Original engraving of Alice with the Sleeping Queens, from Through the Looking Glass by Lewis Carroll. By Morphart Creation @ Shutterstock.com
Price controls are coming, warns Andy Kessler in the WSJ, giving examples from the mouth of our own president.
Joe Biden Pours Salt on a Self-Inflicted Wound
“Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.” (6 March)
“As Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up. That ends on my watch.” (February State of the Union address)
And Worst Yet:
“Cut the cost of prescription drugs. We pay more for the same drug produced by the same company in America than any other country in the world. . . . let’s let Medicare negotiate the price of prescription drugs. They already set the price for VA drugs.”
Prices Guide the Economy
That sounds good on the surface, but as Mr. Kessler advises, don’t fall for it.
Prices set by producers are signals, and consumers whisper feedback billions of times a day by buying or not buying products. Mess with prices and the economy has no guide. The Soviets instituted price controls on everything from subsidized “red bread” to meat, often resulting in empty shelves. President Franklin D. Roosevelt’s National Recovery Agency fixed prices, prolonging the Depression, all in the name of “fair competition.” Watch for the resurrection of that phrase to rationalize price controls.
In the WSJ, Tomas Philipson also noted, companies would “face a tax as high as 95% on sales if they don’t concede to the government price.”
These aren’t negotiations. They are price controls.
Price Controls Don’t Work
Want to whip inflation now? Forget all the Band-Aids and government controls. Instead, Kessler recommends, follow the advice of Milton Friedman:
- stop printing money
- stop stimulus
- raise interest rates to above the prevailing inflation rate. Prices will adjust naturally.
“The market works best when it sets prices,” Mr. Kessler reminds readers. Politicians, however, can’t help themselves.
They might disguise and sneak them in while everyone’s focus is on war, but price controls are coming.
Price controls, despite continuing to institute them, have never worked and never will explains Mr. Kessler.
- Try finding a cheap apartment in rent-controlled New York City.
- Look for many entry-level jobs eliminated because of $15 minimum wages.
- Try to get gallbladder surgery in Britain or other nationalized healthcare systems that ration care.
Releasing strategic oil reserves is only a temporary fix. Increased supply, more pipelines and expanded drilling could easily counter soaring energy prices, but that would require policy makers to face the wrath of the climate clique that loves high fuel prices. So they find other alleged fixes.
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