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mises.org
"The Trouble With Tyson
by William Anderson
[Posted May 29, 2001]
In the continuing battle of words over who is to blame in the California electricity fiasco, economists seem to have fallen into two warring factions: those who favor price controls, and those who do not.
Laura D’Andrea Tyson is in the former faction. Tyson, having served as the chief economic advisor to former President Bill Clinton, was able to parlay her fame into becoming dean of the Haas School of Business at the University of California, Berkeley. She is a "well-respected" mainstream economist who holds views that are general to the modern economics profession. Naturally, Tyson favors price controls.
In a Business Week column dated June 4, 2001 ("Ignoring California’s Energy Crisis Imperils the Economy"), Tyson declares that emphasizing the production of more oil, natural gas, and electricity is nothing more than a " 'drill-and-burn' strategy that benefits its [the Bush administration's] friends in the energy industry and poses unnecessary risks to the environment." Furthermore, Tyson declares that the way to solve this crisis, at least in the short run, is to "impose a temporary cap on wholesale electricity prices." This, she writes, "would ease supply conditions in California and the Western grid. . . ."
That an economist, and especially one who enjoys a lofty position in the economics profession, would write these things says more about the state of modern economic analysis than all of the critical articles in Quarterly Journal of Austrian Economics combined. Tyson’s article is filled with the economic fallacies—especially an inability to recognize the unintended secondary effects that occur because of bad economic policies—about which Henry Hazlitt warns his readers in his classic Economics in One Lesson.
It is not possible, however, to detail all of Tyson’s fallacies. To accomplish such a feat would require more memory than is stored in all of the computers of the readers of this page. (Deforestation of North America would be required in order to deal with all of her fallacies on paper.) Thus, I shall deal only with the highlights...."
Regards, Don |
