Conn Carroll – The Washington Examiner
Who is better to “run” the economy, the big-name experts with the deepest credentials, or the eccentric unknowns who often labor in obscurity?
A recent story in the Wall Street Journal highlights the importance of this question by pointing out that the experts missed both the housing debacle in 2007 and the amazing turnaround in American energy caused by the hydraulic fracturing revolution.
Note that command-economy advocates of all ideological stripes always place immense power in the hands of the experts who “know” what is best for everybody else.
By contrast, free market economies make it possible for anybody with an idea to try it and see if it works. Not always and not perfectly but whole societies don’t have to pay the price when things don’t work out quite right.
Fracking won’t work
In 2003, according to the Journal, former Federal Reserve Board Chairman Alan Greenspan — who surely epitomizes the “wise man” in politics — predicted a natural gas shortage in America.
Investor whizzes Warren Buffett and Henry Kravett saw the same shortage coming and invested heavily in a utility buyout, expecting prices and profits to surge.
Similarly, the Journal quotes Exxon-Mobil head Rex Tillerson admitting that his huge corporation — stuffed to the gills as it is with the best brains in energy — did not see the fracking revolution coming.
Now, meet Harold Hamm, who perfected fracking and who, according to the Journal, “grew up dirt-poor in a tiny town in Oklahoma. He began school around Christmas-time each year, once it became too cold to pick cotton, and he started his career raking out oil tanks. Over the past six years, Mr. Hamm and his company have discovered so much oil in North Dakota that he is now worth $14 billion.”
They bet against the bubble
“In 2006, Andrew Lahde was an out-of-work 35-year-old stuck in a cramped one-bedroom apartment; then he made tens of millions of dollars betting against subprime mortgages,” the Journal reported.
“So did Michael Burry, a doctor-turned-stock investor in northern California with Asperger’s syndrome.” These two men were just two of dozens who bet against the bubble and won big.
And the experts? “Top banking executives were stunned, and leading investors such as Bill Gross, Jim Chanos and George Soros didn’t fully anticipate the downturn,” according to the Journal.
And the lesson is?
In the simplest terms, freedom works better than bureaucratic power. That’s the genius of economic freedom, it puts independent creativity, knowledge and insight to work on behalf of the individual and the consumer in need of products and services. Society is invariably the biggest winner.
Consider the digital tech industry. Free a Steve Jobs or Bill Gates to pursue their individual genius and look what happens: Incredible new products that make people happier and more productive.
Anybody care to bet on whether the healthcare.gov launch would have turned out differently on Oct. 1 had it been done without the bureaucratic and political constraints of the federal government?
