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How to Wreck an Economy

Posted By yihan On February 12, 2013 @ 12:02 pm In Money Watch | Comments Disabled

John Keller
The LRC Blog [1]
February 12, 2013

The junta called the government of Argentina has announced that business owners do not REALLY own their goods, and may not sell them for whatever price they wish. Price controls are now in effect to curb inflation [2], at least that’s the official line. A mere 6 years ago this same government edict failed and lead to the entirely predictable shortages [3] that always follow price controls. Any bets on how long it will take for shortages to be reported this time? Price controls are immoral for so many reasons:

    The government interferes directly with the right of contract between two consenting parties
    The government claims some ownership over the goods in question by dictating its price
    They are a government reaction to prices, which show government’s mismanagment of the currency
    They are an attempt to shift the blame for said mismanagement from the government to the productive class
    They inculcate a sense of entitlement and jealousy among the less educated, who complain about price gouging
    They are always accompanied by edicts to report said price gougers, turning the entire nation into potential informers
    They lead inevitably to shortages of the most basic items which are always the target of controls – gas, food, and other staples (no one puts price controls on Bentleys and Rolexes)

And the list goes on. Of all government’s sins save war and pogroms, price controls must be the worst. With official inflation at 10%, and unofficial inflation closer to 30% I expect the shortages to occur almost immediately. The protests will start right after that.


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[1] The LRC Blog: http://www.lewrockwell.com/blog/lewrw/archives/132217.html

[2] Price controls are now in effect to curb inflation: http://www.myfoxny.com/story/20958959/argentina-freezes-prices-to-break-inflation-spiral

[3] this same government edict failed and lead to the entirely predictable shortages: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acmIudqyzEN0

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