Wednesday, July 9, 2008

exchanges vs. transfers of wealth

My response to T. Boone Pickens' comments on Bill Bennett's show about energy independence. (I didn't see the reference to "transfer of wealth" on the website, but heard it in what sounded like an ad cited on Bennett's show and he uses that phrase in his WSJ essay today.)


I also enjoyed the can-do attitude that Boone brings to the table on oil independence. But he is in error-- by describing our (mutually beneficial) purchases of oil as a "transfer of wealth". It is, instead, an exchange of wealth.

For massive transfers of wealth, one need only look at the farm bill, the housing bill, the Macro "stimulus" package, the Medicare RX program, etc. And given our extensive use of debt financing, one could also point to the transfer of wealth between generations. (Interestingly, these wealth transfers have contributed quite a bit to the devaluation of the dollar-- which itself is responsible for about one-third of the increase in gas prices since 2002.)

Finally, it would be ironic if T. Boone's advocacy of alternative energy strayed into the same category-- if he supports taxpayer subsidies for that particular endeavor.

Grace to you and Mrs. Bennett...eric


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