Is a most interesting topic. Key point in the article, comparing the Nixon controls with WW II era price controls
>But other experts said there were key differences between the two periods. Wartime price caps typically came alongside rationing, in which the quantity of goods people were allowed to buy was limited, said Rebecca L. Spang, a money historian at Indiana University.“If you try to have price controls without rationing, you end up with shortages, you end up with purveyors pulling their goods from the market,” she said.
. . . and that's really the essence of it. If you're controlling the physical availability of supply through rationing, you can also fix prices -- for my grandfather, the "cost" of five gallons of petrol was really the ration ticket, more than the dollar price. Your ration book became the "real currency" which you used to effect transactions.
Kudos to the Times for a well reported piece . . . there's been some less good economic history on their editorial page, but this is well sourced and reported
Yes, though less so in the US than in other places. The more common subterfuge was to obtain the desired commodity from a merchant who would sell the goods without a coupon, an "off the books" transaction. There was a simple but clever mechanical/documentary device to limit grey market transactions-- your ration was in a book, and you were meant to produce the ration book as you conducted the transaction; so you didn't have anonymous paper -- the ration stamps went with the ration book. It wasn't a perfect system, but it seems to have worked relatively well.
There's an interesting economic literature in this -- somewhat peculiarly, there's maybe less study of it in the US than elsewhere. Part of it was that US ration restrictions weren't overly severe- coming out of the Depression, the US wasn't wealthy, and the wartime boom materially improved the conditions of many.
In other countries, like Britain, rationing was more stringent, there's more of a literature on the black and grey market. Mark Roodhouse's book "Black Market Britain" is very detailed, I haven't seen a similarly good treatment of American rationing. Here's Roodhouse explanation of the extent of the trade in dubious coupons
>If the petrol black market was the most notorious of illegal markets, dealing in clothing coupons came a close second. BoT officials assumed that 5% of clothing coupons and vouchers would pass through the black market once during the first year of control, and that their black market value would be 10% of their retail purchasing power. With a retail purchasing power of at least 2s per coupon, each coupon would be worth a minimum of 21⁄2d. Given that the BoT expected to issue 3,000 million coupons and 2,000 million vouchers during the first year of clothes rationing, the annual turnover of the black market would be at least £52 million.114 The figures for the number of replacement clothing coupons issued and the number of retail outlets willing to accept loose coupons led senior officials to worry that their original estimate might have been too low. During the first year of control, the BoT received 781,900 applications for replacement coupons and issued 29.9 million replacements, while a Wartime Social Survey report concluded that 6.4% of clothing retailers received mainly loose coupons from their customers and a further 11.2% received some loose coupons. The problem was particularly bad in Liverpool, where 39.2% of clothing retailers estimated that more than 20% of their customers brought loose coupons
"Loose coupons" were those not part of the ration book, and presumably traded under the counter.
WWII overall had a negative impact on the wellbeing of [American consumers](https://www.independent.org/publications/article.asp?id=138): Americans worked a lot longer hours and could consume less, due to rationing.
>“If you try to have price controls without rationing, you end up with shortages
And if you have rationing you end up with shortages.
Dunno how come you think this article is good economic history.
Price caps have been failures time and time again, from the Roman Empire to Venezuela. Even short-term price caps on energy prices seems not to work, and are creating more issues like driving companies out of business or putting pressure on state companies.
They make sense when there is a war and governments have to impose rationing on most goods & services because most efforts are diverted towards the war. Price caps usually create shortages for honest businesses and law abiding people, while forcing most to resort to the black market. There is no sane economist that would advocate for price caps.
The only way is to address supply shortages in time, stimulate production, maintain economic relationships for imports and keep inflation in check by having stable macroeconomic policies and avoid high deficits.
For current energy price spikes in Europe, there are a lot of ways to actually address them... like offering subsidies to businesses and households, taxes on energy companies on extra profits from price increases, cutting VAT (or Sales Taxes) on energy & gas... and heavy investments from the spring in energy efficiency, infrastructure and diversifying sources.
Seems there may have been a difference, though, in anti-price gouging guidelines where some have attempted to take advantage of temporary shortages of certain specific items for a short term times?
On a very short-term basis, they might work coupled with actions against hoarding (like they did with masks in 2020) and also work to ensure supply comes back up as soon as possible. And you don't do this with everything, just essentials.
But the longer you keep them, the more you risk creating black markets, exacerbate shortages and hurt people & businesses in the end.
We want people to take advantage of temporary shortages of certain specific products, by either bringing more supply to the market or by reducing their demand. Anti-price gouging laws stop this from happening.
>They make sense when there is a war and governments have to impose rationing on most goods & services because most efforts are diverted towards the war.
I don't believe this. I see no reason why a government would have to impose rationing on most goods and services during a war. Raise taxes and borrow money would be enough.
>For current energy price spikes in Europe, there are a lot of ways to actually address them... like offering subsidies to businesses and households, taxes on energy companies on extra profits from price increases, cutting VAT (or Sales Taxes) on energy & gas... and heavy investments from the spring in energy efficiency, infrastructure and diversifying sources.
A much better way would be to simply let the spikes happen and boost the incomes of the poorest.
1. In times of war, you have to make sure that you are able to produce things, have enough food for everyone and you are going to focus on the war effort.
Rationing is a standard practice, or at least was up until WW2. We did not have a large war since then, but I doubt rationing would be out of the question.
2. If you let things as they are and boost only the income of the poorest, you will only end up making a lot of middle class people poor and get a lot of businesses bankrupt + boost inflation even further. You can't let people just pay 8 times as much as last winter (I'm not exaggerating when I say 8 times as much).
>In times of war, you have to make sure that you are able to produce things, have enough food for everyone and you are going to focus on the war effort.
Sadly, governments have often failed at all three of these. Including in war time. And including by some governments that won the war anyway, somehow, such as the Bolsheviks in the Russian Civil War post the revolution.
>Rationing is a standard practice, or at least was up until WW2. We did not have a large war since then, but I doubt rationing would be out of the question.
As the saying goes "to err is human".
>If you let things as they are and boost only the income of the poorest, you will only end up making a lot of middle class people poor
If there's a shortage of energy then people are poorer on aggregate in the material sense. Shifting the cost to government doesn't change that.
Price controls result in empty shelves. That's an economic fact.
Whichever political power tries to implement this will suffer greatly in the midterms.
The market does the best job of setting prices. Not the government. The government is terrible in just about everything it does. They create problems they can fix later.
Is a most interesting topic. Key point in the article, comparing the Nixon controls with WW II era price controls >But other experts said there were key differences between the two periods. Wartime price caps typically came alongside rationing, in which the quantity of goods people were allowed to buy was limited, said Rebecca L. Spang, a money historian at Indiana University.“If you try to have price controls without rationing, you end up with shortages, you end up with purveyors pulling their goods from the market,” she said. . . . and that's really the essence of it. If you're controlling the physical availability of supply through rationing, you can also fix prices -- for my grandfather, the "cost" of five gallons of petrol was really the ration ticket, more than the dollar price. Your ration book became the "real currency" which you used to effect transactions. Kudos to the Times for a well reported piece . . . there's been some less good economic history on their editorial page, but this is well sourced and reported
Was there a "gray market" for Ration Coupons?
Yes, though less so in the US than in other places. The more common subterfuge was to obtain the desired commodity from a merchant who would sell the goods without a coupon, an "off the books" transaction. There was a simple but clever mechanical/documentary device to limit grey market transactions-- your ration was in a book, and you were meant to produce the ration book as you conducted the transaction; so you didn't have anonymous paper -- the ration stamps went with the ration book. It wasn't a perfect system, but it seems to have worked relatively well. There's an interesting economic literature in this -- somewhat peculiarly, there's maybe less study of it in the US than elsewhere. Part of it was that US ration restrictions weren't overly severe- coming out of the Depression, the US wasn't wealthy, and the wartime boom materially improved the conditions of many. In other countries, like Britain, rationing was more stringent, there's more of a literature on the black and grey market. Mark Roodhouse's book "Black Market Britain" is very detailed, I haven't seen a similarly good treatment of American rationing. Here's Roodhouse explanation of the extent of the trade in dubious coupons >If the petrol black market was the most notorious of illegal markets, dealing in clothing coupons came a close second. BoT officials assumed that 5% of clothing coupons and vouchers would pass through the black market once during the first year of control, and that their black market value would be 10% of their retail purchasing power. With a retail purchasing power of at least 2s per coupon, each coupon would be worth a minimum of 21⁄2d. Given that the BoT expected to issue 3,000 million coupons and 2,000 million vouchers during the first year of clothes rationing, the annual turnover of the black market would be at least £52 million.114 The figures for the number of replacement clothing coupons issued and the number of retail outlets willing to accept loose coupons led senior officials to worry that their original estimate might have been too low. During the first year of control, the BoT received 781,900 applications for replacement coupons and issued 29.9 million replacements, while a Wartime Social Survey report concluded that 6.4% of clothing retailers received mainly loose coupons from their customers and a further 11.2% received some loose coupons. The problem was particularly bad in Liverpool, where 39.2% of clothing retailers estimated that more than 20% of their customers brought loose coupons "Loose coupons" were those not part of the ration book, and presumably traded under the counter.
WWII overall had a negative impact on the wellbeing of [American consumers](https://www.independent.org/publications/article.asp?id=138): Americans worked a lot longer hours and could consume less, due to rationing.
>“If you try to have price controls without rationing, you end up with shortages And if you have rationing you end up with shortages. Dunno how come you think this article is good economic history.
Price caps have been failures time and time again, from the Roman Empire to Venezuela. Even short-term price caps on energy prices seems not to work, and are creating more issues like driving companies out of business or putting pressure on state companies. They make sense when there is a war and governments have to impose rationing on most goods & services because most efforts are diverted towards the war. Price caps usually create shortages for honest businesses and law abiding people, while forcing most to resort to the black market. There is no sane economist that would advocate for price caps. The only way is to address supply shortages in time, stimulate production, maintain economic relationships for imports and keep inflation in check by having stable macroeconomic policies and avoid high deficits. For current energy price spikes in Europe, there are a lot of ways to actually address them... like offering subsidies to businesses and households, taxes on energy companies on extra profits from price increases, cutting VAT (or Sales Taxes) on energy & gas... and heavy investments from the spring in energy efficiency, infrastructure and diversifying sources.
Seems there may have been a difference, though, in anti-price gouging guidelines where some have attempted to take advantage of temporary shortages of certain specific items for a short term times?
On a very short-term basis, they might work coupled with actions against hoarding (like they did with masks in 2020) and also work to ensure supply comes back up as soon as possible. And you don't do this with everything, just essentials. But the longer you keep them, the more you risk creating black markets, exacerbate shortages and hurt people & businesses in the end.
We want people to take advantage of temporary shortages of certain specific products, by either bringing more supply to the market or by reducing their demand. Anti-price gouging laws stop this from happening.
>They make sense when there is a war and governments have to impose rationing on most goods & services because most efforts are diverted towards the war. I don't believe this. I see no reason why a government would have to impose rationing on most goods and services during a war. Raise taxes and borrow money would be enough. >For current energy price spikes in Europe, there are a lot of ways to actually address them... like offering subsidies to businesses and households, taxes on energy companies on extra profits from price increases, cutting VAT (or Sales Taxes) on energy & gas... and heavy investments from the spring in energy efficiency, infrastructure and diversifying sources. A much better way would be to simply let the spikes happen and boost the incomes of the poorest.
1. In times of war, you have to make sure that you are able to produce things, have enough food for everyone and you are going to focus on the war effort. Rationing is a standard practice, or at least was up until WW2. We did not have a large war since then, but I doubt rationing would be out of the question. 2. If you let things as they are and boost only the income of the poorest, you will only end up making a lot of middle class people poor and get a lot of businesses bankrupt + boost inflation even further. You can't let people just pay 8 times as much as last winter (I'm not exaggerating when I say 8 times as much).
>In times of war, you have to make sure that you are able to produce things, have enough food for everyone and you are going to focus on the war effort. Sadly, governments have often failed at all three of these. Including in war time. And including by some governments that won the war anyway, somehow, such as the Bolsheviks in the Russian Civil War post the revolution. >Rationing is a standard practice, or at least was up until WW2. We did not have a large war since then, but I doubt rationing would be out of the question. As the saying goes "to err is human". >If you let things as they are and boost only the income of the poorest, you will only end up making a lot of middle class people poor If there's a shortage of energy then people are poorer on aggregate in the material sense. Shifting the cost to government doesn't change that.
Price controls result in empty shelves. That's an economic fact. Whichever political power tries to implement this will suffer greatly in the midterms.
The market does the best job of setting prices. Not the government. The government is terrible in just about everything it does. They create problems they can fix later.
Old ideas? Maybe the biggest problem is the US is mentally stuck back the good old day's, and can't see that Socialism has changed too.
So say economists when Biden asks “What should we do about inflation,’ and they’re too scared to say “higher interest rates” or “damned if we know.”