05/22/12 – Robert P. Murphy – The Scott Horton Show

All right, y'all.
Welcome back to the show.
It's anti-war radio.
I'm Scott Horton and our first guest on the show today is our good old friend, Bob Murphy, Robert P Murphy.
He's a fellow at the Ludwig von Mises Institute, and he's the author of the politically incorrect guide to capitalism and the politically incorrect guide to the great depression and the new deal.
You really ought to read them both.
They're really great.
They really are.
Um, and, uh, let's see mises.org.
And then of course he's got his, uh, his own website, free advice, consultingbyrpm.com.
All right.
Welcome back, Bob.
How are you doing?
Thanks for having me, Scott.
I'm doing well.
Did I get the address there, right?
Yep.
Consultingbyrpm.com.
Okay, good.
All right.
Now, uh, so this piece in the American conservative magazine, that's theamericanconservative.com.
It's called who needs war for oil.
And, you know, I was, uh, puzzling over this earlier.
I'm not sure whether this is a widespread sort of, you know, coast to coast, uh, society wide kind of, uh, uh, misconception or whether this is really just kind of, uh, uh, you know, college professor misconception that, uh, the war is no blood for oil, as they say, that it's, you know, in their, uh, in their chance that the war is necessary for greedy truck driving Americans to have their gallon of gas so that they can drive the way they want.
And, um, and that's not a good enough reason, obviously, to have a war and kill a bunch of people.
And so it ought to be stopped.
And, and that's kind of the myth that you're taking on in here.
Um, but first of all, what do you think?
Do you think it's really just kind of a, a left-wing protester thing?
Or you think that really, this is pretty much widespread throughout society that, well, you know, you gotta have the wars cause you gotta have the oil, right?
Kind of a thing.
Well, yeah, I think it's, it is widespread and you're right.
So the, so I think typically leftists believe that, you know, Americans and their high degree of reliance on fossil fuels for energy, you know, causes all these endless foreign wars.
And so their solution is to get rid of, you know, to switch to solar or electric cars and whatever it, but right-wingers also, I think many of them think, I mean, Rush Limbaugh, his catch phrase, you know, for the first, uh, war against Iraq was to say it's to ensure the free flow of oil at market prices.
And he wasn't saying it as a criticism.
He was saying, that's why George H.W. Bush is right for doing that, you know, because we, we, we have to ensure the free flow of oil of the American way of life depends on it.
So I think this idea that if we're going to use oil, we need to be willing to go by on the middle East is pervasive among left and right.
That's funny.
You know, I was just remembering the other day about here in Rush Limbaugh, way back before September 11th in the nineties, talking about how the occupation of Saudi Arabia drives terrorism.
And his answer to that was simply, Hey, look, we have to occupy the middle East so that we can have that oil because this economy needs oil and that's not going to change pal.
So then the only question is how come Bill Clinton's doing such a lousy job of fighting the terrorists that this occupation agendas, you know?
Well, right.
I mean, they're, I think that again, we're speaking in broad brush strokes here, but I think the typical right winger on this kind of issue looks at the world like it's a giant game of risk or something.
And, you know, they're thinking we have to move our troops in here to make sure we get that oil for our, you know, they wouldn't use the word empire, but that's what they're thinking.
And so, yeah, they think that unless we have troops down in some country, then that means we won't be able to get access to those resources.
Yeah.
Uh, yeah.
So now your thing is that the, the right wingers and the left wingers, the pro war, and you know, the people who use it to justify, uh, and the people who say, well, you know, this is just killing and stealing, which would be my take on it.
Uh, that still, uh, they're not right.
That it's not about the oil.
Well, well, it's, it's a little bit more nuanced.
So I don't deny that the, that the reason, you know, if you want to understand us foreign policy, oil certainly plays a lot to do with that.
You know, that is part of that explanation.
What I'm saying though, is the U S government does not need to be going to war in order to ensure that Americans can get gasoline, that in other words, that the reason for going to war would just be to say who is going to pocket that money from selling the oil.
But if the U S never went overseas and we had, you know, some anti-American dictator running the show, you know, the worst nightmare scenario right wingers can come up with the point is, what are they going to do with that oil?
They're going to sell it.
That's the whole point of taking over some, you know, there's some coup in South America or in the Middle East and some, you know, person who hates the U S government takes over.
The reason they want to take over is because they want to be the ones to sell the oil and keep the money.
So even if they redirect it and sell it to countries besides the U S that would just rearrange global patterns and the U S would import more from Canada or from some other, you know, neutral country.
So my, my point is that America, it's not the case that if America weren't willing, the U S government, I should say, weren't willing to go invade the Middle East that therefore American drivers wouldn't be able to get oil.
I'm saying that that is false.
That is one way to see it is what do we do when we want to put pressure on Iran?
And again, I keep saying we, I mean, the U S government, they embark, you know, they, they blockade it and say, you're not allowed to sell your oil somewhere.
Right.
So that shows, you know, what we do to hurt them is to stop them from selling their oil, which is the thing we're saying we have to go to war because otherwise I might stop selling their oil.
You know what I mean?
It's crazy.
Well, now I'm trying to remember, cause I think there was a Cato study back in the 1990s that said, well, we spend, you know, and I don't know exactly how they estimated it, but you know, our, we spend this many hundred billion dollars in the Middle East on our Middle Eastern foreign policy.
And we spend this many hundred billion dollars on actually purchasing oil and we spend way more securing it than we even spend on the actual oil we consume.
And then I don't know if they were including how much of that demand is the military itself, because of course, what guzzles gas more than their carrier battle groups and their jets and their tanks.
Yeah, that's, that's, I mean, those are all great.
And maybe another, and I made this point in the article, another way of framing it, that more Kate, you know, aimed at the left-wingers is to say, you know, cause they're saying stuff like, Oh, the U S government, uh, by, by its spending on the military is implicitly subsidizing oil.
And so Americans aren't really feeling the true price at the pump because oil is much cheaper because we're, you know, over there bombing people and what have you, and that's a hidden cost.
So my answer to that is okay.
Well, then the, the solution is not to put a carbon tax in place or to have the government tax people more and spend it on developing, you know, batteries for electric cars, the solution then to get Americans to see the true price of the pump, if you're correct with your analysis, it's just to stop spending money bombing foreign countries.
And, and, you know, let's see what the world price of crude would be in the absence of us foreign operations.
And if you're right, then the price would go up and then Americans would naturally through market forces, start driving electric cars, but they're trying to have, you know, they're, in other words, they're saying like Americans need their cheap oil.
And so we kind of have to force them to drive electric cars.
And I'm saying, well, no, under your own worldview, just stop subsidizing oil through the military.
And then let's, you know, try it, you know, give freedom a chance for a minute before you go using force the other direction.
Well, you know, here's, what's funny too, is that, and you know, this gets into the specifics of the Iraq war for one example, but it's pretty illustrative.
So part of the cabal that wanted some kind of regime change in Iraq was the James Baker types.
And which was, you know, the old council on foreign relations types, as opposed to the neocons and they didn't want this giant Wolfowitzian overthrow of the whole society.
They wanted a regime change at the very top as Greg palace put it to change Saddam Hussein out for the next mustache in line, which meant, I guess the next general, hopefully not his sons.
Right.
But that the Ba'ath party would stay in power and they would become the allies of the American Republicans again, like the good old days of the 1980s and whatever.
And that their entire thing was trying to keep Kurdish oil off the market that since the twenties, the different oil cartels, I guess, you know, the Rockefellers and whoever else had drawn a big red line around Northern Iraqi oil and said, let's keep all this oil off the market to keep the price artificially high.
So even as they would jockey for position as to who is doing the pumping and who is doing the skimming in this place or that they all still would abide by the agreement to keep that oil off the market.
And then this became kind of a fight between those types and the neocons who wanted to privatize all the oil and and get it all into production in order to hurt the Saudis position in OPEC and all of this.
But I just anyway, I'm sorry.
That's sort of a tangent.
But Greg Palace reporting is that a big part of the motivation is to keep the price high, to keep the market volatile.
And then, of course, they'll dump it again when the new technologies start really becoming competitive.
They'll drop the price back down.
Anyway, we'll be right back with Bob Murphy after this.
Sorry about the heartbreaker.
All right, welcome back to the show, it's Antiwar Radio, I'm Scott Horton.
I'm talking with Bob Murphy from the Mises Institute all about oil wars and wars for oil and why they don't need to be wars for oil and different misconceptions surrounding these questions.
Scott, if I could just follow that, you made a great point right there before the break there.
And that's I think that's a great thing.
And people need to keep that distinction in mind that, you know, think about it.
What happens when the U.S. and its allies go to war against these countries?
The price of oil goes up because at least in the short term, we start bombing some country, you know, Libya or whatever, or the threat with Iran.
You're worried about those barrels of oil not getting the market while there's still hostilities going on.
So it's clearly to say we need to go to war to keep oil prices low.
I mean, that's false in the short run.
And then, like I say, even in the long run, it doesn't make sense.
These countries, I mean, some of these governments that are sitting on huge oil reserves, it's like 50 percent or more of their government's annual revenue comes from selling state owned oil.
So the idea that despite the U.S., they're just going to not export oil anymore is crazy.
That would hurt them way more than it hurts the U.S.
And again, we know that's true, because when the U.S. wants to punish those countries, those regimes, what do they do?
They say, OK, no one's allowed to buy oil from them.
And that's how they try to punish them.
So that shows that they benefit more from selling oil to us than we benefit from getting their stockpile of oil.
So all this stuff, I think you're right.
And the guy you were quoting is right.
It's just jockeying over who's going to control that.
If there's like 10 major coalitions and they all control one tenth of the world's oil, the way you benefit is if you knock out your rivals so they can't sell.
So that raises the price.
So that means you get more for your stockpile.
But certainly the oil you own, the reason you benefit from owning it, you're not going to drink it.
You're going to benefit from selling it on the world market.
Right.
Because I think you say in the article, what's the point of being a Middle Eastern potent, Tate, if you can't pocket all the oil revenue, man?
Right.
How are you going to afford all that cocaine?
So, again, this is great.
So I know some of your listeners are probably, come on, I just know that, you know, all these big oil companies have to do a lot with international wars.
And that probably is true.
But my point is, it's not because, oh, by definition, therefore, a country that uses oil a lot, therefore, has to have an aggressive foreign policy.
I'm saying those two things are not connected.
That if we I think actually world oil prices would be lower if the U.S. weren't the government weren't so aggressive internationally.
Right.
Yeah, exactly.
And it really is too bad because, you know, I hear people who aren't really Republicans even or war hawks who just sort of these are like the facts of life, death and taxes.
And, hey, you know, you have to have wars over there because or else we can't have oil.
So what are you going to do?
You know, you want to see America without oil anymore?
Come on.
And that kind of thing.
And it's just it's the perfect permission slip.
Tell people that the most integral part of the most essential part of their way of life is at stake.
And they'll go, well, all right, well, I don't know.
You got to kill some Arabs.
I can't smell their burning bodies from here.
So what do I care, you know?
Yeah.
And I think rhetorically, then, and that's why I hope that, you know, people anti-war left wingers who aren't fond of capitalism will at least entertain this argument I'm putting forward is to say, I think you're going to lose if you try to convince the average American that, you know, yeah, if you want to keep driving your SUV, then you realize you're going to be killing foreign babies.
And the anti-war activists might think and that will get them to stop and give up their SUV.
And I'm saying, no, it won't.
No, they're a bunch of baby killers.
They don't mind.
Yeah.
Show them that, you know, you can still drive your SUV without bombing those brown people across the ocean.
And so there's no you know, don't believe Dick Cheney and whoever when they say this is a necessary evil because it's not right.
Yeah.
I'm not sure exactly how the magic works.
It's my master's thesis.
I'm plugging away at it.
What is it about the saltwater in the ocean that means that people on the other side of it don't have humanity and that it's OK to kill them?
I don't know what it is.
It's the distance.
It's maybe I think it's the the salt content has got to be it.
But anyway, yeah, the American people to them.
And you know what it is, too.
It's because they don't teach geography in school.
So the rest of the world is such a abstract concept.
It's not a real place with real people on it.
You know, and TV never shows them screaming as they die and stuff like that.
So it's just it's it doesn't really exist.
It's like it might as well be a cartoon.
You know, people think of the Middle East.
They think of Aladdin, the Disney thing.
Yeah.
Or like some episode of 24 or something where they'll show them plotting and whatever.
But that's really all you would see.
Yeah.
An inaccurate shape on a map.
Right.
But never like a street view of just people living.
Yeah.
Anyway, well now.
So a big part of this to China, it's always about China, China and Russia.
The pipeline's got to go this way and not that way.
And we can't let Iran and Pakistan and India and China all work together in one pipeline because that could mean peace.
And we don't want them to all get along because that might cost us some some advantage.
This is what George Bush called strategery.
And so it's not even about, you know, Exxon's lawyer, James Baker, wanted us to rig a deal so that his company makes more money.
This is all about just making sure, even if it is a world market and it's for sale and the Chinese can buy it, that in the event of an emergency, we can cut them right off.
That, you know, comes down to it.
We have a monopoly on the oil supply in the world, whether it's in Venezuela or Iraq or wherever else.
Yeah.
And I really do think that there's a distinction that, you know, it's not the case that what's good for the maintenance of the US government, you know, international empire security apparatus or whatever you want to call it, apparatus of control.
That is not the same thing as the welfare of the average American person.
And so it is true, you know, if you think of it this way, it's if you're in the US government and yet if if some hostile regime, like if Saudi Arabia fell into the hands of people who ideologically hated the US government, they could certainly mess with US politics.
Like, you know, a month out from the election, they could just cut their oil exports in half, you know, and then cause the price of the pump to go up two dollars a gallon.
And that might make the sitting president lose the reelection.
You know, they could do that.
But the point is they could do that maybe for a month or two.
It'd be, you know, their businesses selling oil.
It's not like that's going to fundamentally change the benefits or cost of driving cars that run on conventional gasoline.
But it certainly could mess up the plotting and the plans of people who are trying to take over the world.
And so that's why they don't like having all these wild cards.
They like having people in place all over who, you know, play ball with them and aren't going to give them any surprises.
But in terms of ensuring, you know, a flow of resources to US businesses and consumers and motorists over the next 50 years, it doesn't really matter who owns the oil because they're going to sell it.
That's the whole point of owning it is to sell it and get the money.
Yeah.
Hey, just look at the relationship between Hugo Chavez and Houston has always been perfect.
They've never had a problem, not once.
And even there, people point to that when I bring this issue up, they go, oh, Hugo Chavez.
And I say, yeah, let's take that out.
A couple of years ago, I think it was in 2008, the US was getting real hostile and people, you know, they were and he was blustering and was saying if the US attacks us, then I'm going to cut off my exports.
But first of all, he never did it.
He was bluffing.
He never, you know, he never said it.
But again, OK, so he stopped selling to the US and he sells his crude oil somewhere else.
So wherever those people used to sell it, you know, get it from that would free up that spare capacity to be sold to the US.
So, I mean, it's unless Venezuela just stopped exporting oil altogether, it's not going to significantly affect how much oil the US can import on a daily basis.
All right.
And do you know, by the way, offhand, how much America spends per year on oil on, say, imported oil?
So I guess I should ask that before the break and give me a chance to go.
Yeah, I know I'm going to have homework, Scott.
I'm sorry.
I said I didn't know I was going to get homework on this show.
No, I probably should have brought a number because I just want to because, you know, we're going to have Chris Hellman on the show later and he's going to be talking about how we blow a trillion dollars a year on the national security state.
And so I was just thinking maybe it would make, you know, like that old Cato study I mentioned, maybe there'd be a good point in there to make about we spend so much more under the pretension that we got a Marine standing every few hundred feet up and down every pipeline in the world, keeping them all secure for us or whatever the hell is going on over there, people think.
And we spend this much more than we actually spend on oil in the first place.
You know, that kind of thing.
I don't know.
I'd like to try to beat somebody over the head with it if I could.
You know, well, I mean, it's not anywhere near that figure because it's, you know, it's in the such and such millions.
Well, yeah, I'd have to think it through.
But no, I don't think it's that it's anywhere near that tens of billions or less than that.
Well, you'd want to look at how many.
Well, because I know the figures in terms of barrels per day, and I'm afraid of trying to do that in my head.
And we'll split.
Right.
Yeah.
Live on the radio.
I'm no good with the decimal point on the fly either.
So don't worry about it anyway.
Well, somebody in the chat room's probably good at math.
We'll have them do the work for us and we'll cover it when we get back from this break coming up.
We'll let them know.
But anyway, it's it's a great thing to talk with you again.
I really appreciate it's a great article that you have here, Bob, who needs war for oil.
And you really do a great job of dispelling the kind of pro war and the anti war myths about oil wars and and these kinds of things.
So very important piece for people to look at.
And I highly encourage them to do so.
Thanks again for your time on the show today.
Thanks for having me, Scott.
That's a great Bob Murphy, everybody.
He's the author of The Politically Incorrect Guide to Capitalism.
You really ought to challenge yourselves with that, liberals out there.
And also the Pig Guide to the New Deal and the Great Depression.