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Forty Centuries of Wage and Price Controls: How Not Fight Inflation

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Economy theory suggests that price ceilings produce shortages and price floors produce surpluses. Good theories should have testable results. This book describes examples in history where the government initiated price controls. It then shows the ill effects such controls caused. The most insightful criticism comes from perceptive contemporary sources who cite the source of their misery. Examples from ancient Eqypt, Hammurabi's Babylon, ancient Greece, French and American revolution, Civil War, World War I and II and the Communism states. The book was written as a polemic against political pressure to freeze prices (remember Nixon's price freeze), yet is still readable and valid today.

This is a history of wage and price controls, and a sermon against them.

The history portion covers antiquity to modern times, in Asia, Africa, Europe,
and the Americas, in democracies, monarchys, and dictatorships of the left and
right, from gentle, moral persuassion through "jawboning" to long prison
sentences and long lists of death sentences.

They claim controls have never worked, always cause additional social damage,
such as shortages and crime, and often make inflation worse. I know of no
counterexample of their claim.

Washington's terrible winter at Valley Forge was caused by the price controls
imposed by the Continental Congress. The Allies retained the Nazi controls
after WWII. Goering, from prison in 1946, wondered why. He could not make
it work. Why would we repeat his mistake. The German economic miracle started
almost immediately after controls were ended.

Other controllers also admitted their attempts failed. I wish the authors
had collected opinions from all controllers, admitting failure or offering
excuses. They could not, of course, because there were so many, all diverted
from doing something that might have been useful.

There is an extensive bibliography, a useful index, and chapter notes
documenting the claims in the main text. They even include a translation
of the price fixing portions of the Code of Hammurabi.

The sermon at the end is less satisfying. They summarize the historical
evidence, speculate on the process of inflation (but get the cause right
-- government), and try to demolish the plans they feared Jimmy Carter
was about to launch.

This book is over 25 years old. I did not notice anything that would have
to be erased from the history section for a second edition, just change the
speculation about Carter's actions to history and add a few more chapters.

I recommend this book for all politions, and all voters. If enough read
it, perhaps there will not need to be a second edition.