Wild About Writing

I enjoy exchanging thoughts and ideas with my friend Michael Callaghan. With Michael’s permission, I thought I would share with you some of our recent conversations.

On Friday, I sent Michael a copy of a letter I submitted to the Globe and Mail (which was published the next day.)  Here is what I wrote:

“It is shameful that in praising Finance Minister Flaherty’s appointment of an economic advisory council as Obama-like (Opening ears, raising hopes – Dec. 19), you overlook the fact that this was the chief recommendation of Liberal leader Stephane Dion when he set out a plan  in the leaders’ debate on October 1 for coping with the economic crisis.

 ”At the time, Mr. Harper said “You’re panicking, Stephane,” and the media ridiculed the proposal as meaningless.

 ”It is doubly ironic that the potential stimulus figure you attribute to the Harper government (Harper eyes stimulus worth $30 billion – Dec. 19), is the very sum set out by Dion’s Liberal-NDP  Coalition as the amount that would be required to get the country moving again.

 ”Clearly, we now have a Dion government – without Mr. Dion.”

Michael responded:

 Quite right. I told my Tory friend that the brazen lying of Harper and  his side-kick has been grossly offensive and increasingly dangerous.. The two of them milked the idea that Canada was largely unaffected by the economic storm swirling through other G10 countries as if  precautions they had taken were shielding us. Now they propose the same G10 measures. Just as the Opposition parties claim, Harper is a brazen 
liar and he can not be trusted.

Anyway, you might also, while you are on the injustice of it all, 
consider the Obama cap and trade proposal.
 
Nonetheless, I think Dion defeated himself. He was a “clarity” man who  didn’t have any. The Liberal party needs to rid itself of everyone in
charge of “communications.” Getting out the word began to fail back in 
Martin’s day. I remember throwing up my hands when I heard Martin on the radio bleeding all over Rex Murphy. “Can no one,” I thought, “get that
fool to shut up?” And Rex Murphy?!!. Owning Rex Murphy is like having 
the clap.

Then Michael sent me the following:

I see by a report today that the inflation rate dropped, largely because
of a decline in the price of gasoline, since food prices increased.  This reminds me of “core inflation” which arbitrarily excludes prices for both energy and food. Which reminds me that Milton Friedman used core inflation numbers of the ’70s to propound his monetarist nonsense. I call it nonsense because it was clear that the oil price bomb of those years caused a general rise in prices that was reflected in all the prices in the economy. If government intervention could have forced gasoline prices down we would have had the same effect then that we have today.

What was needed was an NEP. No one has mentioned it yet, but the effect
of what Obama promises is the US version of an National Energy Progame
for today, and it goes a lot further than Trudeau’s NEP. So, get ready out West, oil prices are collapsing and big government is stepping in to
control the business.

To which I responded as follows:

You are right. What intrigues me is that price is supposed to be a factor of demand vs supply. Now in the past couple of months the price of oil has fallen by three-quarters, from $160 to $40 a barrel, with only a marginal reduction in demand and no increase in supply. In fact, OPEC has been reducing supply.
 
So my question is, if the current price is a reasonable reflection of demand vs supply, why did the price ever get to $160? I can only conclude it was the result oif a monopolistic conspiracy – stated or unstated – among the major suppliers, abbetted by speculators who stupidly assumed they could push the price ever higher. It is this sort of nonsense that makes mockery of Adam Smith and all the cvonventional economists.
 
The problem is that the alternative – state control – is equally bad or worse because then there is nobody to monitor the criminal actions of those controlling the state. So my motto on that, just like “separation of church and state,” is “separation of commerce and state”
 
What we need to do is rigorously monitor the free market to keep its players honest. We moved in that directioin  from the 30s to the 80s, then the pendulum swung back, with today’s disastrous results. Hopefully, we’ll now put in place regulatory strategies that will yield long term improvement.

What do you think? I’d be glad to hear your ideas.

Re the comments above, Jeffrey Simpson’s Globe column from Saturday is a terrific read:

Greed grab and Bush’s triumphalist national narrative