Thursday, September 29, 2022

Price Controls Have Failed for 4,000 Years

In 1892 the French archaeologist Henri Pognon made a historic discovery a few dozen miles northeast of Baghdad: a massive tell that held the ruins of the ancient city-state Eshnunna.

Though it was not excavated until decades later by another archaeological team led by Dutch Egyptologist Henri Frankfort, the tell was one of the great finds of the century, revealing secrets of a Mesopotamian city that had been hidden for millennia.

Among the secrets discovered on cuneiform tablets was that Eshnunna used price controls, a discovery notable in that it appears to be the oldest historical record of humans fixing prices. (I’ve attempted to verify this fact with economic historians, and will let you know if I get a response.)

1 kor of barley [she’um] is (priced) at [ana] 1 shekel of silver;

3 qa of “best oil” are (priced) at 1 shekel of silver;

1 seah (and) 2 qa of sesame oil are (priced) at 1 shekel of silver. . . .

The hire for a wagon together with its oxen and its driveris 1 massiktum (and) 4 seah of barley. If it is (paid in) silver, the hire is one third of a shekel. He shall drive it the whole day.

Eshnunna’s price controls edge out by a couple centuries the Code of Hammurabi (1755–1750 BC), a more famous record from ancient Babylon that was a “maze of price control regulations,” as the historian Thomas DiLorenzo put it.

This might explain why the First Babylonian Empire fizzled nearly a thousand years before the Greek poet Homer told the story of the Trojan War. Price controls don’t work, and an abundance of history (as well as basic economics) proves it.

A Brief History of Price Controls

The Ancient Greeks may have given us Homer and his wonderful stories, but they suffered from the same economic ignorance as the rulers of Eshnunna when it came to price fixing.

In 388 B.C., grain prices in Athens were out of control—largely because Athenian rulers had an incredibly complex set of regulations on agriculture production and commerce, which included “an army of grain inspectors appointed for the purpose of setting the price of grain at a level the Athenian government thought to be just.”

The penalty for evading these price controls was death, and many grain traders soon found themselves on trial facing such a punishment when it was discovered they were “hoarding” grain during a (man-made) shortage.

The Athenian Empire was history by the time Rome attempted its own price control scheme seven hundred years later on a much larger scale. In 301 A.D. the Emperor Diocletian passed his Edict on Maximum Prices, which set a fixed rate on everything from eggs and grain to beef and clothing and beyond, as well as the wages of laborers who produced these items. The penalty for anyone caught violating these edicts was—you guessed it—death. Traders responded exactly as one would expect to these regulations.

“The people brought provisions no more to market, since they could not get a reasonable price for them,” one historian wrote. Not coincidentally, Rome’s empire soon went the same way as that of the Athenians (though the eastern half would survive another thousand years).

And then there’s the British colony of Bengal, located in northeast India. Few people today remember the Bengal Famine of 1770, which is astonishing considering an estimated 10 million people died, roughly a third of its population. What’s even more astonishing is how little attention the event attracted at the time, at least in the London press.

While many attributed the famine to the monsoons and drought that plagued the region in 1768 and 1769, Adam Smith, writing in The Wealth of Nations, correctly observed that it was the price controls that came afterwards that likely turned a scarcity of food into a full blown famine.

“The drought in Bengal, a few years ago, might probably have occasioned a very great dearth. Some improper regulations, some injudicious restraints, imposed by the servants of the East India Company upon the rice trade, contributed, perhaps, to turn that dearth into a famine.

When the government, in order to remedy the inconveniencies of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or, if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season.”

And let us not forget the French Revolution, where in 1793 leaders paused their head-lopping to pass the Law of the General Maximum, a set of price controls passed to limit “price gouging.” (Henry Hazlitt had it right when he called the law “a desperate attempt to offset the consequences of [the leaders’] own reckless overissue of paper money.”)

The American historian Andrew Dickson White (1832-1918), a cofounder of Cornell University, explained the consequences of the policy.

“The first result of the Maximum [price law] was that every means was taken to evade the fixed price imposed, and the farmers brought in as little produce as they possibly could,” White wrote. “This increased the scarcity, and the people of the large cities were put on an allowance.”

Important Market Signals

Fortunately, today we have the advantage of not just history but the science of economics to show us that price controls don’t work.

Basic economics teaches that prices are important market signals. High prices might be an aggravation for consumers, but they signal to producers the opportunity for profit, which leads to more production and investment. They also signal to consumers that the good is scarce, which encourages people to use less of it.

Take gasoline. When prices are $7.50 a gallon, people drive less than they would if the price were $1, $3, or $5 per gallon. Meanwhile, the high price also signals to producers an opportunity for profit, which encourages investment and production, which ultimately leads to lower gasoline prices. As economists will sometimes say, the solution to high prices is high prices.


'I've gone from children's author to truck driver - all because I stood up for JK Rowling'

Having manoeuvred her 32-tonne lorry into a lay-by and joined her fellow HGV drivers for a bacon roll in the nearby greasy spoon, Gillian Philip couldn't help smiling at the stark contrast with her previous career.

As a successful children's author, the last work lunch she had enjoyed had been in a swanky London restaurant. That was another life entirely — one in which Gillian wore stilettos rather than steel-capped boots. But, two years ago, she had been unceremoniously dumped by both her literary agent and the company that had commissioned her to write books for more than a decade.

Her crime? Certainly not lack of talent or diligence — her books sold well. Yet that counted for nothing when she fell foul of the Twitter mob for expressing support online for fellow author J. K. Rowling.

Gillian, 58, couldn't have foreseen that, within a month of publicly backing the Harry Potter writer's criticism of a proposed change in law — one which would allow transgender people to self-identify as male or female — her literary career would be over.

'I know it's a controversial subject that evokes a lot of strong emotion, but in my worst nightmares I couldn't have predicted the devastating fall-out from adding the hashtag #IStandWithJKRowling to my Twitter bio,' she tells me.

'It started with online messages threatening to kill and rape me, moved on to emails being sent to my publishers demanding my sacking and ended, a day later, with me losing my livelihood.

'It was such a scary time. I was worried about mine and my children's safety.'

Unsurprisingly, the story attracted much media interest. But what Gillian didn't reveal at the time was that this all happened just six weeks after her husband, Ian, died.

Bosses at the publishing firm were aware of her family's tragedy and the fact it had left her as sole supporter, both emotionally and financially, of her teenage twin son and daughter.

Opening up for the first time, Gillian says: 'I didn't feel strong enough to talk about my husband's death at the time — I'd have become very emotional — and also I didn't want people thinking I was playing the sympathy card because I'd been widowed.

'This was a bad thing to happen to me even if I hadn't just lost my husband. 'With the perspective of distance, however, I'm horrified that they could have dropped me at that point. At the time, I couldn't see things clearly.'

Gillian's comments come in a week when the publishing industry is embroiled in another clash over free speech. Writer Kate Clanchy, who was last year accused of racism in her award-winning memoir, has said she's become a scapegoat for the entire publishing industry. In a letter to members of the Society of Authors, Clanchy accused Chocolat author Joanne Harris, the society's chair, of calling her 'ignorant, cruel and patronising'. She has also hired private investigators to look into the social media activity of Harris and several others.

In a statement made to those in receipt of the letter, the Society said the document 'made serious allegations about the chair which should be fully investigated', adding: 'Joanne Harris strongly denies these allegations.'

Reflecting on this latest spat, Gillian says: 'When authors can't even rely on their own 'trade union' to defend them, it's no wonder free creative expression is in danger of becoming a historical relic — and in the industry that should champion it most.

'I'm sometimes asked if I miss publishing. I do miss writing, and meeting readers, and of course I miss my pay, but it's a relief to be outside the industry. From my new vantage point, it's even easier to recognise the genuinely nasty atmosphere that prevails — especially in children's publishing.

'Writers are cowed by the vindictive rhetoric of small but over-powerful cliques; few dare to speak their minds, and even fewer dare to write them.'

Gillian is a strong, resourceful woman, but in the days immediately after her own ordeal, she couldn't drag herself out of bed. During one low point, her teenage son had to hold her up when her legs gave way.

She had been employed by Working Partners as an author on a freelance basis for more than a decade. The company produces series of books for children and young adults — among them Beast Quest and Rainbow Magic — and the books Gillian wrote, under the collective pseudonym Erin Hunter, with her real name credited inside, were published by HarperCollins.

Not only did she pen seven books in the series Survivors, which is about dogs, and seven in the Bravelands series, about African wildlife, with a contract to write two more (now cancelled), she also regularly toured the U.S. and Europe, addressing audiences of young readers as the face of Erin Hunter.

So great was Gillian's loyalty to the company that even when her husband had a mini stroke in 2018, and her mother became very unwell with Alzheimer's in February 2020, she finished the U.S. tours — organising care for her loved ones — so as not to leave her employers, and young readers, in the lurch.

She had been married to Ian, who was 26 years her senior, for 30 years when he died in May 2020, after a series of mini strokes which led to vascular dementia.

Working Partners sent her a beautiful bouquet, with a message of condolence and a note telling her to take the time she needed to grieve.

This meant a lot. In the early months of the pandemic, it was difficult for family and friends to rally round, and Gillian and her twins, who were then aged 19 and home from university, were each other's only solace.

'Any compassion intended had clearly evaporated six weeks later when, on June 26, the firm took away my livelihood,' says Gillian. 'My agent broke the news that Working Partners had ended my contract, under instruction from HarperCollins.'

Few writers dare speak their minds

At the time, the publisher stated: 'HarperCollins UK does not have a contract with this author, we have no direct relationship with her and we have not sacked her.'

Meanwhile, Working Partners has said that the decision not to continue working with Gillian was 'not in direct response to the nature of [her] personally expressed views', but rather because she had 'associated the Erin Hunter pen-name with her personal views on Twitter'.

A couple of weeks after her contract was ended, Gillian was dropped by her literary agency and 'all mention of me removed from their website, effectively ending my writing career'.

'I felt betrayed. And even though I knew the people sending messages were trolls, having so much hatred and venom — and those awful threats — levelled at you takes a serious toll.


Liberal author says the family unit is 'a terrible way to satisfy... love & care,' calls to abolish it

Feminist theorist and author Sophie Lewis was the subject of an article on Friday in the UK’s The New Statesman website publication following her new book "Abolish the Family."

Historian Erin Magalaque discussed Lewis’ book which described the family unit as "a terrible way to satisfy all of our desires for love, care, nourishment" and was highly critical of suggestions otherwise.

"The family isn’t actually any good at creating intimacy, Lewis argues; the family creates, in fact, a dearth of care, with shreds and scraps of intimacy fought out between overworked parents and totally dependent kids, hidden behind the locked doors of private property," Magalaque wrote.

Magalaque complimented Lewis’ efforts to mock what she called "inevitable knee-jerk" reactions to calls to abolish the family unit.

Sophie Lewis referred to the family as the "narrowly bourgeois love of biological parenthood."
Sophie Lewis referred to the family as the "narrowly bourgeois love of biological parenthood." (iStock)

"Lewis is clear-eyed and witty about the inevitable knee-jerk reaction to calls for family abolition. (‘So! The left is trying to take grandma away, now, and confiscate the kids, and this is supposed to be progressive? What the f**k?’) And it’s true that family abolition, like other abolitionist movements, presents certain discomforts. Maybe you love your family! Or maybe you just like cooking in your own kitchen. Lewis acknowledges these discomforts, and asks us to imagine beyond them," Magalaque wrote.

Magalaque noted the feminists like Lewis also frame the family unit through a communistic lens, referring to families as the "narrowly bourgeois love of biological parenthood" and communal relationships as a red love, a social love.

"The family, Lewis and other abolitionists and feminists argue, privatises care. The legal and economic structure of the nuclear household warps love and intimacy into abuse, ownership, scarcity. Children are private property, legally owned and fully economically dependent on their parents. The hard work of care – looking after children, cooking and cleaning – is hidden away and devalued, performed for free by women or for scandalously low pay by domestic workers," she said.

Although the article had some criticisms against Lewis’ arguments, Magalaque suggested that the "revolutionary" ideas she posed could be necessary following the economic issues today.

"Burned out from pandemic parenting, facing immense childcare shortages and costs, women are leaving the workforce in record numbers, and in the U.S., forced birth and baby formula shortages are making crisis-parenting the rule, not the exception. The call for a revolutionary way of reconfiguring how we care for each other is more essential than ever, and Lewis’s manifesto is an irrepressible spark to our very tired imaginations," Magalaque described.

The New Statesman promoted this article on its Twitter account on Saturday, leading to backlash from social media users.

Conservative columnist Chad Felix Greene tweeted, "They tell you exactly what they believe."

"If only this sort of unsurpassable foolishness wasn't taken inexplicably seriously by such a significant number of people in a position to bother the rest of us with it," author Helen Joyce wrote.

"Almost by definition, you have to be extremely damaged and abnormal to write something like this. It's like arguing that people should murder their pets for fun or force their children to eat feces. It's just bizarre," Right Wing News Founder John Hawkins tweeted.

Club for Growth senior analyst Andrew Follett wrote, "Restart the ‘Lib Academic Demands Something Deranged Because They're Human Disasters’ clock!"

Lewis previously published an article on The Nation following the Supreme Court overturning Roe v. Wade that women should embrace the fact that abortion is the justified killing of an unborn life.


Peta Credlin says Australians are being treated as if 'we're all but racist' if they don't support the Aboriginal "Voice to parliament"

Australians are being 'morally shamed' into voting for an Indigenous Voice to Parliament, a conservative columnist argues.

Peta Credlin, the former chief-of-staff for Liberal prime minster Tony Abbott, said the proposed Voice will be a race-based body that is more about 'power than recognition' but this is not how it is being sold.

'It will be pitched to voters in oversimplified terms: as being for or against Aboriginal people,' Ms Credlin wrote in The Australian.

The Voice is a proposed body of representatives from First Nations peoples across Australia that will advise federal parliament on matters concerning Indigenous people.

Its creation will require a change to the Australian Constitution that will have to be brought in by a successful referendum vote.

As an example of 'oversimplification' Ms Credlin pointed to the launch this week of what she called the 'big business' campaign for a 'yes' vote, which is backed by the Uluru Statement Group.

The ad features Indigenous playwright and actor Trevor Jamieson telling rapt children the hopeful story of how First People are allowed a 'say' in matters affecting them, which they haven't had.

'The "feel-good" yarning to children around a campfire, is a sign of things to come,' Ms Credlin wrote of the minute-long commercial, which will be mainly targeted at online audiences.

She noted that for previous referendums the federal government had funded campaigns both for a yes and no vote, but Ms Credlin doubted that would be done this time by the Albanese government.

'Labor will rely on big corporations to deluge us with the Yes message and hope, without the millions to match them, that no one picks up the arguments of the No side,' she said.

Ms Credlin accused those pushing for a Voice of being deliberately vague about what the body will do.

'The voice has to make a difference or what's the point of having it?' she wrote. 'Yet that difference can't be spelled out without almost certainly dooming it to defeat, hence the lack of detail.'

Ms Credlin believed Indigenous people already have a substantial say in the nation's affairs, pointing to the number of MPs who identify as Indigenous.

'Why establish a separate Indigenous voice to the parliament when it already includes 11 individual Indigenous voices that were elected in the usual way, without any affirmative action or race-based selection criteria?' she wrote.

'Why give one group of people, based on race, a special say over the actions of our parliament and our government that's denied to everyone else?'

She argued the Voice was really a grab for power. 'There's abundant reason to be cautious about entrenching in our Constitution a race-based body that even Malcolm Turnbull once described as a third chamber of the parliament,' she wrote. 'It’s easy to see where this could end up going – down the path of co-governance.'

Ms Credlin said the Voice had not really been 'thought through' and the danger is that Australians would be morally shamed into voting a 'race-based' Voice 'based on a vibe'.

'A couple of decades ago, we would have marched in the streets about a race-based body in our Constitution,' she wrote. 'Now we’re told we’re all but racist if we don’t support it.'

Will Australians vote for an Indigenous Voice to Parliament?
A poll by the Australia Institute in July found strong support for the Voice to be added to the Constitution.

The poll found 65 per cent would vote yes, up from 58 per cent when the same poll was run in June. Some 14 per cent said they would vote no, with the other 21 per cent undecided. Support was highest among Greens voters, but even 58 per cent of those Coalition aligned would vote yes.

For a referendum to succeed, a majority of the states must also vote yes, but the poll showed that was also easily covered.

All of the four biggest states had comfortable majorities with Victoria on 71 per cent, Queensland 66 per cent, WA 63 per cent and NSW 62 per cent.

Support was highest at 85 per cent for Australians aged 18-29 but those over 50 were still above 50 per cent yes.

Prime Minister Anthony Albanese has indicated the Voice referendum question is likely to be: 'Do you support an alteration to the Constitution that establishes an Aboriginal and Torres Strait Islander Voice?'

Three lines would be added to the Constitution to create the advisory body; one stating it may 'make representations to parliament' on issues concerning Indigenous Australians; and that Parliament may legislate how it works.

To succeed a referendum must both get an overall majority of votes and a majority of voters in the majority of states.

Polls conducted in July indicated Australians strongly support the Voice to parliament with 65 per cent of respondents saying they would vote yes.




No comments: