Somewhere, Karl Marx is dancing a jig.
State and city government want to get into the bailing out business too, and hope to do so by starting to implement some price controls to "ease the suffering of their residents". That's right... price controls.
New York City and San Francisco, for example, are considering rent control. Vermont is thinking about capping the price of a gallon of milk. And Alaska is considering a bill that would set a ceiling on oil prices. Proponents of the move say that the price controls are a means to help ease the pain of these hard economic times for the people of America. But opponents to the measures (including most of the prominent economists in the nation) say that price controls never accomplish what the implementers believe they will, and warn of dangerous long term (unintended) consequences should price controlling measures be implemented.
To me, the idea that there our government thinking about regulating the price of day to day good runs a cold chill down my spine. This is scary stuff... stuff that a scant ten years ago would have been thought of as socialistic madness. But now, all of a sudden, for some of our brothers and sister, the idea of being dependent to the whims and favors of political leaders seems like not such a bad idea. Do these people not realize that this is the way that the old Soviet Union used to do things? Do they not remember seeing the pictures of the bread lines? Or of the toilet paper lines?
Price controls don not do anything more than limit the amount of products produced. That is a basic principle of economics. If you only can make a dollar, you are going to only make enough insure that a dollar produces a profit for you. So if a landlord is locked into a certain price in order to rent out an apartment, then that landlord is going to make sure that the rent covers what it has to as far as taxes, insurance, and loan payments that the rent has to cover and hope he has enough to make it worth his effort to rent the joint. Do you think that there are going to be any widespread repairs being done to rent controlled buildings?
Of course, the short term ramifications of such moves would benefit a politician. An electorate that thinks you are the reason it can afford to eat is more likely to vote for you than the electorate who blames you for starving it. Policies like this allow these men, who are placing restrictions on your freedom to live your life, the cover of compassion. By doing this, it washes away the sin of creating the mess in the first place and allows them to be magnanimous as they wield their ill got power. But when the economy comes roaring back (as so many of us know it eventually will), will they give back all the control they would now wield? Or will the power corrupt (as power tends to do), and turn our compassionate public servants become our merciful kings?
Price controls allow the government more influence than it is wise to allow a government to have over the free market. If the recent economic mess (where the government dictated to banks new requirements to make it easier for people who would not have been able to buy a home to buy a home, and the freefalling market ever since the government decided to start propping up the failing businesses who followed their advice) does not illustrate the error of what can happen when the government decided to hold the invisible hand that makes the market go, then I do not know what will.