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“Here’s a little economics lesson”: Rick Perry fails to explain supply and demand

Energy Secretary Rick Perry attempted to offer up an economics lesson while touring a coal plant in West Virginia on Thursday. He somehow managed to only confuse people.

“Here’s a little economics lesson: supply and demand,” Perry said at the Longview Power Plant. “You put the supply out there and demand will follow.”

The former governor of Texas was responding to a question about the current popularity of shale gas, but he seemed to reference a 19th century economic theory to explain the boom.

According to Say’s law of markets, introduced in 1803 by the French economist Jean-Baptiste Say, production is the source of demand.

Only this economic rule has mostly been discarded by modern economists who argue that supplying a product does not necessarily create demand for it.

According to Perry’s law of markets, there will always be a demand for coal as long as the industry produces it.

This is obviously incorrect. A day could and likely will come when there is zero demand for coal and therefore coal will go unsold and there will be huge storage facilities filled with unused fossil fuels.

Perry’s economics lesson at the West Virginia coal plant this week will only go down as the second biggest flub in his political career. In 2011, during a debate between Republican presidential candidates, Perry said that he would cut three agencies from the federal government — except he could not remember one of the agencies

“And I will tell you, it’s three agencies of government when I get there that are gone — Commerce, Education, and, the, uh, what’s the third one there? Let’s see . . .” Perry said at the time.

The third agency Perry was looking for was the Department of Energy — the agency he now runs.

Taylor Link is an assistant editor at Salon. You can find him on Twitter at @taylorlink_

Taylor Link.

Source: Salon: in-depth news, politics, business, technology & culture > Politics

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