Why do some politicians and bureaucrats constantly forget that when governments meddle in our mostly free market that bad things happen?
Vice President Kamala Harris gave what was supposed to be her biggest speech yet last week, but even some of her supporters say she blew it by promoting price controls over food to “fix” inflation.
The concept she promoted is simple enough.
It is the great conceit that government central planners can prevent inflation — which is caused when governments spend recklessly and massively expand the money supply — by forcing grocery stores, for instance, to set their prices at government-determined numbers.
But such central planning never works, mainly because nobody short of God is smart enough to make such incredibly complex decisions about an incredibly complex food supply chain that involves millions of incredibly complex actions.
In 1958, Leonard Read beautifully explained market complexity — and why the hubris of government central planners can only make matters worse — in his classic essay, “I, Pencil.”
As he showed, the making of something apparently as simple as a No. 2 pencil is an incredibly complex, collaborative, global process that involves thousands of people who don’t know each other.
It begins when a cedar is cut down and crews using ropes and gear tug it onto a truck or rail car.
Numberless people and skills are involved in mining the ore to produce steel and turn it into saws, axes and motors, wrote Read.
The logs are shipped to a mill and cut into slats. The slats are kiln-dried, tinted, waxed, then kiln-dried again.
Read wondered how many skills are needed to produce the tint and the kilns. What about the electric power? And the mill’s belts, motors and other parts?
The cedar slats are then shipped to a pencil factory.
A complex machine cuts grooves into each slat. Then another machine lays graphite into every other slat. Glue is applied.
Two slats — one with graphite, one without — are sealed together, then cut to pencil length. Each pencil receives six coats of lacquer. Complex processes employ thousands who create the graphite and lacquer.
Each pencil eraser’s brass holder is another marvel.
First, miners in places like Peru extract and ship the zinc and copper. Experts transform those raw materials into sheet brass, which is cut, stamped and affixed to the pencil.
The eraser, wrote Read, is made from “factice,” a rubber-like material produced when rapeseed oil from the Dutch East Indies (now Indonesia) reacts with sulfur chloride.
To be sure, an awe-inspiring amount of work goes into producing a simple pencil. Millions of strangers collaborate to make its ingredients, plying their unique trades and skills.
Even more amazing is this: No one person could possibly manage the process.
Despite the absence of a mastermind — or government central planners — billions of pencils are produced every year with such humdrum efficiency that we take pencils for granted.
History is clear on the failure of governments to set price controls in complex markets.
They didn’t work in the 1970s when President Nixon tried them and they haven’t worked anywhere else — unless you think Cuba is a paradise today and once-rich Venezuela is doing well under socialist central planning.
The simple pencil, explained Read, is a triumph of human freedom — of creative energies spontaneously responding to necessity and desire.
It’s alarming to learn that we have a presidential candidate who doesn’t appear to understand or appreciate this most simple economic truth.
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Copyright 2024 Tom Purcell, distributed exclusively by Cagle Cartoons newspaper syndicate.
See Tom Purcell’s syndicated column, humor books and funny videos featuring his dog, Thurber, at TomPurcell.com. Email him at Tom@TomPurcell.com.
Same thing with reimagining the police.
To me, it’s fairly simple what the Vice-President is proposing. She is a socialist at heart and believes our government can solve any problem in a capitalistic society.
If we vote her into the Presidency, we will have taken a huge step towards Cuba and Venezuela.
How did that work out for them?
Price controls don’t work nearly as well as windfall profits taxes, and taxing stock buybacks and executive compensation at say, 90%, then it would be far more attractive to invest in there businesses than it is to created artificial value by stock buybacks.
No one talked about price controls. Idea is to go after large corporations that are price gouging as a way of business. No one talked about getting rid of police. Ideas to improve recruiting, training, and use some of the police budget to send calls for certain kinds of concerns to people actually trainined in de-escalation and mental health care, who would handle the call better than police. Denver’s STAR program is an example that has grown every year, successfully called out on homeless and wellness check issues, similar calls. I’ve been on those calls and so much better to have a trained professional show up without full riot gear and weaponry and sirens blaring. So far, no injuries or deaths. Many cities and states now successfully using this type of program, allowing police to focus on even more serious calls. What an improvement. Being open to change is crucial to a democracy. Truth about what has been proposed is the part you have to get accurate first. Otherwise, your attacks are irrelevant.
Free market? How do subsidies for farmers and big oil fit into a free market? How do tariffs fit in? We tinker with the “free” market all the time and have for years. The truth is that industries possess market power by virtue of the nature of their demand curve and others wield political power to influence legislation to guarantee profits. I agree with Biden and Harris. The “free” market has been used as a cudgel against the poor and middle class for too long. We need to have the corporations and the wealthy pay their fair share.
“No one talked about price controls. Idea is to go after large corporations that are price gouging as a way of business.”
Which is already illegal, and isn’t happening just because inflation is making your side look bad right now.
“No one talked about getting rid of police.”
LOL, please. When you “defund police,” do they stay employed? And let’s not act like you and yours weren’t chanting “ACAB” for months.
“I’ve been on those calls and so much better to have a trained professional show up without full riot gear and weaponry and sirens blaring. ”
LOL, talk about hyperbole.
“Being open to change is crucial to a democracy.”
Change for the sake of change is not.
“Truth about what has been proposed is the part you have to get accurate first. Otherwise, your attacks are irrelevant.”
Sounds more like you don’t like your dialectic being called out.
The area for investigation and correction is price gouging. Inflation has been declining steadily and is now below 3%. Supply chains have been mostly stabilized. Commodity prices have come down. Almost all the reasons for the runup in prices, such as Covid isolation, supply chain disruptions, rising unemployment, etc. have been resolved. So why do these artificially inflated prices continue while profits break records? Something is reeking of greed and predation.
For the record, Harris never spoke about price control, but I hope as President she looks at price fixing.