It is time to go beyond vague generalities about “regulation” and focus on the practical issues confronting our society – and enforcing existing legislation that can help meet them. The current financial crisis is in no small part linked to our reliance on imported oil. It is folly for the most powerful country in the world to depend, for its principal energy source, on a fuel which – in part – must be imported from countries where millions of people HATE us. (Doubt it? Read Osama bin Ladin’s speech of Oct. 29, 2004, readily available on the web.)

Worse, confronted with hostile public reactions to gas at $4 a gallon, did you notice how the price simultaneously fell to $1.75 throughout the economy? It’s hard to call such managed price-fixing the “free competition” required under the Sherman Anti-trust Act (which, under court decisions, also forbids price-fixing by an oligopoly of three or four huge producers). Enforcing this law is urgently needed as a matter of national security and economic recovery.

It’s not just a matter of the price of gas. Although an alternative energy source for cars is fully available, the oil industry has continued to block a rapid transition to energy independence. Positive action to end is needed to end Big Oil’s monopolistic dominance of our energy supplies. It shouldn’t be a surprise that the oil companies seek to prolong their high profits from expensive gas (in the last quarter, Exxon profits were $38 billion). America’s economy and our national security should not longer be threatened by the selfishness of a few huge companies pretending to compete while their control of the White House guarantees their immunity from prosecution for violating anti-trust law.

Few Americans realize that technological change is probably the greatest victim of the oil industry’s power. Hydrogen, the non-polluting fuel of the future, is already feasible, as illustrated by Honda’s hydrogen-powered "CLARITY" now on the roads in California. Prototypes of GM’s hydrogen-powered “EQUINOX” are also in use, and will be in full production by 2010. Since the technology of splitting H2O into hydrogen (usable to power an electric motor) has been resolved, every auto maker in the world is developing cars powered in part or entirely by hydrogen. Yet when the media discuss alternative energy, the word hydrogen is rarely used: all we hear about in wind and solar (neither of which are likely to provide power for automobiles unless its through generating electricity). Despite GM’s VOLT (the prototype electric car), relying entirely on electric motors to power America’s vehicles would have enormous costs to our infrastructure. Moreover, given the need to reduce reliance on oil for heating homes and businesses as well as for fueling cars, solar/wind powered electricity will be more suited to filling this part of the future energy mix.

Discussion of future energy policies has been strangely limited in the mass media. Is this a surprise when our President and Vice President are so closely associated with the oil industry? Mr. Cheney’s position in Halliburton shouldn’t be forgotten. Are all America’s journalists and pundits unaware that Halliburton’s principal business is locating and drilling the wells that access oil supplies? Hasn’t anyone noticed the remark attributed to Alan Greenspan that access to Iraqi oil was the primary reason for our occupation of Iraq?

Money talks. When covering limits to current oil supplies, the media have discussed off-shore drilling and Alaskan oil shale – but almost never hydrogen (despite the investments in electric motors and ultimately hydrogen fuel cells being made by Honda, GM, and other auto makers). Are all American journalists too lazy to check the web for postings on “hydrogen”? Or is it not possible that this silence reflects the economic pressure of big business on editors and media owners?

A handful of Big Oil companies have an effective monopoly over the energy resources of our society – and their monopolistic practices (such as dropping gas prices from $4 to $1.75 a gallon in the blink of an eye) have had the effect of undercutting investment in an alternative source of energy within America’s borders. Bland discussions of “regulation” vs “free market” are irrelevant: the Sherman Anti Trust act, as interpreted by a series of Supreme Court decisions, should make Big Oil’s monopolistic behavior ILLEGAL. Fortunately, the Obama administration will make it possible to wake the Sherman Act from it’s long sleep under the Bush-Cheney Administration.

Roger D. Masters
Nelson A. Rockefeller Professor of Government Emeritus and Research Professor
Department of Government
Dartmouth College
Hanover, NH 03755

Dear Mr Masters,

A very quick word answering your long diatribe.
I agree with you on several points you make, but I would like to chip in about some others.

The one reason why hydrogen cannot be considered as the future replacement for gas for your car is that you cannot dig a well in the ground and have hydrogen squirting out.
Though I don't doubt that hydrogen fuel cells will be refined to the point where they can be used in every car, the problem of hydrogen is double: production and storage.

The energy required to power your car with hydrogen has to be spent generating the hydrogen first. It is even worse than that: you need to spend more or less another third more energy to account for the losses in the production process.
If you burn petroleum-derived fuel to generate the hydrogen, where exactly do you save the planet or the US economy?
This is where solar, wind turbines, micro-hydro plants and so on kick in - and yes it will be to generate electricity, probably stored as hydrogen. (Other storage methods may show up on the way: supra conductive self inductances, high speed flywheels etc.)

As for the current crisis, though oil prices might have had some impact, have you heard about the housing bubble burst?
Now when you have an economic slow-down of the magnitude we are witnessing , I am not necessarily surprised to see the oil prices go down for lack of demand (economics 101).
Of course, absence of evidence is not evidence of absence and I fully agree with you about your general suspicion of price fixing. I plainly state that the observed drop in oil prices at the pump in and of itself does not prove it.

Best regards.
Please excuse my awkward English - it is not my first language.

Yeah. Sure. Give them more freedom.

This article is mostly excellent, but Baker makes the mistake of pandering to the libertarians with this erroneous statement: "Deregulation can be a principled position held by true believers in a free market."

In fact, there is no such thing as a "free" or deregulated market. Markets (based on money) are always dominated by one or more groups, almost always to the detriment of the majority who participate in them. Regardless of how well markets may advance overall prosperity, they will never do so as efficiently as moneyless cooperation has the potential to do. But more importantly, "unregulated" markets serve to ensure that the rich increase their wealth at the expense of the poor.

"Free trade" is a perfect example. It sounds great, but what it means is that rich people are free to pay the lowest prices anywhere in the globe to buy or produce what they wish--destroying middle classes and removing opportunities for real economic development from the 3rd world nations. Most economists, of course, argue that these low amounts paid to workers in the developing world are actually their keys to prosperity, since they mean better wages than were before earned in agriculture. But these economists propose a false dilemma. Lack of slightly better wages in sweatshops does not mean workers will be cursed to forever toil the fields with misery and ignorance as their reward. There is a third way: cooperation. It worked in many tribal societies who seemed to enjoy great leisure (enough to spend time on all kinds of elaborate rituals and storytelling) and even luxuries (feasts, child care networks) that the modern developing world's workers and even some in the developed world could only dream of. It also worked for the Spanish Anarchists for a few years, in more recent history.

"Fair trade", based on the idea that markets should not be oppressive, is a more subtle version of an oppressive free market in which the rich voluntarily throw some bones to the poor. The key word there is voluntarily--and that means that the poor are still at the whim of the rich.

The alternate Golden Rule is true: Those who have the gold, make the rules. Government doesn't shackle markets, markets are shackles in and of themselves. Short of abolishing markets entirely, government can shape them to be less oppressive to those without wealth, but most often, government, even when "democratically" controlled, sides with the rich and acts to further extort the poor. The sad vulnerability of democracy is that it functions only to the extent that information is able to be obtained and analyzed critically--and when schools train children to be good workers, and corporations control the information, democracy is only a facade for plutocracy.

Yes, Mr. Masters, I have heard of the Sherman Anti-Trust Act. I also know the legislative and court history. The only people successfully prosecuted under the act were labor unions.
Today we have companies raiding their workers' pension funds. Where are the prosecutors who imprisoned union heads for less?

BTW: We get more petroleum from Canada than from any place where, "people hate us."

"...government can shape them to be less oppressive to those without wealth, but most often, government, even when "democratically" controlled, sides with the rich and acts to further extort the poor."

Well, which is true? That government can help the poor, or that government will always favor the rich?

The latter of course. It's a mystery that the non-rich, and people like Mr. Rosenblum who claim to speak for them, have so much faith in the notion that government could do good by them, despite all the evidence to the contrary. I suppose government indoctrination centers, er, I mean, public schools, and the propaganda peddled by the conventional media explain that. Stephan Molyneux steps back and examines the big picture here:
http://www.youtube.com/watch?v=P772Eb63qIY&feature=PlayList&p=0629B97DDFA9C7DB&index=16

The one constant in this equation is government. The solution to this problem is less of it. It is not "pandering" to libertarians to speak of "true believers" in the free market any more than it would be pandering to physicists to speak of them being true believers in special relativity. It's not a matter of religious belief, but of understanding reality. And cooperation, as Mr. Rosenblum desires, is exactly what is possible and most in evidence in a free market (which means, a market without coercion, which is the opposite of cooperation). Any truly free society will have a full range of community models ranging from "cut-throat" competition to complete communism. The only thing missing will be one trying to impose on the other.

If the US political system were a true democracy representing the will of the population, then yes, the "government" would cease to be a coercive force and simply be an instrument through which the majority acts. making the government smaller for the sake of making it smaller simply allows corporations to gain greater power. that is the reason why "free marketers" hate the government so much, not because it's inherently coercive (any entity not accountable to the public will be coercive, and that includes businesses) but because the government is the only vehicle through which the little people can stand up to corporations. though the corporations largely control government policy, since we're supposed to be a democracy there is always the chance that the population will act up and take the reins away from the CEO's, and that's a real fear which the businessmen address by calling for "smaller government" in such selective areas as legislative powers and such. What a principled love of liberty the so-called libertarians have!

I would have to agree fundamentally with your assessment of market systems in general. It is as simple as taking evolution as your core example of an unregulated Market. Those without the necessary tools are always at the whim with those who happen upon them.

There is another key point that I would like to add to this theory. It seems that in the selfish nature of all living organisms, who must fight to allocate resources to themselves as a basic tenant of survival, the only way to make cooperation work as a fundamental structure is to create systems in which cooperation can be seen as the only means to achieve ones own desires. Due to the extreme perversity of contemporary media, education and by extension thought, strives toward a completely cooperative society seem nearly impossible. I posit that the only feasible means to such an end would be full disclosure of all relevant information to all the peoples of the world. The mass and forceful dissemination of knowledge in order to empower the population is the only real means of leveling society. This is not to say that this sort of action is an immediate answer, but over time I believe that this will help to shape the minds of the masses into much more rational decision makers. After all, what is an agent of free will without the knowledge to act properly?

The creation of the necessitated knowledge networks to take this type of action are always a dangerous prospect however. Those who control society in the sense we all imagine invariably will have disproportionate control. Luckily, thanks to the modern age of information technology, we have methods to deal with such corruption. Thank god (or whatever) for open source networks.

Forgive me for any errors I have made. I am a bad writer.

It wasn't the market or regulation that caused this mess. It was government meddling in the mortgage markets by Barney Frank and Co. Yeah, the congressman from Mass.

Also, Check out these numbers....
George Mason economist Walter Williams: The Federal Register, which lists new regulations, annually averaged 72,844 pages between 1977 and 1980. During the Reagan years, the average fell to 54,335. During the Bush I years, they rose to 59,527, to 71,590 during the Clinton years and rose to a record of 75,526 during the Bush II years. Employees in government regulatory agencies grew from 146,139 in 1980 to 238,351 in 2007, a 63 percent increase. In the banking and finance industries, regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.

So here are my questions: What are we to make of congressmen, talking heads and news media people who tell us the financial meltdown is a result of deregulation and free markets? Are they ignorant, stupid or venal? What kind of assumptions do politicians and news media make about the intelligence of Americans to expect us to buy the idea that our current mess results from deregulation and free markets? I do not find that assumption flattering. --CARPE DIEM

Before you start attacking the drug companies, be careful what you wish for. I suggest you read this article: http://www.forbes.com/opinions/forbes/2009/0112/072.html

The US provides drugs for the rest of the world. They don't come cheap, especially for rare diseases.

Also, I do not know of one technical or scientific journal that has said we can get rid of the internal combustion engine within the next 30 or 40 years. Mr Baker, what are your credentials on this issue?

Dean Baker has it right and Joel Rosenblum is right, as far as he goes with it - there are no such things as "unregulated markets."

I'd go a step further and say that the phrases "free market" and "free trade" are oxymorons. A market is nothing more or less than a set of restrictions on commerce. Economic transactions are dependent upon mutual trust, which is in turn dependent upon enforced rules of conduct. A set of regulations cannot logically be unregulated, deregulated or "free."

The word "trade" in "free trade" refers to commerce across national boundaries, which brings up another logical conundrum. The very nature of a national border is to be restrictive. It is part of a nation's basic sovereignty.

The coded meaning of the nonsense term "free market" is "regulations that benefit a particular business or type of business." The coded meaning of "free trade" is similar, with the added dimension of transferring national and international political power to corporate entities.

The cant about "smaller government" is similarly about a corporate directed power transfer.

You can read the whole spiel here: http://www.minorheresies.com/essays/2006/4/20/free-markets-free-trade-and-the-tooth-fairy.html

A bit off-topic, but if we all start using hydrogen to power cars, what happens to the stuff that leaks? It will surely rise into the atmosphere and undergo chemical reactions leading to unforseen consequences. I hope there are some atmospheric chemists checking that we aren't going to have new ozone holes, or similar consequences.

We wandering a bit off-topic here but...

The problem won't be the hydrogen that leaks the real question is the methods that we choose to produce that hydrogen.

Currently most of the hydrogen that we manufacture also results in a fair amount of Carbon Dioxide which kind of defeats the purpose of switching to a Hydrogen based economy. Mr. Perdu does mentions the problem of using petroleum based energy to produce the hydrogen.

Simon Higgins' concerns regarding Hydrogen leakage into the atmosphere are well-founded.

Free hydrogen, released in the atmosphere, can undergo an exothermic oxidation reaction, forming covalently-bonded hydroxylic acid.

An analog of Dihydrogen monoxide (DHMO), Hydroxylic acid is the prime component of acid rain, and can be found in watersheds throughout the world. It contributes to the greenhouse effect, and global warming. It accelerates corrosion and rusting of many metals. And it has been found in excised tumors of terminal cancer patients.

Atmospheric levels of Hydroxylic acid as low as 10^6 ppm are incompatible with human life. Yet, through a simple endothermic reaction, Hydroxylic acid can be fractured, to create Ozone.

Personally, I'm with Mr. Higgins on this. We should think very carefully before implementing a Hydrogen-based energy economy.

The term "free trade" is even in the Mass. state educational frameworks for AP courses in high school. Sad...the phrase will be removed by next year.

Please drop by Angry Bear if you have time. Lots going on re: Social Security. Wondering if Larry Summers is pressing the matter, or only Peterson and Walker.

Most of the regulations mentioned here have never got a simple cost-benefit analysis or impact assessment to have just an idea to whom they benefit. They are always being pushed through watching the sky and when you see clouds just get into denial mode against evidence. Exactly what banks are doing now

jorod demonstrated a great example of how canards are disseminated throughout the media. He used numerical figures which were possibly correct but were way off topic and out of context, to say the least. His type of deceit is similar to me telling everybody that they are going to die if they drink tap water. What I forgot to disclose are details of what where when how and why. Of course we are all going to die... someday. The half baked statement, similar to Jorod's can easily be dismissed by disclosing all of the parameters of the situation it will dismiss the culpability of the tap water and of Jorod's confused semi coherent canard which tried to damn certain respectable congressmen and the rules and regulations which tries to keep commerce from becoming a criminal Ponzi scheme

No economist of good repute claims that Fanny, Freddy or Barney Frank were the sole cause of the crisis. In fact, Fanny & Freddy's market share fell through the peak of the housing bubble and only started to in the later years before the collapse - since they were trying to make up market share. It's also interesting that jorod does not notice the many other housing bubbles which occurred in other countries like Spain, Britain and Ireland, which had no comparable government agencies to Freddy/Fanny but still suffered massive economic crises from housing bubbles. I'm sorry jorod, but you must really take an economics 101 course and learn to think logically in economics instead of spouting arguments by partisan hacks who can do the thinking for you.

Look at the following:

http://asktahir.blogspot.com/2011/09/political-program.html

That plan should fix everything alright.