Wednesday, May 25, 2011

What Became of Republicans

After suffering the humiliation of Richard Nixon's resignation, the Republican Party found itself again with Ronald Reagan.  A key part of Reagan's appeal was his reliance on the intellectual firepower of Nobel Laureate Milton Freidman, Alan Greenspan, and other conservative and libertarian economists.

Agree or disagree with their policies and theories, you have to admit that these economists were serious scholars who analyzed their data.  That rigorous analysis caused many of them -- including Friedman and Greenspan -- to conclude that by keeping the price of fossil fuels artificially low, we were stunting innovation and competition.

Too low, you say?  Yes.  Applying "price theory," these conservative and libertarian economists determined that the prices of fossil fuels did not include all of their costs.  Most importantly, the prices of fossil fuels did not include the cost of pollution.  Rather, the cost of pollution was "externalized" (i.e., imposed on the commons) resulting in a misleading price.  That misleading price made it impossible for the free market to make rational decisions (e.g., to invest in alternative energy).

So how did the Republican Party go from rigorous data analysis and disciplined application of economic theories, to the party of "that was not meant to be a factual statement"?

John Howley
Woodbridge, New Jersey

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