Last week, several sites linked to this article in the NY Times discussing how Saudi Arabia hopes the be compensated for their losses if the world moves away from oil. I suspect many of you would find this laughable, and that was the intent of those links.
However, before you chuckle too hard at the idea, remember that this is the same argument people use to rail against Walmart, auto-companies, and other firms that cause the displacement of workers due to changing trade patterns. We have a number of social science and humanities classes here on campus that show videos, in class, about how evil Walmart is – and ask the question, “Is Walmart Good for America?” Of course, the question presumes the answer. I pity our economics students who are brave enough to ask hard economic questions in those classes – I bet they are laughed out of the classroom. In those classes, you would often hear the (incorrect, or incomplete) claim that Walmart outsourcing jobs costs Americans jobs here. The anti-Walmart folks never actually offer a “solution” … I’d like to see them say, “ban Walmart” but they are not even honest enough to say that. They typically just wring their hands about how evil it is, not recognizing that by reducing options for low income workers and customers, you would be making them worse off. In any case, they claim that when customers choose to shop at Walmart, we are making it harder for mom and pop stores to stay in business, and we are making it harder for American manufacturing workers to find jobs – and surely they would want to do something to preserve those jobs. We even offer compensation programs for these things – in almost every “trade agreement” you see funds allocated for job retraining or education credits and so forth.
So, if the claims that the Saudis are making is so ridiculous (and I agree that it is) then why are not the claims made by the anti-Walmarters viewed with equal disdain?
The analog would be to think about how new technology affects existing companies. Would we have taken seriously the claims of NCR and other typewriter companies that they ought to be compensated because consumers choosing to use word processors and PCs seriously dented or eliminated their profits?
Extra credit: why do economists NOT consider that last example a “remediable” externality?