Backwater of Economic Development With Price Controls

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One of the greatest ironies of this Legislature is its attempt to improve the economic outlook with all sorts of gimmicks while ignoring the basics of any introductory course to economics.

Whether it is naivete or true ignorance, lawmakers have tossed all sorts of tax incentives into the hopper with the hopes that the electorate will think that they did something to improve the economic fortunes of the state.


What is almost laughable is the fact that lawmakers are still trying to tweak the cap on gasoline in the belief that they can somehow control the price and therefore win the hearts and minds of their voting constituents at the ballot box this November.

What many seem to forget is that President Nixon back in 1972 tried to do the same thing, to control prices by fiat. The market twisted and turned and struggled to deal with the heavy hand of government.

But instead of improving the economic outlook, those price controls sent the national economy into a tailspin that had decade-long effects, including an unforgettable bout with double digit inflation and double digit interest rates toward the end of the 1970s and a good part of the early 1980s.

Some believe that those price controls ultimately led to the shortage of fuel which created those long lines of cars snaking out of your friendly service station during the early half of 1974. The fear of having government dictate how much one could charge for products or services caused the delicate balance of supply and demand to be kicked out of kilter.

Production of goods slowed, and by the end of the decade demand outpaced supply leading to that double-digit inflation we would all like to forget.

So why the push to cap the price of gasoline — other than the fact that it panders to constituents at the ballot box? It is a hot button issue that if spun in the right direction will garner political support. But will it, in fact, come back to bite all of us just like those national price controls of the 1970s?

Perhaps a little common sense — which seems to be sorely lacking in this issue — is in order. While the big gas companies are cast as bad guys because they don