“One thing we all know from experience is when you control the price of something, you end up getting less of it. Our most vivid memory of that was Jimmy Carter’s gas lines.” – George Shultz
It has been said that “history repeats itself.” In theory the more we learn about the mistakes of our past, the better we can influence the present and the future. But that can be easier said than done.
Attempts to control prices span recorded history. There is no other economic policy that has failed over diverse historical societies. In every century, civilization, mode of government and economic system where price controls existed, they have had the same effect: they do more harm than good.
In Ancient Egypt, the Pharaohs tried to control the price of wheat supply. With no profit motive, the farmers produced less until famine set in and the economy collapsed. In Babylon, wage and price controls in the Hammurabi Code eventually brought down the empire. In 58 BC, Roman farmers fled to the city due to price controls on wheat and corn, and soon it led to the fall of the empire.
Price controls are popular and politically profitable in times of economic distress, but they are an economic disaster for recovering a depressed economy. They disincentive investors and slow or stall growth and tie the hands of international market-based economies, making them dysfunctional.
“Nobody ever did, or ever will, escape the consequences of their bad choices.” – Kathryn Kaine
According to the World Bank, 76% of developing countries control the price of energy and food, and 13% control the price of construction materials and metals. Even though price controls have a history of failure, many politicians continue to implement them because it is an easy way to attract voters. The World Bank notes that each country with price controls has stagnant economic growth.
As cities become more expensive, politicians and reformers call for rent control. Economists think that’s a terrible idea. They say it helps a small group of renters, but it keeps rents artificially high by discouraging construction and property upkeep. This spills over on the surrounding neighborhoods, which lowers property values and it increases more section 8 housing and it fuels gentrification.
During WWII, President Franklin Roosevelt rationed items needed for the war effort, which birthed the lucrative “black market” where people could buy, sell and trade ration coupons. When President Richard Nixon restricted gas price hikes in the 1970s, long lines formed at gas stations and gas was rationed. In U.S. cities where politicians have passed rent control laws, property values have gone down and so has tax revenue.
During an energy crisis, the first response from liberals is to mandate prices on energy, especially gas and oil. Although there is a long history that proves trying to solve political problems with price controls not only leads to shortages, but can destroy an economy, Democrats are doing it again.
“The only thing that price controls can guarantee to anyone is more shortages.” – Michelle McMurry
In classic progressive style, liberals in the House passed a bill that will make a bad situation much worse. In May, legislation to punish big oil for “price gouging,” written by U.S. Rep. Kim Schrier, D-WA, passed 217-207 without a single Republican vote while four Democrats joined the GOP in voting no.
This bill was encouraged and backed by President Joe Biden, who campaigned to declare war against the oil industry. This is one promise he kept that Americans wish he forgot to keep. This bill “vaguely” makes it unlawful to increase gas and home fuel prices “excessively?” But what no one knows is who will judge how much of an increase is excessive.” The Federal Trade Commission will punish oil scoundrels.
U.S. Rep. Katie Porter, D-CA, a co-sponsor of this bill, remarked, “Big Oil is price gouging families because they can. Enough is enough!” Press secretary Jen Psaki told a press briefing, “Our energy policies are not hindering the oil industry’s production. They cut back on their own.”
ConocoPhillips CEO Ryan Lance blamed Biden and the progressive climate geeks for the current oil squeeze. He said, “This administration’s poor energy policies, and poor regulatory policies, are to blame, not our profits. As an industry, we can’t lose sight of the return on our investments.”
The American Exploration and Production Council said allegations of price-gouging were totally false. In a press release, the U.S. Chamber of Commerce said, “It’s time for this administration to partner with our domestic energy producers and leverage America’s ability to produce more oil and gas so we can focus on pro-growth policies to benefit our economy and the world’s security.”
While ExxonMobil, Chevron and other oil companies admitted they made $40 billion in the first quarter of the year, many of these companies are spending billions in stock buybacks and paying huge dividends to investors. And this is an inconvenient truth that Democrats have chosen to overlook.
Now gas prices have skyrocketed 81%, a historic high, Biden has worked to deflect responsibility for pain at the pump and criticism of his energy policies. Rather than take responsibility for his anti-American energy policies, Biden is begging rogue dictators to fill the gap of imported Russian oil.
“It’s time we punish all energy producers for taking advantage of this international crisis.” – Joe Biden
His first week in office, Biden shut down the Keystone Pipeline, banned new leases on drilling for oil on federal land and halted drilling in the Artic Reserve. He then ordered energy czar John Kerry to review all gas and oil regulations. He claimed Donald Trump gave them “free rein to over-drill and pollute.”
But Joe Biden did not do his homework. According to BP’s Statistical Review, consumption of fossil energy fell by 4.5% between 2017 and 2020. That is the largest decline since 1945. The drop in oil consumption contributed to three-quarters of the decline, when America was energy independent.
“The only way to increase the supply of anything is to cut government regulations.” – Donald Trump
In the Hebrew Bible’s Book of Hosea, we learned, “You reap what you sew.” Biden declared war on the industry his first week in office and he is blaming everyone but himself for high gas prices.
In 2019, for the first time in 70 years, the U.S. became a net energy exporter and the largest producer of oil and natural gas in the world. Biden took us backward 70 years and refuses to admit it.
Americans have a history of showing little resistance to the lure of price controls. From the time of the Continental Army, when price controls nearly brought a ruinous end to the American Revolution, to the 1970s, when Nixon tried to conquer inflation with wage and price freezes, Americans have suffered dearly from shortages and economic disasters brought on by these failed policies.
The Republicans should block this monster in the Senate, but will they with midterms coming up?
“Everything is possible, from angels to demons to economists and politicians.” – Paulo Coelho
Originally published on thecentersquare.com