Pro Commerce

The Oil Price Means Ten Years of Inflation Ahead

Economics was created by Adam Smith, Thomas Malthus, David Ricardo, Stanley Jevons, Alfred Marshall, and Leon Walras. All of whom worked before our modern society was built on oil; and before oil became the foundation for the modern world.

Oil and gas are the most important sources of energy for all transportation, most power supplies. Oil/gas energy is the basis for steel production and cement; the nitrogen for most agriculture comes from ammonia which comes from oil and gas and is also the basis for nearly all plastics.  

It is easy to teach economics and to get a PhD in the field without ever noticing this oil/gas foundation for the economic world.

Of course we use coal, hydro and a little solar and wind power. But it is a small proportion of our modern energy.

Our first opportunity to appreciate the oil/gas foundation of our economy didn’t come until 1973, too late to rebuild an entire field of economics.

In October 1973 OPEC implemented an oil embargo on the United States in retaliation for President Nixon’s $2.2 billion in aid to Israel to replace its military equipment lost in the Yom Kippur War. The embargo was only 25% of Saudi oil to the U.S. but it raised oil prices from $3 a barrel to $12.  Gas prices at the retail pump went from $0.38 to $0.55.

That began a ten year inflationary period. In 1979 oil prices again rose largely due to the revolution in Iran and the start of the Iran-Iraq War. Oil went from $20 a barrel to $40 a barrel.

The inflation as measured by the Consumer Price Index, went from 3.4% before the oil crisis to 12.3% in 1974 and remained high at 13% in 1979 with a low of 7% in between in 1976. The U.S. had a CPI with an inflationary average of 9.3% until it finally dropped to 3.8% in 1982.

We have inflation again. Rising from a CPI of 1.4% in 2020 until the incoming President Biden banned fracking on public land in January 2021, oil doubled in price and the CPI went to 7.0% for that year.

Today as I write the CPI is over 8% and I expect it to stay high and likely rise.  Inflation is now global as every country has its currency tied directly or indirectly to the U.S. dollar.

Economists still don’t see the connection between the price of oil and gas and inflation. The lesson of the 1970s comes too late for economic theory.

Oil/gas prices are the basic cost of all transportation, most power supplies; it is the basis for steel production and cement; the nitrogen for most agriculture and most plastics come from oil/gas as I said in the second paragraph above.  Those base prices slowly work their way throughout the economy around the world and ratchet up the prices of nearly everything including wages.  Most prices and especially wages and rents are sticky and only ratchet up for many years.

That is a lesson that needs to be incorporated into economics.

Sixty Years With Abortion

I lived in San Francisco 60 years ago, the so-called ‘bad old days’ of abortion by coat hangers.

I knew three women who aborted in that early period.  The first went to Tijuana where a Mexican doctor did the procedure; whatever it was, she didn’t know.  Cost was $50 plus travel.

By the late 1960s abortion by a doctor was legal in California with two letters signed by a psychiatrist that mental health issues justified an abortion.  Two friends of my girlfriend at the time chose to abort this way. The psychiatrists each charged $100 and the performing doctor who did a dilation-and-curettage charged $50.  The doctor who was young then is my wife’s doctor today, a prominent female physician.

By 1971 I was on the board of the Point Foundation and made a grant to Dr. Harvey Karman’s two female allies who came to San Francisco to train a dozen doctors and nurses to do a vacuum aspiration form of early-term abortion with the Karman Cannula.  They set up a clinic across the street from the University of California San Francisco Hospital and Med School and charged $25 for an abortion procedure that used a seaweed cylinder to open the muscles at the entrance to the uterus and then used the Karman Cannula for extraction.

Roughly a year later four nurses from Oakland came to my house and proposed a similar clinic in Oakland that would charge $50 and add a pre-and post-op discussion with the patient.  I made the grant.The four nurses lied to me. They used the money to organize picketing of a porn theater in Oakland.  A key learning experience for me about the Puritan future of the abortion issue!

A few months later, in January, the Roe v Wade decision became national law.   

The most interesting subsequent information came from a book, Freakonomics in 2005 that showed the connection between the Roe decision in 1973 and the decline in crime starting in 1993 due to the decline in black babies born subsequently. Black women being the disproportionately heavy users of legal abortion.

One Giant Apology From Me

The brilliant Ruth Wisse wants me to apologize, so I do.  I apologize for my whole family past and present; I apologize to all Americans who love America.

Ruth points out in several articles that a large swath of Jewish immigrants, beginning around 1890, came to the United States with fervent communist ideas.  That is understandable since they came from tyrannical worlds and could see no other political solution to their miserable pogrom-dominated lives.  The problem is that this tidal wave of immigration to New York grew to the millions; concentrated in a new world ghetto, this cluster of Jews never learned why America was a better alternative to communism.  They never really assimilated to their new political paradise.

This cluster of communist Jews, living in America, millions of people, never learned how attached to a horrible outmoded ideology they were.  In the 1930’s they were a dominant group in the American Communist Party and its thousands of colluding front organizations.  After WWII they remained aligned with communism and the Left.  Even as the murders of Soviet Jews became public they never denounced communism.  Even as the murderous rampages of Stalin and the Gulag become public knowledge, American Jews never publicly recanted their alliance with ultimate evil.

To this day American Jews are predominantly Lefties, unapologetically still in the same evil tradition.  The prototypical left-wing Jew is Bernie Sanders.

My mother and father were extreme Lefties.  My father became a rabbi to evangelize for Left Liberalism.  Even though his family were Californians from the 1850s and certainly were Republicans ( one of the second generation, my grandfather’s generation, was named Abraham Lincoln Phillips). My grandfather named my father Wendell after the great Boston abolitionist. 

My father became a Lefty at the U. of California and joined my mother’s New York communist clan in his 20’s.  He was so Left that I joked with him that he believed Adlai Stevenson (Democrat candidate for President twice) was more important than Moses.  

My mother’s family were the heirs to a Prussian sect of Judaism, Ethical Culture, that was a Leftist coven.  Her brother Fred Hart was an actual Marxist.  Fred made money in the stock market and was the sustaining donor of the National Guardian, a Russian communist front in the 1950s, later to become a Chinese Communist front in the 1960s. History has no record and no way of knowing that Fred provided all the Guardian’s sustaining funds from 1952 to 1972.  

My mother and her brother were the first American tourists to visit China in the mid 1960s, thanks to Fred’s vital role at the Guardian.  In that period I asked my mother why she wasn’t disturbed by the nightmares of Stalin, the Gulags and Mao. Her reply was the same as Lefties today: “Real communism has never been tried.”  

How deep was this communism?  I asked my close friend Ruth Kadish, in the mid 1990s, part of the Jewish Lefty clan, whether she had changed her mind about the guilt of Julius Rosenberg the Soviet atomic spy once the KGB files were made public.  “No, you can’t trust the anti-Soviet crowd,” she replied.

I abandoned my Lefty family tradition at age 20, having learned about the American genius from reading the Federalist Papers, Democracy in America, Animal Farm and living on an Israeli Marxist kibbutz.

It is now time for me to apologize for the terrible Lefty hogwash and blind ideology that my family, a part of the disgraceful pattern of American Jewry, have spread in this great American land.  I apologize to all Americans who love and appreciate America for my family's guilt.