Price controls: Bad in Ancient Sumeria, bad now
One of the great downfalls of modern society is our propensity for navel-gazing: The idea that everything that happens to us is unique and that nothing can be learned from history.
We see this whenever economic crises spiral beyond our control, which happens on a regular basis, and our political leaders immediately shift into “do something” mode, which almost always involves oodles of legislation.
For example, a favorite concept of politicians trying to get a handle on inflation - the rise in the general level of prices of goods and services in an economy over a substantial period of time – is to implement price controls.
Many Americans may recall President Nixon’s imposition of wage and price controls in 1971, to combat what was seen as “intolerable” inflation of more than 4 percent. What was originally a 90-day freeze on wages and prices turned into nearly 1,000 days of measures.
Not surprisingly, “the initial attempt to dampen inflation by calming inflationary expectations was a monumental failure,” as US inflation reached double digits, according to The Econ Review.
To demonstrate the inanity of price controls, The Ludwig von Mises Institute’s website has an article with excerpts from the book “Forty Centuries of Wage and Price Controls: How Not to Fight Inflation.”
A highlight: “For the past forty-six centuries (at least) governments all over the world have tried to fix wages and prices from time to time. When their efforts failed, as they usually did, governments then put the blame on the wickedness and dishonesty of their subjects, rather than upon the ineffectiveness of the official policy. The same tendencies remain today.”
The book covers the ancient world, the Roman Republic and Empire, Medieval Europe, the first centuries of the U.S. and Canada, the French Revolution, the 19th century, World War I and II, the Nazis, the Soviets, postwar rent control, and the 1970s.
It’s extremely informative and excellent evidence once again that we as a species seem to have a great deal of difficulty learning from our past mistakes.