When Will They Ever Learn?

Thomas DiLorenzo (tomd@mises.org ), a member of the senior faculty of Mises University and a professor of economics at Loyola College in Maryland writes a piece of “Four Thousand Years of price Control” on Mises.com Blog (click to read the article in full in list of Blogs in the left column). In it he refers to a book, “Forty Centuries of Wage and Price Controls” by Robert Schuettinger and Eamon Butler, first published in 1979. Eamonn Butler is our friend on Adam Smith Institute’s Blog, also listed in the left column.

Two extracts make the point well:

“In Babylon some 4,000 years ago the Code of Hammurabi was a maze of price control regulations. "If a man hire a field-labourer, he shall give him eight gur of corn per annum"; "If a man hire a herdsman, he shall give him six gur of corn per annum"; "If a man hire a sixty-ton boat, he shall give a sixth part of a shekel of silver per diem for her hire." And on and on and on. Such laws "smothered economic progress in the empire for many centuries," as the historical record describes. Once these laws were laid down "there was a remarkable change in the fortunes of the people."

Ancient Greece also imposed price controls on grain and established "an army of grain inspectors appointed for the purpose of setting the price of grain at a level the Athenian government thought to be just." Greek price controls inevitably led to grain shortages, but ancient entrepreneurs saved thousands from starvation by evading these unjust laws. Despite the imposition of the death penalty for evading Greek price control laws, the laws "were almost impossible to enforce." The shortages created by the price control laws created black market profit opportunities, to the great benefit of the public.”

Price controls never work well. Yet, some US Senators in each party are advocating them now for the temporary spike in oil prices following the hurricane season. How much historical experience do they need?

Thanks to Voluntary Exchange (“It's as intrinsically human as opposable thumbs”) for drawing my attention to the article, which you can read at: http://voluntaryxchange.typepad.com/voluntaryxchange/2005/11/4000_years_of_p.html

By the way, Thomas DiLorenzo is the author of How Capitalism Saved America (Crown Forum/Random House, 2004)--which is the Smith Prize winner for 2005--and The Real Lincoln (Three Rivers Press/Random House, 2003).