Wednesday, 16 December 2015 11:52

Hendrickson's View

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Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

A Free-Market Economist's Take on Ken Burns' "The Roosevelts"

By now, you've probably seen or heard about Ken Burns' 14-hour documentary on the three most famous Roosevelts: Theodore, Franklin, and Eleanor. I have to confess that I almost didn't watch it.

There were two reasons for my reluctance. First, I am not a fan of either Teddy or FDR as presidents. The former was guilty of a lust for war and domestic strongman tendencies, and the latter tragically prolonged the Great Depression. Second, I had watched a one-hour preview of the seven-part series and found it almost nauseating in its worshipful tone. Listening to the hostess, one would have thought that America would have remained mired in the 19th century were it not that these three gods had come down from Mount Olympus to show us the way.

Thank goodness I made myself watch the actual documentary. Ken Burns and his writer, Geoffrey C. Ward, steered clear of presenting a mythological hagiography, and instead gave us vivid, insightful, fair-minded biographies of three immensely important, but oh-so-human Americans.

Although America's history from the late 1800s until Eleanor's death in 1962 serves as the backdrop to these three larger-than-life biographies, it is crucial to understand that this documentary isn't a history of America, but of the Roosevelts. Sure, I or any other economist or historian could quibble about the details. For example, when the script says that Teddy never advocated a redistribution of wealth, I could retort: What about his statement, when running for president on the Bull Moose ticket in 1912, "Our aim is to promote prosperity, and then see to its proper division?" Or when the narrator mentions that some businessmen characterized FDR as dictatorial, he could have cited the 1936 Gallup poll showing that 45 percent of Americans believed FDR's policies could lead to dictatorship or the 1941 Fortune Magazine poll showing that fully 93 percent of employers felt their property rights were under siege and were worried about dictatorship. I never felt, though, that the authors were trying to mislead, manipulate, or propagandize.

Instead, the filmmakers scrupulously strove to present fair, balanced portrayals of their three protagonists. First, they straightforwardly and without sensationalism dealt with the less-than-flattering aspects of their characters - Theodore's compulsive need to be in charge and prove his manhood; Franklin's need for loyal, adoring female companionship and his "deviousness" (although Geoffrey Ward never quite explains that characterization); and Eleanor's aloofness as a mother. Also, the documentarians included many of the Roosevelts' opponents' criticisms, leaving it to the viewer to decide which side was right on various issues.

"The Roosevelts: An Intimate History" shines on at least five levels:

1) It humanizes three individuals who have largely become iconic caricatures. You may not agree with them, but if you can't find anything to like or admire about these three, you have a heart of stone.

2) For all but dedicated Roosevelt scholars, there is much to learn. I personally gained a new appreciation for FDR's morale-boosting leadership during World War II, and for Eleanor's courageous commitment to civil rights for African-Americans.

3) This program provides encouragement and inspiration to anyone who has suffered loss, heartbreak, and trauma, either psychological, such as losing both parents early (Eleanor) or one's mother and wife on the same day (Theodore) or physical - e.g., FDR's polio, the severity of which I never understood until seeing this documentary. Whatever you think of the Roosevelts' politics, it is a triumph for the human race when individuals can survive, thrive, and accomplish much after being dealt harsh blows.

4) The series raises interesting implicit questions about the psychology of presidents. Should we know what makes presidential candidates tick? Certainly it takes a person of special strength of character to be a great president, and often such character is forged in the furnace of shattering experiences, but should we elect someone like Teddy whose manic behavior was driven by a need to escape his demons and to constantly prove that he is strong and manly?

5) Finally, "The Roosevelts" encourages us to think about what kind of president is right for America. What is the right balance between leadership, vision, and values (essential) and power (dangerous) in an American president? Even if a president means well and has good intentions, do the ends justify the means, such as doing an end-run around the Constitution?

I salute Ken Burns for a top-notch, informative, fascinating documentary. And I say that as a free-market economist who has fundamental disagreements with many of the Roosevelts' economic policies. Watching the documentary was 14 hours well spent.

Saudi Arabia Versus the Keystone Pipeline

Wow, I had barely recommended repealing the laws that restrict U.S. oil exports as part of an overall ramping up of competition in global oil markets when news hit that the Saudis were cutting the price of oil shipped to the U.S. The price of oil has been zigzagging downward since then - much to the benefit and delight of American motorists, who have seen gasoline prices fall, and to the angst of oil producers as lower prices squeeze profit margins.

Some may think that the Saudis are targeting American producers by cutting the price of crude oil shipped to the States even as they raised their price to Asian markets where the supply/demand balance is more in the Saudis' favor. However, Stansberry & Associates resource analyst Matt Badiali points out the sour crude that the Saudis are shipping here doesn't compete directly with the light sweet crude coming out of American shale. The Saudis are competing with Canadian producers to whom, as Badiali shows, they have been losing market share. Since the Saudi cost of production is lower than the cost of producing oil from Canadian tar sands, it looks like the Saudis have the upper hand in a price war against the Canadians.

Of course, there are multiple factors here which make predicting the long term problematical: How much longer can the Saudis maintain their rate of production? How fast are the Canadians achieving economies of scale and advancing along the learning curve to reduce the cost of extracting oil from tar sands? Can the Saudis make up in increased sales volume the profits that they lose as the price of oil declines? What geopolitical events might throw a monkey wrench into the Saudis' strategy?

Still, as of today and for at least the near future, the ongoing fall in oil prices has to be a major concern to Canadian tar sands producers. At what price point will lower oil prices force them to cut back on production? Given the possibility that producing oil from tar sands may become uneconomical, would building the Keystone XL pipeline through the American heartland still make sense for American companies and investors?

Indeed, the Saudi decision to drive down oil prices in North America means that the future prospects for the economic viability of the Keystone project need to be re-examined. President Obama has stubbornly refused to give the green light to Keystone. Wouldn't it be ironic if, after squandering so much political capital on his obstructionist position, it turns out that market prices kill or continue to delay the project? Up until a few months ago we needed Keystone - if not for actual production, at least as a sign that America was committed to the development of petroleum resources. The very commitment to increased energy production likely would have been factored into market prices, lowering them earlier has actually happened.

So, what now? Should the Keystone Pipeline be built? That's not for me to say and, frankly, I don't see the future clearly enough to know whether it will be economically viable in the coming years. Neither is it for President Obama to say or know. Only the market can tell us which decisions to produce are wise and which are mistaken.

Policy-wise, the president should simply get out of the way, call off his regulatory dogs, tell his green constituents to sit on it, and let entrepreneurs decide what risks they wish to incur. If they build it and lose money, well, it's their money that's being lost, not the taxpayers' money as it has been for various Obama-financed alternative energy boondoggles. And if they do make money, it will be because they are supplying a commodity that Americans want and their addition to the total supply of oil will result in prices to consumers being lower than they otherwise would - in other words, a win-win situation for both consumers and those who took the risk to build and own the pipeline (with an added beneficiary being the government through its tax on corporate profits).

A final thought: The Saudis aren't being "the bad guys," even though those who hope to work on or otherwise profit from building the Keystone XL pipeline might wish the Saudis and their cheap oil would disappear. There are no "good guys" and "bad guys" in this strenuous struggle for market share. What we have in the oil markets is an example of the rough-and-tumble, unsentimental, take-no-prisoners nature inherent in competitive commodities markets. The sovereign consumer is in charge. Consumers decide which firms thrive and which die based on which ones best serve us. Consumers don't care which particular producers supply our need for commodities - we just want to buy the commodity as cheaply as possible.

The oil market is working. We consumers - thus, society as a whole - are benefiting. In the competitive scramble to serve us, some producers will succeed while others fail. We should be grateful for them all, winners and losers, for each one of them, in their attempt to earn profits by supplying our needs has added to the competitive pressures that have pushed down oil prices. The cheaper oil gets, the more our prosperity will increase. Good luck to all the competitors, and thank you for working for our benefit. *

Read 2164 times Last modified on Wednesday, 16 December 2015 17:52
Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

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