Is Hugo Chavez a gift to mankind?
Man’s greatest accomplishment is his ability to adapt. Whether through technological development, increased efficiency, innovation of skill, or just good old fashioned hard work, mankind always finds a way to meet its needs and to advance civilization. There may be stumbles and outright failures along the way, but the way is still ever forward. Obstacles are not barriers, but instead, guideposts to new and exciting worlds in which our lives are better than before, even as greater and more difficult challenges rise to meet us. It is our naked self-interest that propels us towards such discoveries and accomplishments, which in turn create a better place for all.
Every individual…generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
To be clear, man as pure homo economicus is a myth; a construction for ease of argument and extrapolation. But it is a useful myth in that it isolates a primal motivation to progress. Adam Smith’s key insight, of course, was that in pursuing our naked self-interest, we also promote the self-interest of others. This is the backbone of libertarian philosophy, that each person being allowed to pursue their own hopes and dreams without undue interference (and without unduly influencing others) will accomplish the greatest amount of wealth and happiness for all.
Of course, wrenches are invariably thrown into the works, such as the (unsurprising to some) encroachment of government.
CARACAS, Venezuela, Jan. 8 — President Hugo Chávez signaled a vigorous new effort to assert greater control over Venezuela’s economy on Monday by announcing plans to nationalize companies in the telecommunications and electricity industries.
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The announcement was the latest in a series of bold steps Mr. Chávez has taken since his re-election in December to consolidate his power and move Venezuela toward what he calls a socialist revolution. Mr. Chávez said he would also seek a “revolutionary enabling law†from Congress that would allow him to approve bills by decree, as well as a measure stripping the central bank of its autonomy.
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On Monday, in addition to the telecommunications and electricity nationalizations, Mr. Chávez also appeared to signal that he wanted control over four multibillion-dollar oil projects in the Orinoco River basin, which he said should become “state property.â€
Nationalization of these major industries will inevitably come to no good. Adam Smith foretold this as well:
Princes, however, have frequently engaged in many other mercantile projects, and have been willing, like private persons, to mend their fortunes by becoming adventurers in the common branches of trade. They have scarce ever succeeded. The profusion with which the affairs of princes are always managed, renders it almost impossible that they should. The agents of a prince regard the wealth of their master as inexhaustible; are careless at what price they buy; are careless at what price they sell; are careless at what expense they transport his goods from one place to another… No two characters seem more inconsistent than those of trader and sovereign.
I hear Glasnost you ask: But isn’t Hugo simply acting in his own interests? How can that be so bad given the libertarian mantra?
It is true that Hugo is acting in his own self-interest, and that his own self-interests do not bode well for others. Or do they?
I would certainly agree that Hugo is in the process of making a huge mess of things in Venezuela. In my opinion, it is inevitable, and demonstrably heart-breaking, that his people will suffer great misery thanks to Hugo’s meddling. Already, he seems to be undermining his own country’s interests:
Venezuela, which has the largest conventional oil reserves outside the Middle East, has already increased its control over numerous oil production ventures in the past year. The largest consumer of Venezuelan oil, of course, remains the United States, despite efforts by Mr. Chávez to export larger quantities of oil to China and other Asian markets.
Antagonism of Venezuela’s largest customer does not strike one as the smartest way to conduct one’s affairs. But, again, is there a silver lining in that sable cloud sown deep with despair?
It is one of the first laws of supply and demand that when supply becomes scarce prices rise and new suppliers seek to the enter the market. When that resource is a natural one, such as oil, the entrants are limited to either discovering new sources of the commodity, or to developing alternatives that can compete with the scarce resource.
Regardless of whether “peak oil” is actually being reached, artificial scarcity is being introduced to the market by the OPEC cartel as well as by general mismanagement of the industry around the world. Already in response to Saudi, Iranian and Russian market manipulations and general bureaucratic bungling, we have seen renewed interest in such things as oil shale and tar sands. Even the diesel engine is making a comeback (although, this is not your father’s diesel engine). Could Hugo’s nationalization attempts, and aggressive anti-Americanism finally put the market over the top?
Hugo’s pursuit of his own self-interests, I believe, may be a major catalyst in forcing the innovators, developers and inventors of the world to get serious about alternative energies. Indeed, the sources of oil are primarily controlled by powers that are decidedly unfriendly to the U.S. and the West. Hugo’s open courting of more meaningful and antagonistic alliances are meant to exploit that shared hatred and to rally the oil producers around the common cause of bringing the capitalist West to pay homage. Call it Hugo-geld.
But being a socialist, Hugo and his comrades fail to recognize the dynamism of human nature. They don’t comprehend the reaction to their efforts to hem the West in. Instead of bending our will to meet his own, Hugo will only succeed in unleashing the awesome power of our self-interest. No place in the world is as nimble and capable as America at adapting to new challenges. And by that I do not mean the government, but the people. It is our individual self-interests that are at stake (both as a threat to financial well-being, and as hope to achieve greater wealth through exploitation of new resources), and those interests will be the driving force in reaching a state of oil-irrelevance.
Raising oil prices to artificial highs, and taking an antagonistic stance will serve to invite energy alternatives into the market. Those alternatives will come from undoubtedly the West. If not America alone, some combination of American, European and Canadian technologies and developments will be the source of grave despair for the OPEC nations who depend solely on their control of the majority of the world oil supply for their very existence. What will they do when we don’t need them anymore?They will cease to be players on the world stage. They will no longer wield the sort of influence in geopolitics that they now shamelessly brandish. Instead, the oily veneer will be lifted from these regimes, and the West will prosper on.
It could be, therefore, that Hugo Chavez represents the tipping point necessary to finally make alternative energies attractive enough to expend productive resources on developing and exploiting them. For that, Hugo may indeed be a gift to mankind. For if the only way to greater prosperity for the world is to move forward, it will necessarily take self-interest to get us there. Hugo’s self-interest is limiting in the short term, but if it is a spark which ignites that of the free world, we will surely all be better off in the long run.
[tags] Hugo Chavez, oil industry, invisible hand, economics, Saudi Arabia, Iran, Russia, geopolitics, innovation, invention, alternative energy [/tags]
It seems likely Hugo might end up pumping more oil, short term, to support stupid socialist policy. After all, he needs to fund the revolution.
I expect that he’ll try. However, as always seems to happen with these endeavors, the money that should be spent on maintaining and improving the industrial infrastructure will instead go to those socialist, feel-good programs that tend to drive poverty instead of relieving it. Hugo will be left with creaky, inefficient means of production and a decreasing ability to exploit the commodity. In the end, all Venezuealans will lose.