A Notable Exchange

Ayn Rand was 21 years old when she appeard before the U.S. House to testify regarding communists in Hollywood… Indeed, it was a different time and somewhat difficult to grasp 60 years later but the upshot is profound.

Mr. McDowell: “That is a great change from the Russians I have always known, and I have known a lot of them. Don’t they do things at all like Americans. Don’t they walk across town to visit their mother-in-law or somebody?”

Miss Rand: “It is almost impossible to convey to a free people what it is like to live in a totalitarian dictatorship. I can tell you a lot of details. I can never completely convince you, because you are free. It is in a way good that you can’t even conceive of what it is like. Certainly they have friends and mothers-in-law. They try to live a human life, but you understand it is totally inhuman. Try to imagine what it is like if you are in constant terror from morning till night and at night you are waiting for the doorbell to ring, where you are afraid of anything and everybody, living in a country where human life is nothing, less than nothing, and you know it. You don’t know who or when is going to do what to you because you may have friends who spy on you, where there is no law and any rights of any kind.”

From Ayn Rand’s testimony before the United States House of Representatives Un-American Activities Committee, October 20, 1947 ( as reported in the official Government Printing Office record on the “Hearings Regarding Communist Infiltration of the Motion Picture Industry.”)

There may be, perhaps, yet still in this country those who ignorantly and blindly entertain benevolent thoughts about socialism… The truth, the reason most I contribute to this and other blogs without any core hesitation, or without any apparent lack of energy, is the fact that the evil philosophies of fascism and communism were, in retrospect, the two great mass killers of the era I was born into and my parents and grandparents lived through. Of these murderous ideologies (fascism, communism, nazism, moaism), communism was the greatest killer. 100 million men, women and children have been murdered by socialism so far, and the killing continues today, notably in North Korea. In terms of body count, socialism is by far the most evil religion, the most evil ideology of any sort, of all time. There are other religions which can claim many bodies, including Christianity but insofar as wanton death and instilling in its captives utter suffering socialism takes the cake.

The point here is that although we have leaders from time to time (Ronald Reagan, for example) who truly understood this, they are far and few between. It is the case that any steps towards these murderous religions on a state level is evil and must be fought with our minds and our words to our greatest ability – our last resort becomes bloodshed as history has seen.

The communists snuffed out free thought as efficiently as in any authoritarian religious state. They are not skeptics – Marx and Lenin founded an irrational religion every bit as dogmatic, credulous, and opposed to free minds as any of the older religions they marginalized.

Ayn Rand can be honestly criticized by those who perceive her as a thorn in their religious fundamentalism, and that is fine for as far as that goes. But no one can take issue with the tenets of a philosophy based on rational thought and premised upon the absolute prohibition of the initiation of physical force upon others coupled with the knowledge and understanding that a free mind and a free market are corollaries. She was all about individual rights and freedom – the absolute antithesis of the murderous regimes premised upon socialism. Moreover, she saw a free-market economy (capitalism) as not just the best choice among competing systems but THE ONLY possible system – it is utterly self-evident.

Robert Tracinski wrote:

“In a free-market economy, everyone is driven by his own ambitions for wealth and success. That’s what “free trade” means: that no one may demand the work, effort, or money of another without offering to trade something of value in return. If both partners to the trade don’t expect to gain, they are free to go elsewhere. In Adam Smith’s famous formulation, the rule of capitalism is that every trade occurs ‘by mutual consent and to mutual advantage.’

It is common to condemn this approach as selfish—yet to say that people are acting selfishly is to say that they take their own lives seriously, that they are exercising their right to pursue their own happiness. By contrast, project what it would mean to exterminate self-interest and force everyone to work for goals mandated by the state. It would mean, for example, that a young student’s goal to have a career as a neurosurgeon must be sacrificed because some bureaucrat decrees that there are “too many” specialists in that field. Such a system is based on the premise that no one owns his own life, that the individual is merely a tool to be exploited for the ends of “society.” And since “society” consists of nothing more than a group of individuals, this means that some men are to be sacrificed for the sake of others—those who claim to be “society’s” representatives. For examples, see the history of the Soviet Union.

A system that sacrifices the self to “society” is a system of slavery—and a system that sacrifices thinking to coercion is a system of brutality. This is the essence of any anti-capitalist system, whether communist or fascist. And “mixed” systems, such as today’s regulatory and welfare state, merely unleash the same evils on a smaller scale.

Only capitalism renounces these evils entirely. Only capitalism is fully true to the moral ideal stated in the Declaration of Independence: the individual’s right to “life, liberty, and the pursuit of happiness.” Only capitalism protects the individual’s freedom of thought and his right to his own life.”

Only when these ideals and, in fact, the real enlightened vision of our founding fathers are once again taken as seriously as life itself will we be able to recognize a free-market economy not as a moral ideal, but in fact a moral imperative.

ZPG revisited …

Back in the late 60’s and then into the early to mid 70’s there was a social movement known as ZPG, or Zero Population Growth. The guy who started it in earnest was Paul Ehrlich. He wrote a book called the Population Bomb arguing, among other things, that the biosphere cannot sustain anywhere near a doubling of the earth’s population. Yet, here we are with about a doubling of the population and per capita food production is stunning, there are no mass starvations going on, and the biosphere is doing just fine (Al Gore notwithstanding).

What captures my attention about Ehrlich is not the affects of population growth upon the biosphere, but upon liberty. Ehrlich was generally correct in his mathematical calculations of population growth, but completely wrong in the premise of his logical argument which followed that arithmetic observation, i.e. that ecological catastrophe is directly proportional to population, affluence and technology. Had he had a view of the world from the perspective of the loss in political freedom, individual rights, and private property as a natural consequence of population growth he would have been seen today in a much different light. The fact is now obvious to any candid observer – the earth is capable of sustaining a huge population and the environment and biosphere are far more resilient and powerful – by magnitudes. However, there is a critical sliver of insight to be observed from Ehrlich. There is a catastrophe going on, but few seem to see it clearly and it is the catastrophe of liberty lost.

Population growth, per se, does not result in the loss of political freedom, individual rights, and private property rights but the socio-political basis upon which populations grow absolutely has an impact. If generations of people and families are brought into the world under the premise of massive redistribution of wealth as a given, as opposed to laissez faire capitalism, then you do have a direct correlation with population growth and an incremental loss of the freedoms that make living so great/worthwhile. If populations grew based strictly upon their ability to sustain themselves through productive activities, trade (arm’s length transactions), and rational thought that fully reflected the real, measurable, individual costs and thereby reflected fully the market for goods and services then population growth would NEVER nor could EVER be a problem that threatened one’s pursuit of life, liberty and happiness (properly understood as the obtaining and keeping of private property). .

However, if people are conditioned that they can procreate at will without understanding or having to experience (in real terms) the full economic implications of that decision, they will mis-allocate (either over-utilize, or under-utilize) their reproductive abilities at a rate that is either higher or lower than would otherwise be the case were the costs of their actions fully taken into consideration. We have lost, by virtue of the great society idea, the generational radar that tells us as individuals and communicates to our children when to reproduce, at what rate, and under what circumstances it should take place. The immorality implicit in redistribution from producers to non-producers has a long tail of consequence because, just as with socialism, true cost becomes more and more difficult, if not impossible, to calculate.

So, where Ehrlich went wrong was in his formula. Originally, he stated I = P x A x T (where I = Environmental Impact, P = Population, A = Affluence, T = Technology). The proper formula, in retrospect, would show an inversely proportional relationship between the rise in socialism times populations born into it and therefore dependent upon it, to individual freedom, liberty, and the accumulation of private property (the essence of our founding ideal of ‘pursuit of happiness’).

Hence, Ehrlich argues incorrectly that affluent technological nations have a greater per capita impact than poorer nations. This is a conclusion drawn from a flawed premise and therefore unsustainable. What would be worth considering is the idea that nations premised upon redistribution of wealth, progressive taxation, the primacy of government, interventionism, along with all forms of collectivism that emanate from those first steps, will have a huge impact on the pursuit of life, liberty and happiness. Thus it will appear that as population increases things will get much much worse – but this is not the key corollary, the socio-economic system under which the population rises or falls IS.

Man’s inherent desire for freedom and liberty cannot ultimately be suppressed, nor can the self evident revelations of the enlightenment (fundamentalist religions and government education notwithstanding). Neither candidate for President of The United States understands this idea, much less is willing to speak publicly about it. We have both political parties fully invested in more, not less, interventionism as a given (it is simply a difference in degrees and speed). The end result will be as catastrophic as Paul Ehrlich’s warning to us in the late 60’s, but it will not merely be due to population growth but rather the consequence of the socio-politico inbred in those teeming populations, that of men being the tools of men. Or, in the words of Francisco d’Anconia: “Blood, whips and guns-or dollars. Take your choice-there is no other-and your time is running out.”

Fox Nitwits

This morning I damn near threw the coffee table into my plasma screen!

The hosts on Fox News Saturday morning show were interviewing some nitwit congressman from the New York area who once again made the outrageous comment that allowing oil companies to drill offshore and/or in ANWAR is unnecessary because these very same oil companies are not taking full advantage of the oil leases they currently have – this cat actually said that the reason they don’t drill these leases is to prop up the price and soak the consumer. The congressman then suggested that legislation should be introduced and passed that forced oil companies to drill on all of these leased lands OR ELSE THEY WOULD LOSE THEIR LEASE AND IT WOULD BE GIVEN TO SOME OTHER COMPANY WHO WOULD AGREE TO DRILL. None of the hosts had a clue as to the facts, and consequently were incapable of asking any hard questions of this so-called representative of the people…

The following information MUST get out.. here are some facts everyone needs to understand, internalize, and then stick in the face of any other nitwits who spew such falsities.

1. The biggest single component of retail gasoline prices is the cost of the raw material used to produce gasoline – crude oil.

2. Components of gasoline price (at the pump):

A. Crude oil -70%.
B. Refining and retailing -17 %
C. Taxes – 13%

3. Who owns “big oil?” Well, since you asked…you do! IRA’s (14%), Pension Funds (27%), Mutual Funds (30%), and Individual Investors (23%) account for roughly 94% of the ownership of “big oil.” When politicians such as Barack Hussein Obama talk about a “windfall profits tax” he is talking about taxing you! According to Energy Information Administration (publicly available data on the top 27 energy companies tracked by the EIA), the total income tax paid by these companies almost doubled between 2004 and 2006 – they paid in over $90.4 billion dollars in 2006! Folks, the reality is that these companies simply pass those costs onto end users at the pump (see item C in #2 above… and add to that the internal tax component slapped on at the corporate level). Imposing additional taxes on the U.S. oil and natural gas industry will not help to increase supplies of energy for American consumers but will serve only to discourage investment. Instituting new taxes or repealing tax provisions designed to encourage investment in the United States will only reduce new domestic oil production and refinery investments, threaten American jobs, and make it less economic to produce domestic energy resources. The end result would be obvious – a greater dependence on imported crude oil and gasoline.

5. Relative to sales, the net income of oil and natural gas companies is somewhere in the neighborhood of 7.4%. This is by no means out of the ordinary for industrial companies. In fact, they are basically in the middle of the pack. Pharmaceutical and Medicine runs about 26%, manufacturing companies in general run around 7.6%.

6. Oil companies invest literally billions of dollars for the right to explore on federal lands. If the company does not produce within the time frame of the lease agreement, the agreement is over and it reverts back to the federal government – this is a lease, not a sale. Oil companies have a huge (billion $) incentive to recapture their investment through production. To suggest they purposefully do not produce is utterly a lie and is totally false.

7. Oil companies actively develop leased lands, but not all leased areas contain oil or natural gas in sufficient quantities to make it economically feasible to extract. The timeline and cost to evaluate, explore, permit, lift and extract is long and complex.

8. The mere fact a lease exists does not necessarily mean there is oil or natural gas there – energy companies have to get the leases first, and then go about seismic sensing to determine if further exploration is even warranted. Bottom line, there are huge risks and challenges in searching and extracting.

9. Due to environmental and other studies, permits required, the installation of production equipment (on shore and off), neighboring landowner disputes and litigation, and other regulatory hoops the process of producing on potentially productive leased lands can be delayed significantly.

10. 85% of the continental outer shelf and almost 70% of onshore federal lands are off-limits or face significant restrictions to development – the amount of oil contained in these areas is UNKNOWN because they cannot be subjected to modern inventory studies.

11. Oil and gas companies move as quickly as they can to develop production on any leases with economic feasibility. But the real fact of the matter is that they must also pay rent to the government while they conduct development and exploration efforts, a process that takes time. Reducing the time companies have to develop a lease or increasing the costs imposed by government will not increase supply for American consumers. Nor will denying access to areas of oil and natural gas potential like the Atlantic and Pacific Outer Continental Shelf and ANWAR.

12. Every additional barrel of oil or cubic foot of natural gas that can be economically produced will help to either lower or, at worst, maintain the price of products derived from crude oil and natural gas. It is utter myth and misrepresentation to state that drilling and extracting more of any natural resource cannot affect its price.

13. Oil and gas companies are the ones taking all the risks! They pay out billions of dollars to obtain leases, they pay more to hold those leases, and then invest huge sums to determine feasibility and inventory potential. By levying more constraints and costs upon these companies you will only discourage the very activity we need the most to help alleviate our supply constraints.

14. Lastly….for now…. while it is true that we have not build a new refinery here in the U.S. in the last 30 years this does not mean we have not expanded and to one degree or another modernized the facilities we have. Moreover, the economics of making gasoline (only one of a myriad of products made from crude oil) favor refining as close as possible to the point of lifting. So, it makes more sense, financially, to lift and refine then ship. If we had more domestic production of crude we would, by necessity, invest far more in refining capacity as well.

Sources:
American Petroleum Institute

Oil and Gas Primer