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Quotation of the Day…

… is from page 98 of Edwin Cannan’s December 1916 Economic Journal paper, “The Report on Food Prices,” as this paper is reprinted in the original edition of Cannan’s marvelous 1927 collection, An Economist’s Protest:

The great majority of the newspaper-reading public is always ready to listen to an accusation of scoundrelism against any small minority from whom it happens to buy some commodity: A to Y join cheerfully in slandering Z, without ever thinking that next week it will be Y’s turn to be slandered by A to X, with Z, who has now forgiven his favourite newspaper’s aberration in attacking his trade last week; and so on, with never a thought of the handle given to the hated Socialist. Articles appear explaining that there is no shortage of this, that, and the other commodity and that the rise of price is due solely to the machinations of the “__ Ring.”

DBx: Prices (and wages) not set or obstructed by government reflect underlying economic realities. These realities are often ones made worse by government. Too often – and today no less than in Cannan’s day – people who are unhappy with the messages that are accurately reported by the prices ask that same government to prevent the prices from accurately reflecting those realities.

People who support price controls operate with a dark-ages-like superstition that insists that changing the image or the description of some real phenomenon is sufficient to change the substance or the reality of that phenomenon. Are some workers’ market wages lower than you’ve somehow divined these wages ‘should’ be? No problem! Have the government declare a minimum wage and the wages of all affected workers will miraculously rise to that minimum level! Is the price of gasoline higher than you’ve somehow divined it should be? No problem! Have the government declare a maximum price at which gasoline can be sold and the price of gasoline will miraculously fall to that level!

If we were to encounter a newspaper reporter who insists that the real-world events on which he reports are determined by the words he uses to report them, we’d immediately know that that ‘reporter’ is wholly incompetent to be a reporter. Yet our world swarms with politicians and pundits – and even some people who are credentialed as economists – who act exactly as does such a ‘reporter.’ And these politicians, pundits, and economists are accorded respect and even called “progressive.”