is no economic justification, for in a free market higher profits invite competition and investment, and above all their is no moral justification, because these profits are earned.

We should not conclude, however, that Barack Obama is demonstrating a stunning ignorance of economics with this ham-handed, closed-fisted emergency economic plan.  It is true that the plan itself is appalling and even a partial implementation would be detrimental to the economy and a disaster for America.  But to conclude that Mr. Obama must be simply stupid is to take the man at face value, to pre-suppose that it is a goal of his to actually improve the economy.  If he wishes to bring everyone to the same level - the same low level - then he is quite on the right track.  If he cares not a whit about the economy but simply wants to become President of the United States, then his words reflect wisdom, not ignorance.  Sure, his plan is a naked power grab, but the man knows his audience.

No, I do not think Barack Obama is ignorant at all.  I cannot confirm the same for the idolators who swallow the words he bestows upon them like so many loaves and fishes.  


1.  Here’s an interesting personal anecdote.  When I arrived home after hearing this radio report, I saw that my wife was on the telephone with one of our friends, one who happens to be reading Atlas Shrugged for the first time.  She was telling my wife, “Did you hear this thing about Obama that just came out?  I had to call you right away when I heard it.  It’s right out of Atlas Shrugged!”

2.  The New York Times, Obama and McCain Confront Troubled Economy,” http://www.nytimes.com/2008/08/01/us/politics/01cnd-campaign.html?hp, 1 Aug 2008. 

3.  Barack Obama’s Emergency Economic Plan, http://www.scribd.com/doc/4385783/Barack-Obamas-Emergency-Economic-Plan.

4.  Congressional Research Service, CRS Report for Congress, Oil Industry Profit Review 2007, 8 Apr 2008, Table 1, p. 2.


Burgess Laughlin said...

Thank you for bringing this to your readers' attention--and for making explicit the various possible implications.

I doubt that Obama or McCain will nationalize any industry. Most politicians and their supporters seem to have learned that the parentalist approach to statism--in which the stern regulating father and the nurturing welfare-giving mother "guide" their children's lives without directly enslaving them--works well.

If the state regulates an industry and the industry fails, then that is the fault of the industry; if the industry succeeds, thereby benefiting the tax coffers of government, then the state is praiseworthy.

By contrast, socialist statism, in which the state has full, official ownership is too risky. It is better, the parentalists seem to hold, to control than to own.

The parentalists in the Republican Party are lax in economics but very stern in personal morality; The parentalists in the Democratic Party are the reverse.

Stephen Bourque said...

I don't think any President of the United States can nationalize an industry in the same way that South American dictators can. Not yet, anyway.

However, I do think - and Barack Obama does too, evidently - that the President can use taxation (which would require the complicity of Congress) and the regulatory apparatus (which does not require Congress) to essentially confiscate as much as he wants from any industry that he can paint as the enemy of the "little guy."

And who will speak out against him? The New York Times?

Myrhaf said...

Imagine the ideas politicians would be coming up with if we were in an actual crisis.

Joe the Realist said...

You are in complete denial about what President Obama intends to do in his first term. In case you haven't noticed, our still President Bush just nationalized the entire financial industry, much much bigger and more important than the little ol' oil industry, and far scarier in the sense of how easy it was to complete the job and enrich the bankers. Nothing Obama could do would come close to how Bush and his cronies have destroyed our financial system and our standing in the world. It's sickening to know that our great country that I love so much has become a has-been, second-rate power hated by the entirety of the world. Please, President Obama, do something to reverse the fascist trends of your predecessor!

Stephen Bourque said...

I am not in denial; I simply can't fit every one of my views in every article I write. I wrote this post back in August in response to a particular comment Barack Obama made.

The Republicans in general, and President Bush in particular, have been utter disasters. I did not vote for either candidate in the election last week (I wrote in "none of the above"), and I am glad that the Republicans have been defeated. Unfortunately, simply noting how bad the Republicans are does not make Barack Obama any better.

I do think we are better off with Mr. Obama in office than any Republican, but it is certainly not because I expect him to "reverse the fascist trend." I expect him to continue that trend. However, with a Democrat in office, the disaster will not be as likely to be blamed, absurdly, on the "free market."

I have been less than prolific lately on the blog, but you can see some more recent commentary on the financial crisis here.