Gosh, I thought Texas grew because of oil, now I realize it grew because it created wealth through its school system. These Slate cliches validate other cliches, and are validated by them. Gene Coyle Jim Devine wrote: > This article is interesting. Any pen-l comments? > > >SLATE MONEY: Wed., March 1, 2000 > > > >Why High Oil Prices Are Bad ... for the Sellers > > > >By James Surowiecki > > > >Although OPEC remains in the American imagination essentially an > >Arab organization, with its meetings ending in those great visuals > >of the sheiks sweeping through palatial hallways in their flowing > >robes, the key player in the output cutbacks that have propelled > >oil prices up near $30 has actually been Venezuela, thanks to the > >work of its new oil minister, Ali Rodriguez. Venezuela is OPEC's > >second-largest producer. In the past, it's also been OPEC's most > >notorious cheater on the quotas that each member is supposed to > >obey. But Rodriguez has stayed firm in his commitment to the output > >cutbacks, even as OPEC members have started talking about the need > >to bring prices down. > > > >In one important sense, this is of course a good thing for > >Venezuela, which under its new strongman president, Hugo Chavez, > >has been trying to rebuild an economy that gives disarray a bad > >name. Oil is Venezuela's most important export, and its most > >important source of foreign currency and state revenue. In 1999, > >the country's exports fell more than 15 percent (its imports also > >dropped sharply). Assuming that oil prices stay above $20 a barrel > >for the rest of this year, those numbers should be significantly > >better. > > > >The problem is that insofar as higher oil prices encourage > >Venezuela to rely on its natural resources for economic growth and > >job creation, they probably do more long-term damage than > >short-term good. This may seem counterintuitive. We all know that, > >in general, it's better to have resources than not, and certainly > >an important part of America's economic history is about the > >exploitation of its remarkable natural wealth, mineral and > >agricultural. It's just as hard to imagine America's steel or auto > >industries without the Mesabi Range than it is to imagine Nevada > >without the Comstock Lode. > > > >But the American experience has not, in fact, translated especially > >well to other countries, particularly in the 20th century. That may > >be because most of the United States' natural resources were > >subject to private exploitation rather than becoming foundations of > >the state economy, and it also probably has something to do with > >the sheer size of the U.S. economy, which was never going to be > >dominated by a single industry. Along the same lines, the > >tremendous variety of U.S. capitalism--that is, the incredibly > >diverse kinds of businesses that proliferated under it--meant that > >while gold rushes and oil booms would play important economic > >roles, they would not necessarily stifle growth elsewhere. > > > >In much of the world, though, the connection between natural > >resources and strong economic growth is quite weak, and some > >studies have suggested that countries with fewer natural > >resources--like, most obviously, Japan--are more likely to grow > >faster. The argument is not a difficult one to understand. In > >today's global economy, tying yourself to a commodity product means > >tying yourself to the whims of a marketplace that, at least for the > >last 20 years, has been driving commodity prices steadily down. > >More important, the oil industry cannot provide the kind of > >technological spillover that seems to be playing a key role in > >boosting U.S. productivity. You can get better and better at > >pumping oil--although since OPEC is a cartel, even the pressure to > >get better at pumping oil is less than it should be--but that does > >nothing to help the rest of the economy get better at what it's > >doing. > > > >On a deeper level, reliance on a state-owned oil company fosters a > >completely misbegotten idea about how wealth is actually created. > >With oil, it seems fairly simple: Those who have it, reap the > >benefits. (It's more complicated than this, but not much.) But with > >almost everything else, wealth is not just there for the taking. It > >has to be created, through the transformation of time--via > >work--into value. And you can only grow an economy if you keep > >getting more value out of the same amount of time. This is central > >to why capitalist economies work. It has very little to do with > >living off natural resources. > > > >It's true that Venezuela is attempting to restructure its economy > >in other ways, many of them oddly reminiscent of things like the > >United States' 1862 Homestead Act and the like. And if the > >oil-price hike is intended simply to put Venezuela back on its feet > >after a year in which its economy actually shrank by 7.2 percent, > >then you can see the sense in it. But when you look at the > >economies of the world's major oil producers, with the notable > >exception of Mexico, it doesn't exactly give you hope. High oil > >prices are a great short-term fix. But they're no long-term answer > >at all. > > The penultimate paragraph seems to endorse a labor theory of value! > > Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
