Myopic Statism

It's redundant, but at least it clarifies the topic: myopic statism.

I hide facebook friends from my news feed for a reason.  Unfortunately, today I was using Amy's computer and was reminded of why facebook's hide feature is vital to my health and wellbeing. A friend posted this story where Harry Reid uses that wonderful political tool and argumentative fallacy (again, redundant) of the red herring: divert attention from the spending problem to the revenue problem.  Reid wants to eliminate tax breaks for oil companies.  For this post I'm going to step through the utilitarian and basic economic arguments against this idea.

As of yesterday afternoon at the Kroger around the corner, gas was selling for $3.899/gallon.  Taxing oil companies would push this up further.  In case this is your introduction to basic sense this might be a shocker, but companies don't pay taxes the consumers do.  Increased taxes means increased prices so that the consumer can't afford as much of the producer's good and the producer won't produce as much.  The net result is that society is poorer; less wealth is created.

Second, every government car, tank, and jet is powered by... wait for it... the oil companies!!!  So if the price of oil goes up so does the cost of government which means spending goes up which means taxes go up, which means there'll be a call to further tax oil companies, which means... get it?  This is the opposite of both Boehner and Reid's goals (not really though, politicians live for power and to rule over others, they just have to put up a front).

Next, consider what the oil companies do.  They invest in billion dollar projects that produce oil and gas for a few years.  When their wells stop being profitable they have to kill the wells.  Oil and gas may still be in the reservoir, but it makes no sense to continue using more resources to extract the oil than it will return.  Prices are the way to measure resources consumed vs. resources produced.  When the government comes in and adds a tax on the oil companies their price signal to kill wells comes earlier than it otherwise would.  The effect of eliminating tax breaks for oil companies means more resources will go unused sitting in subsea reservoirs.

It's important to note that oil companies are great enablers of life and prosperity.  Without them billions of people would die.  If this is not obvious then you don't grasp the degree to which petroleum has made civilization and our well being possible.  Contrast this with government that killed over 100 million people in the 20th century and continues to kill thousands in the 21st.  Statists are promoting the wrong organization unless they're sadistic homicidal maniacs... some are.

The statist has a great distrust in so called "big business".  It's understandable, I mean a company that wields billions of dollars a year has great power to create or abuse the stored potential in dollars.  If this is true, then how much more suspicious should we be of an organization that wields trillions and claims the right to violate property, civil, and human rights!!??  Companies are not above the law unless the government gives them special privileges (such as corporate personhood and limited liability).  Considering our founded fears of largeness and since this post is full of utilitarianism then let me propose this: the government should have no right to tax a company that has less revenue than the federal budget.  Seems like a good rule of thumb to me.

I recently attended the Offshore Technology Conference where I got a glimpse of the scope of human cooperation that goes into every drill site.  (again appealing to utilitarianism and the political obsession with jobs for jobs sake) the oil industry creates millions of jobs, most are extremely specialized and highly skilled.  Every part in the chain from the geologist to the rupture disc engineer to the subsea modeler (that's me) to the platform operators and the millions in between are an incredible testament to human achievement and cooperation.  Government on the other hand works on a very different premise; it's only resource is coercion.  It does not engage in cooperation without force.  It is anti-humanitarian, anti-progress, and anti-wealth.  Destroy the state and promote mankind!

"Tax the oil companies" is as myopic as the statist solution to "tax the rich" i.e. "majority tyranny over the minority".  Luckily, that utilitarian response has been done for me: