Op-Ed: Price control belongs to the history books | National
“One thing we all know from experience is that when you control the price of something, you end up getting less. Our most vivid memory of that was Jimmy Carter’s gas lines.” –Georges Shultz
It has been said that “history repeats itself”. In theory, the more we learn about the mistakes of our past, the better we can influence the present and the future. But that may be easier said than done.
Attempts to control prices cover recorded history. No other economic policy has failed in diverse historical societies. In every century, civilization, mode of government and economic system where price controls have existed, they have had the same effect: they do more harm than good.
In ancient Egypt, the pharaohs attempted to control the price of wheat supply. Without profit, farmers produced less until famine set in and the economy collapsed. In Babylon, the wage and price controls in the Hammurabi Code ultimately brought down the empire. In 58 BC, Roman farmers fled to the city due to wheat and corn price controls, and this quickly led to the downfall of the empire.
Price controls are popular and politically profitable in times of economic distress, but they are an economic disaster for the recovery of a depressed economy. They discourage investors and slow or block growth and tie the hands of international market economies, rendering them dysfunctional.
“No one has ever escaped, or will ever escape, the consequences of their wrong choices.” –Catherine Kaine
According to the World Bank, 76% of developing countries control the price of energy and food, and 13% control the price of building materials and metals. Even though price controls have a history of failure, many politicians continue to implement them because it’s an easy way to attract voters. The World Bank notes that every country with price controls has stagnant economic growth.
As cities get more expensive, politicians and reformers are calling for rent control. Economists think it’s a terrible idea. They say it helps a small group of tenants, but it keeps rents artificially high by discouraging construction and maintenance of the property. This spills over to surrounding neighborhoods, lowering property values and further increasing the number of Section 8 homes and fueling gentrification.
During World War II, President Franklin Roosevelt rationed items needed for the war effort, which gave rise to the lucrative “black market” where people could buy, sell and trade ration coupons. When President Richard Nixon restricted gasoline price increases in the 1970s, long lines formed at gas stations and gasoline was rationed. In U.S. cities where politicians have passed rent control laws, property values have gone down, and so have tax revenues.
In an energy crisis, the Liberals’ first response is to impose prices on energy, especially gas and oil. Although there is a long history that proves that trying to solve political problems with price controls not only leads to shortages but can destroy an economy, Democrats are doing it again.
“The only thing price controls can guarantee anyone is more shortages.” – Michelle McMurry
In classic progressive style, the Liberals in the House have passed a bill that will make a bad situation even worse. In May, a law to punish big oil companies for “price gouging,” drafted by U.S. Rep. Kim Schrier, D-WA, passed 217-207 without a single Republican vote while four Democrats joined the GOP by voting no.
This bill was encouraged and supported by President Joe Biden, who campaigned to declare war on the oil industry. It’s a promise he kept that Americans wish he’d forget to keep. This bill makes it “vaguely” illegal to “excessively” raise the prices of gasoline and household fuels? But what no one knows is who will judge how excessive a raise is.” The Federal Trade Commission will punish the oil scoundrels.
U.S. Representative Katie Porter, D-CA, co-sponsor of this bill, noted, “Big Oil is inflating prices for families because they can. Enough is enough ! Press secretary Jen Psaki said at a press briefing: “Our energy policies do not hinder the production of the oil industry. They reduce on their own.”
ConocoPhillips CEO Ryan Lance blamed Biden and progressive climate geeks for the current oil crisis. He said, “This administration’s bad energy policies and bad regulatory policies are to blame, not our profits. As an industry, we cannot lose sight of the return on our investments.
The American Exploration and Production Council said the price hike claims were completely untrue. In a press release, the U.S. Chamber of Commerce said, “It’s time for this administration to partner with our domestic energy producers and leverage America’s ability to produce more oil and gas so that we can focus on pro-growth policies for the benefit of our economy and the security of the world.
While ExxonMobil, Chevron and other oil companies admitted to making $40 billion in the first quarter of the year, many of these companies are spending billions on stock buybacks and paying huge dividends to investors. And it’s an inconvenient truth that Democrats have chosen to ignore.
Now that gas prices have soared 81%, an all-time high, Biden has worked to deflect blame for the pain at the pump and criticism of his energy policies. Rather than take responsibility for his anti-American energy policy, Biden is pleading with rogue dictators to make up for the lack of imported Russian oil.
“It is time to punish all energy producers for profiting from this international crisis.” -Joe Biden
In his first week in office, Biden shut down the Keystone pipeline, banned new oil drilling leases on federal lands and halted drilling in the Arctic reservation. He then ordered Energy Czar John Kerry to review all gas and oil regulations. He claimed that Donald Trump had given them “carte blanche to overdrill and pollute”.
But Joe Biden hasn’t done his homework. According to BP’s statistical study, fossil fuel consumption fell by 4.5% between 2017 and 2020. This is the largest drop since 1945. Falling oil consumption contributed to three-quarters from the decline, when America was energy independent.
“The only way to increase the supply of anything is to reduce government regulations.” –Donald Trump
In the book of Hosea in the Hebrew Bible, we learned: “You reap what you sew. Biden declared war on industry in his first week in office and he blames everyone but himself for high gas prices.
In 2019, for the first time in 70 years, the United States became a net exporter of energy and the largest producer of oil and natural gas in the world. Biden took us back 70 years and refuses to admit it.
Americans are used to showing little resistance to the lure of price controls. From the days of the Continental Army, when price controls nearly brought a ruinous end to the American Revolution, to the 1970s, when Nixon tried to defeat inflation by freezing wages and prices, Americans have suffered greatly from the shortages and economic disasters caused by these failed policies.
Republicans should block this monster in the Senate, but will they with the midterm elections?
“Anything is possible, from angels and demons to economists and politicians.” – Paulo Coelho