A refresher course on economic principles for the right

The other day, President Bush, in response to a question as to why he has not pushed more for energy conservation, responded that the American people are smart enough to figure it out on their own. This prompted conservatives at the National Review to call for a “Dubya-Love Moment” in honor of what they perceived as the straight-talking truth!

It is truly amazing that a philosophical movement once filled with some of the smartest minds in economics now wears economic ignorance as a badge of honor.

So here’s how to respond to those on the right who still don’t get it that energy policy requires government intervention, and not just blind faith in markets:

1. People can’t choose to take public transportation if it doesn’t exist; we need government policy to make better public transit options.
2. One of the biggest obstacles to a national renewable energy platform is the lack of inter-state transmission lines in key areas; this requires government approval and investment.
3. The current price of fossil fuel energy is still too low; it does not include the costs of CO2 damage and the military costs of protecting pipelines; markets can’t work right if prices are wrong and only government can correct the prices for fossil fuels.
4. Government is the biggest buyer of energy in the country so changes in government procurement policies have big impacts on energy markets.
5. Businesses may hesitate to invest in alternative energy if they think the price of fossil fuels be go back down and therefore undercut their investments in alternatives; by government providing a price floor for fossil fuels this risk can be mitigated.
6. It is also good to remind those who blindly think that the market always works that if we had followed the advice of environmentalists and economists decades ago, we would’ve been able to make a smooth transition to our energy future and the money for $4 gas would be going largely into U.S. coffers instead of the hands of our enemies; i.e. the lack of government energy policy has been a national security disaster.

And the list goes on and on. So please, if you encounter any people on the right who suffer from the “free-market derangement syndrome,” please correct them and remind them that the right used to actually take Econ 101 seriously.