 By JAY AMBROSE Scripps Howard News Service May 05, 2006
Wham! Oil prices went out of sight, and the pain has been felt in a host of ways, but inflation is paltry, the annual growth rate in the first quarter was an amazing 4.8 percent and unemployment is a barely noticeable 4.7 percent. Afflict this economy with first one woe and then another, and it may slow down for a minute - but the next thing you know consumers have their confidence back, businesses are making profits, hiring is increasing, production is at its most efficient ever and the government is issuing numbers telling us the happy story. What's the secret? It's what the former Fed chairman Alan Greenspan called "flexibility," but what I prefer to call freedom, and it's the very thing that some demagogic Democrats and not a few Republicans would diminish in the face of high oil prices. They want to restrict oil company profits in order to ... what? The theory is that somehow these restrictions would bring prices down. They would in fact lower the investment and incentive for the sorts of projects needed to increase petroleum supplies sufficiently to lower prices, which are driven by demand here, in China and elsewhere. The truth of it is that the politicians want to please voters by punishing oil companies and their shareholders - thousands of them ordinary people depending on nice returns for nice pensions - for being in a profitable place at the wrong time. Be wise enough to leave the market alone and you get a zeal and ingenuity that tend to fix things, not just for the rich, as the anti-capitalists would have it, but for people at all economic levels. You get innovation. You get a redirection of resources to where they will serve the public best. You get exactly what you do not get when the government intrudes with a heavy hand. You get the opposite of what they have now in the welfare state called Germany, one of Europe's many examples of excessive interference with economic activity. There, in Europe's largest economy, the government that has tied businesses in such knots and taxed its population with such a vengeance that no matter how inventive and industrious the people, they do not receive the benefits of their labor. As a commentary in the Wall Street Journal pointed out, the growth rate is not 4.8 percent. It is 1.3 percent. The unemployment rate is not 4.7 percent. It is 11.5 percent. Unlike the United States, Germany has not added 5.2 million jobs to the workforce over the past three years, but lost 800,000 jobs in that period. None of this is to say we are perfect here. On the energy front, we've been stupid in more than one way: Using phony environmental arguments, for instance, liberals have blocked oil production in Alaska and offshore. Speaking generally, we are over-regulated, even if we are not as regulated as Germany. We protect special interests to the detriment of the public interest in some trade policies, and subsidize agribusiness. We have our own welfare state issues - such as a Medicare program that could sink us if it is not sensibly restructured. Republicans in Congress, meanwhile, are proving that all their rhetoric for years about fiscal responsibility was the insincere yapping of a minority party that would go absolutely haywire once in power, as if bent on showing no Democrat could possibly outspend them. Despite all that, we encumber our markets with less centralized planning, micro-managing rules and taxation than most other countries, and are thereby enabled to cope with issues that would cripple a lesser economy, and not just cope with them, but thrive. We have not solved all economic problems or achieved heaven on Earth and there are obviously many improvements possible, but ours is an extraordinary, historic accomplishment in delivering a high quality of life to a broad swath of a large, diverse population. Chalk it up to freedom.
He can be reached at SpeaktoJay(at)aol.com
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