Thursday, November 22, 2007
Hidden price controls
The oldest and most basic economic law is: Price and wage controls never work. It was first observed in 300 AD when Roman emperor Diocletian (the same dude who perfected the art of killing Christians) placed controls on the price of bread, hoping to prevent urban riots. The inevitable result was shortages, riots, and bakers going out of business. We can understand why Diocletian couldn't foresee the result, but we can't forgive any ruler after 300 AD.
And what do we have now? Shortages of some products, wild swings in prices of others, companies going out of business, employees losing good jobs. This looks a whole lot like partial wage and price controls, yet we don't have an Office of Price Administration.
Well, where's the agency? China. Mexico. India.
By allowing China to flood our retailers with cheap products, and Mexico to flood our employers with cheap labor, the Clinton and Bush dynasties have very cleverly imposed hard but hidden ceilings on wages and prices, without any explicit signs or laws, without an agency that Congress could restrict or eliminate. Anyone who objects to the controls is called a "protectionist" or "nativist", and the controls can be defended as "pure free trade", which is supposedly the proper goal of free-market economics.
Orwell would love it.
[I'm certain someone has already made this connection ... it seems quite obvious ... but I can't find it directly on the web through any combination of words I can think of. If it's a common thought, described by some other terminology, I apologize!]
And what do we have now? Shortages of some products, wild swings in prices of others, companies going out of business, employees losing good jobs. This looks a whole lot like partial wage and price controls, yet we don't have an Office of Price Administration.
Well, where's the agency? China. Mexico. India.
By allowing China to flood our retailers with cheap products, and Mexico to flood our employers with cheap labor, the Clinton and Bush dynasties have very cleverly imposed hard but hidden ceilings on wages and prices, without any explicit signs or laws, without an agency that Congress could restrict or eliminate. Anyone who objects to the controls is called a "protectionist" or "nativist", and the controls can be defended as "pure free trade", which is supposedly the proper goal of free-market economics.
Orwell would love it.
[I'm certain someone has already made this connection ... it seems quite obvious ... but I can't find it directly on the web through any combination of words I can think of. If it's a common thought, described by some other terminology, I apologize!]
Labels: the broken circle
¶ 12:44 PM
