So, we rise from the rubble...
"Somehow the task of saying the unsayable always seems to fall to The New York Times. It’s like their assigned role as the newspaper of record. If the Times says it, it is OK for everyone to say it. For some years now, this has been the job of the paper. To float trial balloons, to warm up the public, to give a green light to policymakers, to introduce absolutely mental and intellectual chaos into our realm such that we are invited to believe things that are utterly ridiculous.
I will drop here my favorite example from Feb. 28, 2020, when the lead virus reporter (since thrown under the bus) introduced readers to an utterly preposterous idea: "We should reject all conventional practices of public health and instead “go medieval” on the coronavirus. Lock everyone in their homes. Block the highways. Ground the planes. Force everything to close."
He didn’t get his way entirely but almost entirely. What matters here is the manipulation of the public mind. Before that day, such would have been considered complete and utter nonsense, as dangerous as it is ineffective. After that day, policymakers were invited to imagine grotesque possibilities. Their minds swelled with excitement. Ultimately, they got their way. Thanks a lot, New York Times.
Another Trial Balloon: Here’s another date for you: Jan. 13, 2022. That’s the date that The New York Times floated the idea of price controls. After that, the rest of the corporate media got busy: TheStreet, MSNBC, CNN, they all fell in line to suggest that this was not crazy but rather a legitimate policy option. Dig this line: "America’s recent inflation spike has prompted renewed interest in an idea that many economists and policy experts thought they had long ago left behind for good: price controls."
That’s the opening sentence. Yep. Here we go! Not all attempts at reining in prices have been such clear failures. During World War II, the Roosevelt administration imposed strict price controls to prevent wartime shortages from making food and other basic supplies unaffordable. Those rules were generally viewed as necessary at the time, and economists have tended to view them more favorably. In fact, there have been plenty of instances of wartime price controls throughout history, often paired with rationing and wage growth limits.
Hey, we are in a war against a virus! Are we unwilling to use tools we used in the past? Of course we aren’t talking about the 1970s! Don’t be silly!!
This Time Is Different! Few economists today defend the Nixon price controls. But some argue that it is unfair to consider their failure a definitive rebuttal of all price caps. The 1970s were a period of significant economic turmoil, including the Arab oil embargo and the end of the gold standard - hardly the setting for a controlled experiment. And the Nixon-era price caps were broad, whereas modern proponents suggest a more tailored approach. Oh, oh, oh!!! A “tailored approach,” huh? Of what does this consist?
You see, the problem back then was that the price controls were not coupled with… rationing! How silly of those guys! Didn’t you know that the only way to make massive government coercion work is to impose maximum government coercion across the board?
That’s what “tailoring” consists of: "Wartime price caps typically came alongside rationing, in which the quantity of goods people were allowed to buy was limited, said Rebecca L. Spang, a money historian at Indiana University. “If you try to have price controls without rationing, you end up with shortages, you end up with purveyors pulling their goods from the market,” she said."
But hey, there’s more. The key is to impose controls that are product specific and time limited. You know, like two weeks to flatten the curve! By instituting temporary and product-specific price caps, the logic goes, the government could ensure that the poor don’t end up getting gouged. Fans say lower prices would give an incentive to companies to sell as much as they can possibly produce at the permitted price.
Testing Kits: Want an example? This you won’t believe. It turns out that the White House has already experimented with price controls. Maybe you can guess the product in question: home COVID tests! It all happened last September when the White House began authorizing tests. They said that they had to be sold at cost, which was about $14 at the time. When the price controls expired the prices went up as high as $24.
So you see what’s happening here. The price controls were rolled out to prove that they “work” and when they expired, the prices went up, proving further that they should have kept them in place. When I went slogging around town for testing kits, there were limits on the number you could buy and they lasted on shelves only a few hours, with long lines. I wondered at the time why they didn’t raise the prices. The reason: fear of regulators. They were selling only with government permission. That permission could be withdrawn at any time.
There we have it. Long lines. Rationing. Unavailability of goods that you want. This is what happens when you disable market forces. It screws up everything, but government officials have a ball playing market.
It’s Coming: Here we go again, with the great excuse of the virus being deployed as yet another occasion for intensifying controls on the people. They won’t work, obviously. But this time the authorities won’t make the mistake of failing to impose rationing at the same time. It will be all about gas, heating oil and food. Mark my words: Some version of this is coming.
For months now, I’ve predicted that the government would use anti-gouging laws to impose price controls under another name. But I’ve underestimated the stupidity and brazenness of this White House. We have every reason to expect full-blown controls imposed under that name. There will be price controls, but they will work this time because they will be “tailored,” they will be “product specific,” they will be coupled with “rationing” and they will be “temporary.”
For now the White House says that controls are not on the table. Not ready to go there yet. Yeah, where have we heard that before? The heck of it is that they have the time. They still have a full year in office with a single party that controls basically everything in league with an army of bureaucrats ready to pass edicts and crack the skulls of the noncompliant.
