Ignoring economics

Thomas Sowell has a series of articles on how people have been ignoring economics lately, at their own peril.

I first became aware of the law of gravity as a small child when I pedaled my tricycle off the porch and crashed into the yard. Gravity of course operated all along, whether I was aware of it or not. Economics is a lot like that. Many people completely unaware of economics sometimes discover it the same way I discovered gravity, through some personal or national crash.

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Liberals especially tend to think up all sorts of good things we want -- a "living wage," "affordable housing," "universal health care," and an ever-expanding wish-list of things everyone should receive as "rights" -- with little or no awareness of the economic repercussions of turning that wish list into laws. In many cases, items on their wish list have already been turned into laws in other countries and in other periods of history, but there is remarkably little curiosity about the actual consequences in those countries and times.

So what are these consequences?

Whenever an artificial price ceiling is imposed by fiat, there will be a shortage of whatever good is being controlled. This is the case whether we're talking about prescription drugs, gasoline, labor, or human creativity. Whenever an artificial price floor is imposed by fiat, there will be a glut of whatever good is being controlled.

Other columns in the recent past have dealt with:

• "Price gouging" by oil companies – high prices are not a matter of "greed", and attempts to force oil companies to lower prices led to the gas lines of the mid 70s
• Unemployment vs. discrimination: In the US when discrimination was legislated, we did not see high unemployment among the groups legislated against.