From: Rakesh Bhandari (email@example.com)
Date: Sat Nov 09 2002 - 00:05:29 EST
James Kenneth Galbraith presents a version of what the oilism thesis in regards to US foreign policy; for example, JKG argues that US control of Iraq is needed to keep the price of oil within a certain band; he then argues (I think) that the strong dollar policy is an attempt for the US to corner declining oil supplies. http://www.prospect.org/print/V13/21/galbraith-j.html First excerpt: Nor is Bush's strategy necessarily irrational insofar as it affects oil -- in the short run. With a new Iraqi government, the United States will gain a client state that is prepared to help keep the oil price within the band that both U.S. consumers and the remaining U.S. oil producers can tolerate -- low enough so as not to fatally drain purchasing power from the former, high enough so as not immediately to ruin the latter. Given the George W. Bush-Dick Cheney commitment to unlimited oil consumption, this will prove useful in putting off a day of reckoning. As total world oil production declines -- credible scientific evidence suggests that this may start happening quite soon -- the Middle East's share of the remaining reserves will rise. So, too, would the potential for cartel control and price manipulation. A robust U.S. military presence in the oil fields, directly or by proxy, will naturally make higher oil prices less of a danger. This is part of the appeal of war with Iraq.... Second excerpt: It is a straightforward fact that if global oil production starts to decline but U.S. consumption does not, everyone else will be required to cut purchases and uses of oil. But how can oil prices be held stable for Americans yet be made to rise for everyone else? Only by a policy of continuing depreciation in everyone else's currency. Such a policy of dollar hegemony amid worldwide financial instability, of crushing debt burdens and deflation throughout the developing world, is perverse. It will make our trading partners' exports cheap, render their imports dear and keep their real wages low. It will price American goods out of world markets and lead to unsustainable dependence on foreign capital. It will be a policy, in short, of beggar-all-of-our-neighbors while we live alone, in increasing idleness and inside the dollar bubble. This is the policy that Bush and Cheney are actually imposing on the rest of the world. But they cannot make it last. It will make lives miserable elsewhere, generating ever more resistance, terrorism and military engagement. Meanwhile, we will not experience even gradual exposure to the changing energy balance; we will therefore never make the investments required to adjust, even eventually, to a world of scarce and expensive oil. In the end, therefore, that world will arrive much more abruptly than it otherwise would, shaking the fragile edifice of our oil economy to its foundations. And we will someday face a double explosion: of anger against our arrogance and of actual shortage and collapsing living standards, when the confidence of investors in the dollar finally gives way.
This archive was generated by hypermail 2.1.5 : Thu Nov 14 2002 - 00:00:01 EST