Get your Free financial review. There has been immediate push-back from those who understand basic economics. Price controls invariably lead to shortages. Shortages of basic foodstuffs can lead to⦠You get the point. Bad idea. Woe to you, O land, whose king is a child. As Schuettinger and Butler point out in their history of wage and price controls, government- provoked inflation is nothing new.
Nor are the proposed solutions, as they explain in Forty centuries of wage and price controls: how not to fight inflation The Heritage Foundation, :. Since that time, we have examined over one hundred cases of wage and price controls in thirty different nations from BC to AD The basic reason for this is that they have not addressed the real cause of inflation which is an increase in the money supply over and above the increase in productivity.
Rulers from the earliest times sought to solve their financial problems by debasing the coinage or issuing almost worthless coins at high face values; through modern technology the governments of recent centuries have had printing presses at their disposal. When these measures resulted in inflation, the same rulers then turned to wage and price controls. The devaluation started relatively modestly but accelerated under Marcus Aurelius AD when the weights of coins were reduced.
Egypt was the imperial province most severely affected. During the fourth century, the value of the gold solidus changed from 4, to million Egyptian drachmai. Levy also attributes the grotesque rise in prices which followed to the increase of the amount of money in circulation. The price of the same measure of wheat in Egypt rose from 6 drachmai in the first century to in the third century; in AD , the price rose to 9, drachmai and in AD to 78, Shortly after AD the price had reached more than 2 million drachmai.
Other provinces endured similar inflations. It was forbidden to buy or sell coins: they had to be used for payment only. It was even forbidden to hoard them! It was forbidden to melt them down to extract the small amount of silver alloyed with the bronze. The punishment for all these offences was death. Controls were set up along roads and at ports, where the police searched traders and travellers. Of course, all these efforts were to no purpose. Perhaps the most notorious attempt to control wages and prices took place under the Emperor Diocletian.
