Last Thursday on public radio's Marketplace Morning Report, Bob Moon interviewed billionaire T. Boone Pickens about his highly self-publicized energy plan, which centers on using wind power to replace a portion of the natural gas used to create electricity, and then using that replaced natural gas to power cars. As it happens, Pickens has invested in a big way in windmills and is extremely well placed to profit from an increase in the use of natural gas-powered vehicles. But the part that bothers me most isn't the fact that a billionaire is running a propaganda campaign in an effort to rig the regulatory structure to force consumers to buy what he sells -- though that bothers me plenty. The part that bothers me most is the mixture of toxic nationalism and egregious economic illiteracy in the ads Pickens is airing to plump for his plan. Which brings us back to Moon's interview with Pickens:
Moon: Let me ask you to respond to something that Will Wilkinson of the Cato Institute said in a commentary on Marketplace the other day. Here's some of his criticism of you:
Will Wilkinson clip: He's leaning hard on our worst nationalist impulses. What he's really saying is, why buy the things you need from dangerous foreigners when you could be paying more to buy them from rock-ribbed Americans, like T. Boone Pickens.
Pickens: It's more than me. I mean, this is about America. This isn't about Boone Pickens and whether Pickens' wind farm makes money or whatever happens to it. But I mean, here with $700 billion going out of the country, and let's say that we could cut it in half -- $350 billion in the United States, can you imagine how that would multiply for jobs here. I'd much rather that gonna $350 billion was being used here than to give some for foreign oil.
Allow me to point out that Pickens' reply is nonsense. He continues to insist on characterizing mutually-beneficial exchange across borders as hundreds of billions of American dollars "going out of the country." But, in a nutshell, the reason Americans bought all this oil from abroad was that they had no way to get more energy bang for their energy buck. Unless the prices of domestic energy sources decline relative to that of foreign oil, shifting domestic consumption to energy from domestically-produced sources will require Americans to pay more for energy--leaving them less for everything else.
This is not a recipe for multiplying jobs. Rather, it would leave less money in the economy to start new businesses and to expand successful ones. This is a recipe to make ordinary American consumers poorer and energy corporations, like the ones Pickens owns, richer. If Pickens was making sense, the implication would be that Americans would be better off if we "in-sourced" everything. T. Boone Pickens, meet David Ricardo.
Either one of the world's wealthiest men doesn't understand elementary economics, which clearly tells us that his plan will make Americans poorer, or his plan is not really "about America."
Here's my July 31st Marketplace commentary on Pickens. And here's Cato's Jerry Taylor in March debunking "energy independence."