In preparation for a possible op-ed on the Strategic Petroleum Reserve (SPR), which was established after the OPEC embargo to act as an added buffer, I asked an expert about whether the private industry saw it coming. I explained that I needed to know so that I could take my defense of the free market one of two ways:
* If the private sector people did anticipate the embargo, then I would explain that Nixon's price controls and high tax rates would make it pointless for speculators to build up inventories before the crisis hit. So SPR isn't necessary, we just need to unleash the market to do its job.
* If the private sector did NOT see the OPEC move coming, then I would explain that this isn't a strike against the market and FOR the government; after all, the planners were caught off guard too. So the question going forward is, okay, now that we realize OPEC could do this again, who is most likely to prepare for it better? Private speculators who are risking their own money, or bureaucrats?
Now, is anybody else slightly troubled by this? It gave me the willies when I realized that my solution was going to be the same no matter what had happened historically. Now granted, this is partly the point of Misesians who stress that economic theory is a priori. But still, I could definitely understand if a leftist thought this simply proved how dogmatic I was.
"If your approach to mathematics is mechanical not mystical, you're not going to go anywhere." -- Nassim Nicholas Taleb
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