Think that government can deliver lower prices on demand? History says no


Price and wage controls never deliver what they promised
Thomas DiLorenzo discusses what should be taught in basic history and civics classes.

Price controls were finally ended in Germany by Economic Minister Ludwig Erhard in 1948, on a Sunday, when the American occupation authorities would be out of their offices and unable to stop him. This spawned the "German economic miracle."
 
Price controls were the cause of the "energy crisis" of the 1970s and of the California energy crisis of the 1990s (only the wholesale price of electricity was deregulated there; controls were placed on retail prices). For more than four thousand years, dictators, despots, and politicians of all stripes have viewed price controls as the ultimate "something for nothing" promise to the public.

With the wave of a hand, or the flash of a legislative pen, they promise to make everything cheaper. And for more than four thousand years the results have been exactly the same: shortages, sometimes of catastrophic consequence; deterioration of product quality; the proliferation of black markets on which prices are actually higher and bribery is rampant; destruction of a nation's productive capacity in the industries where prices are controlled; gross distortions of markets; the creation of oppressive and tyrannical price control bureaucracies; and a dangerous concentration of political power in the hands of the price controllers.

This is what the economically ignorant among the American public is clamoring for Congress to do with regard to today's energy industry. Let's hope that the recent "hearings" in Congress on the topic of gasoline prices were just another public relations charade.

The whole article is worth a read.

I'm going to take a brief aside here though. Classic liberals or libertarians believe that the free market is capable of producing more, better, faster and cheaper results than anything mandated by government. The voluntary exchange of goods and services supported by the uniform rule of law is the key to abundance.

Free market, as in unregulated on either end.

It is as close to a universal economic truth than we have found yet. The freer the market, the more wealth created for everyone involved.

That doesn't mean that there won't be catastrophic failures. These are necessary, just as necessary as the runaway successes.

From this simple idea follows the second pillar of classic liberalism, minimum government involvement creates the widest distribution of resources and freedom.

Classic liberalism does not promise wealth unlimited for every single person. It does promise that wealth increases according to human effort as long as each person freely chooses what to do.

Anything else usually degenerates into an income redistribution scheme or an indecipherable mess, sometimes at the same time.

From this principle follows the third pillar, individual choice is absolutely vital to freedom.

This in turn gives us the proper role of law in society.

Law exists to protect individual choice and the free exchange of goods and services, so long as that choice and exchange do not interfere with the freedom of another.

It really is that simple. Everything else is just a matter of making sure that no one has more legal privileges than everyone else.

— NeoWayland

Posted: Wed - January 4, 2006 at 04:36 AM  Tag


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