“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Sunday, July 22, 2007

ah, private enterprise, how sweet the sound

And the state… was on the other side
We can beat them… for ever and ever – David Bowie
Not – LI

As we have tried to make abundantly abundantly clear on this blog, we consider the terms in which politics is ‘seriously’ discussed in the U.S. to be laughable. We especially find laughable that there is some primal difference between public entities like the South Dakota Department of Education and private entities like Exxon. There is not now, there has not been, and there never will be a primal difference of that kind. To consider how that clown show called libertarianism bases itself on this fallacious fault line makes the observer of the American scene almost despair. Just as cultures have their special cuisines, they have their special stupidities. This is the Ur American one. You can talk until you are blue in the face, but the next thing you know, someone will be dreaming of how we can all set up a magic kingdom in which the state is shrunk like a pair of panties gone through the hot cycle while the private domain blossoms and grows and is full of hippety hop nursery animals.

Well, in this kingdom of the blind, you don’t even have to be one eyed to be king – you simply have to blink every once in a while.

The press, gaudily touting itself as the fourth arm of the government, at least presents an accidental truth. Indeed, the press operates, mostly, as a lubricating agent to ensure the smooth expropriation of a nation’s wealth into the pockets of those who deserve it least and who, entrenched behind that vast architecture of legalized crime called the financial market, gain the most. I suppose in this system, the surprise is that one gets any honest reporting, rather than the opposite. Still, we were amused that the NYT, fresh from its awestruck coverage of the scholarly depths and breadth of the CEO set, had the audacity to publish a sort of crib sheet from the Exxon PR department by Jad Mouawad entitled,
Gas Prices Rise on Refineries’ Record Failures.
Whenever the oil companies are ringing up record profits while prices soar, the newspapers are put in a bind: how can one create an explanation to disguise the simple and truthful one that oil companies enjoy excess wealth, have spent tons bribing generations of congressmen to ensure that they will enjoy excess wealth, and have no scruple about picking the average autodriver’s pocket to put that money in the hands of Exxonish upper management types? Newspapers can be awfully creative, but Jad Mouawad makes an unprecedented move in this article by in effect, simply saying na na na na na.

Some critics of the industry have theorized on Internet blogs that the squeeze on gasoline and other refined products points to a deliberate effort among oil companies to bolster profits by keeping supplies tight. But experts point out that the companies have little incentive right now to hold back on fuel supplies.

“Every refinery would like to run as much crude as possible but they simply can’t,” said David Greely, senior energy economist at Goldman Sachs, who in a recent report compared the drop in domestic refining with an “invisible hurricane.” “These are more complex systems. There are more chances for things to go wrong. And when things go wrong, they tend to back up the system.”


Notice, of course, that Mouawad not only quotes a Goldman Sachs guy against those unnamed internet bloggers (as opposed to the bongo drumming bloggers), but that he is so certain that the incentives that the internet bloggers don’t understand exist that, uh, he doesn’t tell us what they are. They just are. I mean can't you trust a guy who says that the refiners want to produce more gasoline? If you can't take him at his word, well, feelings get hurt. This is what those barbaric internet bloggers don't understand, but Jad understands so well. Surely, during the interview, David Greely started crying big buttery tears, just like the Walrus, and our friend Jad, just like the carpenter, lent him his big checked handkerchief. Salt tears mingled, no doubt, with a lunchy Terrine De Foies De Volaille appetizer. I hope those internet bloggers are truly ashamed of themselves. Really! Ruining an appetizer like that. The internet blogger argument is so mean, and cruel, that Jad and his buddy aren't even going to honor it by giving a counter argument. In this way, those internet bloggers are proven decisively wrong.

The article is so riven with baloney, lies, half truths and half wittedness that we just get tired thinking about it. Still, for some facts about the oil industry go to this blog, (an Internet blog! my god!) which takes out a pocket knife and picks the article to pieces pretty quickly.

Jack Kupransky makes a pretty obvious point. First, he quotes the NYT:
As a whole, refining disruptions have been considerably higher than in previous years: they averaged 1.5 million barrels a day in the first quarter, compared with 700,000 to 900,000 barrels a day from 2001 to 2005. In the days after the hurricanes, refiners were forced to briefly halt as many as five million barrels of production.
Then, unlike the gods and heros that inhabit Goldman Sacks, he actually does some simple arithmetic:
To anybody who knows nothing about the business, a shortfall of "1.5 million barrels a day" in refining capacity might sound like a really big deal, except for the fact that available inventory levels of retail gasoline (as reported weekly by the Department of Energy's Energy Information Administration (EIA) having been running consistently above 200 million barrels for this entire period, way more than enough to cover even a 1.5 million barrel a day shortfall. If inventories weren't able to cover the shortfall, we would see inventories declining dramatically over time. Yes, inventories are 4.5% below a year ago (but only by a mere 9.5 million barrels), but that further proves that refinery shortfalls are not causing inventories to be drawn down in a dramatic way. Multiply 1.5 million per day by 90 days and you get 135 million barrels. The EIA data proves that gasoline inventories have not been depleted by 135 million barrels. In other words, the loss of production due to outages did not result in a shortfall of available gasoline. In other words, there was no supply shortage.”

So, why did the NYT chose to publish this laughable piece of pro oil company propaganda? The shoe drops at the end of the article, with a nice instance of quote marks to make us realize that only internet bloggers and real yahoos would ever question OIL:

“But with a third summer of high gasoline prices, lawmakers are debating legislation they claim would punish oil companies for exploiting the tight supply situation and engaging in “price gouging.” At the same time, they are pressing refiners to produce more fuel.”

Price gouging. My god, how twentieth century, along with usury laws and the like. Those fucking legislators should know better, and – in fact – they do. They will make noise. They will do nothing. The machine, the public/private machine, will work smoothly. Ain’t that sweet – sweet as sweet crude!

11 comments:

P.M.Lawrence said...

"As we have tried to make abundantly abundantly clear on this blog, we consider the terms in which politics is ‘seriously’ discussed in the U.S. to be laughable. We especially find laughable that there is some primal difference between public entities like the South Dakota Department of Education and private entities like Exxon. There is not now, there has not been, and there never will be a primal difference of that kind. To consider how that clown show called libertarianism bases itself on this fallacious fault line makes the observer of the American scene almost despair."

That's the trouble with "-isms" - they create pigeonholes of taxonomy into which not everything fits. It's just that there are a lot of people who self identify as libertarian and reject anything else as libertarian on that simple test. They reject any artificiality about coroprate structures, assuming that if they are not overtly state activities they are ipso facto ordinary products of individual arrangements.

On the other hand, even some Americans haven't soaked that up. Readers might like to look at Kevin Carson's mutualist blog for an alternative.

Brian said...

Don't get me wrong-the mutualist vision is far more appealing to me personally than Union-led socialism controlled by party hacks (is there anything worse than plutocracy-I would argue states controlled by humorless and corrupt and self-righteous Marxist politicans are) but, absent an incredibly disruptive and complete transformation of the world's economy, how does he really think this will come about? They can never answer how the tragedy of the commons-especially environmental degradation- is dealt with. Mutualism assumes that State violence is the only form of violence. I see Mad Max and The Humungus more than your local food co-op.

Scruggs said...

Brian, the question of the Tragedy of the Commons has been answered many times: they were violently "privatized". Absentee landlords, welfare queen entrepreneurs and speculators -- all enjoying regulatory capture -- have wrecked them. The Snopeses set up camp afterwards and put the the finishing touches on. More idealistic ownership schemes than the traditional Commons suffered a slightly different fate, especially those set up in response to privatization. The people engaged in them were robbed, murdered, raped and enslaved, by the same people who privatized the commons.

The more pertinent unanswered question concerns how to deal with state or warlord violence without setting up communities capable of waging war, with people willing to die to protect them. The Mennonites and Amish appear to have an answer. However I doubt that way is going to appeal to many people. It's hard to keep taking abuse without responding in kind. Once you do, the people who are good at that eventually form an elite.

The dipshits that enrage Roger (and every other sane person) and call themselves libertarians are nothing more than oligarch-kissers, with a half baked conception of laissez faire composed of encomiums to oligopsony.

Brian said...

Interesting debate, Mr. Scruggs. I'm not sure it 100% illustrates your point, though.

Are you saying there has never been a "tragedy of the commons" situation? The Ogallala Aquifer is an interesting case-couldn't one argue that the very existence of huge industrial agricultural concerns is to blame for much of the decline in the aquifer? Thus, is this a Tragedy of the Commons in reality? I think it more speaks to the negative impacts of concentrated capital.

What about hydraulic gold mining destroying California's rivers? This is still related to more concentrated capitalism, but not entirely-there were a lot of smaller gold mining companies and proprietorships that engaged in hydraluic mining. Unless you have societies where there is absolutely no concentrated capital or large scale organized business, there will always be abuse of "common" lands.

P.M.Lawrence said...

The answer to the Tragedy of the Commons question is actually quite simple, if we only look at the historical record. Real commons were not free for alls, they worked under enforceable customary constraints. For a start, "commons" is plural; any one common was only open to its own commoners, or to outsiders like drovers who paid fees like Thistle Rents. Commoners actually had property rights over particular bundles of privilege with respect to a common. That meant that they were limited in just what they could do, e.g. the old phrase "by hook or by crook"describes how they were limited in what wood they could take for fuel by the means of collection, so they didn't harm sustainability. Offenders could be had up for it; I have a copy of Buchan's Cromwell, and in that the background material describes how one of Cromwell's collateral ancestors was on record for being had up in just such a way.

In fact, the violent privatisation of England's commons was not a response to a failed system so much as part and parcel of the outside forces acting to damage it. For some historical background to this early stage of the enclosures, read the context Thomas More provides in Utopia.

Scruggs said...

Brian, my point was the Tragedy of the Commons is a load of nonsense. It is an utterly unrealistic construct and typically used as a justification for privatization.

In the case of the Ogallala, how did the depletion get to be so dire? I can assure you that it wasn't as a result of anarchist hobbits being foolishly wasteful or playing sociopathic games of beggar my neighbor! It came as a direct result of the state privileging powerful entities without ensuring they take responsibility for future needs. The libertarian argument, for what it's worth, is that regulatory capture is nearly impossible to avoid, that political liberalism is a holding action against capture-- that at its best liberalism is barely remedial -- and that giant combines would be impossible without the direct assistance of the state.

At this point, I think it's worth reemphasizing what P.M. Lawrence said earlier:

"That's the trouble with "-isms" - they create pigeonholes of taxonomy into which not everything fits. It's just that there are a lot of people who self identify as libertarian and reject anything else as libertarian on that simple test. They reject any artificiality about coroprate structures, assuming that if they are not overtly state activities they are ipso facto ordinary products of individual arrangements."

Glenn Reynolds, Jane Galt and a gaggle of Silicon Valley cranks self-identify as libertarians, without bothering to meet any of the criteria that go along with libertarianism. For reasons that continue to elude my understanding, people let them get away that and use that bogus identification to discredit people who really are capable of moral reasoning.

Brian said...

That is an interesting argument(and I did acknowledge that very argument). As a member of a "regulatory" profession heavily captured by those privelged actors-well....at least I don't work for the "defense" sector. :(

Brian said...

Of course, I would be a very lousy libertarian (profession aside) 'cause I hate the "right" of smokers to pollute mu indoor air wherever I am and because, unlike some over at Ioz, I'm really not convinced that evil government shouldn't be arresting that nasty POS Vick for torturing "HIS" dogs. I huess I'm a lousy liberal after all.

P.M. Lawrence said...

I meant "corporate", not "coroprate" of course. Oddly enough, I now notice that I contributed to the material on the Tragedy of the Commons that Scruggs cited.

But there are two things to think about in connection with the Tragedy of the Commons, ones which are very real and present. The first is that they really can exist, either because someone deliberately sets one up that way (see the Byzantine Kapnikon implementation of "Hearth Tax" that made it largely self-policing, and easier to police over time for the parts that weren't self-policing), or because it suited someone to leave it that way (like requiring merchants to spread credit card transaction fees over all customers' purchases).

The other is that the reason why "it doesn't happen in practice" is survivor bias. Nothing stops one happening by accident, it's merely that it's usually temporary and ephemeral because it self destructs (unless something else is causing another sucker to be born every minute - like Barnum's method of showing a caged Lion and Lamb together, just put another lamb in every so often).

So, there is a real price to ephemeral self destructive cases; and it is we who pay it when we are caught in them. Nothing stops them occurring spontaneously every so often - they fade quickly, but each exacts a cost.

For real world examples, consider the shoaling of fish as a predator defence, and the meiotic driving gene way of destroying a population through selfish evolution.

On the idea of how to handle outside threats, one way I've looked at is the historical record of the feudal system, particularly with the commanderies of military religious orders on the eastern and south-western borders of Christendom. There's food for thought there - including in how they degenerated (did you know that Prince Henry the Navigator's work flowed naturally from that?).

roger said...

Interesting remarks, all. Actually, this comments thread goes to so many different topics and examples it reads like one of Ruskin's saner Fors Clavigera letters!

The tragedy of the commons is one way of looking at social costs. However, I do think that someday, somehow, I'd like to see the idea dawn that the earth is not man's, nor the seas, nor the air. It would be nice if there were some pagan, primitive, animistic respect for the limits of the human that formed one parameter of any argument about the arrangement of the social order.

As for the best way that the social order can be arranged - I'd argue that there isn't any. That is one of the reasons I'm a liberal. I'll make that argument in some future post.

P.M.Lawrence said...

I'm trying to address things both top down for goals, and bottom up for transitions in the right direction. Any inconsistencies should be useful feedback for firming things up.

In the light of that, I went to some trouble trying to push one improvement in relation to unemployment in particular and economic imperfections in general. I describe it here and in some other material on the same page. It's worth mentioning in this thread because it does rest on correcting for a Tragedy of the Commons, pending engineering it out.

Briefly, this particular instance of a Tragedy of the Commons is the state-mediated disconnect between the hiring-firing decision and the burden of unemployment. Whether that works through the tax burden of funding Social Security payments as here in Australia (where the term covers unemployment benefits and not narrowly what old people get), or whether it works through the policing costs of coping with the unemployed, it's still a Tragedy of the Commons.