He Challenged Price Controls in Peking

by Skip

Who is going to make better economic decisions? A smallish group of self-deluded “we know all that is necessary/we know better than you do” narcissists or millions of people making self-interested decisions outside of anyone’s control? It is the First Law of Supply and Demand:

Prices are competed to that level at which people want to buy exactly the amount which it pays to produce at those prices – not more, not less. Prices that are controlled by politicians are typically set so low that people demand more than can be produced for those prices. That, not poverty, is what creates shortages. That calls for rationing, which is controlled by and gives power to the politicians. That’s the way it is in the United States when politicians take control.

Armen Alchian’s 1982 address (“Customs, Behavior, and Property Rights”) to the Peking Institute of Foreign Trade

While Alchian’s example was ostensibly pointed at Western politicians, imagine the ChiCom’s surprise when they realized he was dissing the entire communist top-down economic control system.

I have found that few elected politicians or bureaucrats (communist or not) can resist the temptation of thinking they are more intelligent than almost anyone else, including actual experts in such fields. The result is generally not what they proclaim because the action isn’t typically about long-term results. They are counting on being gone by the time the fraud shows up, or voters and consumers with short attention spans will forget who screwed things up. These midwits declare their actions are because of “fairness,” but most of the time, it is really for “ingratiation to the mass”.

Take some of the medications that Medicare is now “negotiating” with Big Pharma because some politicians didn’t like the pricing. Sorry, there is no “negotiating” at those scales – only acceptance because of the other terms that will drive almost any company out of business due to fines or excessive taxation. Nothing says “let us reason together,” like when a government [financial] gun is pointed at your head, like Xi’s China. While its industrial policy was laxer in 1982, it has been crunching backward to the Mao era. I hope Xi lives a short rest of his life but continues to demand fealty to this policy; it will ensure that the Chinese economy will never be larger than ours.

Author

  • Skip

    Co-founder of GraniteGrok, my concern is around Individual Liberty and Freedom and how the Government is taking that away. As an evangelical Christian and Conservative with small "L" libertarian leanings, my fight is with Progressives forcing a collectivized, secular humanistic future upon us. As a TEA Party activist, citizen journalist, and pundit!, my goal is to use the New Media to advance the radical notions of America's Founders back into our culture.

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