It’s almost a pity people have stopped watching CNN. That makes it far too easy for the network to slip something like this past us:
London (CNN Business) – People are paying a lot more for food, gas, cars and services, and inflation isn’t over yet as the pandemic continues to distort the economy. So should governments consider setting the price of essential goods?
It’s been done before, typically during times of crisis, but for most mainstream economists, the answer to this question is a resounding “no.” Limiting how much companies can charge will distort markets, they argue, causing shortages and exacerbating supply chain problems while only temporarily reducing inflation.
“Price controls can of course control prices — but they’re a terrible idea,” David Autor, a professor of economics at the Massachusetts Institute of Technology, remarked in a survey published earlier this month by the University of Chicago.
Asked whether price controls similar to those used in the United States during the 1970s could reduce inflation over the next year, less than a quarter of economists surveyed said they agree while nearly 60% said they disagree or strongly disagree.
Remember how I suggested that you read some Andrew Dickson White? I do hope you took me seriously.
When a government inflates the currency, as ours has been doing to support its insane spending, and prices start to rise rapidly, the government invariably does two other things:
- It blames producers for the increases;
- It toys with price controls.
I’ll leave the completion of this line of reasoning to my Gentle Readers.
We’ve already seen at least some attempts to blame rising meat prices on the near monopoly on meat packing by a few greedy companies, and of course – everyone hates the oil companies.
When was the last time that government acted sensibly, taking the opinion of experts that also coincided with past performance?
Yep – batten down the hatches, and get your supplies laid in deep for the coming shortages. Price controls are going to be tried again. The supply chain is already hosed enough that they’ll just blame the impending shortages caused by setting prices artificially low on the ‘broken supply chain’ – and that it’ll take a few years to sort out… (neatly kicking the can down the road – while the affected industries are damaged beyond ready repair).
I lived through the 70 even-odd gas rationing, and the ‘moderate’ inflation we had then. I fear that will seem like a minor inconvenience by what’s likely coming our way. Hold on tight – and tighten your belts. It’s going to be a rough ride – regardless of who holds Congress.