From Ancient Rome to Richard Burgon, price caps have always been fantasy economics
‘What is more useful–newspapers or television?’ the Soviet joke goes. ‘Newspapers, of course. You can’t wipe your arse with a TV.”
Shortages in the Soviet Union, extending from toilet paper to pretty much everything, were driven by the failure of prices to reflect anything meaningful. Prices were set arbitrarily by Gosplan, the central planning agency, based on crude estimates of input costs; rather than on the basis of actual production costs or consumer demand.
Comparisons with the Soviet Union, like those with the Nazis, are usually ridiculously hyperbolic. But recent days demonstrate that the lessons of history are often ignored and bad ideas rarely die.
Fantasy economics is back with a vengeance.
The whole piece is well worth reading, partly because it highlights how endlessly willing the political classes are to push failed policy ideas. They must know they can't work, but if enough people are prepared to accept them then they will push them. It's what they do.
The sad truth is that higher prices are necessary to send a signal that the underlying cost of products has increased. That does, unfortunately, mean that Britain is a poorer nation than it would have been. There are plenty of things we can do to try to arrest that slide and turn things around, but Soviet-style price controls belong in the dustbin of history.
6 comments:
How does a price cap work with renewable energy?
If the windmills are spinning they take the subsidy and give us electricity.
If the windmills spin too much we give them money to reduce the spin.
If the windmills stop spinning we give ooddles of money to the hydro electric companies to let the water spin those turbines. Water shortage? Wot water shortage.
Meanwhile we continuously pay for American forests to be shredded and shipped here so that it can be mixed with imported coal and burned to produce green electricity.
Meanwhile also we nurse along old nuclear generators to go full whack continuously while nos amis across La Manche tell us that unfortunately their nuclear generators are a bit sick and cannot provide. Quelled domage.
So if we threaten to pay less per kwh, what part of this house of cards is going to come clean and say "Ok, we were bluffing. Here is some cheap electricity we were hiding up our sleeve."
Aye, right. As we say oop north.
Basically, we are fucked.
After forty (or more) centurie sof wage and price controls...
"We have concluded that, while there have been some cases in which controls have at least apparently curtailed the effects of inflation for a short time, they have always failed in the long run. The basic reason for this is that they have not addressed the real cause of inflation which is an increase in the money supply over and above the increase in productivity.
Schuettinger, Robert L.; Butler, Eamonn F.. Forty Centuries of Wage and Price Controls: How Not to Fight Inflation (p. 5). Ludwig von Mises Institute. Kindle Edition. "
An experiment that has been tried again and again, but governments and rulers are unwilling to learn the lesson.
Any article which refers to Richard Burgon is guaranteed to bring a smile to my face, but the scary aspect here is that the public are in favour of price controls. And populist papers like the Daily Mail will again be happy to cheer them on.
If the electorate understood the gist of that article, the Conservatives would be in power for ever. Let's hope that Liz has the wit and the grit to explain it to them. Rough times ahead.
We thought they had learnt the extremely bitter lesson DJ describes under the tutorlage of Milton Freeman and Mrs Thatcher. But any society that believes a person can change sex by surgery is not sufficient of intellect to learn such lessons. Extinction beckons.
"An experiment that has been tried again and again, but governments and rulers are unwilling to learn the lesson."
It is The Ruled who need to learn the lesson. Then, the snake oil wouldn't sell. But, sadly, the supply of mugs is infinite. Which is why we are indeed fucked.
Doonhamer - that's it, the mess has gone to far to be would back now without a great deal of pain. The pain will be ours as usual.
DJ - unless they really are dim, it seems to be too tempting not to try it again - forever kicking the can down the road.
Sam - it isn't complicated either and could be taught in schools. It'll never happen though.
Tammly - that's how I look at it. The trans game has been an unambiguous litmus test and there is no way back from that level of stupidity.
decnine - yes, people seem to swallow it because they want to.
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