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07.16.08

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The Cure for High Commodity Prices

Ted Rall makes the case for nationalizing key industries.

By Ted Rall


The gas station attendant came outside. Wow, I thought, full serve! Ignoring me, she flung a magnetic price decal on top of the price per gallon. Regular unleaded had gone up 20 cents in the time it took me to drive from the curb to the pump.

"You're kidding me," I moaned.

"It's 3 o'clock," she shrugged. "Just got the new price."

There has to be a better way, I thought. And there is.It isn't drilling in the Alaskan wilderness. It sure isn't John McCain's plan to offer $300 million to the first person to come up with a longer-lasting car battery.

Gas prices could hit $7 a gallon before long, Wall Street analysts say, but Americans--always optimists!--take a little comfort in the fact that Europeans have paid more than that for years. But a lot of foreigners are laughing at us even harder than we're laughing at the Euros.

Did you know that Venezuelans pay a mere 19 cents per gallon? It's 38 cents in Nigeria. Turkmenistan might not have electoral democracy, but its citizens only shell out $4.50 to fill a 15-gallon tank. Before we replaced Saddam Hussein with--with whatever they have in Iraq now, Iraqis paid less than a dime for a gallon of gas.

One of the things that these countries have in common, of course, is that they're oil-producing states. Countries that export oil and gas have trouble explaining to their citizens why they should pay for their own natural resources--and most are smart enough not to try. Iran, Saudi Arabia, Egypt, Burma, Malaysia, Kuwait, China and South Korea are just a few of the countries that keep fuel prices low in order to stimulate economic growth.

But they also share something else: common sense. Strange as it might sound to Americans used to reading about big oil windfalls, they consider cheap gas more of an economic necessity than lining the pockets of energy company CEOs. So they don't consider energy a profit center. To the contrary; government subsidies (Venezuela spends $2 billion a year on fuel subsidies) and nationalized oil companies keep gas prices low.

Unlike corporations, governments don't care about turning a profit. They care about remaining in power.

Like the rest of the world, Venezuelan consumers have been squeezed by rising prices, and even shortages, of groceries. In 2007 Venezuela's socialist-leaning government decided to do something about it. First they imposed price controls on staple items. When suppliers began to hoard supplies to drive up prices, President Hugo Chavez threatened to nationalize them. "If they remain committed to violating the interests of the people, the constitution, the laws, I'm going to take the food storage units, corner stores, supermarkets and nationalize them," he said. Food profiteers grumbled. Then they straightened up.

When it works, nothing is better at creating an endless variety of reality TV shows than free market capitalism. But when it doesn't, businesses fold. Banks foreclose. People starve. And no one can stop it.

The problem isn't the weak dollar or the non-existent housing market. It's capitalism. A sane government doesn't leave essential goods and services--food, fuel, housing, healthcare, transportation, education--to the vicissitudes of "magic" markets. Non-discretionary economic sectors should be strictly controlled by--indeed, owned by--the government.

Consider, on the one hand, snail mail and public education. The Postal Service and public schools both have their flaws. But what if they were privatized? It would cost a lot more than 42 cents to mail a letter from Tampa to Maui. And poor children wouldn't get an education.

Privatization, particularly of essential services, has always proven disastrous. From California's Enron-driven rotating blackouts to for-profit health care that has left 47 million Americans uninsured to predatory lenders pimping the housing bubble to Blackwater's atrocities in Iraq, market-based corporations' fiduciary obligation to maximize profits that is inherently incompatible with a stable economy whose goal is to provide people with a decent quality of life. No one should pressure industries that produce things that people need in order to live to turn a quarterly profit. No one should go hungry, or remain sick, because some commodities trader in Zurich figured out some nifty way to take an eighth of a point arbitrage spread between the price of a hospital stock in New York and in Tokyo.

P.S. If you're reading this in Caracas, please mail me some gas. 

Ted Rall's most recent book is "Wake Up, You're Liberal! How We Can Take America Back from the Right" (Soft Skull Press).


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