In 1980, Milton and Rose Friedman wrote these words in their book Free to Choose regarding the energy crisis of that day:
Government officials, newspaper reports, and TV commentators regularly attribute the energy crisis to a rapacious oil industry, or wasteful consumers, or bad weather, or Arab shiekhs. But none of these is responsible.
The subtle and sophisticated people who fill the newspaper columns and the airwaves with such silly explanations seem never to have asked themselves the obvious question: why is it that for a century or more before 1971, there were no energy crises, no gasoline shortages, no problems about fuel oil–except during World War II.
There has been an energy crisis because government created one.
To the despair of every economist, it seems almost impossible for most people other than trained economists to comprehend how a price system works. Reporters and TV commentators seem especially resistant to the elementary principles they supposedly imbibed in freshman economics.
Obvious questions never get asked.
Much like in the energy crisis in the 70s, the usual suspects get blamed for our present day crises – bad mortgages, high gasoline prices and problematic health insurance. Companies, CEOs, traders, greedy salespeople are the bad guys. Unpopular politicians catch some blame too, but it’s usually misplaced and based more on how well the media and general public like the politician.
Obvious questions: Are these the right things to blame? Why do some industries rarely or ever have crises and some seem prone with crisis? What are the possible causal differences in these industries and how exactly do those causes generate the problems in one industry or not in another?