On Thursday, Donald Trump delivered an energy policy speech at The Williston Basin Petroleum Conference in Bismarck, North Dakota.
The speech continued to show Trump's lack of respect for free markets. His view seems to be that there are various economic matters that must be directed by government and that he is the best "deal maker" to ensure that the government makes the best deals in these situations. He clearly holds a view best described as an American Führer Principle perspective.
In his speech, Trump stated:
Under my presidency, we will accomplish complete American energy independence.This, of course, is a declaration made by most presidential candidates ever since the Arab Oil Embargo of 1973. It is total confusion and Trump joins the pack in this confusion.
What does this declaration mean? It means a perspective that advocates for taking the evaluation of the risk of another Middle East oil crisis out of the hands of independent risk takers and putting it in the hands of the government.
It ignores the fact that entrepreneurs are quite capable of evaluating the risks and opportunities on thousands of commodities on a daily basis. If the threat escalated with regard to a disruption of oil supplies out of the Middle East, oil prices would skyrocket, causing market-created conservation of supplies and entrepreneurs, in anticipation of a real threat, would stockpile supplies. No Führer needed.
Further, if there really is a threat that Middle East oil will be cut off at some point in the future, the U.S. should be eagerly using as much Middle East oil as possible now and husbanding domestic supplies.
"American energy independence" flies in face of the way to deal with a real threat of a cutoff in Middle East oil. If there really is such a threat, you absorb all the Middle East oil you can now, so that when the threat develops you have not used up the easiest to produce domestic oil.
Things got worse as Trump went on in his speech. He said:
American energy dominance will be declared a strategic economic and foreign policy goal of the United States.This suggests once again that Trump is thinking in terms of a horrific government created national industrial policy. It is Trump thinking again as the master leader and negotiator of the economy, seeming unaware of economic teachings that show it is impossible to successfully centrally plan an economy. (For more indications that Trump would implement various national industrial policies see: The Most Under-Reported Sentence in Donald Trump's Foreign Policy Speech).
Trump then reemphasized his desire to become independent of OPEC oil and also what he deemed "nations hostile to our interests."
We will become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests.If a country is willing to sell us cheap oil, how can that possibly be hostile to out interests? As Mises and Rothbard have taught, it is trade that reduces tensions between countries.
Trump went on with an even more horrific step, indicating that the revenue generated from his "American energy independence" plan will, to some degree, belong to the federal government:
We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure.This is, of course, on top of Trump's declaration that he will allow the Keystone Pipeline project to continue as long as the government participates in the profits (See: Fascist Economics Squared? Trump Will Approve Keystone Pipeline for a Cut of Profit).
As Rob Garver notes:
First of all, the federal government isn’t in the business of shaking down private businesses for a share of their profits in exchange for favorable treatment. There’s another entity with that business model, but its leaders don’t announce their plans in press conferences.
Additionally, suggesting that the government share in the profits of a business it would also be in charge of regulating for safety and compliance with environmental regulations creates some pretty dubious incentives.
Finally, the idea that the government should target a specific project as a source of extra cash, either through some sort of unprecedented profit-sharing arrangement or through another targeted assessment, which would amount to a company-specific tax, has got to be pretty terrifying to free-market Republicans in general.
Many libertarian supporters of Trump seem to hold the view that Trump will be less willing to get the United States involved in military actions overseas. This I doubt. I expect a new Trump Administration to act quickly to send US troops to the Middle East to fight ISIS and to employ some kind of military operations in Libya. And that is for starters.
But putting aside what Trump will do on the global military front, I believe the authoritarian, central planning efforts that a Trump presidency would bring domestically to the United States would be extremely oppressive and, yes, in many ways move the U.S. economy to look much more like that of a Third World economy.
Libertarian supporters of Trump fail to take into consideration Adam Smith's important observation with regard to empathy and location that he outlined in The Theory of Moral Sentiments. In other words, if Trump is only a domestic horror, and not a militaristic global adventurer, that is a very serious problem in and of itself.
Trump's energy policy speech provides every indication that he has the instincts of a central planner and completely subscribes to the Führer Principle perspective. Not good, not good at all.
Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics. His linked page is here. His San Francisco Review of Books essays are here.