Tom Friedman’s First Law of Petropolitics

Author: Andrew
Posted: July 2nd, 2006 @ 1:06pm
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Tom Friedman, New York Times journalist, columnist, and Pulitzer-prize winning author of The World Is Flat, will be kicking off PopTech 2006 this October. In last month’s Foreign Policy magazine, Friedman proposed his First Law of Petropolitics (reg req.), namely that, “as the pace of freedom declines, the price of oil goes up; as the price of oil goes down, the pace of freedom increases”.

The basic premise is that high oil prices prop up tyrranical regimes, precisely because the leaders of petrostates like Iran, Nigeria, and Russia don’t have to rely on their peoples’ tax revenues for income. Here’s an exerpt from the terrific discussion Foreign Policy recently convened on Friedman’s Law, the full video of which is now available online:

…We know in our history the motto of the American Revolution was, “no taxation without representation”. The motto of petrolist states is “no representation without taxation”. If I don’t have to tax you - because all I have to do is drill an oil well, never drill my people - then I don’t have to represent you.

And there is a real logic to this. Obviously these petrolist states, what happens is when they get this huge windfall, what happens is these regimes use it to buy off opponents, to insulate themselves from foreign pressures, to never have to construct a society where they have to maximize their openness to the world in order to extract the most energy entrepreneurship, creativity and intelligence from their people. They use this money so they can continue to rule by tapping an oil well and never tapping their people.

This metaphor helps explain what the Economist calls The Curse of Oil - why poor, but resource-rich nations seem to be permantly incapable of using their wealth to improve the lot of their people. For excellent additional reading, see this note from the Federal Reserve Bank of Dallas on Economic Freedom and the Price of Oil.