Mandeville, LA – Exclusive Transcript – Richard Cantillon made this point 300 years ago: “You want the manufacturer to be as close to the resource, and the market then to be as close to the manufacturer, as you can be. If you do this, this drives the cost of the goods, just using simple supply and demand.” And if we were getting gas from say the Gulf of Mexico or the Atlantic Ocean, what would our transportation costs be? Minimal compared to getting it from foreign countries. Check out today’s transcript for more on Cantillon and the current economics of the gas industry.
Begin Mike Church Show Transcript
Mike: Dealing with the point of getting oil from Brazil, I would just like to share with you for a moment that I’m reading a book that contains the translated essays of the great French economist Cantillon. Have you ever heard of Cantillon? Cantillon came before Adam Smith, even though Smith gets the credit for a lot of Cantillon’s work. It’s a really cool book. Each chapter is two pages at the longest. It’s guys from the Mises Institute at Mises.org that did the newest translation of Cantillon’s essays on the economy.
What is interesting here is how Cantillon makes the common sense, practical analysis that the reason that things are grown where they are grown or are produced where they are produced is precisely because the resources are nearest by. Therefore, the transportation cost to get the resources from point A to point B are diminished. This is why markets — of course, he’s speaking of Europe back at the turn of the 17th Century, 1800’s as it were, or 18th Century, the 1700’s as it were. He’s talking about how in Europe, a market city pops up in places where it is centrally located in between the producers. The reason for that is because it minimizes the cost of transportation to get the product to market.
If you’re manufacturing something, or extracting a resource somewhere, unless it’s only contained in this particular geographic area and you have to ship it 7,000 miles to its ultimate destination, you have enormous transportation costs that you would not have otherwise. Then people will say [mocking], “Yeah, but Mike, the Saudis, they produce oil more cheaply than they do. It’s cheaper.” Well why is that? Is that because they’re Saudi Arabians or is it because they don’t have an Environmental Protection Agency? Is it because they’re genius Saudi Arabians or genius Iranians or is it because they don’t have a Bureau of Land Management? Is it because they are Yemeni or Libyan, or is it because they don’t have an Equal Employment Opportunity Commission? Is it because they are Iraqi or is it because they don’t have a minimum wage?
In other words, what gives that the advantage? We have the damn stuff bubbling beneath the ground here, bubbling beneath the floors of the gulf, the floors of the oceans, Atlantic and Pacific. And if Alaska is stupid enough to remain a state of these United States — I still cannot get over that. What the hell is wrong with you people in Alaska? Break away from this soon-to-be busted, disgusted, can’t-be-trusted empire as fast as you can.
So if you were getting the oil from equitable sources, let’s just say Gulf of Mexico or Atlantic Ocean drilling, your transportation costs, if all things else are considered equal, would be minimal than getting it from Brazil. So why should we be making these vainglorious trade deals with the Brazilians? Don’t get me wrong, I have no opposition to trading with Brazil or any other country. In the grand scheme of things, if your true desire is to fill your Hummer’s gas tank up with the cheapest fuel available, then you would want the refinery in New Orleans, Louisiana, in Chalmette, Louisiana, or in Beaumont, Texas or in Port Arthur, Texas or Galveston, Texas or in Orange, Texas or the outskirts of Houston, Texas. You would want your refineries as close to the source of the oil as is humanly possible.
You can’t open a new refinery in these new United States because the bark-humping, frog-licking, dolphin-humping tree huggers won’t let you. You can’t build a refinery. The State of Montana can’t just decide we got all this crude oil here, so let’s put a refinery up. There are so many bazillions of federal hurdles to cross, even though the federal government has no authority whatever under the Constitution, originally read and understood, to regulate this commerce or to regulate the means of production there. The people of Montana could have a refinery.
This is the point, and Cantillon made it 300 years ago. You want the manufacturer to be as close to the resource, and the market then to be as close to the manufacturer, as you can be. If you do this, this drives the cost of the goods, just using simple supply and demand. I won’t say it drives the cost down, because there could be other factors. Nothing is perfect. It’s just amazing when you read, from the early 1700’s, the essays from Cantillon and their brief, enjoyable essays as translated, just the simplicity of how Europeans at the dawn of the Age of Enlightenment saw how free markets could work wonders and could cure all manners of human ills, human ill of hunger and of readily available goods and supply, whatever they may be, clothing, things like candles and oils and fuels and seeds. All these things, markets will work all these things out if they are left free to do so. Cantillon keeps referring to how natural it is. It’s just natural.
Also, in towns you have the compounding effect where if you’re going to have a bunch of people out there plowing fields, growing corn or wheat or bell peppers or tomatoes or whatever the case may be, you’re going to need somebody nearby to build the damn tractors, or in their case, the plows as it were. You might even need a local blacksmith to fix the tractors. We have lost all track of that because we’re trained to think globally. [mocking] “It’s a global economy.” It’s a global economy by choice, not by need. There’ s hardly a resource on the planet, other than rare metal magnets, that you can’t find in the United States, on this wonderful continent that we are so blessed to live on, that you could find anywhere else in the world.
This rabble, this misdirection of [mocking Obama], “Look, I’m fixing a problem. We’re doing business with Brazilians. The Brazilians are going to save us.” Isn’t that wonderful? The greatest, freest super power in the history of great, free super powers and we have to be bailed out by South America. Seriously, folks! And all this is made possible by a general government out of control, by a people totally out of touch with their birthright and their heritage and the practicality of republicanism. This really, really pains and troubles me, folks. It ought to pain and trouble you.
End Mike Church Show Transcript