- The Washington Times - Tuesday, March 18, 2003

WASHINGTON, March 18 (UPI) — The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks. This is the third of three wrap-ups for March 18.

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The Cato institute

WASHINGTON — Blood for oil?

by Jerry Taylor

Is the coming war with Iraq about oil when all is said and done? The anti-war movement seems to think so. I am not so sure.

Unless the peace movement has discovered telepathy, I doubt that it's in any better position to divine the hidden thoughts or secret motivations of U.S. President George Bush and British Prime Minister Tony Blair than I am. Arguing about unstated motives, therefore, is a waste of time — claims cannot be proven or disproven.

Is it so difficult, however, to imagine that both Bush and Blair sincerely believe — rightly or wrongly — that a well-armed Iraq poses an intolerable danger to the civilized world? If access to oil were of concern to them, one might have expected members of their administrations to hint as much. The Thatcher and Bush administrations, after all, were quite open about the role that oil played in justifying the first go-around in Kuwait.

Polls in the United States revealed at the time, moreover, that the public responded favorably to the argument. Why the supposed reticence now?

Regardless, it's difficult to know exactly what is being alleged when one is confronted by the slogan "No Blood for Oil!"

If the argument is that war is primarily being executed to ensure global access to Iraqi oil reserves, then it flounders upon misunderstanding. The only thing preventing Iraqi oil from entering the world market in force is the partial U.N. embargo on Iraqi exports. Surely if access to Iraqi oil were the issue, it would have occurred to Bush and Blair that removing the embargo is about $100 billion cheaper (and less risky politically) than going to war.

If the argument is that war is being undertaken to rape Iraqi reserves, flood the market with oil, bust the OPEC cartel, and provide cheap energy to Western consumers, then war would be a dagger pointed at the heart of the "Big Oil." That's because low prices equal low profits.

Moreover, it would wipe out "Little Oil" — the small-time producers in Texas, Oklahoma, and the American southwest that Bush has long considered his best political friends. Accordingly, it's impossible to square this story with the allegation that Bush is a puppet of the oil industry.

In fact, if oil company "fat cats" were calling the shots — as is often alleged by the protesters — Bush would almost certainly not go to war. He would instead embrace the Franco-German-Russian plan of muscular but indefinite inspections because keeping the world on the precipice of uncertainty regarding conflict is the best guarantee that oil prices (and thus, oil profits) will remain at current levels.

If the argument is that Big Oil is less interested in high prices than it is with outright ownership of the Iraqi reserves, then how to account for Secretary of State Colin Powell's repeated promise that the oil reserves will be transferred to the Iraqi government after a new leadership is established? Do the protestors think that this high-profile public commitment is a bald-faced lie? Moreover, if that's the real goal of this war, then I'm forced to wonder why the United States didn't seize the Kuwaiti fields more than 10 years ago.

If the argument is that this war is aimed at installing a pro-American regime more inclined to grant oil contracts to American and British rather than French and Russian oil firms, then it invites a similar charge that France and Russia are against war primarily to protect their cozy economic relationships with the existing Iraqi regime.

Regardless, only one or two American or British firms in this scenario would win economically while the rest would lose because increased production would lower global oil prices and thus profits. Because no one knows who would win the post-war contract lottery, it makes little sense for the oil industry (or the politicians who supposedly cater to them) to support war.

Moreover, the profit opportunities afforded by Iraqi development contracts are overstated. The post-war Iraqi regime would certainly ensure that most of the profits from development were captured by the new government, whose reconstruction needs will prove monumental. In fact, Powell has repeatedly hinted that Iraqi oil revenues would be used for exactly that purpose. Big money in the oil industry goes to those who own their reserves or who secure favorable development contracts, not to those who are forced to surrender most of the rents through negotiation.

If the argument is that the United States is going to war to tame OPEC (accomplished, presumably, by ensuring that a puppet regime holds the second largest reserves within the cartel), then it runs up against the fact that the United States has never had much complaint with OPEC. Occasional posturing notwithstanding, both have the same goal: stable prices between $20 and $28 a barrel.

The cartel wants to keep prices in that range because it maximizes their profits. The United States wants to keep prices in that range because it ensures the continued existence of the oil industry in the United States (which would completely disappear absent OPEC production constraints) without doing too much damage to the American economy. The United States doesn't need a client state within the cartel, particularly when the cost of procuring such a state will reach into the hundreds of billions of dollars.

Oil, however, is relevant to this extent: Whoever controls those reserves sits atop a large source of potential revenue that, in the hands of a rogue state, could bankroll a sizeable and dangerous military arsenal. That's why the United States and Great Britain care more about containing the ambitions of Iraqi leader Saddam Hussein than, say, the ambitions of Zimbabwe President Robert Mugabe.

Still, if seizing oil fields from anti-Western regimes is the name of the game, why aren't U.S. troops massing on the Venezuelan border and menacing Castro "Mini-Me" Hugo Chavez?

In sum, the argument that the impending war with Iraq is fundamentally about oil doesn't add up. While everyone loves a nice, tidy political morality play, I doubt there is one to be found here.

(Jerry Taylor is director of natural resource studies at the Cato Institute.)

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The Mackinac Center for Public Policy

(MCPP is a nonpartisan research and educational organization devoted to improving the quality of life for all Michigan citizens by promoting sound solutions to state and local policy questions through the objective analysis of issues. MCPP seeks to broaden the policy past the belief that government intervention should be the standard solution for various issues, and offers a comprehensive approach encompassing voluntary associations, business, community and family, as well as government.)

MIDLAND, Mich. — Private fitness programs show how civil society works

by Jack McHugh

"If the government doesn't do it, nobody else will." How many times have we heard this as an argument for a particular government program? We have become so accustomed to government involvement in every aspect of our lives that it's easy to forget there is another way.

More often than not, if the government won't do something, somebody else WILL do it — if it's worth doing.

Here's an example. The state of Michigan has been spending more than $1 million a year to support local physical fitness, health, and sports councils that develop fitness curricula and distribute educational material. Promoting the general physical fitness of citizens is the sort of program that only government will undertake, right?

Wrong. Here is just one example of a similar program operating in the private sector with no government subsidies. Since 1996, General Motors and the United Auto Workers union have jointly supported their own "LifeSteps" program, which promotes sensible diets and exercise. More than 300,000 employees and families have used the program, which includes health screenings, educational programs, and a toll-free personal health adviser hot line.

Michigan has spent tax dollars on similar programs, but in the case of LifeSteps the work was done using private, voluntary funds — not tax dollars. The spur of market incentives likely concentrates the minds of LifeSteps managers. Unlike recipients of tax-funded grants, LifeSteps managers know their future funding depends on how well their program reduces GM and UAW productivity losses caused by injury and illness.

Tax-funded programs too often are judged only by how much money is spent, how many brochures are distributed, or other political measures, rather than by objective assessments of their actual impact.

There is a broad term for this private, voluntary, non-coercive approach to dealing with societal problems. It's called "civil society." Instead of relying on institutions of government to provide social goods, participants in a civil society rely on private intermediary institutions such as the family, voluntary associations, religious groups, and commercial firms operating in a free-market economy. When people rely on government to meet general needs, we call this "political society."

Some might ask what's wrong with conducting both types of fitness programs — government and private. Plenty.

When government seeks to improve upon private intermediary institutions, it has a political incentive to create a sense that the problem is being solved, potentially causing citizens and private organizations to disengage. Government intervention also removes resources from private individuals and organizations through taxes, reducing their ability to fix problems themselves. So not only do government programs diminish the imperative for private action, they also take away the resources that fund private action.

Government involvement also typically comes with onerous rules and regulations that end up impeding private efforts to deal with a given societal problem.

LifeSteps is an example of how civil society meets needs and solves a problem — general physical fitness in this case. It is a partnership between a private employer and its employee union. Efforts like LifeSteps are often successful because they address particular problems as close to the source as possible, rather than imposing top-down, cookie-cutter solutions proposed by government, or political society. Civil society works because it engages the voluntary, creative energies of free people.

(Jack McHugh is a legislative analyst and the project manager of MichiganVotes.org. a comprehensive Web-driven legislative database operated as a free public service by the Mackinac Center for Public Policy.)

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