As a marketing writer and technical editor for a major engineering firm, which includes oil and gas, I was struck by your comment that, according to "liberal theory," "…history suggests otherwise" that states create jobs by spending money (OGJ, Sept. 14, 2009, p. 88). Whatever history you are thinking about, it is a history mostly in your imagination and has no bearing on the real history about which historians write, students study, and the rest of us can, indeed do, know by reviewing even the most cursory evidence. States have always been catalysts for economic growth. This is demonstrated over and over, from ancient times to the present.
The industrial revolution began because states financed or guaranteed financing (as in pre-Civil War New England, for example) ships to bring raw cotton to mills that created finished textiles while states, especially the United States, paid for the forcible removal of domestic populations and paid for the means to establish the plantation system, including slavery.
State expenditures for military purposes have always been a catalyst for overseas commercial expansion and the source of new technologies, whether it was the shipping industry in Britain, the world's foremost naval power in the 18th and 19th centuries, or the host of industries—avionics, aeronautics, electronics, metallurgy—created by state expenditures for research and development, typically for military applications, here in the US after World War II.
The oil and gas industry benefited immeasurably by state expenditures for exploration technologies throughout the post-WWII period. In fact, the business literature immediately after WWII is replete with approval of state expenditures into the economy. Why? Because there was much fear by many in government and the private sector that with the end of wartime production, the US would simply go back to Depression-era conditions. State expenditure, largely through the military but elsewhere, was seen by the private sector, including the oil and gas industry, as the appropriate antidote.
And it wasn't just direct expenditure into the economy. The GI Bill, passed after WWII, had the state paying for the education of millions: architects, chemists, engineers, mathematicians, physicists, construction specialists, and others. Yet somehow this had no role in contributing to the economy we have today?
Then there is digital technology for which the public paid 100%—I repeat, 100%—of the research and development from the 1940s through the 1960s, which was then handed over to the private sector, the Bill Gates mythology notwithstanding. And have you never heard that the internet started as the completely state-funded "milnet" in the 1960s for the Pentagon?
Of course, there is the oil and gas industry, which has benefited tremendously by public-sector subsidies in exploration technologies, sweetheart deals, preferential bidding, tax benefits, and—yes—military intervention. The entire post-WWII US military presence in the Middle East was understood, as stated in our postwar policy documents (now declassified), as "the big prize" in the US gaining access to and then controlling oil production. Our presence in the Middle East has served as an enormous subsidy to the US oil and gas industry in keeping domestic prices relatively low compared to European and Asian economies, especially our biggest competitor there, Japan, and now China. In fact, the whole system was set up precisely to keep competitors out, and the captains of the oil and gas industry have always been happy to oblige and dutifully filled the campaign coffers of politicians who pursued such policies. No doubt you want the tax benefits, the subsidies, and the military interventions to defend "our interests." No doubt what you also want is to not pay for it.
Are you unaware of this? Or do you simply consider massive public expenditures to the private sector, directly and indirectly, throughout our history and the history of every wealthy country worldwide, advancing the interests of the private sector—oil and gas, too—as shining examples of "conservative" theory?
Michael Grossman
Los Angeles
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