Remembering Richard Gordon: Libertarian Mineral Economist
I recently learned that Richard Gordon, emeritus professor at Pennsylvania State University and one of the most influential free-market energy economists of all time, passed away last month at the age of 80.
For those who are unfamiliar, Gordon was the epitome of a career economist. He continued writing for nearly two decades after his retirement from Penn State, with his final piece, a book review, appearing posthumously in Regulation.
The man had a profound understanding of natural resources, and the government’s role — or lack thereof — in reaping their benefits. He gained accolades from everyone and anyone, from the International Association for Energy Economics to the government of Venezuela.
Gordon stands as one of two of the greatest thinkers from the first generation of modern energy economists. He held a PhD from the Massachusetts Institute of Technology, the same school where eminent, free-market, petrochemical economist M.A. Adelman taught for many years.
It is hard to overstate the influence of these two men. The work of both economists, Gordon working on minerals and Adelman on oil and gas, form the foundation of much of what we now know about how markets in natural resources work.
Gordon’s work stands apart from others in that it was never particularly partisan; it sought to examine the nature of monopoly and risk, and their relationship with natural resources. He published a number of books and spoke frequently to those involved in the industries he studied.
Even in retirement, he would go on to write dozens of articles, chiefly in Regulation, including reviews of some of the most prominent books published in his field in the past two decades. Regretfully, much of this work is locked away in decades-old journals, but much can be learned from the three policy analyses he produced for the Cato Institute.
In “Two Cheers for the 1872 Mining Law,” Gordon and Peter Van Doren explain why most arguments for increased resource-extraction taxes make little sense. They show that there are no “windfall” profits for miners extract resources, and most people who argue for increased taxes simply ignore the many bad investments that miners make.
“An examination of all assets, including those that do not perform well … leads to the conclusion that in markets with many participants, risk-adjusted excess profits on assets are zero.” The paper systematically breaks down the most potent arguments leveled by those seeking to increase taxes on mineral extraction or change the nation’s well-serving mining laws.
More potent was what may be one of the best pieces Cato has ever published, “The Case against Government Intervention in Energy Markets.” The piece does well to summarize Gordon’s life work into a quick 21-page paper arguing that most energy policy in recent years is based on a faulty understanding of how energy markets work.
“How to we transition away from fossil fuels?” “How do we achieve energy independence?” “How should we regulate extractive industries?” These are all questions that have real consequences, and most of the answers currently available are based in this limited understanding of the products they seek to regulate.
Gordon was a brilliant scholar, whose work changed the way many people see the bounty we have inherited on Earth. He dedicated nearly six decades of his life to understanding these issues, and his work will live on in those he influenced.
I never met the man, but can certainly count myself among them. We can only hope that, some day, his vision will be realized, and humanity will reap even greater benefits than what we have in the past.