This recent Dalrymple piece in Standpoint expresses skepticism about any benefits that might accrue to Britain from the use of “fracking” technology to extract the large deposits of shale gas that have been discovered, arguing in part that they would only be used to expand the public sector:
For Britain to hope that the exploitation of a natural resource would rescue its ailing economy seems to me like a man who purchases lottery tickets in the hope that they will secure his old age…What would we do with our large revenues? It is not necessary to be Nostradamus to imagine. At least one government would use this free gift of Nature (give or take the costs of extraction) to increase the size and emoluments of the so-called public service, and also the generosity of welfare payments..
The piece includes some economic arguments with which I for one do not agree (when I can find time, I will try to address them in more detail in the comments):
As for industry, something rather similar would probably happen. Cheap energy would obviate, at least to a degree, the need to become more efficient; it could (and I think would) be used to maintain wages that would otherwise not be justified and to avoid the necessity for innovation and adjustment. It would allow cheap imports and thereby raise not just the standard of living without concomitant effort, but permanently raise expectations. If the cheap energy were exhausted, the supposedly “healthy” economy would very soon stand revealed as a painted corpse.
This skepticism about the potential benefits stems from his view of British culture:
Pasteur famously said that chance favours only the mind prepared, that is to say a mind that is alert, knowledgeable and flexible enough to realise the importance of phenomena that it happens upon by chance. In the same way, one might say that gifts of Nature, in the form of resources, favour only an economy prepared. The United States still has an economy so prepared; the United Kingdom has not.….Naïve people often allude to the supposed paradox of African countries richly endowed with natural resources that nevertheless remain deeply impoverished. This is not a paradox at all: with the wrong institutions, the wrong ideas and the wrong culture, such resources can be a curse rather than a blessing, increasing in stability as the political fight over those resources becomes more desperate or acute, and undermining other productive activities. In the same way, incidentally, an educated population, if it is educated in the wrong things, imbued with the wrong expectations, is a curse rather than a blessing…[E]xperience has taught us to have no real faith in the future of our country. We are no longer a nation of shopkeepers, but a nation of political manipulators, whose main hope of betterment is a larger slice of whatever cake exists in the present moment.
“Of course the United States has more natural advantages than Britain; but its real advantage is that it knows how to take advantage of its advantages.”
I suppose that’s why, with all it’s land and natural resources, American public debt now stands at around $16 trillion?
This American, for one, agrees with you. We are not quite as far down the road as Britain, but we are traveling the same road, and are not far behind.
One major advantage we have is a general disdain for social welfare programs. In 1996 we ended the practice of living off of the dole forever. Unfortunately we simply spend the money on other things.
One of America’s major advantages these days is our ability to borrow from other countries in order to pay for our current spending – obviously not an advantage to be proud of. If we wanted to live within our means and address our future debt crisis, we would not have re-elected Barack Obama.
Here are the disagreements with Dalrymple’s economic arguments that I mentioned:
“Cheap energy would obviate, at least to a degree, the need to become more efficient”
But efficiency is not an end unto itself. If Brits are able to acquire more energy, efficiency becomes less important.
“…it could (and I think would) be used to maintain wages that would otherwise not be justified…”
But there is no objectively correct or justified wage.
“…and to avoid the necessity for innovation and adjustment.”
But the extraction of shale gas via fracking is just such an innovation.
“It would allow cheap imports and thereby raise not just the standard of living without concomitant effort…”
I don’t think of this as a bad thing, within reason.
“If the cheap energy were exhausted, the supposedly ‘healthy’ economy would very soon stand revealed as a painted corpse.”
But refusing to make use of an available resource because it will one day run out doesn’t strike me as an intelligent approach. And by all accounts, that day would be far into the future.