Thomas Marshall is one of only nine U.S. Vice President to serve two full terms, though history has nearly forgotten him. He was popular at the time (1913-1921), partly because his speeches were so entertaining. A talented story and joke teller, and a constant wisecracker, he was probably America’s funniest V.P. He described the Senate as the “Cave of Winds,” which did not endear him to the Washington establishment. President Woodrow Wilson’s top advisor, Edward House, who called Marshall the court jester, said his wit detracted from his effectiveness. “An unfriendly fairy godmother presented him with a keen sense of humor, and nothing is more fatal in politics.”
Marshall is mainly remembered for one famous quip. When long-winded Kansas Senator Joe Bristow droned on for an hour about “What this country needs,” the Vice President whispered to a clerk, “Bristow hasn’t hit it yet. What this country needs is a good five-cent cigar.” Ever since, politicians of every generation have made speeches announcing “what this country really needs…” It became such a cliché that one satirist wrote, “What this country really needs is… fewer people who know what this country really needs.”
Who decides what the country needs? Ordinary people – consumers. In a free market, people individually decide what they need, want, and are willing to pay for. Apparently Marshall wasn’t the only one who thought there was a need for 5 cent cigars; within a few years dozens of companies sold millions of nickel cigars. Conversely, I thought there was a need for really expensive pencils, but when I tried selling them for ten dollars each, nobody bought one.
That’s how a free market works. One only makes money by supplying something people want badly enough to pay for it. Businesses cannot survive by investing capital to manufacture products nobody wants or needs. Economics regulate business behavior far more effectively than government rules. Yet governments, especially states, frequently try to determine the market for various products and services, and condition permits on whether there is a “need.” In most states, certain business licenses require applicants to demonstrate that there is a “need” that the proposed business would meet. Untold millions are spent studying such applications, though all a state needs to do is wait and see if the business survives.
One current case in point involves the Federal Energy Regulatory Commission (FERC), which regulates and permits pipelines and transmission lines, among other things. Section 7 of the Natural Gas Act requires FERC to conduct a “public convenience and necessity analysis,” before permitting a new pipeline, to make sure there is a need for it. Last month, some environmental groups sued FERC in federal court for finding that there was a need, and therefore permitting several pipelines.
Opponents say there is no economic need for new pipelines, their latest tactic in an ongoing struggle against virtually all energy infrastructure. They fear any project that enables the distribution of oil and gas could exacerbate climate change. So, they are asking courts to vacate permits by declaring the “need” analysis invalid. How will a judge know whether there is such a need? The court is not composed of experts in the highly-volatile oil and gas markets. FERC is supposed to have such experts on its payroll, but of course none of them have any money at stake, so they can afford to be wrong. The applicant company and its shareholders cannot, so they are much more likely to study the market judiciously, before fronting the multi-million costs of such projects.
In this case, with American oil and gas production reaching new heights, and liquid natural gas production up 70 percent since 2005, the fastest-growing part of the market is exports. That is promising. Imagine how different the world would look if it relied on the U.S. for its oil and gas, instead of Russia, Venezuela, Saudi Arabia, or Iran. Clearly, there is both a security need and an economic need for those resources in the export market. Thus, energy industry opponents want the courts to disallow any discussion of exports when determining the “need” for energy pipelines.
Here is a suggestion to save the court some time. Let the companies build their pipelines. If customers are willing to pay high enough prices to make the projects profitable, then the need has been established. If not, the projects go broke and there is no further concern. No agency needs to decide “what this country really needs.” The market will do that, even without government analysts.
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