All Commentary
Wednesday, May 1, 1974

Made in Washington

The fact that the nation’s “crises” are made in Washington leads many citizens of the United States to the false conclusion that solutions are to be found there, too. Opinion polls may reveal that the popularity of the President, or of the Congress, or both, has fallen below zero; yet an overwhelming preponderance of these same supposedly disillusioned citizens will demand that the Federal government “do something” to solve whichever crises happens to be most aggravating at the moment.

Let there be no doubt that crises are made in Washington — whether it be a matter of meat, grain, energy, transportation, education, health care, or even inflation. The reason why shortages invariably are caused in Washington is because that’s where all the raw material is concentrated.

The raw material concentrated in Washington? The meat? The grain? The fuel? No, of course not these things. But meat is not the raw material of a meat shortage, nor fuel the raw material of an energy shortage. The only raw material of any shortage of goods or services is coercive intervention. And only when that coercive intervention is concentrated in Washington can there be the kind of shortage that amounts to anything like a crisis.

Let’s stick to the “energy crisis” for a moment. What is meant by coercive intervention? It is the use of violence to disrupt or interfere with the peaceful voluntary actions and transactions of willing buyers and sellers. For example, someone steals a gallon of gas, or a whole truckload, or bombs a refinery, or even an entire oil field.

Those are forms of coercive intervention, and they are destructive and disruptive of production and trade. But does the theft of a gallon of gas or the shutdown of a particular oil field result in a shortage or crisis of national or international proportions? No, it doesn’t. The market, if left open and free to function, can readily cope with and adjust to such changes. If supplies are diminished to some extent, higher prices will discourage consumption and stimulate production until a new balance is achieved, with no crisis whatsoever.

Major Violence

Suppose there is more extensive violence — such as an Israeli-Arab war that closes canals, cuts pipelines, destroys producing wells and shipping facilities. Wouldn’t that bring an energy crisis? Indeed it could, but not necessarily, and not directly. Any crisis that comes of such warfare will come only in those countries where the war is used as an excuse to close the market and coercively prevent prices from adjusting to the new conditions of supply and demand. If the citizens of the United States, for instance, allow themselves to be stampeded by war in the Middle East to either demand or allow ceiling prices on oil and gas and other fuels, only then would there be concentrated in Washington the raw material of an energy crisis. And, to repeat, that raw material is coercive intervention: not the war in the Middle East, but the coercion turned against the people of the United States by the government in Washington to which they had surrendered their freedom of choice and freedom to trade.

Market Interference

The process of closing the market against citizens is called price control, but a more realistic name would be people control or prohibition. Citizens are coercively prohibited from buying or selling precious fuels at market prices. If the legal price is lower than the free market rate, the consequence is a shortage — a demand that will not voluntarily be satisfied at that arbitrary price — a crisis of coercive intervention that must persist as long as the Federal government chooses to exercise the power of choice citizens have relinquished.

What motivates individuals to allow government to close the market may be of interest, but it doesn’t have anything to do with the consequent shortage or crisis. Perhaps it was sympathy for Israelites or hatred of Arabs, a desire to befriend the poor, a concern over pollution, an objective of national self-sufficiency, an attempt to curb profit margins, or any one of the other reasons that might have entered 200 million different minds.

The fact is that the power to close the market was concentrated in Washington and was exercised; and no other consequence was possible except a shortage and a crisis, at the prices and under the rules coercively prescribed. To then demand that Washington exercise further power, impose additional prohibitions, can only aggravate the crisis. All that is necessary to effect an instantaneous and miraculous end to the shortage is to lift all controls over the production and marketing of fuels; leave the matter to the voluntary actions of willing buyers and sellers in an open market.

So, how does one go about lifting these controls? Write his Congressman to do something? Perhaps that might be helpful. But an alternative is to stop writing Congressmen to do things for us, do what we can for ourselves and accept the responsibility for such risky decisions and actions. Washington would soon get the message if we wanted to try freedom.  

  • Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.