Tuesday, April 04, 2006

Price Controls

For Argentina's Sizzling Economy, a Cap on Steak Prices
Published: April 3, 2006

This Author was searching for something to write on today, and decided to scalp somewhat from other Bloggers. Jeffrey Tucker at Misesblog.org wrote a good Piece, saying Larry Rohter should have mentioned the vast growth in M2 in Argentina as reported by the Argentina Central Bank over the last Years since the devaluation of the Peso. Such growth will propel Inflation. Another Blogger wrote of hyperInflation in Zimbodwee(sorry for the lack of Cite, as I lost the Address--expressing the rational order of myself). John Whitehead also commented favorably on the Krishner attempt to forestall Inflation.

I dimly remember the activities of Arnold Fertig in the Phillipines in WWII, he being one of the American Commanders of the Phillipino resistence to the Japanese. He stated in his autobiography (???) that he set a Price Control on one Product (either Rice or Corn) which was a major staple of the People, and this enforced Price Control limited the excesses of Inflation and the Black Market. Different circumstance and different economy, but Price Controls need not be automatically bad, unless they become confusing and bureaucratic.

Inflation generated from the amounts of M2 increases shown by Argentina will never be curbed by Price Controls. The only Inflation curb under these conditions (9% growth of the Economy, and over 100% growth in M2) can only be be Taxation; also anathema to ever-growing numbers of Economists. I even favor low Tax rates, but Ones which are strictly enforced without loopholes. It does not alter the fact that Argentina could benefit by a 7% real Tax increase overall. lgl

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