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The expansion of personal and economic liberty in Western Pennsylvania cannot occur without the strengthening and expansion of the private sector. Currently, the public sector enjoys such a significant economic advantage nationally and locally that it is impossible for voluntary economic relationships to flourish without the government overseeing and intruding upon them.
Perhaps the greatest natural resource discovery in Pennsylvania’s history, Marcellus Shale promises to bolster the power of the Commonwealth’s private sector by creating scores of thousands of well-paying, private sector jobs. The promise of a stronger private sector and the greater economic choice that that entails is already producing conflict between those who support a monopolistic public sector and those seeking to explore Marcellus Shale and bring jobs to this state.
In order to see this conflict, one need only look at Democratic Gubernatorial Candidate Dan Onorato’s expressed desire to illegally extort jobs from natural gas companies by withholding drilling permits unless said companies agree to hire only Pennsylvanians. While we all hope that Marcellus exploration will create jobs for Pennsylvanians, it is economically unwise and contrary to our republican values for politicians to force employers to hire constituents for work whether those constituents are qualified or not.
Although the Onorato example might be the most blunt example of conflict between the public and private sectors, the proposed severance tax – a tax on natural gas producers levied on every 1,000 cubic feet produced — should also be understood as the public sector in Pennsylvania attempting to live at the expense of our booming natural gas industry. After all, considering that many natural gas companies already pay a variety of taxes in Pennsylvania – including the second highest corporate income tax in the nation – the severance tax must be understood as a blatantly unfair attempt by the Commonwealth’s public sector to fund record public employee benefits at the cost of private sector workers and entrepreneurs in an emergent industry.
Of course, in the conflict between the public and private sectors, the private sector always has a trump card: only the private sector creates wealth. In the case of Marcellus Shale, only private sector companies are capable of exploring and capitalizing on this new resource. The public sector may be flush with disproportionately high benefit packages but, at the end of the day, it doesn’t create anything by itself.
Especially for young people, the development of Marcellus Shale is perhaps most important because it promises to create scores of thousands of well-paying, entry level jobs with total job creation estimated at more than 200,000 by 2020. The public sector cannot promise the same job creation for young people or for anyone else.
In this divide exists the defining lesson of Marcellus Shale: a stronger private sector creates wealth which it spreads through jobs, returns on investment and less expensive, higher quality products to be purchased by everyone. Moving forward, we must embrace the promise of Marcellus Shale and the more vibrant private sector that it will create, for only through such a private sector and the jobs it will create can we enjoy more expansive personal and economic liberties free from public sector interference.
Giles Howard is the founder and president of the Publius Foundation. Email Giles at ghoward[at]publiusfoundation.com.
Come on Giles. This is classic. Big corporations don’t want to an extraction tax that would, as Gov. Rendell and Dan Onorato call for, give the DEP more oversight over the industry as it necessarily expands in Pennsylvania. So the tax revenue won’t go toward fixing the budget, which it never would, but rather towards making sure the drilling is done in a safe manner that helps a community economically without degrading it environmentally. Clean ups are expensive. Drilling will happen, natural gas is an important part of our energy future, but to encourage it in the guise of economic liberty is ludicrous. The tax could play a small part in internalizing the costs of possible environmental degradation to areas subject to drilling.
I agree there are a lot of interest groups here: unions, whom Onorato has a lot of support from and needs to appease, the coal industry, who would lose out on market share as the energy market diversifies (including natural gas and other alternative energies), and now the most powerful of all, the natural gas lobbying industry. According to this report by Business Week, the imposition of the tax has little to do with liberties of any type (economic or social) it has directly to do with profits, which according to some studies from Penn State could number in the trillions of dollars.
http://www.businessweek.com/ap/financialnews/D9H4R24O0.htm
Your argument here reminds me of your attacks on the proposed idea of a soda tax. In New York and D.C., beverage companies spent gobs of money on ad campaigns and used their money and influence just like the tobacco/cigarette industry did to oppose taxes on their products all in the name of individual liberty. Forgive me, whenever industry lobbyists hide their true intentions in the guise of defending “ordinary Americans” and fighting the curbing of personal liberties and statism, I tend to be skeptical.
Also, check this out, the impact of a drilling moratorium in New York state.
http://www.bloomberg.com/news/2010-08-04/new-york-s-senate-approves-drilling-moratorium-on-natural-gas-from-shale.html
First of all, a drilling moratorium in Pennsylvania would not only be foolish, it would be a clear violation of the constitutional rights of property owners. It doesn’t matter whether you don’t like the prospect of natural gas drilling, you don’t have the right to tell someone who owns their mineral rights that they cannot engage in a contract with a natural gas driller.
Second, it’s good to see you admit that much of Onorato’s anti-drilling rhetoric is an attempt to appease unions.
Third, current severance tax proposals that I’m aware of do not specify that tax proceeds will go straight to the DEP. In fact, a more reasonable guess would be that any proposed severance tax would allocate a small portion of the money to the DEP and the rest would go to the general fund. In this way, a severance tax would not be used to protect the environment but instead to forestall inevitable statewide spending cuts that are already long overdue.
Fourth, all things considered, I’d suggest that there is in fact a relationship between taxes and liberty. Indeed, the founding of our nation provides rather direct evidence of this relationship.
I don’t think it is as clear as you think it is (and by that I mean 100 percent). The DEP has a mandate “to protect Pennsylvania’s air, land and water from pollution and to provide for the health and safety of its citizens through a cleaner environment.” How can it do its job if it is underfunded and undermanned? The extraction tax, backed by Onorato (not Rendell, Rendell’s tax would be used partly to fill budget holes, Onorato’s would not) would do just that. I agree that we “don’t have the right to tell someone who owns their mineral rights that they cannot engage in a contract with a natural gas driller.” However, when someones private decisions end up having external public costs the only one able to mitigate the effects of that are the government, and here that is the DEP. Wherever the hydraulic fracturing has been used, complaints continue to spring up about polluted drinking water that should not be ignored.
http://www.post-gazette.com/pg/10245/1084405-178.stm
After seeing all the Union members marching with Onorato I have no qualms calling him very very very pro-union (he can’t win without them). At the same time I have no problem calling Pat Toomey and other Republicans “bag men for the rich (and super large corporations).” For example, “fracking is exempt from many of the federal regulations that govern other forms of energy extraction under the 1974 Safe Drinking Water Act, including a requirement that companies disclose what chemicals they inject into the ground.” And who is that thanks to? The same Republicans who want no extraction tax, no regulation, and more profits even if it means harming the environmental quality of the natural resources of a vast region in which thousands of people live.
As Paul Krugman, the Princeton economist says: “You see, the rich are different from you and me: they have more influence.” Nothing is more clear here in Pennsylvania and doing it in the name of personal liberty is a far cry from the founders’ vision for our country.
I am still waiting to see a job posting that doesn’t state you must have 3, 5, 10 years oil/gas experience. How many Pennsylvanians do? Why are we not being trained to do these jobs?