From A Pandemic of Economic Illiteracy. A. Barton Hinkle, Cato. Fall 2021
“Biden Targets High Shipping Costs as Pandemic Ravages Global Supply Chains,” the Washington Post reported this summer.
The article noted the increase in shipping charges had roots in several factors. The White House, however, focused on one:
“Biden’s aides acknowledge the pandemic is responsible for much of the disruption,” the Post reported.
“But they say THE LACK OF COMPETITION ENABLED CARGO CARRIERS AND RAILROADS TO EXPLOIT THE PANDEMIC BY DRIVING PRICES TO HISTORIC HIGHS.”
…
Shipping is far from the only realm in which charges of pandemic price‐gouging have appeared.
A quick Google search yields an abundance of studies, news articles, complaints, and reports.
Yet, while complaints private enterprise is exploiting a global crisis to price‐gouge have been a steady drumbeat since COVID-19 first landed on U.S. shores, similar charges have been made for decades.
The first state to enact a price‐gouging law was New York in 1979.
Today, according to the National Conference of State Legislatures, 39 STATES PROHIBIT PRICE‐GOUGING DURING DISASTERS.
…
When the COVID-19 pandemic hit, so did an epidemic of government attempts to rein in higher prices.
In D.C., Sen. Elizabeth Warren (D–Mass.) introduced a bill to stop pandemic price‐gouging.
In Minnesota, lawmakers in the House passed a similar measure.
Around the country, governors invoked anti‐gouging legislation already on the books.
IN NEW YORK FOR GOOD MEASURE THE LEGISLATURE PASSED ADDITIONAL PRICE‐GOUGING LEGISLATION TO STOP “VIRUS PROFITEERS.”
…
The problem with such measures is well‐known: lawmakers can’t repeal the law of supply and demand.
HIGH PRICES INCENTIVIZE SUPPLIERS TO SEND GOODS AND SERVICES WHERE THEY ARE NEEDED MOST.
…
At the same time, HIGH PRICES DISINCENTIVIZE HOARDING, which helps ensure scarce supplies are more evenly distributed.
Trying to prevent “greed” by sellers only facilitates greedy behavior by buyers. Depressing prices by fiat counteracts those worthwhile aims.
You might say economic illiteracy is a form of contagion itself, with strains of varying transmissibility and lethality.
…
In Narrative Economics: How Stories Go Viral & Drive Major Economic Events (2019, Yale economist Robert Shiller writes about the pathogen known as “technological unemployment”: THE IDEA THAT ADVANCES IN LABOR‐SAVING MACHINERY WILL LEAD TO MASS UNEMPLOYMENT.
The term “technological unemployment” itself first appeared in 1917, he notes, but the virus broke out in the larger body politic in the 1930s.
…
Typical of the concern was the assertion by economist Stuart Chase, inventor of the term “New Deal,” that “the better able we are to produce, the worse we shall be off.”
So virulent was this notion, Shiller reports, that when dial telephones were installed in the U.S. Senate, “SENATOR CARTER GLASS INTRODUCED A RESOLUTION TO HAVE THE NEW DIAL PHONES TORN OUT AND REPLACED WITH THE OLDER PHONES” so switchboard operators’ jobs could be saved.
The resolution passed.
…
Fear of technological improvement, today it centers on fear of artificial intelligence, is not a healthy strain of economic thought, but there are far deadlier ones.
THE INTELLECTUAL VIRUS KNOWN AS COMMUNISM KILLED TENS OF MILLIONS OF PEOPLE IN THE 20TH CENTURY and inflicted untold suffering on hundreds of millions more.
Yet, while it has largely been eradicated, isolated pockets remain.
…
Even worse, it has the potential to spread.
According to a poll conducted by YouGov for the Victims of Communism Memorial Foundation, 36% OF MILLENNIALS APPROVE OF COMMUNISM.
While many of the afflicted are likely to recover from this malady with time, others might not be so lucky.
…
After all, no one — not even the most supremely intelligent among us — is immune to economic fallacy.
Shiller notes even ALBERT EINSTEIN BLAMED THE GREAT DEPRESSION ON TECHNOLOGICAL PROGRESS, arguing “the improvement in the apparatus of production through technical invention and organization has decreased the need for human labor.”
…
With continued good fortune, the coronavirus pandemic will eventually be consigned to the ash heap of history.
But HUMANITY HAS YET TO FIND A CURE FOR THE PANDEMIC OF ECONOMIC ILLITERACY.
(end of article)
… …
“Humanity has yet to find a cure for the pandemic of economic illiteracy.”
The more government interferes with laws and regulations:
-the less efficient the economy is
-the poorer the general population is and the richer the special interests including current established businesses and politicians, who profit by making us all poorer
One side, Democrats (socialists), focuses on short-term trying to make us feel better, at the cost of tomorrow big pain.
The other side, Republicans (capitalists), focuses on long-term trying to make us be better, at the cost of today small pain.
Democrats are fans of big government, Republicans are villains of big government.
All this is common knowledge, we all have inherent and experience-learned fundamental economic literacy so, quite clear, no doubt, one side prefers bad big pain and the other side prefers good big gain.
(Byrds song My Back Pages)
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