Contributor Post Created with Sketch. Recommended by Ricochet Members Created with Sketch. Quote of the Day: Price Controls

 

“Four things have almost invariably followed the imposition of controls to keep prices below the level they would reach under supply and demand in a free market: (1) increased use of the product or service whose price is controlled, (2) Reduced supply of the same product or service, (3) quality deterioration, (4) black markets.” – Thomas Sowell

Did anyone notice California’s governor imposing statewide rent control on September 10? It was done to make housing more affordable and more available. It was sold as a means of fixing the homeless crisis. Of course, the cities that already had rent control are the cities with the greatest housing shortages and highest rents, but why let reality intrude on a great theory.

Now the whole state of California gets to share the benefits enjoyed by San Francisco and Las Angeles.

And while California’s Democrats proclaim “this time it will be different!” Thomas Sowell’s prediction is almost certainly a more accurate prediction of what California is about to experience.

Published in Economics
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  1. RandR (RdnaR) Member

    Thomas Sowell is not “predicting” what may happen in the future as much as explaining what past history has overwhelmingly proved will happen.

    • #1
    • October 26, 2019, at 8:28 AM PDT
    • 4 likes
  2. Russ Schnitzer Member

    California is an example of politicians wanting to control everything. Rents are just the beginning. When president Nixon (a Republican, by the way) put wage and price controls into effect I witnessed another effect of controls, i.e., misallocation of resources. At the time, I was a relatively new engineer working at a major defense company, and here is what I observed. One of my coworkers, a very bright engineer, a Cal Tech graduate with a Bachelor and Masters degree in Aerospace engineering, quit his position to work in real estate sales when he found that his wife, who worked in that field, earned more money than he did and he was not allowed a pay raise because of wage controls.

    I remember thinking at the time – What a waste of talent! My comment is not meant to deprecate real estate sales people, but after achieving degrees from such a prestigious technical institution as Cal Tech, this is truly an example of misallocation of resources.

    Such misallocation of talent occurred over and over under wage controls. Thomas Sowell has it exactly right.

     

     

    • #2
    • October 26, 2019, at 9:37 AM PDT
    • 6 likes
  3. Seawriter Contributor
    Seawriter

    Russ Schnitzer (View Comment):
    One of my coworkers, a very bright engineer, a Cal Tech graduate with a Bachelor and Masters degree in Aerospace engineering, quit his position to work in real estate sales when he found that his wife, who worked in that field, earned more money than he did and he was not allowed a pay raise because of wage controls.

    I remember those days. I wanted a raise, but could not get it because of wage controls. So my boss fired me. Then he rehired me in a “different” position at higher pay. 

    • #3
    • October 26, 2019, at 9:41 AM PDT
    • 4 likes
  4. DonG (skeptic) Coolidge

    But the rate limit useless (5% + inflation). That won’t have too much impact.

    • #4
    • October 26, 2019, at 11:19 AM PDT
    • Like
  5. Old Bathos Moderator

    California has so many resources and creative, productive enterprises that the left has to work especially hard to impoverish it. 
    we keep waiting for a revolt by the normals but it never seems to come.

    When I was young, I recall my father, who brought desegregation actions in Mississippi and Tennessee in the 1960s, explaining how the political establishment used race and fear to divide people and keep power.

    Something similar is at play to keep the normals from uniting.

    Welfare scraps instead of opportunity, empty political calories offered on climate, sex and homelessness while full-scale looting takes place…how much longer can the con persist?

    • #5
    • October 27, 2019, at 1:53 PM PDT
    • 3 likes
  6. Seawriter Contributor
    Seawriter

    Old Bathos (View Comment):
    Welfare scraps instead of opportunity, empty political calories offered on climate, sex and homelessness while full-scale looting takes place…how much longer can the con persist?

    A while longer. California has not yet hit Venezuela or Cuba yet. When it does, maybe there is hope. Possibly, the Federal government can have it revert to territorial status. 

    • #6
    • October 27, 2019, at 2:04 PM PDT
    • 4 likes
  7. Phil Turmel Coolidge

    Seawriter (View Comment):

    Old Bathos (View Comment):
    Welfare scraps instead of opportunity, empty political calories offered on climate, sex and homelessness while full-scale looting takes place…how much longer can the con persist?

    A while longer. California has not yet hit Venezuela or Cuba yet. When it does, maybe there is hope. Possibly, the Federal government can have it revert to territorial status.

    They seem to be testing a Venezuelan power grid lately….

    • #7
    • October 27, 2019, at 4:35 PM PDT
    • 3 likes
  8. JoelB Member

    Seawriter (View Comment):

    Old Bathos (View Comment):
    Welfare scraps instead of opportunity, empty political calories offered on climate, sex and homelessness while full-scale looting takes place…how much longer can the con persist?

    A while longer. California has not yet hit Venezuela or Cuba yet. When it does, maybe there is hope. Possibly, the Federal government can have it revert to territorial status.

    With the collapse of Venezuela, Cuba is spiraling down to approach conditions in Haiti. No fuel, no electricity, no economy. I hope someone in California gets a clue.

    • #8
    • October 27, 2019, at 6:59 PM PDT
    • 3 likes
  9. Randy Weivoda Moderator
    Randy Weivoda Joined in the first year of Ricochet Ricochet Charter Member

    Teaching people about why the free market works is a job that will never end. It doesn’t matter how many times government control of markets fail. People want to believe that some authority figure can set prices and make it all work, and they need to be constantly reminded that it always leads to failure.

    • #9
    • October 27, 2019, at 7:16 PM PDT
    • 3 likes
  10. Al French of Damascus Moderator

    Randy Weivoda (View Comment):

    Teaching people about why the free market works is a job that will never end. It doesn’t matter how many times government control of markets fail. People want to believe that some authority figure can set prices and make it all work, and they need to be constantly reminded that it always leads to failure.

    Hence the recent election results in Argentina.

    • #10
    • October 27, 2019, at 9:20 PM PDT
    • Like
  11. I Walton Member

    The sad thing is the mental disease doesn’t fix itself. Sane people leave, well established folks settled before the insanity took over and it works for them and politicians seem to benefit from all of it. It’s what happens to civilizations that are top down, so far always.

    • #11
    • October 28, 2019, at 5:53 AM PDT
    • Like