Calling OPEC a conspiracy

This week's decision by OPEC oil ministers, with the media and
Western government leaders nervously dancing respectful attendance
around the gathering in Vienna, to increase oil production by an amount
that might or might not reduce gasoline prices has driven one of my pet
peeves to the surface. Why do the world's political leaders and media
kowtow to OPEC, treating it as if it were a respectable international
organization? Why don't more people describe it as a criminal conspiracy
designed to line the pockets of brigands at the expense of the world's
consumers?

I know, I know. One could make similar observations about other
international organizations, from the United Nations to the IMF to the
World Bank, all of which, viewed from a certain angle, are organizations
of professional parasites designed to increase the amount of blood they
and their henchmen can suck from the dwindling sector of productive
people worldwide. But OPEC is a special case. It is a cartel designed
solely to maximize the income of its members by manipulating production
levels and thereby manipulating prices. It doesn't even pretend to have
some larger humanitarian purpose (although some of its apologists make
feeble efforts by talking about the need for infrastructure in
underdeveloped OPEC countries).

As a fairly fundamentalist free marketeer, I'm not sure there should
be laws against cartels. In a society that doesn't regulate economic
activity tightly they are sure to develop, as Adam Smith clearly
recognized when he was inventing (or systematizing) the discipline of
economics more than 200 years ago. But the best defense consumers have
against the wealth-maximizing conspiracies of cartels lies in the free
play of voluntary economic activity that brings them into existence in
the first place.

The classic economic analysis of cartels is that in a free market
there will be incentives for producers to collude to fix prices so as to
deter competition and increase their wealth. If a few dominant producers
of a certain product or service can agree among themselves not to sell
below a certain agreed-upon price, they can all squeeze more money out
of consumers than would otherwise be the case, and with less of the
effort and bother involved in competition with pesky upstarts.

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Even as a free market contains incentives to form cartels and other
conspiracies to restrain trade, however, it also embodies incentives for
each member to "cheat" (that's the word most often used but
"unintentionally help consumers" might be better) on the agreement by
selling more than his quota on the side or under the table. In practice,
in a reasonably free market, such incentives tend to undermine cartels
rather effectively. In theory and for the most part in practice, the
only way to maintain an effective cartel is to get the government to
enforce its terms by coercion or the threat of punishment.

Most regulatory schemes, when you get to the bottom of them, are
enforcement mechanisms for budding cartels. Critics sometimes complain
that a regulated industry will find ways to "capture" a regulatory
agency and dictate (or at least influence) its decisions so that they
benefit the most powerful members of the industry, and that happens
often enough to make the idea of regulatory agencies more than a bit
dubious as mechanisms to protect consumer interests. Often enough,
however, there's no need to capture an agency. It is likely to have been
set up by the most powerful members of an industry explicitly to reduce
competition and punish smaller competitors and prevent would-be upstarts
from getting a foothold in the market because the regulations are so
complex and designed so established companies can handle them
better.

OPEC is a bit different from cartels in a marketplace because it
consists of governments that have the power to use outright coercion to
enforce their decrees. But because the governments view themselves as
sovereign entities, there are marked similarities. These countries
operate in a world marketplace in which no one country has the power or
authority to enforce mandates worldwide, however powerful they may be
within their own country.

Close observers of OPEC over the years will tell you there has been
some "cheating"; indeed, most believe there's "cheating" even today,
that about a million barrels a day above the OPEC quotas is getting into
the marketplace from OPEC countries. Thus the effectiveness of OPEC has
waxed and waned over the years. Like the federal authorities who set the
minimum wage, OPEC conspirators have been fairly realistic and fairly
careful not to set quotas or limits that are completely unenforceable.
Thus the perception of effective power backed up in many but not all
cases by the actuality of effective power is preserved.

One of the reasons OPEC has been relatively effective at serving the
greedy interests of its member government over the years is precisely
that it has taken on the trappings of international diplomacy. The
Christian writer C.S. Lewis -- writing when the communists still had
plenty of power, the Nazis were a recent memory and expanding welfare
states were the fashion in the West -- noted that the worst evils in
today's world aren't done by obvious villains and lowlifes. Instead,
they are ordered, in triplicate and with supporting memos, by
respectable-looking people wearing suits and sporting manicured
fingernails, working in well-lighted, efficient-looking office
buildings.

So the OPEC ministers don't meet in a cave in the hills, with armed
guards checking attendees to see if they know the secret password. They
don expensive tailored suits, come with their retinues to first-class
hotels in attractive and historic cities, arrive in chauffeured
limousines, carry out their deliberations as if they were international
peace or refugee rescue deliberations, keep minutes, leak hints to the
press, spin rumors, then announce the results of their difficult but
constructive and respectful meetings to all and sundry.

Being government people, they look and act like politicians and
diplomats. And they are treated with the respect that the media in our
culture unfortunately confers on politicians, especially those that move
in prestigious international circles. The money-grubbing thugs who met
in Vienna to consider how to deal with various pressures while still
exploiting their natural resources and the world's consumers most
effectively are not viewed or described as money-grubbing thugs. Instead
they are treated as respectable members of the international community,
whatever that is.

Now I wouldn't want to try to outlaw OPEC, if only because it would
require a world government with more power than the U.N. has to try to
enforce such a law. But shouldn't they be viewed, treated, covered and
written about as what they are -- an essentially criminal and
self-centered conspiracy to enrich themselves at the expense of poorer
people? Such people shouldn't be jailed, perhaps. But they shouldn't be
treated with respect. They should be viewed as enemies of decency,
civilization and progress and treated with at least the contempt
reserved for right-wing preachers or militia members.

Simply treating OPEC with the public disrespect it deserves would do
a great deal -- though not as much as secretly buying oil through some
sub-clerk who wants to retire in three years -- to undermine OPEC's
ability to stick it to the world's consumers. But few people in the
press are willing to look past the surface trappings of respectability
and describe OPEC in realistic terms. And over time, treating OPEC as a
respectable member of the world community gives the conspiracy
increasing legitimacy -- almost enough to make us forget the dastardly
impulses at its root.