EDITORIAL - Sensing another opportunity to posture and pretend they are relevant to national events, members of congressional committees in May called oil company executives to hearings about high oil company profits and even higher gas prices. This would all have been quite forgettable but for Congresswoman Maxine Waters’ revealing slip of the tongue that laid bare the liberal agenda for private industry–nationalize it and replace it with government bureaucracy.

During the hearings in the House, Shell Oil Company president John Hofmeister charged that Congress bore some responsibility for high oil prices because of the severe limitations on exploration and drilling in Alaska and along the coasts. He further stated that prices were likely to rise further if these restrictions weren’t lifted. Congresswoman Maxine Waters answered with an angry, and barely controlled, threat that the government would retaliate for higher prices by taking over the oil companies.

Nationalizing private industry has a long track record in communist countries, and the petroleum industry is a common target. Dictators such as Hugo Chavez, Vladimir Putin, and Saddam Hussein have all nationalized their energy industries and funneled the profits to themselves. Waters has always occupied the extreme left of her party, and evidently the ways of totalitarian regimes appeal to her.

Set aside the argument that no government enterprise ever runs as efficiently as private enterprise, due to the lack of competition and the unresponsiveness of any bureaucracy to changing markets. The free market is the most effective system for achieving efficiency in all aspects of capital ventures. In the case of the petroleum industry, these aspects would include exploration, recovery, refinement, distribution, hiring and training of employees, and serving the interests of stockholders. Government bureaucracy is an impediment in every one of those areas.

Set aside, also, the fact that realizing a profit in an industry is the very responsibility of its executives. The greater the profit, the more value they contribute to their companies. Executives are hired and fired based on this performance, and no executive is recruited and given marching orders to "hold profits down and don’t make too much money." Congresswoman Waters and her colleagues seem not to understand this point.

But the monumental mistake that Ms. Waters and her fellow congressmen make is that nationalizing any industry is a study in diminishing returns. Ms. Waters and her fellow congressmen, along with every other government employee and enterprise, are all funded by taxes. Taxes are raised from private citizens and corporations. The petroleum industry itself generates billions of dollars in taxes annually, at every phase of the process of bringing oil from deep inside the earth to deep inside our gas tanks. By nationalizing this industry, Ms. Waters would cut off this source of revenue from the government.

Further, this massive industry, when it becomes a massively inefficient government program, will have to be supported by–yes, you’re well ahead of me here–more taxes from individuals and corporations. Thus, nationalizing the petroleum industry would put a greater tax burden on every other industry. In our capitalist system, one which Ms. Waters is evidently ignorant of, those higher costs are passed on to consumers by higher prices.

As prices in other industries rise, Ms. Waters, guided by her totalitarian exemplars, would naturally nationalize those industries as well. The socialist spiral would continue to grow, sucking in more and more industries until our capitalist system collapsed and the government would run everything. There would be no private enterprise, and the government would have no legitimate source for revenue. This is the ideal world Ms. Waters envisions with her threat.

Ms. Waters’ degree from UCLA is in sociology, not economics, so her ignorance of these realities could be forgiven. She worked on both of Jesse Jackson’s presidential campaigns, so she may have learned from Mr. Jackson the techniques of coercion and blackmail to force a private industry executive to do her bidding. But to do so before a national audience shows not only a fundamental lack of judgment, but betrays a profound hostility for the powerful economic engine of the free market that provides the revenue for all government expenditure. One would think that even a sociology major would understand the supreme idiocy of biting the hand that feeds her.