The Web of Intervention; P.L. Poirot

THE WEB OF INTERVENTION t'J paulof. poirol OUTDATED is the story of the farmer who had almost taught his mule to eat sawdust in place of oats-when the critter died. But a modernized version might tell of the motorist who tried to fuel his car with government in place of gasoline. The I-cent hike in the federal gasoline tax on October 1, 1959 brought the national average of state and federal gasoline taxes to 10.2 cents a gallon. In addition to these direct state and federal levies, there are corporate income taxes, payroll taxes, real estate taxes, and numer ous other assessments by all levels of government, all along the line from production to consumption, that also are reflected in gasoline prices. All told, well over half the retail price of gasoline goes for taxes. With every gallon of gasoline purchased, the customer must take at least a "gallon of government." And motors respond no better to such a fuel mixture than does a sawdust-fed mule.

One clear consequence of the government-boosted price of gasoline is the current popularity in the United States of small, fuel-conserving, foreign-made cars. Do mestic auto manufacturers are doing their utmost to 112 THE WEB OF INTERVENTION 113 cope with the situation, by adjusting motor and chassis design and by other measures which eventually will bring pressure upon the U. S. government to impose tariffs, quotas, and other barriers against auto imports. This illustrates how governmental interference with the market at one spot, as in the taxing of gasoline, in evitably brings demand for corrective intervention at other spots. One Step Leads to the Next The web of intervention also may be traced backward to the reason behind the ever-increasing gasoline taxes: the now almost unquestioned view that road building is a function of the government. The more roads de manded of government, the more taxes needed to defray mounting costs. One departure from the free market method of providing the goods and services people want leads on to other departures-and to more substitution of coercive intervention for voluntary production and exchange.

Closely related to these matters of gasoline prices and taxes and intervention is The Question of Govern mental Oil Import Restrictions) examined by New York University associate professor of economics, William H. Peterson, in a 69-page booklet published by the Ameri can Enterprise Association (August 1959, $1.00). Dr. Peterson briefly traces the background and growth of government oil import policy since the launching of the oil industry a century ago at Titusville, Pennsyl114 PAUL L. POIROT vania. The policy was essentially one of free trade in oil up through the end of World War I, the limited gov ernment intervention for the most part being to encour age the development of foreign sources of oil. The Great Depression marked a change of policy, however, with tariffs imposed in 1932 and import quotas the following year. Since then, the policy has wavered somewhat through hot and cold wars, but culminated in a Presi dential proclamation of mandatory import control, ef fective in March 1959, primarily on grounds that na tional defense requires virtually a self-sufficient oil industry.

Behind this argument lies (1) the fact that known domestic reserves of oil have failed to keep pace with rates of extraction in recent years, (2) the fear of deple tion of domestic supplies, and (3) the presumption that government protection against foreign oil would encourage exploration and development of new domes tic reserves at a faster rate than known reserves are be ing consumed. Dr. Peterson's analysis of these facts and theories finds no justification for restricting oil imports. "Quite the contrary;" he concludes, "study of the program in prac tice indicates that it is harmful to the foreign relations of the United States, disruptive to the defense position of the armed forces, depletive to domestic oil reserves,. injurious to the vitality of the American oil industry both at home and abroad, costly to American consum ers, and finally it establishes precedents for further inTHE WEB OF INTERVENTION 115 tervention incompatible with the precepts of a free society."

So, we are faced again with these precedents for fur ther intervention incompatible with the precepts of a free society. The government is asked to build roads, the precedent for gasoline taxes, which in turn are the precedent for import restrictions against foreign-made cars. And who can say that high gasoline taxes are not also responsible for many of the government regulations and controls over domestic output and imports of pe troleum products? By the early thirties, state and federal gas taxes averaged more than 5 cents a gaUon-28 per cent of the average service-station price consumers were paying. If that 5 cents-now doubled-had gone for gaso line instead of government, whois to know or say what might have been the effect on discovery and develop ment of additional oil reserves during the past quarter century? And what was the effect of these taxes on ex haustion of known reserves and on imports of foreign oil?

Would there have been more, or less, stringent prora tioning of domestic crude oil production in the absence of gasoline taxes? Did the state and federal gas taxes have anything to do with the 27!4 per cent depletion allowance made available to oil producers? And how do each of these and numerous other governmental inter ventions interact on one another? Just how would the property of taxpayers have been used had the govern ment not intervened to deny that personal freedom of choice? No one knows or can know that answer, any 116 PAUL L. POIROT more than anyone knows or can know how to govern the creative activities of those other than himself. All we can possibly know in this regard, supported by growing mountains of evidence, is that one governmen tal intervention leads to another in an endless chain of retrogression from the best of which free men are capa ble. What peaceful persons are forced to give and re ceive, through governmental intervention, cannot help being· less satisfying than would have been the conse quences of their voluntary efforts, cooperation, and ex change. For the effort expended in forcing individuals to produce other than as they choose is that much effort subtracted from the gross productive potential.

Mules cannot live on sawdust. Motors cannot run on government. Human beings cannot realize their poten tialities for progress if restrained and coerced. Coercive actions are precedents for further intervention incom patible with the precepts of a. free society.