Prices Are Measures
OCTOBER 01, 1977 by JOAN MARIE LEONARD
Miss Leonard is a free-lance writer.
Changing the price of anything by law is like trying to change the number of minutes in an hour or days in a week. You can’t. That’s the way it is. Can you imagine the confusion if we all lived according to different calendars or weights or measures? The result, of course, would be total chaos—an end to civilized cooperation, interrelationships and exchange between people.
An end to a life system is always inconceivable. But when the conditions are only partial, we allow them to inject their poisonous influences. We become accustomed to their obstructions and begin to consider them natural conditions, until the confinement they create is so obstructive we can’t move and are forced to break through like a newborn eagle bursting from the encumbrance of its egg.
No matter what any legislator says, there are 12 inches in a foot.
And there are 10 millimeters in a centimeter. And 16 ounces to a pound. It’s just a matter of communication. Change it and there’s no communication. A legislated price is a mislabeling no different from putting half a pound in a jar and calling it 16 ounces. Legal interference in the market falsely weights all our scales.
Any time the law sets a price, it "changes" a real price, or tries to. It makes a lie into a law. It throws rocks into the scales of trade and justice. It sabotages the precise, self-adjusting, "navigational" instruments of all business, investment and consumption. It tries to tell us that north is south, that what is bad is good, that our shortages are things that are plentifully available. Every below-market price lies about the item’s availability. Every above-market price lies about its scarcity.
All this legalized misinformation seems to go quite naturally with the thinking that informs us we can spend our way to prosperity.
But price is realistic. Price measures all market conditions. It is the only true measurement we have for all determinants in the market.
Price changes affect all market conditions because all factors are interrelated. No single commodity, no single category of workers can experience a fixed price or wage without affecting the whole market. The market is an ocean that reacts to the injection of every pebble of price. When legal interference becomes so pervasive that it applies directly to many wage-earners and segments of industry, the resulting widespread rigidity is devastating and catastrophic.
Any time laws introduce rigidity into the natural flexibility of the market, even a slight change of conditions is compounded in effect and can trigger the breakdown and destruction of the system. The natural flexibility of the market accommodates all change with the least destructive effect.
Price controls are obstacles in the way of natural market momentum. They set up an economic "fault line" with business moving naturally in one direction while government pressures continuously build greater and greater pressures in the opposite direction. All government interference is opposition or there would be no government interference. Every fixed price is a change in natural price or there would be no price fixed. Every intervention creates stress where there was no stress.
Where the results of price controls and market regulations aren’t tragic they are on the way to being tragic as they proceed to misshape and distort the market. All companies within an industry may be asked to operate at a fixed level of return, but they are all operating on different and varying margins of costs, supplies and conditions. Legislated wage rates affect all companies regardless of their strength or situation—making it difficult for many companies to survive or even get started.
And what’s bad for business is bad for consumers. In brief, every control over the market is a law against consumer satisfaction.
You can pass a law against convertibles, but you can’t change the market that exists for them, established simply by people who like them. The law can’t change the market any more than it can change us and what we want and what we will pay to have it.
A law that removes anything from the market, or limits its availability through price controls, only temporarily removes a part of the market’s total ability to satisfy everyone. Everyone. And progressively—in every way.