Why Kamala’s Price Controls Will Lead To Shortages
Politicians very rarely blame their own policies for the suffering that they create. They usually double-and-triple-down on their bad policies. When that doesn’t work, they create an entirely new policy to combat the bad effects of the older one. Government “price controls” have a never-ending failure rate throughout economic history. They create shortages! But when politicians are faced with the choice of either blaming themselves, or creating shortages…they usually opt to create shortages
Hello everybody and thank you for tuning in to the Liberty Report.
With us today we have Chris Rossini, our co-host.
Chris, welcome to the program.
Great to be with you, Dr. Paul.
Very good.
We're going to get involved in politics.
I don't enjoy a lot of this politics.
People say, if you don't enjoy it and you don't like it, you didn't get into politics because you weren't aiming to be the chairman of the banking committee.
Why do you have to talk about it?
Well, everybody else is.
So sometimes I look at the results, the results, and a lot of arguments and debate back and forth on what they're going to do and what they believe in.
And we end up with the Fed, we end up with debt, we end up with our wars, and those are the big pictures.
But anyway, we're going to talk about it today because there's a candidate for president, happens to be a woman, I think.
I think this state she is, yes.
So I think, you know, Kamala now has come out very strongly on an economic issue.
Economics is a whole deal now because she's going to defend the buying economic program.
She thinks that was pretty good.
But she's giving her own flavor of this.
And so she's been talking this week about wage and price controls, especially price controls, especially food.
So she's been playing this up.
So this is a big issue.
We'll be talking about that and why regulation of prices and wages never work.
They make things worse.
But I do want to mention today that this is a subject of inflation, and it's a real attention getter.
And it's a shame that there's not a better explanation because if you can think that just a major candidate, several, deals now with the whole campaign is, what I want is wage and price controls.
I mean, that is so sad.
It's so bad.
And that's what they're for.
But there's a lot of things, and we want to mention that, how many controls we already have.
So this is something that they want to avoid, you know, thinking about, well, what's the problem?
Well, prices are too high.
Standard of living is going down.
Some people paying higher prices and suffering more than other people.
And everybody buys groceries, and they're really, really upset.
And so they come up with crazy explanation.
Well, they're gouging us.
They're charging too much.
Well, I thought the consumer demanded to be charged the least amount possible to, and the businessman has to accommodate the consumer in order to build his business.
So that just doesn't make a whole lot of sense that the attack should be that blame it all on the businessman or labor unions.
Oh, they're gouging us.
They're charging too much.
Labor costs are going up.
And this is one of the reasons we have partnered with Birch Gold Grew is because they talk about this in light of investments that we have.
And their specialty is talking to people who may own some stocks and there's ways that you can open a gold IRA because a regular IRA you just can't put gold in there.
So the government has a lot of regulations and sometimes I worry about all their regulations and all this.
But right now it is a way you just can't call up your stockbroker and say, buy me an ounce of gold.
That doesn't happen that way.
So, but Burch Gold, you know, offers some information, an explanation on how one might be able to do this.
And that is what I am going to mention right now.
Because if you'd like to get this information and learn more about it on how you can have a gold IRA and switch maybe some stocks, the rigger stocks over to gold itself.
And you could do this without buying and selling and being taxed on it.
You could just shift it over, and they've made it that easy.
But if you want more information, this is what you do.
You text Ron 989898.
That's Ron 989898.
And they, free of charge, will send you information on how you could set up, if you so desire, a gold IRA.
And that's what I'll say one more time.
I'll say text Ron 989898 and see if that is something that you'd like to get involved in.
Why Price Controls Create Shortages00:15:08
But I do want to thank all our viewers for tuning in today, as usual.
And Chris, once and more, is with us today.
And generally, we design Friday and talk about economic policies.
And we've talked about wage and price controls.
We've talked about inflation.
We've talked about too much government.
And we have hit it very strongly on exactly what the government should be doing and what they should not be doing.
But they're still doing it.
And right now it's still baffling to me to think that a major candidate, the polls, which probably are fudged, are showing that Harris has really bumped up by campaigning on this theme.
What we want are price controls.
And, you know, I don't think you have to have a PhD.
Matter of fact, it'd be better not to have a PhD because I think too many PhDs believe in this.
But even so, wage and price controls have been discredited many, many times by both liberals and conservatives.
But when the prices start going up because of inflation of the prices and devaluation of our currency, they then start finding scapegoats.
And right now, Harris is saying gouging.
They're gouging what's happening.
You know, people living in this area where I live use this argument too immediately.
We have a hurricane comes in.
Things are really messed up.
Trees are down and houses need rebuilt and the shortage occurs and people need some help.
So they say, you know, the prices are going up.
There's a shortage.
So there's a high demand.
And the natural thing for the market to do is push prices up.
And if there is a shortage, which generally happens, if you just allow the market to work, oh, you know, we can make more money if we go in there.
So more people come in.
So is the supply of labor and repair people to come in.
But people want to say, oh, you know, I used to pay $10 for this.
Now you want $15 for it.
That's gouging.
That's wrong.
That's evil.
We have to outlaw that.
So they come in and say, no gouging, no interest, you have to charge exactly what you did last year.
Guess what?
You have a shortage, shortage of labor, because it might be riskier coming in.
It might cost more.
They might be coming further distant.
The market would work this out if they just allowed free market pricing.
That's what the purpose of free markets is, is to find out what real value is.
And that's why the consumer and the businessman and the people who sell us stuff, you know, work it out.
But when you come in and say it's gouging, well, we want the government so smart, they know what to do.
We'll put on price control.
Chris, I suspect that you wouldn't be part of that argument.
No, not at all, Dr. Paul.
And we shouldn't be surprised that Kamala Harris would embrace price controls, which throughout all of history, even down to the Roman Empire, it is a total disaster creator.
You know, it creates shortages.
It's basic economics.
But we live in an era where politicians rarely, if ever, admit that they're wrong.
And the things that they've done have created the mess that we're in.
Just think about the COVID, the vaccines.
Once it was discovered that they didn't prevent you from getting COVID or from spreading it to others, that should have been it.
But was that it?
It was not.
They kept making a second and a third and a fifth and an eighth.
Are they still making it?
I don't know, but I know a lot of people don't get them anymore.
It's the same thing with the wars.
Yesterday, Daniel and Dr. Paul pointed out that it took the United States 20 years to replace the Taliban with the Taliban in Afghanistan.
And not the Taliban of 20 years ago.
Now a Taliban with all our weapons.
So this is what they do.
They always double down, they triple down.
And it's the same thing with the economy.
The problem with inflation is government spends too much money, way too much money.
They're 35 trillion in the hole, trillion, and the Fed prints money.
This drives up prices.
So the government should cut back on its spending.
They don't even consider such a thing and stop the money printing.
So instead of doing that, they're like, no, there's high prices.
We'll fix prices and create price controls.
We'll put a cap on what people can charge.
And that just messes everything up even further.
That creates shortages.
And we'll go into why there are shortages.
And then the government, on top of that, we can expect this in the future.
When there's shortages, they'll say, hmm, well, if we're short of these products, we should start rationing the products.
And that's when all the bureaucrats come in.
Remember all those people with the masks and all the six feet rules?
They'll make up all the rules that you could imagine.
If your name ends in R, you can buy potatoes on Tuesday because there are shortages.
I'm sorry, we're going to have to ration.
So this is the path that governments usually take.
It doesn't have to be taken, but if the people don't know any better, that's what's ahead for us.
Very good.
You know, in my lifetime, I recall wage and price controls put on on three different occasions.
But the one I remember most because I was more involved and looking at these things, but it was in the 1970s when the Nixon put on the wage and price controls.
But the one thing that I remember clearly that it really impressed me is they put them on one day, and really it was the next day, you know, there were shortages.
Because if they were selling things at $10 and they know that into the system, they have to be moving it up because the inflation had all been there.
It has to be $12 for us to break even.
So they said, no, you have to still sell it for $10.
Well, guess what?
There were shortages immediately.
And then the gougers came in who were trying to rescue it because that's what you need are the prices to adjust.
But anyway, it damages the economy very, very rapidly.
And most of the time in our history, in the United States, they wake up and they back off.
But I think there's always some price controls involved With the government.
You know, Milton Friedman had a famous statement that all inflation, price inflation, is related to monetary inflation.
You know, print too much money, you're going to have prices go up.
And that basically is true, but it's not even Stephen.
And that's why people get confused.
So if the government doubles the supply of money, some prices might more than double.
Some might only go up 20%.
So the distribution is done.
They can't eliminate the supply and demand according to consumers' desires because they might give up on buying something and the businessman has to go out of business.
So it's not even Stephen.
And wages never go up equal to the money supply at some prices.
So even when you raise the minimum wage, you never can keep up.
And that's why it becomes so evil because inflation technically is a tax.
They print up the money, they steal the money from the people who have or are holding savings and devalue it.
So if a dollar becomes worth 50 cents, you've been taxed 50%.
So this is why it is so bad.
But you have that adjustment, which is not mathematically calculable.
But there's another thing that happens is that there's policies that add into this.
And I think Chrissy actually mentioned the one that I think is dramatic, and that is what we got now, even as a residual, and what we had a few years ago with COVID, the lockdown on COVID.
So you had the inflation and prices were going up, but then also you have this lockdown.
This is an additional thing on top of the inflation.
And things were very, very bad when the lockdown was at its peak.
But we still have lockdown.
They didn't get rid of the whole thing.
So that's the problem.
So you have two things.
You have the money supply going up, which is erratic and irregular and unpredictable.
And then you have all kinds of regulation.
You know, just think of the routine regulations, the thousands and thousands of pages and bureaucrats running things.
People just writing regulations that have no authority.
They're writing the laws.
You can take it to courts and the judges and the courts write the law.
And what they do, what they want to steer away from, and they will not talk about is the price of money and the unit of account and defining what a dollar really is.
They want to ignore that.
That's the principle.
If they did that, a lot of this other would disappear because we wouldn't have a monetary policy like we have, and we wouldn't have anybody trying to say, oh, there's gouging going on.
Under those circumstances, and we've had some in our history, and if you have the sound money in a free market, prices go down.
People say, oh, that's deflation.
No, it has to go to the value, the purchasing power of the dollar going up.
It's not deflation.
Deflation of money is a government-sponsored issue.
But anyway, the problems we face has to do with the special interests that demand high inflation of the money, manipulation, price control.
This is the biggest one, the price of money, interest rate.
If this mess has occurred, then somebody says, we have to have somebody regulating this interest rate.
Sometimes we want it zero.
Sometimes we need it to go up to 21%.
That's in my lifetime.
I remember both.
And it makes no sense whatsoever, but they're still doing that.
And that's why predicting that if Harris, if Kamala Harris has her way, it won't go well.
It'll be a real wreck to the economy.
And we're in a bit of a wreck already.
That's right, Dr. Paul.
For the average person, they may hear this.
Price controls create shortages, but they may not know why.
Why shortages?
Why does it happen?
They can't explain it.
Well, it's very, very simple, actually.
Think about when you go to the supermarket.
Now, price control means that they're going to fix the price below the normal market price.
So that's basically a sale.
What happens when you go to the supermarket and something's on sale?
That product, there's maybe one or two left by the time you get there.
People buy more of it.
When something is under the market price, people rush to buy more of it.
So think of a steak that's $20 that one day you see it's a dollar.
By the time you get to the supermarket, it's gone.
Okay, because the price is well below the market price.
So people buy more of it.
Demand increases with price controls.
Now, on the other end of it, companies are expected to produce below the market price, and they can't do that.
They can't go bankrupt.
They can't produce things at a loss.
So they end up producing less of it.
So you have more people buying, and the companies are producing less of it at the same time.
And that's why there are empty shelves.
What the companies end up doing is they take their land, their labor, their capital, and they move it to an area that's profitable, where they'll make money because they have to make money.
They can't be like the government and go $35 trillion in debt.
They have to survive.
So you have more buying, less producing, and that's all it is.
You don't need an economics course for this, a textbook.
This was a one-minute explanation.
But the policy that Kamala Harris, if she were implemented or Congress, would create empty shelves because a one-minute explanation did not reach enough people.
There's another thing that occurs to try to compensate for the stupid policies of our government.
And that is immediately there is disobedience because they want to obey what is honest and true, and that is keep the market going.
Keep supplying the customer at the price that they'll pay and have the market work.
So what happens?
There's what happens.
A black market evolves.
Of course, the black market is the real market.
And you don't run out of shortages.
There's always something there in the black market.
So that then becomes an enforcement problem.
And just think of what happened in the Soviet system.
That was a serious crime.
You couldn't even raise a potato in your backyard without getting into big trouble.
So they have to use a terrible amount of force in order to stop people from trying to do the right thing because their instincts are right.
You know, another thing that we hear about, and when somebody like Harris comes up with this, they'll be charged with, oh, they're a bunch of communists.
She's a communist.
That's all it is to it.
And, you know, that's a little bit confusing.
They don't have to be, you know, Soviet-type communists.
And they don't have to be labeled communism because what they are, they're interventionists.
They're economic interventionists.
They're Keynesian economists.
They don't believe in sound money.
And they have all these gimmicks that they have.
But I think it's credibility loss to say they're communists.
And I think that it's important that we try to point out what is wrong, as Chris was just doing a minute ago.
You know what really goes on and why it happens.
And then people should, if I had a group of kids 12 years and even under, and explain monetary policy to them, I tell you what, they understand that, you know, what would it be like if you just had all the money printed?
You know, they can figure it out.
So, but you have to have a lot of propaganda to cancel that out of the minds of people and then have the propagandists come in and say, well, that's the gouger.
Why 51% Can Dictate00:04:55
It's the sin of the businessman.
It's the sin of these labor union leaders.
They want to try to get the value of their labor equal to what the prices are going up.
So it's just one leads to another.
And I think the whole system, rather than just saying they're a bunch of communists, probably could lead to communism.
It probably is something there.
But it's a system of economic planning.
This whole thing, and this is why democracy is so bad.
Because if you can get 51% to say it is gouging, then they do that.
So the campaign's coming up now.
So say Kamala Harris wins overwhelmingly.
Well, the majority said it.
The majority said, you know, we want wage and price controls.
So probably within a day or two, things would crash as they did in the 70s.
But the whole principle that has to be followed is: yes, economics has to be understood.
Liberty has to be understood.
And when people say, well, we're going to do away with the welfare state, well, that'd be good.
Why should the military industrial complex and the pharmaceutical industry get all this welfare?
But if you do that, people say, oh, that would be good.
But then they come up and say, but we have to protect somebody.
Then the protectionists come in.
Democracy says, well, we have to have 51% because it's the dictatorship of the majority.
And so you have to get several groups.
You might have five or six special interests that want inflation.
Deficits don't matter.
The universities preach that.
And they argue that case and they just go on and on.
And then it becomes just about impossible to systematically reverse the direction.
It's easy to every year spend more and more deficits, more and more, more inflation over the prices.
That's easy.
But you can't reverse it for political reasons.
You can't say, okay, I'm advising this and we have the votes.
We're going to cut the budget 1% every year.
No increases, but we're going to cut the budget 1% a year.
I'll tell you what, you better get a lot of bodyguards because they're not going to tolerate that.
So this is the thing.
We're leading into a real big problem if we don't deal with this nonsense.
And then there's some that advocate this, are called cultural Marxists because they have in their mind rebuilding is necessary, but they have a firm conviction that rebuilding is better when you wipe out the old school and whatever you have.
This idea of profits and people working and rewarded for merit.
Wobb.
Well, that's, you mean, you'd pick people to become pilots by, you know, not by the merit and their abilities flying an airplane, and we'll pick it because of some other crazy way of making sure there's diversity.
So this kind of thing, you know, those ideas are what lead to this.
But I think things will get worse if we have our opportunity.
And Chris, we do know about many organizations that are dedicated to promoting the cause of liberty.
Excellent, Dr. Paul.
Yes, I will finish up with my closing thoughts.
We really have a bad addiction in America.
The people want the government to always do something, always.
And you don't want that.
Why?
Because the government will do something.
That's why you don't want it.
It's become so bad that every little thing that happens, you know, what does the president have to say about this?
What are they going to do?
You know, what are they going to do?
They have to do something.
And if they don't, and then they'll complain, oh, he's probably out golfing, as if that's a bad thing.
We want the president and Congress to golf as much as possible every day would be the ideal.
Why?
Because what are you left with when they're out golfing?
You're left with liberty.
You're left with freedom.
They're not taking away your money.
They're not placing restrictions on you.
They're not mandating you to do things.
That's what happens when they're on the golf course.
It's not a bad thing.
But one of the greatest ironies, probably in the history of men, the people of America have an aversion to freedom, almost a hatred.
I'm sure a lot of people hate freedom.
And we have proof.
We have the biggest government in the history of the world.
Imagine that.
The land of the free ended up with the biggest government in the history of the world.
You can't have both.
It's one or the other.
And right now we have the other.
And it's bad.
It's as bad as one would imagine it would be.
And Americans look at politicians and they judge them.
Big Government's Hidden Costs00:05:27
Well, what did he do?
What laws did he pass?
You know, the best politicians are like Dr. Paul.
They don't pass very few, if any, possibly zero.
That's what's called limited government.
Very limited.
They only intervene very, very rarely when it's absolutely necessary.
Today, it's every single thing all day long, 24 hours a day, all over the world.
That's what it's become.
And we have to just start at some point.
You've got to start at some point to go in the opposite direction, back to rationality, back to limited government, back to freedom.
I'm going to close by talking a little bit about some of the other price regulations that we don't think of as strictly as a price, but it is the same principle.
They're manipulating the markets to benefit certain companies against the other.
Take, for instance, the pharmaceutical industry.
They're exempt from lawsuits.
So if they mess up and a lot of people suffer, and that happened, obviously, with COVID and the medications that went out, you can't sue them.
They're exempt.
So that's a special privilege.
The market permits going after the people who have cheated and hurt people or committed fraud.
That's one thing.
So that I think is important to realize that that is a manipulation of price because that affects the price.
And when they don't have to deal with that, they can charge more.
And just think that right now, the big issue is the cost of medication.
If you had a true market in medications, believe me, the cost of medications would be way down.
But there's too many powerful interests, just like the military-industrial complex.
That's a consumption of a lot of wealth.
A lot of wealth is wasted.
So when the working people of America have to sacrifice their income and other things and have the inflation and send it overseas, I tell you what, that is obviously making the prices go up.
So prices will go up, but it's sort of indirect.
People don't think of it that way.
And I mentioned it already, but the big one we have to remember, the big rigging of the most important price is the cost of money.
And if you have sound money and interest rates tell us, you know, What the demand is for, how many people want to build houses, how many people are saving money.
So, you don't get capital until somebody gives or puts the capital into the market.
An individual gets capital if they make $10,000 a year and they live on $9,000, they have $1,000 worth of capital to invest and go on to something else.
And just medical care in general, the prices, you know, the government's involved in every aspect of medical care these days, and that pushes prices up.
And so that's when they, when the inflation and all, do that.
This is why there's going to be, there is a demand.
Government has to take over all medical.
Everybody has to join the government-run system.
Tariffs, that's a tax, and that affects prices.
So, if you put back in the 70s, they put a 10% tax on all imports, and eventually that was taken down.
But we're still, both parties now are talking about tariffs, and those are prices.
They're affecting the price, which is the price, that's inflationary prices, which is different because that is combined with the inflation of the monetary system.
But the combination makes it more difficult to understand and more vulnerable to the demagogues.
The demagogues can do this very easily.
Oh, you want to take, you want to cut all this welfare.
Yeah, why shouldn't we cut the welfare from the military industrial common?
Think how rich we would be if we didn't have to fight endless wars.
I mean, it just wouldn't work.
So, there's a lot we could do.
And the one last thing I want to finish with is: size is not evil automatically.
Size of a company or somebody controlling an industry, if they got there with the help of the government regulation, that's evil.
But if somebody in the oil days of oil, they said the Rockefellers, you know, we're the monopolists, we have to go after them.
But they got big one way by driving the prices down to unbelievable small amounts where more people could benefit from it.
So they were made huge by providing a service the people wanted.
So the people were voting for good size as long as they provide the service.
And that's, I think, it is, people should get away from saying, oh, they're big.
I think it's just plain old jealousy that motivates them.
We don't like bigness.
Well, what if they're doing a great job for the economy and providing people for what they want at the best price evil?
How could we be opposed to that?
I'll tell you what.
You know, freedom and market economies are so beneficial.
It's the same we don't do a better job at making sure everybody understands that.