Sunday, February 10, 2013

Argentina Expands Price Controls By Banning Advertisement


Not content with the harassment and the persecution of private sector economic profession for making estimates on price inflation, which widely departs from government's figures, Argentina’s government has embarked on banning advertising.

From the Washington Post
Argentina’s newspapers say supermarket and appliance companies have been told to stop advertising during a price freeze the government imposed to stem inflation.

The government denies this: Consumer protection official Maria Colombo calls it “an invention” of the daily newspaper Clarin.
This is simply a showcase of how intervention begets intervention, i.e. from price controls to censorship.

Yet the sustained pursuit of the policy of price controls translates to incremental expansion to cover a bigger or wider sphere of the economy until the government entirely replaces the private sector.

Warned the great Austrian professor Ludwig von Mises, (bold mine)
If this unpleasant experience does not teach the authorities that price control is futile and that the best policy would be to refrain from any endeavors to control prices, it becomes necessary to add to the first measure, restricting merely the price of one or of several consumers' goods, further measures. It becomes necessary to fix the prices of the factors of production required for the production of the consumers' goods concerned. Then the same story repeats itself on a remoter plane. The supply of those factors of production whose prices have been limited shrinks. Then again the government must expand the sphere of its price ceilings. It must fix the prices of the secondary factors of production required for the production of those primary factors. Thus the government must go farther and farther. It must fix the prices of all consumers' goods and of all factors of production, both material factors and labor, and it must force every entrepreneur and every worker to continue production at these prices and wage rates. No branch of production must be omitted from this all-around fixing of prices and wages and this general order to continue production. If some branches were to be left free, the result would be a shifting of capital and labor to them and a corresponding fall in the supply of the goods whose prices the government has fixed. However, it is precisely these goods which the government considers as especially important for the satisfaction of the needs of the masses.

But when such a state of all-around control of business is achieved, the market economy has been replaced by a system of centralized planning, by socialism. It is no longer the consumers, but the government who decides what should be produced and in what quantity and quality.
Argentina has embarked on a slippery slope towards totalitarianism. And this is likely to lead to crushing hyperinflation that would result to dystopia.

In the world of politics, politicians fervently hope and desire that they can legislate away the law of demand and supply.  They fail to heed the lessons of King Canute (or Gnut the Great) who, according to a legend, futilely ordered the ocean waves to stop advancing. King Canute only wanted to prove to the courtier- sycophants that he was not omnipotent or that his power was limited.

Hubris at the expense of society.

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