Monthly Archives: September 2008

You Got Government in My Markets! You Got Markets in My Government!

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It seems some folks try to have it both ways when talking about “the market.” They are right to remind us that “the market,” so beloved of free-market types, does not simply exist in a state of nature. Much of the extended market order is enabled — even constituted — by rules that define property and regulate the terms of exchange. Many of these rules are created and/or enforced by government. If markets were “out there” in the wild, just being all efficient and stuff, the poverty of humanity down through history would be completely vexing. This is just neo-institutionalist economics 101, and I’m down with it.

In particular, the American economy is so far from textbook laissez faire that it is well-nigh-impossible to find a breakdown in market institutions that does not have some bit of government policy as a chief contributing cause. As I said in an earlier post on a similar theme, “The American economy is in fact a byzantine amalgam of market and state institutions enmeshed in a thicket of regulation.” So when part of it goes KAPUT it’s cheap to blow ideological notes on the trumpet of market failure, especially if you’re the sort of person who likes to go on and on about how advanced markets cannot even exist except within the framework of government law.

If you doubt the centrality of the government side of this, let me give you James Pethokoukis:

The more you look at the history of the housing-spawned credit crisis, the more you notice Uncle Sam popping up, Zelig-like, in every scene. Fannie Mae and Freddie Mac were government-birthed entities that decided to buy securities tied to subprime loans. And it was government officials on Capitol Hill, the recipients of millions in campaign donations from the F&F lobby, who decided not to rein in those entities. You had the government ‘ s Community Reinvestment Act nudging banks to make unsound loans. Government banker Alan Greenspan pushed interest rates too low for too long earlier this decade, creating an extreme financial situation that made the crazy Wall Street strategies look temporarily reasonable. And for decades, government has pushed higher homeownership as a national goal, via F&F as well as through the tax code, siphoning off resources that might have been better devoted to other economic sectors.

And now, folks like Barney Frank pretend government just showed up on the accident scene moments ago like an innocent passerby who wonders aloud, “Anyone here know what happened? Anyone?” I mean, how can we try to prevent future financial crises, or least minimize their damaging effects, if we delude ourselves on the causes of the current one?

We’re seeing the apocalyptic failure of some huge markets. Yes, those markets have failed. And those markets are what they are because government made them what they are. We need better markets, and therefore we need better government. I can’t say exactly what that means at this point, but surely Sarah Palin can.

What's an Incrementalist Market Liberal to Think?

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Suppose Bernanke and Co. skillfully steer the economy through the meltdown. They succeed in propping up confidence in the markets, lubricate financial markets by taking on toxic assets, and then carefully selling them off as valuations improve, etc. etc. Bernanke will be hailed as a genius, and the whole episode will be taken as vindication of technocratic economic policy-making. This will drive a bunch of people crazy. Austrian foes of central banks, for one. Small "d" democrats, for another. We the people certainly never agreed to buy AIG!

Now, the democrats leave me mostly cold. If the government is going to be in the business of regulating and insuring markets, I’d much rather a bunch of ultra-elite economists do it that than a democratic body. Vetting these kinds of appointments is democratic enough. What we’re seeing these days with unusual clarity is the structure of the de facto American constitution. The best universities in the world select for ability and turn out highly elite economists. Informal but powerfully entrenched professional networks draw many into government service, which is assigned high status within the profession. A combination of reputation, connections, and political ability puts people like Bernanke into the Fed. This is simply incredible, since Bernanke is perhaps one of the two or three most qualified people in the world for this job. And the Fed’s de facto power is evidently immense.

But would we be better off without Bernanke’s job? I sincerely don’t know. I am torn about the strong version of the Austrian story. I think they might be right that none of this would have happened had there been a free market in money, etc. But I half-suspect that we wouldn’t be able to sustain such complex, globally-integrated financial markets in the absence of a relatively active government regulatory role. That is, we might not be as rich as we are now had we been living in a world of financial laissez faire. And if, as I half-suspect, I am wrong about that, I wonder how relevant it is. I very generously put the probability of the abolition of the Fed in the next twenty years at .10. If my dreams of awesome intellectual influence were suddenly realized, my advocacy of its abolition I think moves the probability of it to about .20. But there are other hopeless crusades that matter rather more to me. I leave this one to Ron Paul.

So what can I really be for in the present circumstances. Merely that the Fed do better. That ice catch fire and the Fed disappear? I guess there’s no reason I can’t be for both.

The Benign Rule of Ben Bernanke and the Ideal of Democratic Equality

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Tyler Cowen writes, “The economic fallout from these events [the crashes, the bailouts, the nationalizations] is dominating the headlines.  The intellectual and ideological fallout we are just beginning to contemplate.” Here’s what I’m beginning to contemplate.

If a high level of income inequality is a side-effect of voluntary exchange according to just rules, then what’s the problem? Market liberals tend to suspect there is no problem. What I’ll call “democratic liberals” think there’s a huge problem: the threat of economic inequality to democracy. Market liberals support democracy and democratic liberals support markets. The main disagreement, I am convinced, concerns views over the point of democratic institutions and their function in securing liberal values.

Some apparent democratic liberals are so fixated on the intrinsic value of deciding things collectively that any liberal commitments they may have turn out to be completely incidental. (Benjamin Barber is a good example. There’s a good bit of liberal rhetoric, but he is a Rousseauvian “forced to be free” democratic communitarian — a straightforwardly illiberal view in my book.)  I think of those people as “democracy fetishists” and I set them aside.

Non-fetishistic democratic liberals see a certain ideal democratic system as either instrumental to or constitutive of a society guided by authentically liberal values. In either case, sound democratic institutions are necessary to the security of our basic liberties. Democratic equality, according to which each citizen has an equal voice in determining the rules under which they must live, helps ensure that no group is able to dominate, oppress, and exploit other citizens. “One man, one vote” is a fundamental principle of democratic equality, but it’s usually seen as insufficient. Adult citizens may be on equal footing when it comes to votes, but we are very far from equal in “political resources” — all the means at our disposal for shaping the ultimate product of the democratic political process. Campaign finance rules are generally meant to secure relative democratic equality by limiting the inequality in certain political resources. One of the chief arguments for public financing of primary education is that citizens require some development of their intellectual capacities and a certain fund of knowledge in order to be able to effectively defend their interests in concert with others my means of the democratic process.

And then there is the idea that simply limiting economic inequality through redistribution will limit inequality in political resources, and thereby limit the ability of the rich to rig our institutions to their advantage. Paul Krugman, an archetypical democratic liberal (and one who understands markets very well, thank you), thinks this is already happening. For Krugman, it is so urgent to combat economic inequality because the liberties of most are threatened if the super-wealthy few are able to capture the institutions meant to secure the liberties of all.

But I don’t get it. First, there is often an assumption of class interest that is clearly false. The self-interested voter hypothesis does not do well generally. And the wealthy are very far from unified in their politics. As Gelman et al point out, the poor tend to vote pretty much alike (Demmocrat) but the rich are quite divided. Judging from their book, the best way to cut it I think is this: rich people who go to church are Republicans. Rich people who don’t are Democrats.  But isn’t this a distraction?

It seems to me that money is a relatively insignificant source of inequality in political resources. I’ve shared a house with two different guys who have clerked for the Chief Justice of the Supreme Court. Those guys probably had more influence in determining the effective policy of the U.S. government, just as a matter of doing their day-to-day work, than it is ever possible to buy with campaign ads. A JD from Yale, Harvard, Chicago, etc. is a ticket to professional networks that exert immensely disproportionate influence on the political process. Or consider Tyler’s other former debate partner, Randall Krozsner, now on the Fed Board of Governors. Could the wealthiest man in the world hope to influence American economic policy more than Krozsner? Unlikely. Indeed, Ben Bernanke’s Fed is basically unilaterally controlling the American and world economies without asking any of us for input. But the point is not the Bernanke is the most powerful man in the world. The point is that MIT and Harvard economics Ph.D.s have political resources that money cannot buy. Neither Marty Feldstein nor Paul Krugman need be in government to matter more to economic policy than a billionaire could dream. I don’t mind this. I like the technocratic elitism of the U.S. economics and legal bureaucracies. But then it’s hard to get exercised simply because some people are really really rich.

It strikes me as comical that our economy is now more or less ruled by a benign technocracy almost entirely outside democratic control, but most democratic liberals choose to complain that some billionaires are getting bailouts. If the problem with economic inequality is the threat to democracy due to large inequalities in political resources, shouldn’t democratic liberals be freaking out over the fact of the Federal Reserve, or about the immensely disproportionate influence on public opinion and policy by New York Times columnists and ulta-elite academic economists? It seems to me that if you’re not completely fliping out over these things, you can’t be genuinely interested in democratic equality. So if you insist on flipping out  over income inequality anyway, it can’t be a certain ideal of democracy that’s animating you. You’re going to need a different story to tell.

Here’s my story. Roughly meritocratic inequalities in political resources are OK. We want the democratic process, which cannot be counted on to yield high-quality policy, to be constrained and guided by legitimate experts. But then if wealthy people are better-educated, and better-educated people are more likely to make quality decisions about policy, than a democratic system more responsive to the wealthy than to the poor is more likely to deliver quality  policy (i.e., policy that does what it is intended to do). And if wealthy, better-educated people are more likely to be committed to liberal values overall, and there’s evidence that this is the case, then money-based inequalities in political resources may deliver liberal goods more reliably than a system under strict and comprehensive democratic equality.

The True North Strong and Freer Than Ever

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Check it out patriots. According to the newly-minted Cato/Fraser Economic Freedom of the World Report, the frosty land of toques and chesterfields has leap-frogged the U.S. to take 7th place, completely humiliating the tied-for-8th place land of the ever-less-free, home of the brave.

Is it now possible to even half-credibly make the case that the United States, in the age of warrantless wiretaps and the shoeless airport security line, is a freer country than Canadia? I doubt it. Read it and weep, fair weather laissez faire yanks:

O’ Canada! Why are you so cold?

Pluralism and the Strains of Commitment

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[Warning: This post assumes a lot of background, and may not be generally accessible.]

I’ve been re-reading bits of Justice as Fairness to try to nail down Rawls’ take on the relationship between the difference principle and the value of the basic liberties. But I got sidetracked.

The story on the development of the doctrine of “justice as fairness” is that Rawls saw that he initially grounded the argument for the stability of his ideal system on a particular comprehensive conception of the human good — one that is neither all that broadly shared, nor rationally mandatory. The argument in A Theory of Justice failed to take into account the inevitable pluralism in such conceptions in a free society. So Rawls famously changed the structure of his argument in Political Liberalism to better accomodate the unavoidable fact of pluralism in free societies.

It has been frequently pointed out that it’s pretty remarkable, and suspect, that this rather fundamental change in the argument entailed no really substantive change in Rawls’s conclusions. And that is remarkable, and suspect. Rawls just never does get his head around real pluralism, and his account of stability always seems to revert to the assumption that people brought up within a just social order will end up believing and valuing the same thing when it matters to the argument.

What I have in mind is his brief discussion of the strains of commitment in Justice as Fairness. The question is why won’t the rich always try to renegotiate the principles that govern our basic social institutions to their benefit? If they do clamor for more, the principles won’t last, and so won’t be stable, which they must be if they are to be adequate principles of justice. So why won’t the relatively rich try to get a better deal, if raised under the right institutions?

First, EVERYBODY shares an idea about the point of society and political institutions. Impossible. That idea — free and equal people engaged in mutually advantageous cooperation — entails a certain idea of reciprocity. Sure. And that principle of reciprocity is the difference principle, Rawls says. Remember, the idea is that all rich people raised under just institutions will think this. Unlikely. But it gets more implausible the more he drills down:

We also suppose that in addition to the reason which all have [that the difference principle is the principles of reciprocity implied by the abstract political conception everyone will allegedely share], the more advantaged have a second reason … The point here is that the more advantaged see themselves as already benefited by their fortunate place in the distribution of native endowments, say, and benefited further by the basic structure (affirmed by the least advantaged) that offers them the opportunity to better their situation, provided they do so in ways that improve the situation of others.

You know you’re in trouble if your argument (intended to be adjusted to the inevitably roiling pluralism of a free society) depends on all-but-universally-shared ideas about “the distribution of native endowments.” A bit earlier, Rawls notes that “this idea of reciprocity is implicit in the idea of regarding the distribution of native endowments as a common asset.” That’s also part of what, come the reign of justice, we’ll all understand.

I’m sorry. Even granting Rawls’ badly undermotivated framework stipulation that the strains of commitment cannot be expressed through emigration or capital flight, this is a total failure if the aim is to take reasonable diversity of thought seriously. These passages read like a reductio of the attempt to reconcile justice as fairness with the fact of reasonable pluralism. By Rawls’ own account, JAF seems to have no hope of passing the compliance/stability test without simply positing a level of agreement that makes a mockery of the whole idea of reasonable pluralism.

Remember, Rawls’ project is to outline a realistic utopia — a society that could really exist given actual human nature. So his stability arguments amount to predictions about, among other things, the beliefs and desires that would prevail among people brought up under institutions that satisfy his two principles of justice. The principle with the very highest priority here is an inviolable right to free thought and expression. And Rawls’ prediction is, what? That in that kind of society — in which freedom of thought, speech, conscience, etc. are paramount –  rich people won’t try to get a bigger piece because they will  all agree, more or less, that the “distibution of native endowments” is a common asset, that they’ve got it plenty good, and there could be no justification for wanting more.

We’ll never be in a position to see this prediction play out, but knowing what we know about the way actual human minds work, I would bet the farm against it. Even when he weakens his Kantianism, Rawls leans hard on it, and is undone by it. For all the talk about pluralism, he’s really depending on some assumptions about the universal structure of the “two moral powers” — rationality and the moral sense — that make his yearning for a kind of stability that is more than a fragile, contingent modus vivendi seem plausible. But it just isn’t plausible.

Porn Is Adultery

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Sigh. Moreover, a cigarette is suicide, the minimum wage is chattel slavery, and novels are full of lies, lies, lies!  Kerry points out the insulting, should-be-obvious implication of the Douthatian position:

It would follow that almost all of us have experienced monogamy as a series of small treacheries and degradations of which we are barely aware. We lack the cognizance to understand that porn constitutes a breach of trust; we don’t understand the agreements we’ve entered into, their terms having been set without our knowledge. Our relationships are constantly under attack, our closest bonds assailed, and we carry on in a cloud of misbegotten contentment.

This is silly.

Indeed. Ross’s position still completely mystifies me in terms of psychology, morality, logic, and if there is something else in play, it mystifies me in those terms, too.

Naomi Klein

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Is an angry fish, wondering where her water went. Naomi Klein is a Catholic without a Pope. Naomi Klein cannot believe it all turned out this way. Naomi Klein wants to sell you a better buggy whip. Naomi Klein is brought to you by the objects of her confused contempt. Naomi Klein “believes her own bullshit.”

On the topic of Naomi Klein’s recent contribution to human ignorance, Brad DeLong offers Keynes’ retort to Trotsky. Let’s freshen this up a bit and ask Klein to consider the thoughts of another disappointed hereditary communist. Here is the late Richard Rorty in “The End of Leninism and History as Comic Frame” speaking to Naomi Klein and her comrades:

The events of 1989 have convinced those who were trying to hold on to Marxism that we need a way of holding our time in thought, and a plan for making the future better than the present, which drops reference to capitalism, bourgeois ways of life, bourgeois ideology, or the working class. We must give up on the Marxist blur, as Marx and Dewey gave up on the Hegelian blur. We can no longer use the term “capitalism” to mean both “a market economy” and “the source of all contemporary injustice.” We can no longer tolerate the ambiguity between capitalism as a way of financing industrial production and capitalism as The Great Bad Thing that accounts for most contemporary human misery. Nor can we use the term “bourgeois ideology” to mean “beliefs suited for societies centered around market economies” and “everything in our language and habits of thought which, if replaced, would make human happiness and freedom more easily realizable.”

Rorty, regretfully agreeing with Alan Ryan and Jurgen Habermas that market economies appear to be part of the best we can hope for, suggests other dissappointed Marxists should just go ahead and drop their jargon, which turns out to be good for little more than signaling to one another. “It would be a good idea,” Rorty argues “to stop talking about ‘the anticapitalist struggle’ and to substitute something banal and untheoretical — something like ‘the struggle against against avoidable human misery.’”

Naomi Klein did not get this memo, or she burned it. Naomi Klein took 1989 with less honesty and grace than did Richard Rorty. Indeed, a yearning for the restoration of 1988 rises from every page of Naomi Klein oeuvre. Indeed, that’s a decent account of her project: to restore, in the early 21st Century, the sense that one can be a real intellectual, and not something like a young Earth creationist, while believing what even Richard Rorty could not believe after 1989.

But let’s not give Rorty too much credit here, either. To see “the struggle against avoidable human misery” as “banal and untheoretical” is ridiculous. That human beings should not suffer, that suffering is avoidable, that we should not simply reconcile ourselves to its inevitability and retreat to the consolations of mysticism, is an invention of modernity, and central to the ideology of progressive liberalism. The struggle to improve human welfare is banal only in contrast to the expectation of something much more romantic, dramatic, and stupid, such as the consummation of history through the revolutionary remaking of human society. And that is precisely what Rorty rightly says that it is baseless to expect and wrong to want.

But Klein wants it. And Rorty’s bourgeois petty reformism must seem anything but untheoretical; it is certainly ideological. And the struggle against avoidable human misery is evidently still not good enough, for Klein exhibits a rare genius in carefully avoiding the ample and well-understood body of knowledge about how human misery is best avoided.

Conspiracy theory will always find an audience among the ignorant, but there is no real chance that Naomi Klein matters much in the end. There is Naomi Klein and then there is the way the world is. Well-functioning market institutions will continue to lift the world’s poor from misery. It remains that Milton Friedman did immensely more to avoid avoidable human misery than did three generations of Richard Rortys and Naomi Kleins, who in stark contrast helped drive tens of millions of human beings straight into it. And Naomi Klein is a  dishonest, self-infatuated hack. With a little help from people who know what they are talking about, it all works itself out.

[Next up in the "What You're Searching For" series: "Mormon"]

Poor Live Better Now

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Arthur Laffer and Stephen Moore in the Journal:

When all sources of income are included — wages, salaries, realized capital gains, dividends, business income and government benefits — and taxes paid are deducted, households in the lowest income quintile saw a roughly 25% increase in their living standards from 1983 to 2005. (See chart nearby; the data is from the Congressional Budget Office’s “Comprehensive Household Income.”) This fact alone refutes the notion that the poor are getting poorer. They are not.

Laffer and Moore point out that we’ve been underestimating gains to the poor due to the decline in people per household, and the increase in the EITC, which led more poor people to file tax returns and therefore show up in certain sets of data.

And the new WSJ site looks terrific.

Qualifications and Sarah Palin's Crazy Politics

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I’ve been watching people I don’t think are idiots flip out over the fact that Sarah Palin has the politics of a typical Republican governor. I completely understand not liking Republicans, but you’ve got to admit that it’s weird to accuse a Republican politician for having the views of a Republican politician. So I’m calling sexism!

Also, qualifications for office. I don’t understand what people mean by this. Or maybe I think that what people mean by this is nonsense. I think it is blazingly obvious that John McCain, as a matter of temperament and values, is completely unfit to be president. Giuliani’s convention speech about how the election is like a job interview only affirmed for me Barack Obama’s superior qualifications. He is a man of remarkable competence, with an eye for both the big picture and the institutional details, who has a sober temper and an evident ability to inspire and effectively lead those reporting to him. He’s just the kind of guy I’d want as an executive, were I filling an executive position. Joe Biden is qualified to be president in much the same way McCain is; he is a lifelong asshole and American senator. Sarah Palin? I seriously don’t know. Maybe she’s a crazed Biblethumper who will send all our books to Iran and then nuke them. Maybe she’s George Washington with luxuriant tresses. But how would you know when everyone is falling over themselves to characterize her to their stupid team’s advantage? Politics makes people dull and dishonest. The politicians, too.

Would It Matter If I Guaranteed You Would Enjoy This Post?

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Maybe Yglesias tried to think of a more tendentious partisan angle to all this business about “bailouts,” but couldn’t come up with one, so instead of bothering to write a post, he just turned the crank on the PunditBot2008-D, which produced this for him while he was out getting a smoothie:

But conservatives don’t believe in that kind of safety net for regular people — just for the billionaires. Guaranteed health care? Forget it. Guaranteed retirement income? No way. Just let the market work, and when it stops working the executives will be okay and the rest of us will, oh, something or other.

Incisive! It seems that when Matt says “Progressives believe in a robust safety net for everyone,” the idea is we’re supposed to be in favor of bailouts for regular people and billionaires. That’s generous, but I’d drop safety nets for billionaires.

Anyway, institutions are institutions are institutions. Government institutions aren’t magical. Some institutions can indemnify others, but it can’t be turtles all the way down. Government is limited in capacity to insure individuals and corporations against loss. The widespread assumption that there is in fact some kind of unlimited, all-purpose backstop — that the U.S. government can simply guarantee itself against its own failure through magical fiscal and monetary willpower  (i.e., economic Green Lanternism) — seems to me a big part of the problem here. So, no safety net for billionaires. I’m sure that we can all agree that government action that would contain an economy-wide meltdown — when possible — may be desirable, even if it does incidentally help some billionaires as part of the effort to keep regular people from losing their shirts. What everyone needs, capitalist and prole alike, is better institutions, including a better regulatory framework for the financial sector, so that markets do work. So let’s have that.

But let’s also not pretend that the government’s attempt to “guarantee” that you will get your retirement income, or that you will get your heart surgery in a timely fashion, or that a functioning financial system will endure, actually makes these events more likely than they would be under alternative institutions that make no such guarantees.

Read David Schmidtz on safety nets and guarantees:

What do we want from a welfare state safety net? Is it enough for an economic system to help people become so prosperous that they can afford to carry those who truly cannot carry themselves, or must there be a guarantee that those who cannot carry themselves will be carried by someone else? Should we look at the actual history of charity and mutual aid, or is the bare lack of a guarantee sufficient grounds for denying that charity and mutual aid can serve as a safety net? If there has to be a guarantee, is it enough officially to guarantee that no one will ever have to carry himself in times of trouble, or should we insist on some level of actual performance as well? What if we have to choose between official guarantees and actual performance? What then?

What then? Forget guarantees and go for actual performance. I think the same thinking probably holds for much of the financial system. As Schmidtz puts it, the worst problems arise when we try to externalize responsibility for decisions. Our institutional choice isn’t between collective responsibility and individual responsibility. Our choice is between institutions that externalize responsibility and those that internalize it. Responsibility is very often internalized collectively — risks are successfully pooled — with insurance contracts, limited liability corporations, or associations of mutual aid. We need institutions of collective responsibility. But those institutions need reliable mechanisms that guard against adverse selection and moral hazard, and that’s the hard part. Official guarantees (implicit or expllicit) tend simply to create the sense that ultimate risk and responsibility rests elsewhere without doing enough (or anything) to prevent the guarantee from making itself more needed.

Fail, Baby, Fail

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I pretty much agree with Nathan Oman:

… I have to confess that the fall of a major financial institution puts me in a down right jaunty mood.

Sure, the markets already have lost 3%, but what makes me happy is the news that Lehman Brothers threw itself at the knees of the Fed and the Treasury Department over the week end, and Berneke and Paulson looked on in stoney indifference. At last, it would seem, capitalism is going to do what capitalism is supposed to do: Punish those who make bad investment choices. Hopefully, we are in for a bit of short term pain while markets find their bottom and the dead and dying are taken out behind the barn to be shot. On the other hand, once the carnage is over those with money to loan, invest, and spend — and there are lots of them — will come out from hiding in their bunkers with the knowledge that we’ve unwound the risk, and a market that has learned something about the valuation of credit derivatives can move forward. To be sure, the landscape will be utterly changed, but that had to happen any way. Better this way than through a long, slow, expensive process of bailing out the super-rich. This is bad for the financial markets and the real economy may take a hit as well. It is good, however, I think for the long-term political health of capitalism.

I also agree with Tyler. Felix Salmon correctly scores the responses of the McCain and Obama campaigns to the Lehman collapse, though every time Salmon says “more” about regulation replace with “better.”

Stealing from Taxpayers Is the Easiest

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Last week, Robert Bradley, Jr. wrote a terrific review of T. Boone Pickens’ latest autobiography, The First Billion Is the Hardest. The conclusion, in particular, is right on:

Mr. Pickens’s standing to pronounce on energy matters was earned as a free-market producer. He is now using that standing to defy the market itself.

His arguments for a government-led remake of the nation’s energy use are sketchy at best, dangerous at worst. Despite his grand claims, generating wind power is uneconomic, and transmitting it is even more so (windy places are far from electricity markets). Wind is unreliable, requiring constant backup from natural-gas-fired plants in particular. Wind takes summer days off. In Boone-speak, wind is all hat and no cattle.

As for natural gas: Mr. Pickens scarcely mentions the manifold problems with natural-gas vehicles, from the price premium for a new car (around $6,000) to the cost of fuel conversion (averaging around $12,000 per car). Converted vehicles must sacrifice trunk space to accommodate a heavy natural-gas cylinder. The task of retrofitting service stations, let alone cars, puts the cost of the Pickens Plan north of a trillion dollars. And what happens if oil prices fall and natural-gas prices spike?

Why is Mr. Pickens pushing this energy plan so hard, aside from the supposed good of the nation? The most obvious reason is that his Clean Energy Fuels Corp. — invested heavily in natural-gas dispensing stations — would be a big winner. Mr. Pickens also has on the drawing board a $10-billion wind-power project — “the biggest deal of my career.” Another reason, one suspects, is a desire to reclaim the kind of folk-hero status that Mr. Pickens lost after Mesa’s fall. He might become the “greenest” energy man since Ken Lay was at Enron and Lord John Browne rebranded the “BP” of British Petroleum to mean “beyond petroleum.”

A third reason is less obvious. Mr. Pickens refers to Big Oil as “the monster.” Why such an animus toward an industry that has been at the forefront of the American dream? As it turns out, both Mr. Pickens and his father (a failed independent) spent unhappy years at Phillips Petroleum. During the takeover battles with Big Oil, Boone was professionally and personally smeared and was ultimately denied his dream job: running an integrated major. He also links Mesa’s fall to overdrilling by the cash-flush majors.

A man is entitled to his vendettas, of course. But surely the government shouldn’t help fuel them. One hopes that Mr. Pickens can reinvent himself one more time, remembering — how did he put it? — that “the greatest opportunity lies in a free marketplace.”