Price Control: Killing the Messenger

Newnan resident Lawrence W. Reed is Chairman Emeritus of the Foundation for Economic Education. His most recent book is “Was Jesus a Socialist?” He can be contacted at [email protected]

When the British newspaper The Manchester Guardian was founded in 1821, it quickly established a reputation as an advocate of freedom and free markets against protectionism, cronyism and bloated government.

It has been deeply and widely respected for over a century.

Then, as Britain swung to the left after World War II, the paper did the same. By the time he changed his name in 1959 to The Guardian, he had become a reliable spokesman for the Socialist Labor Party. When Venezuelan dictator Hugo Chavez died in 2013, he called it a “breath of fresh air”. What was “new” in the nationalization, expropriation and bludgeoning of a country in ruins remains, to be charitable, rather puzzling.

Today, you can marry the most discredited and adoring madness in the state and be welcomed into the opinion pages of The Guardian. The latest example, written by Isabella Weber in the December 29, 2021 edition, was too much even for the New York Times’ Paul Krugman, a former economist turned propagandist. The headline was: “We have a powerful weapon against inflation: price control. It’s time we thought about it. Krugman replied, “I’m not a free market fanatic, but that’s really dumb.”

Isabella Weber is set to star in a TV ad selling snake oil remedies. She might open it by saying, “I’m not an economist, but I pretend to be one at the University of Massachusetts-Amherst. This is where she “taught” economics. Rumor has it that the science department there is in charge of witches and wizards, though I can’t confirm that.

Any economist who deserves to keep his job knows that controlling prices is to inflation what drinking Clorox is to stomach aches. But now that the great mob of government has managed to fuel price inflation with its spending and money-printing frenzy, we should be prepared for more quacks to echo Weber’s suggested solution.

When the first caveman bludgeoned his neighbor to expropriate the food his neighbor had gathered, he gave brutal, physical expression to the essence of socialist society. Price controls are not voluntary demands, so they fit perfectly into the socialist temperament.

The object of price control is not inanimate numbers and dollar signs. Penalties for violation of price control decrees are imposed on individuals. Jails and fines are for people, not prizes. Price control is inherently a control of people.

The economic consequence of government price controls is economic disruption. Its history in America and everywhere else is one of shortages, lineups, black markets and popular disaffection.

Inflation is always and everywhere a monetary issue. Rising prices don’t cause inflation any more than wet streets cause rain. Monetary authorities inflate and then prices rise, in that order. Now that prices are rising at their fastest pace in 40 years, remember that in the past two years alone, monetary authorities have increased the money supply by more than 30%. There is a direct link here that price controls would not do anything about.

The price hike is unpleasant for many. They are a message from the market that ticket printers are misbehaving. Imposing price controls kills the messenger when you don’t like the message.

Newnan resident Lawrence W. Reed is Chairman Emeritus of the Foundation for Economic Education. His most recent book is “Was Jesus a Socialist?” He can be reached at [email protected].

James V. Hayes