FRIEDMAN: If you look back over the past history, the talk about the fact that this has been
a nation that has been wasting energy, that we have been squandering a finite resource,
is utter nonsense.
By any relevant criterion this situation is precisely the opposite.
At least since the 1920s governmental policy has been making energy more expensive than
it should have been.
Relative to the real costs of producing energy, we have been overpaying for it.
If from an economic point of view we've been doing anything, we've been using too little
energy and not too much.
The artificial pricing of energy has forced us to substitute more expensive ways of producing
things for energy.
Well then you will say to me, "Why then is it that we have an energy crisis?
Why does President Carter propose a major far-reaching program that would restructure
the whole energy industry?
Why does he say that this is the first priority item that fighting the energy fight is a moral
equivalent of war?"
The answer I believe is that three forces have coalesced to produce a real energy problem.
The first and the most immediate was the establishment of an effective OPEC cartel, of an effective
monopoly, which beginning in 1973 was able to raise substantially the price of oil.
Incidentally, the creation and establishment of that monopoly owes a great deal to the
encouragement which was given to the OPEC countries to form such an organization by
the mistaken diplomacy of the United States government.
The second factor has been the cumulative effect over time of government controls and
regulations beginning, to go to the most important of them, with the fixing of the price of natural
gas from the '50s and of oil from 1971.
And the third has been a change in the philosophical attitudes of the public toward the role of
government...
So our present energy problem, like our present problem in many other areas, derived from
the cumulative effects of the cartel, of government controls and regulations, and of this change
in philosophical attitudes.
What is the present status and prospects then for U.S. regulation?
Many people have emphasized that Carter's energy plan would not achieve its stated objectives,
but that's looking at the surface of things.
The true and real objectives of the energy plan are not and cannot be the stated objectives.
Again I have a very difficult choice to make.
James Schlesinger is an intelligent, well-trained economist.
He cannot possibly believe that the plan he has proposed would produce the results he
says it would.
What is the real objective?
As with so many other things, you have to look beneath the surface.
The real objective is power and control.
You have many predictions that Mr. Carter will not get his way, that there will come
out of Congress an energy plan that will be very different than what he puts in.
I think that's wrong; I think Mr. Carter has already gotten his way in what really counts.
He has already gotten the major element of the whole program, namely a Department of
Energy, a Department of Energy which has 20,000 employees and a budget of $10 billion--a budget
roughly equivalent to the profits of all of the American oil companies combined.
He is going to spend--what is it?--three dollars a barrel for oil in order to keep the price
of oil from rising.
But more important, you therefore have 20,000 full-time employees who have a strong interest
to propagandize for and to work for the government takeover of the oil industry.
And is there any doubt that that is what they will be doing?
Let every other element of that program be defeated in Congress, be turned down, and
it's only a question of time until they are enacted because what really matters is having
the position of power from which to move.
So I believe that those people who have been rather optimistic on the ground that Congress
is not going to enact the measures Carter proposed are making an enormous mistake; that
the Congress has already given Carter most of what's involved.
I may say the Department of Energy was established with a bipartisan vote of Republicans and
Democrats.
Unfortunately Republican politicians are no less shortsighted than Democratic politicians
when it comes to matters of this kind.