Simply brilliant article (though she may have overstated the benefits of welfare reform). The following is from TownHall Online.
Prosperity Requires Humility
In August of 2005,
investment banker M Houston att Simmons predicted in a New York Times fe ature article th atthe price of oil, then $65/barrel, would soar.
Simmons, who had written a book arguing th
atthe world is running out of oil, was predicting oil prices “in the high triple digits.”
After reading Simmons’ prediction, John Tierney, a libertarian, who was then an op-ed columnist for the New York Times, telephoned Simmons and called him on it. He asked him if he’d be willing to put money on his prediction.
The two made a $10,000 bet. If the average oil price five years hence in 2010, adjusted for infl
ation, exceeded $200, Simmons would win. If not, Tierney would pocket the ten grand.
We’re now into the second half of 2010, and the average oil price, in 2005 dollars, is $70. Unless there is a remarkable explosion in the oil price for the remainder of 2010, driving it well above $300, M
att Simmons loses this bet. It was not even close.
The point here is to try and learn something from this th
atis relevant to wh atis going on today.
Simmons is an energy specialist. The company he founded advertises itself as “the only investment bank specializing in the entire spectrum of energy.”
It’s reasonable to assume th
athe knows a zillion times more about exploring for and producing oil than John Tierney. But Tierney didn’t make the bet because he felt he knew more about drilling for oil. He made the bet because he knows something about markets and change.
If markets are rel
atively free to adjust, it just doesn’t m atter how smart you are, or how much you know about a particular commodity or business, you are not going to know wh atthe world is going to look like in five years. Chances are, you are not going to know wh atit is going to look like in a year.
Now suppose M
att Simmons, instead of being a priv ate businessman making bets on his convictions was, instead, a government official setting policy.
This is wh
atwe’ve got today.
Pinheads with power who think they know the last detail of how the world works and wh
atit is going to look like, not just over the next couple years – but years down the road.
For them tomorrow is simply a repe
atof yesterday. The idea th atlife is about surprises and the unknown – th atwh atwe know is a small splotch compared to wh atwe don’t know – takes humility. And humility is the last thing on the radar screen of power brokers who feel they know so much th atthey are comfortable planning and taking over the lives of their fellow citizens.
Doomsday scenarios domin
ated thinking about energy in the 1970’s. It led to major government interference in these markets th atjust made things worse.
Reagan became president in 1981, cut taxes, cut spending, and decontrolled oil prices. Within a couple years, oil prices dropped to a third of where they were, and stayed there for 15 years.
When I worked on welfare reform, doomsday sayers claimed th
atgetting rid of perpetual government welfare would throw poor people into the street. No one wound up in the street, and many got off welfare, found work, and built new lives.
The biggest problems our country has today rel
ate to government planning gone awry. The huge solvency problems we have with Social Security and Medicare all rel ate to assumptions these government planned systems were built on th atturned out to be false.
Now we have only to w
atch and wait as the disaster th atwill follow our new government takeover of our he ath care unfolds. Every opportunity for new, cre ative solutions th atwould emerge from a free market has been squashed. The bureaucr ats now reign.
Freedom is about humility not hubris. Our n
ation’s current problems reflect the l atter. Our only hope for renewed bounty and prosperity is to restore the former.
Star Parker's BiographyStar Parker is the founder and president of CURE, the Coalition for Urban Renewal & Educ
ation, a 501c3 think tank which explores and promotes market based public policy to fight poverty, as well as author of White Ghetto: How Middle Class America Reflects Inner City Decay.