To the Editor:
What if the government started regulating prices at yard sales?
What if they set a minimum price for yard sale items at, say, $15dollars per item? Would this help people trying to get by?
No, of course not. No one is going to pay $15 for most of the items sold at yard sales.
The law would just prevent all those items from getting sold at all, harming both those trying to sell things they don’t need and those trying to find affordable things they do need.
It would severely limit economic cooperation between willing partners.
Surely, this is completely obvious.
So what if government sets the minimum price for hourly work at, say, $15? Exactly the same thing occurs.
Lots of jobs could be done for less, but they won’t be available, because no one is going to pay $15 dollars to hire someone to do them.
The law would just eliminate all those jobs, the same way it prevented all those yard sale items from being sold, harming both those trying to hire entry-level workers and those trying to enter the workforce.
So why do so many seemingly intelligent and well-meaning people support such authoritarian price controls?
Perhaps, highly influenced by 20th-century culture, they assume that society is a Machine — a Social Machine that can be engineered to make it “run” better.
So they debate the best way to design and control the Social Machine, to “fix the Economy.” But what if the human community is not a Machine? Then solutions based on this false premise will fail.
Economist Ludwig von Mises said, “You throw a rock in water, it sinks. Throw a stick in water, it floats. But throw a man into water, and he must decide to sink or swim.”
The point is that “the Economy” is not a machine that mindlessly reacts, but the result of zillions of individual, personal decisions — human actions based on judgments about what is in the best interest of themselves and their families within their own particular circumstances, tempered by their own morals, beliefs, and priorities.
“The Economy” is a living thing — one aspect of a community of living people, strangers cooperating together by means of trade.
Authoritarian price controls, no matter how well-intentioned, cannot change that reality — and hurt the very people they are intended to help.