Berkeley Economics Professor Brad DeLong is calling for the nationalization
of US energy industries. I’d prefer a substantial gas or carbon tax, but I
think DeLong is right about the dilemma we are in. Better nationalization than
the current status quo. Unfortunately, the unwillingness of the American public
to support higher gas prices seems to stand in the way of any progress, gas
taxes or nationalization.
DeLong writes (here):
Nationalize the American Energy Industry.
In the 1960s it became very clear that the price of oil in the United States
needed to be higher: Because of powerful congestion and 
pollution
externalities, we were overinvesting in the automobile civilization. A larger
tax on oil would nudge the economy closer to the social optimum. In the 1970s
it became very clear that the price of oil in the United States needed to be
even higher: Because of instability in the Middle East, unacceptable
geopolitical risks were being generated by our dependence on the Middle East as
a source of energy. A larger tax on oil would nudge the economy into a
configuration in which this geopolitical danger would be lessened. And at the
start of the 1990s it became very clear that the price of carbon energy needed
to be higher: global warming. Yet it never happened. It never happened because
of what Lloyd Bentsen’s aides used to call the “ullengaz” industry—“oil and
gas.” Powerful enough to block desirable public policy regulation and adjustment
for nearly fifty years now. In general I am opposed to state-run 
nationalized
industries: that is definitely the private sector’s place, not the government.
But the interaction of rent-seeking politics with the flaws of America’s
political system have made me willing to make an exception in the case of
America’s oil industry: the increased allocative inefficiency that will flow
from government ownership and management is, in my judgement, likely to be much
less than the increased political efficiency that will flow from no longer
having the energy industry able to purchase enough Representatives and Senators
to block needed policy moves that it fears will be adverse to its interests. So
nationalize—not to expropriate or to penalize the shareholders, but to get this
particular selfish and destructive political voice out of American governance.
I also agree with his begging the rulers of China and India on the climate change issue:
Beg the Rulers of China and India. Unless the North
Atlantic Conveyor shuts down and Europe returns to the climate of the
Younger Dryas Era, global warming is not a huge deal for the North
Atlantic economies for a century. We mourn the losses of our glaciers
and our snowpacks. We lament the extinction of the polar bears, the
coral reefs, and the giant sequoias. We welcome the extra sunny days to
go to the beach. We move a few miles north, relocate economic activity
to get out of the paths of hurricanes and droughts, turn down our
heaters, turn up our air conditioners, and live our lives. It would be
expensive for us to simply adapt—more expensive I believe than dealing
with the problem—but we could do so.
But China and India will soon have, along with their neighbors,
three billion farming peasants in the great river valleys of Asia. They
depend on the regular monsoon rains and the river flows of the Indus,
the Ganges, the Mekong, the Yangtze, and the Yellow Rivers. Global
warming means the climate will change. There will either be much more
precipitation in the valleys and feeding the rivers, or much less. If
there is much less, hundreds of millions will die in famine and
drought. If there is much more, millions will die in floods and the
dwelling and working places of hundreds of millions will be washed
away. The peasant-farming populations are not rich enough to simply
adapt.
So we need to beg the rulers of China and India to understand their
long-term interest: 
The welfare of their countries over the next four
generations depends on rapidly controlling global warming. Their own
personal survival—unless they want mobs descending on their homes when
they are in retirement, dragging them and their descendants out into
the street, and carrying their heads on pikes—depends on rapidly
controlling global warming. And because one of either China or India is
going to be the globe’s dominant superpower in a century, pleasing that
future superpower now is in every country’s interest. So we need to beg
the rulers of China and India to recognize their personal and their
countries’ long-term interest, and to use their power as future global
superpowers to help us get this climate-control party started.
I hereby do so. Rulers of China and India: I beg you. Get on board. Please.
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