20080531 The Government's Scapegoats by Robert Murphy

The Government's Scapegoats by Robert Murphy

Robert Murphy Saturday, May 31, 2008

With food and energy prices soaring, housing prices collapsing, and the economy sinking into what could be a deep recession, the government has been searching around for villains. The latest scapegoats are speculators, OPEC, and of course, the big bad oil companies. As usual, our government ignores its own role in our current economic mess. To add insult to injury, most of the politicians’ proposed “solutions” would only make things worse.

Whenever there are large moves in prices, people naturally become suspicious of the mysterious speculators. These shadowy figures lurk behind every financial market, and apparently have the power to move prices up or down at will, earning fat profits for themselves. (If this were true, why do the speculators only appear at certain times? Why not make guaranteed money constantly?) The politicians promise to crack down on this antisocial behavior, and let prices return to the levels set by supply and demand.

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Finally we come to the easiest scapegoat, domestic oil companies. Politicians have been threatening to impose a windfall profits tax, and Maxine Waters infamously suggested outright nationalization at a recent hearing. As with speculators, the theory here is that oil companies can set whatever price they want, and the hapless motorist has no choice but to pony up at the pump. Only by taking away those excess profits can justice be restored, say our politicians and pundits.

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Read the entire column here: The Government's Scapegoats by Robert Murphy