Senator Vitter Discovers Adam Smith

With or withouton the presidential reading list, markets aren't going away. Neither is oil or the need for a free people to protect ourselves and our environment from recklessness in the pursuit of it.
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There's something vaguely amusing in the spectacle of the junior senator from Louisiana lecturing the president -- formerly of the Harvard Law Review, now of the United States of America -- on any topic that involves intellectual heavy lifting. Ironies abound. But David Vitter has a proven instinct for comedy, demonstrated when he campaigns as a family values candidate in front of crowds that contain a few men actually capable of fidelity to their wives.

The Obama lecture is delivered in Vitter's turn as guest blogger on the National Review's website. The gimmick of the piece is to assign the president Adam Smith's Wealth of Nations as "required reading." Excellent idea, in the unlikely event Obama never got around to Wealth of Nations in high school or college. But having made the assignment and still several hundred words shy of a finished blog, Vitter seems to be in deepwater, to use a word that has gained currency in recent months down here along the Gulf of Mexico.

An important economist and something of a prophet, Adam Smith championed the "invisible hand" of the market as superior to the mercantilism fashionable in his time. (And perhaps again in ours, though China's global ascendancy is not something Smith could have been expected to envision.)

But Vitter's blog isn't really about Wealth of Nations. Long on bombast, short on nuance, Vitter careens from Smith to climate change, taking swipes along the way at Carol Browner, Steven Chu and others he dismisses contemptuously as "the Obama crowd." What he really wants to talk about, though, is oil, specifically the oil moratorium that followed the Deepwater Horizon catastrophe. He deplores the moratorium as deeply hurtful to the corporate interests who have bankrolled his tenure in office.

The most extraordinary thing about the blog: Vitter seems to see oil, not as the most cosseted and pampered industrial sector this side of arms manufacturing, but as a triumph of free-market economics. This is amazing. It's as if oil hasn't contributed so mightily to so many legislators -- Vitter among them -- as to become a virtual arm of government. (Hotheads might go further and argue that government is the arm and Big Oil is the government, not just in Arabia, Iran, Mexico and Venezuela, but no less obviously in Louisiana as well.)

Free-market thinking has played an important part in the saga of American success, but not for a hundred years in anything like its pure form. And well before that, Adam Smith had some pretty powerful minds arrayed against him, including our cherished Founding Fathers. Vitter pauses to sigh over Wealth's fateful pub date -- 1776 -- without seeming to realize that Alexander Hamilton opposed the Scotsman's views and instead argued successfully for a central government strong enough both to overcome the states-rights crowd and resist predation by economic rivals abroad. Among other departures from free-market orthodoxy, Hamilton saw the need for tariffs and for creation of the federal bank that today issues Sen. Vitter his ample paycheck and a subsidized health insurance package the rest of us can only envy.

The free market's invisible hand "organizes economic activity with astounding efficiency," Vitter writes breathlessly, seemingly unaware that while he plowed through Smith's book, if indeed he did, Wall Street collapsed, trillions in national wealth evaporated and millions of Americans lost their jobs. Even Alan Greenspan has risen up from prostration before the altar of libertarian economics to concede that markets are not quite so marvelously self-correcting as novelist Ayn Rand had promised him they would be.

Maybe Vitter has also begun to lose faith. No sooner does he deliver his full-throated paean to the glory that is oil than he is wringing his hands. It's as though, without his help, an industry so fragile will roll over and die like an oiled porpoise. The focus of Vitter's lamentation: the recently lifted moratorium on offshore drilling. The moratorium lasted a few months but somehow, by Vitter's account, still threatens to rob a 150-year-old industry of a vitality that the senator holds responsible not just for the nation's economic vigor but for "American exceptionalism" itself. (That's all it took to destroy Big Oil, senator? A half-year moratorium? Oh, ye of little faith!)

No doubt to Vitter's delight, the hand of federal regulation had indeed become invisible in the years leading up to the BP blowout. The Minerals Management Service, since renamed, had gone giggly on oil industry booze and fine dining. With regulators off its back (or on their own backs) and with just a little help from Halliburton, BP's free market buccaneers yielded to time-honored traditions. In a spirit of thrift that would have done Poor Richard proud, they cut corners and ignored safety protocols in ways that turned out to be -- oops! -- rather costly. And not just for a giant corporation and the men who died on its rig, but for Louisiana fishing families and motel proprietors all along the Gulf Coast. (To say nothing -- as is usually the case -- about the long-term environmental burden.)

A reawakened regulatory apparatus that actually forestalls the next deepwater disaster is surely one of the best things that could happen to Big Oil. Its more thoughtful executives and directors concede as much.

But not their man in Washington.

Vitter's politics are a prescription for actually extending our dependence on oil, which he refers to as "cheap energy." He calls it "the heart of America's recipe for remarkable growth since World War II" -- forgetting for the moment that oil had risen to $150 a barrel under the Republican administration of the most oil-friendly president since, well, that same president's father.

Vitter would go Dick Cheney one better and not just eviscerate regulation but indemnify oil against the full cost of befouling America the next time it happens. His summertime initiative was a bill to cap oil company damages in a disaster -- a classic example of protectionism and market meddling that would have left Adam Smith spinning in his grave. Fortunately, the bill died aborning, yet another scratch for a man with one of the Senate's thinnest records of legislative accomplishment.

Not to worry. Even with a senator in its pocket as clumsy as Vitter, oil will hold sway for years to come. Indeed, the price looks likely to spike again soon, throwing our fragile recovery into another tailspin and reminding us how foolish we -- and the markets -- have been to let the development of alternative technologies languish. Vitter heaps contempt on Chu for even imagining gas at $7-a-gallon -- the price that could be soon surpassed if the subsidies and tax breaks were set aside and the full cost of oil's environmental degradation were taken into account. What the Nobel laureate seems to realize -- Vitter's misconstrual notwithstanding -- is that pricing oil at its actual cost is the fastest way for the next-generation technologies to flourish with something like, yes, free-market vigor.

Call it mercantilism, call it the betrayal of the market, but the historical reality is this: Start-up incentives (including the Interstate highway system, to mention just one trillion-dollar gift to oil) are what brought on petroleum's pre-eminence. It's just that the corporate welfare and government giveaways seem to have gone on a bit past oil's infancy. We can drill, baby, drill, all the way to China, but that's not going to weaken the stranglehold imported oil has on our economy. And when we get to China, we'll discover something already apparent to perceptive energy pundits (the National Review's blogger excepted): China is committing mountains of yuan to the development of renewable energy sources, while men like Sen. Vitter do what they can to keep us hooked on fossil fuels.

Adam Smith, by the way, quite accurately anticipated the decadent culture of special-interest lobbying that has made a lackey of David Vitter, the same David Vitter who, before Katrina, fought valiantly for lumber interests seeking to make bagged garden mulch of the Gulf Coast's environmentally critical cypress forest -- or what's left of it. Writes Smith: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public... "

Striking a balance between regulatory overreach and the market's occasional bursts of disastrous ineptitude is the challenge of our time, one that already engages the Senate's more capable minds. With or without Wealth of Nations on the presidential reading list, markets aren't going away. Neither is oil or the need for a free people to protect ourselves and our environment from recklessness in the pursuit of it.

Jed Horne was a senior consultant to the National Oil Spill Commission and is the author of Breach of Faith, Hurricane Katrina and the Near Death of a Great American City.

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