Economics error: trade makes people “dependent”

Lynne Kiesling

I am listening to an NPR story right now on the conflicts over the construction of the new pipeline to bring Canadian heavy crude oil from the tar sands to the US. Steve Inskeep introduced the story by observing that as Canadian tar sands production increases, US consumers will “become more dependent on Canada”.

This error is more than just a rhetorical one; it’s an error of logic and a failure of basic economic understanding, because it shows that Inskeep and his staff don’t grasp the reciprocity and the mutuality of trade and exchange. You could just as easily say that more oil transactions between US consumers and Canadian producers makes Canada “more dependent on the US”, because the revenue they earn from selling us oil is income that they use to do what they want to do in their lives, in much the same way that the oil we buy from them is a product that we use to do what we want to do in our lives.

Failing to incorporate the reciprocity and mutuality of exchange into your analysis is an all-too-common logical flaw, particularly in the increasingly breathy and Chicken Little media. They should know better.

Advertisements

4 thoughts on “Economics error: trade makes people “dependent”

  1. Crude oil is “dirty”. Heavy crude oil is “dirtier”. Heavy crude oil from tar sands is even “dirtier”, almost as bad as coal, which is the “dirtiest.

    The current Administration is all focused on “clean” energy: solar, wind, geothermal, etc. The Administration would rather be focused on a carbon-free future, except that there is no future in that in these days of a divided Congress. The 2000+ page monstrosity known as Waxman-Markey actually passed in the last House.

    NPR is against dependency on foreign sources of energy because the Administration is against dependency on foreign sources of energy, since all of the transportable forms of energy (except Canadian hydro-power) are “dirty”.

    Yes, this particular line of argument is economically illogical, but so are many of the other lines of argument in the politicized energy and environment discussions. This line of argument is no worse than the argument that “breaking windows” (replacing coal generation with wind and solar) is good for the economy and would stimulate recovery; or, that we could conserve our way to prosperity.

Comments are closed.