The Price of Price Controls

It is frequently the case that populist politicians and others in power will exercise control over prices as a means of protecting consumers and the disadvantaged from unscrupulous suppliers. This is most evident today in legislation against price gouging but the tendency in general is to exercise control whenever and wherever possible regardless of circumstance. Control over prices is inevitably couched in terms of “justice” or “fairness.”

In their book Forty Centuries of Wage and Price Controls, Robert Scheuttinger and Eamonn Butler provide extensive empirical evidence of the results of such controls dating back to the Code of Hammurabi in Babylon over four thousand years ago. One such example is offered from the American Continental Congress in 1778 following price restrictions imposed by different states on materials deemed essential for the continental army. The effect of these restrictions were shortages of the very materials supposedly being protected, inspiring the following:

Whereas it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purpose proposed, but likewise productive of very evil consequences—resolved, that it be recommended to the several states to repeal or suspend all laws limiting, regulating or restraining the price of any Article.

Empiricism aside, logic explains why price controls result in shortages. Prices fluctuate in response to changes in supply and demand. Prices that do not adjust upward with increased demand will tend to further increase demand. At the same time, such restrictions limit profits, thereby further diminishing supply. This economic reality is inescapable and offers the true price of price controls.

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The Missing Link

It is common for many actions to be incorrectly attributed. This is often intentional, shielding individuals from responsibility. However, as it becomes more commonplace, it becomes ever easier to skirt responsibility as well as advance agendas.

Nowhere is this more evident than when actions are attributed to the state or governments. For example, when the tax collector appears, he is not blamed for extracting government tribute, While he might not realize the full benefit of his actions, he is paid out of the funds which he expropriates with the coercive force of government. As in all cases of such action, it is this individual who acts, not government.

Governments are collections of people elected or appointed to perform the functions necessary to keep the government operating. We could argue whether the government should exist and/or have the power it has, but the exercise of that power is always performed by individuals. The link between the action and the responsible party is always at this individual level. It is for this reason that Ludwig von Mises said in Planning for Freedom:

“If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action.”

Until we hold individual actors accountable for the abuses of government, we will see an end to neither the actions nor their consequences.

Open-Mindedness vs. Blind Obedience

I recently wrote a post explaining how groups in power are generally unwilling to listen to opposing viewpoints. On the whole, people only feel the need to appear open-minded when they are trying to rise from a lack of power. However, the post did not address an equally important aspect of the same topic, specifically the definition of open-mindedness.

To many today, open-mindedness is defined by acceptance of their position. In other words, a person who is open-minded is one who sees the sagacity of “my” position. This obviously cannot be an accurate definition as it can’t be applied by all people in the same way. Being open-minded has nothing to do with acceptance and everything to do with consideration, contemplation, and reevaluation. The person who can soberly evaluate his own position against that of opposing viewpoints is open-minded.

It is instead blind obedience most people seek when they claim to look for the open-minded. Any challenge to their own position requires them to evaluate their decisions, something with which they generally appear uncomfortable; they are more close-minded than they care to admit. Unfortunately, like so many social terms tossed around today, open-mindedness is misapplied by the very people lacking it.