Jamesian Philosophy Refreshed

Thoughts in the manner of Hazlitt: Any commodity market is of necessity about hedging from more than one side, as well as about speculating. An industry that consumes a lot of energy (say, an electric utility) wants to hedge against the price of its supplies spiking up, just as the suppliers, in Texas or Saudi Arabia, want to hedge against the possibility of a sharp downward move. So the markets can serve both hedges. No: there is no reason why this should artificially drive prices up. Anymore than it artificially forces them down.   The risks of fluctuating crude oil prices will be borne by somebody. The risk exists, nobody other than an advocate of central planning believes that it can be ordered to go away. Somebody will bear it. Utility company, oil producer, speculators, or some combination. Under normal conditions, then, by letting speculators come in to play a role between the two hedging operational parties I have mentioned, commodity markets perfor...

Almost nobody talks about "price parity" any more. A few decades back the term was the common coin of politcal debate, central to arguments about agricultural price subsidies. During the depression, Rooseveltian economists decided that a period about 20 years before that , 1910-1914, had been a golden age for farmers. The price of goods farmers had to buy (made by urban folk) were in a "parity" with the price of the goods they were selling, their crops and slaughtered critters. So (the Brain Trust decided) the goal of federal policy ought to be to get back to that parity. Ag subsidies, direct and indirect, were justified for over the next 30 years or so on the basis of helping farmers return to or maintain parity, defined by pre-WWI price relationships. These subsidies were by the the 1960s receiving heavy critical fire all along the political spectrum, and although the critics didn't manage to stop the subsidies (which are still very much with us in ...