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How long will it take before a light bulb flashes in Biden’s head to institute price controls? Y’know, good old fashioned socialism where the price of milk is limited to a maximum of, say, $3.50 a gallon (actually, milk has had federal price controls for many decades, already), the maximum price for gasoline is, say, $3 a gallon, the maximum price for meat is $x a pound, etc.
(Paging akuperma.)
No price controls. He is simply printing money to give to those who are lacking and forcing companies to produce formula or whatever other markets his decrees destroyed.
What about price caps on Turkish taleisim and esrogim from Calabria??
In our free economy, price is determined by supply and demand. If the price is high, supply is low.
If you fix prices at a lower level than determined by the law of supply and demand, you will either have shortage (c: Soviet Union, where goods were always inexpensive, but often unavailable) or you need to institute rationing (which tends to mean the well connected get what they need, and others go without).
An alternative is to reduce demand, such as by raising taxes, especially on the poor (since higher taxes on the rich would result in lower savings, rather than consumption). Regressive taxes such as payroll taxes, flat rate income taxes or sales tax would reduce demand to it would be in equilibrium with lower prices. Importing a large number of workers would help to lower wages, but the new workers would also be consumer which would increase demand. Lowering wages would be very useful but that is hard to do (cutting the minimum wage won’t help when employers need to offer wages above the minimum wage to recruit employees). Cutting disability and retirement benefits to force people into the job market would fail since the higher incomes that employment would give the returnees would increase demand. Not printing money would help the most, but that requires raising taxes or cutting benefits from government programs, which raises political problems (few taxpayers want to pay more, and receive less).
You can also increase supply through deregulation (of business hostile rules) and changing the tax structure to encourage more supply, as well lowering tariff and non-tariff trade barriers for imports.
The opening poster asks whether Joe Biden will propose price controls to fight inflation. There is no evidence that Joe is considering it. It is, as usual from UJM, a bad question.
Nixon proved that price controls didn’t work. But price controls aren’t socialism. Socialism would be for the government to buy the oil refineries the oil companies refuse to reopen and build it’s own infant formula factories.
A tax increase would be the best way to kill inflation but not a tax increase on the poor but on the well off. They continue to spend and spend and spend and spend and don’t care how much things cost. Repealing Trump’s tax scam would also reduce budget deficits. Ending protective tariffs would also reduce inflation but many of the same people who complain about inflation also want everything produced in the United States notwithstanding the fact that that increases costs for consumers and businesses. And the idea of lowering wages is another example of bad government regulation.
51 years ago this summer, Disgraced, Anti-Semite, EX-President Richard Nixon implemented a 90 day Wage and Price Freeze in America.
It was a poorly thought out reaction to inflation. It created shortages of goods in the marketplace.
Dad owned 15 childrens clothing stores. Many Back to School orders did not arrive from clothing manufacturers. The producers could get higher prices exporting the goods than delivering to domestic customers.
Grandpa was a shirt manufacturer. He was paying more for piece goods and trim all during the spring and July and planned to raise prices for Xmas season deliveries due in Chain warehouses by September 1. He immediately came out ‘new’ products and set the prices higher than the old, All mens dress shirts were now made with a locker loop below the rear collar. The added cost in material and labor was about 12 cents per garment, In fact the loop was added to the cutting room markers for the garments using material that would have been thrown in the scrap bin. The wholesale price for the shirts were raised about $1.50 which helped cover the overall increase in costs during 1971 til the freeze. His underwear factory stopped producing plain T-shirts. Now the designs were changed to be pocket T-shirts. New product, added feature meant he could set higher prices.
We were not a net importer of clothing back then, so US factories and manufacturers could react to the wage and price freeze quickly and not lose money.The 90 day freeze was a colossal failure. There were shortages and as soon as the freeze was lifted, prices skyrocketed adding to the inflation spiral.
Back then, people and businesses obeyed government. Most adults had lived through rationing and price controls during WW2. Today, people are far more likely to ignore such a government order and take their chances with lax inspection and inforcement,
Where is Jimmy Carter now that we need him??
For those too young to recall the last real effort to use UJM’s price control model to address escalating energy prices, the Carter administration attempted to impose price caps on crude oil and distillate products during the OPEC oil embargo in the late 1970s. It was an unmitigated disaster and did little other than further shrink domestic supplies and provide a generation of lawyers with full employment in litigating lawsuits against the DOE rules which weren’t finally resolved until 2005.
The most effective way to fight inflation would be to raise taxes, deliberately try to force wages down, and to increase entry of additional workers (e.g. recruit immigration enough to make wages fall). Raising the retirement age, ending disability insurance and forcing under employed people (students, housewives, etc.) into the labor market would also increase the labor supply which will encourage lower wages. Falling wages reduces demand, which lowers prices.
While the above work as a matter of economics, they tend to get a failing grade in terms of sociology and political science, and are hard to implement in democratic (small D) societies.
The most effective way woudl be, to quote Reb Regan, “for Jimmy Carter (3rd) to lose his job”. Reduce problems that government creates for businesses, make sure people expect that their businesses will not be vilified and regulated.
President Johnson right after his retirement died.
ujm (RE; retirement age)
If your goal is to reduce inflation, and raising the retirement age would reduce the death rate, it is a classic double-edged sword. A higher retirement age would increase the work force, and encourage lower wages for everyone. However it the is a causal relationship between retirement and death, higher retirement age would both make old people better off economically (which would increase consumer spending) while at the same time living longer (and consuming more). Higher consumption increases demand which is inflationary.
In a rare case of agreement, UJM’s comments about retirement is entirely correct. Subsequent to his “retirement” as a neurosurgeon and NASA rocket scientist, he has been working as Walmart “Greeter” for nearly a decade, sharing his charm, warmth and empathy with all who pass through the doors.
On a serious note, I think we all know individuals whose “decline” either began or accelerated substantially following their retirement, especially for those whose life and social network revolved around their professional engagement and structure of getting up every AM, driving to the office, checking emails every 5 minutes etc.Religious Jews now retired on social security have time to sit and learn like kinyan mesachta and/or oraysa.
We need price controls on Cholev Yisroel milk as the price has increased by over a dollar per half gallon in recent weeks. Cholev akum has no increased anywhere near that amount.
yaakov,
all prices are going up, some may be faster than others, that may be the only difference.maybe more competition than price controls? Or a traditional boycott? Ask your Rav to authorize drinking chalav stam (or rent-a-cow) until prices drop.
It is an interesting illustration – when government distorts the markets, people immediately ask for more regulations to save themselves from previous government mistakes. Hashem yerachem.
yaakovdoe, is it chalav akum or chalav stam?
what about just print money and all solutions will be problimized.
if you see certain kashrus issues as chumra rather than halocha and you are in financial difficulties (get tuition discounts, collect government tzedoko, your wife has to work, can’t afford a good esrog, etc) – would it make sense to get hatarsas nedorim and save on chumros (if you saw a Sotah lately and feel like you need nazrut to save your neshomo – take cheaper chumros instead).
Just a note to CTL. Do you mean the “Disgraced, Anti-Semite, EX-President Richard Nixon” who saved Israel in ’73 and got us out of Vietnam? And by the way, When Kennedy and the Democratic party actually did steal the election in 1960, unlike the current disgraced ex-President, Nixon thought more of his Country than of himself and refused to contest the result for, as he said at the time, “it would tear the Country apart.” You mean that Nixon?
P.S. You’re supposed to be an educated guy. What happened? Did you sleep through 10th grade?
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