“The social usefulness of well-defined property rights, free exchange, and the system of relative money prices . . . has perhaps been demonstrated most convincingly by the catastrophic failure in the twentieth century of those societies that tried to function without them.”

– Paul Heyne, “Efficiency,” in David Henderson, ed., The Fortune Encyclopedia of Economics (New York: Warner Books, Inc., 1993), p. 11.

“The wildcatters showed their gratitude to their city through their philanthropy. They were not the only ones who supported good causes in our region, but many of the foundations in Houston had their beginning in the oil and gas industries.”

– Joe Pratt, Cullen/NEH Professor in History and Business, University of Houston

George Will invoked the theme of Texas exceptionalism in a recent column pitching  the state’s governor Rick Perry for the Republican presidential nomination.…

[Editor Note: With T. Boone Pickens (et al.) trying to get natural gas vehicles off the ground with a $80,000 per vehicle special tax break, it is worth examining the origins of the political means versus the economic means to business (profit/loss) success. All roads lead to Franz Oppenheimer (1864–1943), a German sociologist/political scientist who saw capitalism’s business leaders at work.]

“I propose in the following discussion to call one’s own labor, and the equivalent exchange of one’s own labor for the labor of others, the ‘economic means’ for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the ‘political means’.”

– Franz Oppenheimer, The State. New York: Free Life Editions, 1908 (1975), pp. 24-25 (full quotation at end of blog).

MasterResource sharply distinguishes between enterprise that is motivated by and dependent upon consumer demand in a free market, and profit-seeking that is abetted by special government favor (SGF).…

“The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”

– Milton Friedman. “Which Way for Capitalism?” Reason, May 1977, p. 21.

Special government favor. A little something for nothing at the other’s expense…. Sure, a particular business or industry can gain in the short run. But when everyone is getting the booty, almost all lose.

Just look where government is today. The chronic, gargantuan federal budget deficit is testament to the Enrons then, GEs now  receiving government subsidies from either the U.S. Treasury or the tax code. The rest of us pay (or will pay) what the rent-seekers are getting and not paying for (outside of their lobbying costs).…

Four-dollar per gallon gasoline provides more margin for oil producers than four dollars per million British thermal units (MMBtu) provides for natural gas producers. Historically speaking, oil prices are high and natural gas prices low.

In the face of low prices, the natural gas industry can practice self-help in a free market–or resort to political shenanigans. Self-help means producing less (hard to do in a technology boom!) or selling more. Whether converting fuel oil customers to natural gas in the home heating market or building gas-to-liquids plants to convert natural gas into petroleum products, including gasoline, natural gas companies and their trade groups can work to be their own best friend.

But segments of the natural gas industry, led by master rent-seeker T. Boone Pickens, has turned to the political means to bolster demand and thus price.…