Ode to Price Controls

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In the early 1970s the United States experienced what became known as "The U.S. Food-Price Spiral." As the term implies, prices of food commodities in the U.S. during these years endured extraordinary rises, causing tumultuous consequences of a social, political, and economic nature.

While the origin for this inflationary price spiral was varied, there is little doubt that it was, at least in part, due to a change in the mating locale of Peruvian anchovies. These tiny fish normally gathered at the coastline of Peru to carry out their biological want. Why they suddenly altered their mating locale is shrouded in some mystery, but it resulted in curtailing the migration of huge masses of birds to those shores which dramatically diminished the world's supply of guano-the bird droppings rich in nitrogen-a mainstay of cheap fertilizer.

The food price spiral was tailor-made for demagogic chicanery and resulted in a national debate, innumerable economic studies, political skull-duggery and posturing, wild accusations by factions from all sides of the social and political spectrum, and congressional hearings. Ultimately it led to the price controls of 1971 under the hand of President Nixon, and culminated with President Ford's futile WIN campaign-"Whip Inflation Now."

Predictably, price controls were an unmitigated disaster and resulted in dislocating the US economy for many years. The Chicago Mercantile Exchange, a bastion of free market philosophy, and an institution directly affected by price controls, quite naturally became embroiled in this debate. When the dust settled, CME chairman, Leo Melamed, wrote the following Ode to Price Controls:

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Ode to Price Controls

I wish to record, just for fun,
How price controls happened in '71.

The story can serve as a future lesson
Should we with the economy go a messin'.

So now that they're going some 6 feet under
How did we make such a classical blunder?

To future generations, this ode I christen
Ladies and gentlemen, just listen:

Said the Democrats:

The next issue with which to contend
Are the rising prices and what they portend.

We need a remedy that will look good,
One that is appealing and understood.

"Price controls," of course, they fit the need!
A solution to the problem with instant speed!

Of course, they might turn out to be bad,
Cause shortages, disruptions, that would be sad.

But that should not be our main concern,
We'll create the issue, and then it's their turn.

The G.O.P. will never approve this solution,
It's against the free-market institution.

Then we can blame the rising prices
On Republican inaction in times of crises.

Thought the Republicans:

The Dems have created a clever trap,
An issue on which we could take the rap.

This could cost us many a vote
Inflation is at the public's throat

But we, too, can play this game of tag
In political know-how, we don't lag.

We'll turn the tables on their little scheme
We, too, will join the price control team.

Of course, they might turn out to be bad,
Cause less production, that would be sad.

But the President will never play this tune
And allow the country to go to ruin.

He'll ignore controls without any shame
And then nobody will be to blame.

Said the Media and Press:

To report the news is our obligation,
To seek the issues or their mutation.

Inflation has become a terrible woe,
We need a quick solution to keep it in tow.

Congress had enacted what sounds so good,
Why doesn't the President do as he should?

Of course, they might turn out to be bad,
Prove counter-productive, that would be sad.

But at least they would serve us for a time
The raising of prices would become a crime.

Thought the Labor Leaders:

Our workers have had it with rising prices;
Something must be done to end this crisis.

A free economy is good and well,
But not when our dollars are going to hell.

Controls on prices are what we need,
(But not on wages—heaven forbid!)

Of course, they might turn out to be bad,
Cause less employment, that would be sad.

But then we can blame the legislators
For being bad law perpetrators.

Espoused the Consumer Advocates:

Big business runs our U.S.A.
They make the little guy pay and pay.

To help the citizen is our job,
We're his saviors—the ignorant slob.

What we propose is a magic wand
To bring down prices with a wave of the hand.

Controls are the thing, they work like magic,
They'll stop the profits, and that's not tragic.

Of course, they might turn out to be bad,
Cause hoarding and panic, that would be sad.

But if they work like ancient voodoos,
Then we get the credit and take the kudos.

Said Business Management:

The crisis really must come to an end,
Our public image we must mend.

Controls will placate the public's mood
If we're for them, it will look good.

Of course, they might turn out to be bad,
Cause business slowdown, that would be sad.

But if we object too strongly,
It will be interpreted wrongly.

So let's hope they're what we need
To the free market economists, pay no heed.

Counseled the President's Advisors:

That controls are bad, there's no denial
But if we applied them for only awhile,

A sort of in-between election trial,
It wouldn't cramp our conservative style,

And maybe they wouldn't much harm compile.
Meanwhile we would derive a political mile

By quieting the housewife's growing rile.

Said the President:

I'm against controls in any form
They're not the answer to this storm.

They'll disrupt the economy of our nation,
Create shortages and cause us to ration.

They create bureaucracy like the O.P.A.
They cause inequities and disarray.

But wait—let's look at the facts
Controls were created by Congressional Acts.

The Dems and G.O.P. have had them adopted
To pass me the buck, they have opted.

The Press is for it, the Media too
The dissenters are quiet and very few.

Labor is pressing for action at once,
If I don't do it, I'll look like a dunce.

Consumers think it's a magic spell
Prices will come down at the ring of a bell.

Business is for it and they must know
What's good for the country to make it grow.

My advisors agree, if applied for a while,
They might not much harm compile.

How silly of me not to see the light,
If everyone's for it, they must be right.

They'll help diminish the public's ire,
They could break the rising spiral fire.

Maybe they are magic—you can't be sure,
Any action could be the right cure.

Of course, they might turn out to be sad,
But Congress passed the law, too, too bad.

This tale is funny, if it weren't so sad,
Ladies and gentlemen, we've been had.

 

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