Bush slips on the oil market

[Chris Burford <cburford@xxxxxxxxxx>]

In a beautifully sarcastic article which I picked up in the International
Herald Tribune today, Paul Krugman exposes Bush's Freudian slip on oil markets:

>>

NEW YORK President George W. Bush said something interesting about
economics the other day. No, really. It wasn't his usual line about how tax
cuts are the answer to whatever ails you; he said something unscripted,
something that reflected what he really thinks and feels. You might say
that his remarks gave us a sense of his soul. And it turns out that his
soul - or maybe it's just his heart - belongs to people, of whatever
nationality, who sell oil.

Recently Mr. Bush was asked about the decision of the Organization of
Petroleum Exporting Countries to reduce output by a million barrels a day.
That's about as much as the Department of Energy's estimate of peak daily
production if we drill in the Alaskan tundra - a peak that won't come until
the middle of the next decade. And OPEC cut production in order to keep oil
prices high despite slumping world demand, which would seem to be against
U.S. interests.

Yet Mr. Bush was remarkably sympathetic to OPEC's cause; it seems that he
feels the oil exporters' pain. "It's very important for there to be
stability in a marketplace. I've read some comments from the OPEC ministers
who said this was just a matter to make sure the market remains stable and
predictable," he declared.<<

http://www.iht.com/articles/28498.htm

Worth looking through the whole article to see how Krugman exposes the
incoherence fundamental to Bush's ideology about markets.


Also last night in the UK, the politically influential programme Newsnight
had a review by its Economics Editor, Evan Davis, of the California debacle
over the energy market. His snappy message was that all markets have their
different characteristics and have to be analysed for the balance of market
forces, and regulation of the market. "Markets and never pure and simple".

He argued that "even in pioneering Britain" in almost every sphere in which
deregulation was imposed, it has been necessary to revisit the market and
see how it actually operates.

My impression was that this marks a shift in consensus thinking in the UK
away from laissez faire economics. There is no one point at which this will
be seen as decisive, but Davis skilfully placed himself in the new centre
of the debate.

Previously he had appeared to be associated with a stance that was rather
laissez faire, but perhaps I mis-read his connections: Below is a bit from
his blurb on the BBC website, and further below, from the "Social Market
Foundation". Or have I just got a knee- jjerk reaction to references to Hayek?

Chris Burford

London



Evan Davis Economics Editor of Newsnight

>>
Prior to joining the BBC he worked for the Institute for Fiscal Studies, an
independent research institute specialising in the study of taxation and
social security. He also worked in the economics faculty at the London
Business School. Evan was brought up in Surrey, attending The Ashcombe
School in Dorking. He went to university at St. Johns College, Oxford (1981
to 1984) and was a Harkness Fellow at the Kennedy School of Government at
Harvard University from 1986 to 1988. He is on the Advisory Council of the
think-tank, the Social Market Foundation, for whom he has written several
papers and reports. He is also author of Public Spending, published by
Penguin last year, and he is a co-author of the Penguin Dictionary of
Economics.<<


From the website of the Social Market Foundation:
>>
The social market philosophy is different. The task of government is not to
intervene to solve every 'problem' which attracts the transient attention
of the public; rather it is to lay down a framework of law and regulation
within which individuals are free to act as they wish, and markets free to
supply what people want. This framework must be robust enough to protect
society both against untramelled government and untramelled markets. Hayek
called it 'the constitution of liberty'.<<