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It was
with relief that I noticed there is no shortage of
mangoes, onions, tilapia, pork or chicken and many other
commodities, including tissue paper, pencils and soap.
Should I
point out that these items are not subject to an undue
amount of government control in terms of production and
pricing?
What do
you call a person who does the same thing over and over
and over again without any success? A) an idiot, B) an
economically “liberal” politician, or C) all of the
above?
Pork
prices have recently exploded. From approximately P135 a
kilo where I shop, pigue is now selling at P173, an
almost overnight increase of more than 30 percent.
Well,
there is obviously only one solution: price controls,
right? Or maybe use government funds to subsidize the
price back to P132. Both of these “solutions” are being
offered by certain politicians regarding the price of
gasoline. So why not pork also?
Except,
that government interference in the free market would
only lead to both shortages and higher prices.
Unfortunately, policy experts have not figured that fact
out even with a 4,000-year track record of failure.
Required
reading for all elected officials should be Forty
Centuries of Wage and Price Controls by Schuettinger
and Butler, first published in 1979. It is a fascinating
study for the fact that it seems some of the same people
who were running ancient governments are Philippine
legislators in 2008.
From
Four Thousand Years of Price Control by Thomas J.
DiLorenzo of Mises University and Loyola College in
Maryland: “In 284 A.D. the Roman emperor Diocletian
fixed the maximum prices at which beef, grain, eggs,
clothing and other articles could be sold, and
prescribed the penalty of death for anyone who disposed
of his wares at a higher figure. The results were that
the people brought no provisions to markets since they
could not get a reasonable price for them, and this
increased the dearth so much that at last, after many
had died by it, the law itself was set aside.”
I have
never understood why government people mistrust, if not
hate, the free-market system. With all its faults, it
works. They refuse to accept the fact that price
controls always, always, cause shortages. And the free
market always provides supply and fair pricing.
Rice
prices should probably go up to grow the agricultural
sector and rice production. When interisland shipping
was deregulated, transportation prices initially went
up. But the industry became more competitive and
profitable, giving consumers better service and, in the
end, better pricing.
Farmers
would make more money, enabling them to modernize and
increase production. Everyone might want to not plant
kamote, but plant rice. Then, guess what? Supply would
increase and prices would go down.
Oh, you
say, but then prices will go up without some sort of
government control. Yes, and then they go down,
equalizing out because of the law of supply and demand.
The
National Food Authority (NFA) controls only 5 percent of
the total rice supply. Yet, it costs some P10 billion a
year to accomplish very little. The biggest problem
facing our rice-producing industry is credit facilities
for farmers who now suffer at the hands of “5/6” lending
practices. The government should fill the gap by using
that P10 billion to provide reasonable credit access to
enhance the free-market system.
But what
about all the poor people if prices rise? In every case
with our Asean neighbors, government control hampers
both production and farmers’ income. And our usually
ignored rural poor are these agricultural workers.
Thailand is the largest rice-exporting country primarily
because of its credit support. But farmers who fall
under government price “protection” are less well-off
than those who sell and compete in the free market.
If price
support and subsidizes are so wonderful, particularly
for the poor, why, after 35 years of NFA existence, are
our farmers some of the poorest on the planet, and our
rice production is one of the worst on a per-hectare
basis?
A great
part of the world’s foodstuff price and supply problem
is improper government intervention, as in the case of
corn-based ethanol production in the United States. Land
that formally produced wheat now produces corn because
of government mandates and subsidies.
Parañaque Rep. Roilo Golez is showing courage and wisdom
in my opinion, by asking for a moratorium on the
development of biofuels that would compete with food
production.
Of
course, according to the politicians, the current rice
price/supply problem is “very complex” (for them) and is
because of climate change, population and conversion of
agricultural lands, to name but a few factors.
No way
it could possibly be, because of decades of government
interference here and abroad in the free market? Every
government policy to keep prices artificially low fail
and, worse, is counterproductive to production and
economic growth.
But just
keep trying, policymakers. Maybe you need only another
4,000 years to prove the free market wrong.
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