Mr. Moderate

Rationing and price controls both represent actions by government to interfere with the operation of the free market. History has demonstrated that rationing and price controls will not work over the long haul. Or to put it better, they always generate unintended consequences (like extreme shortages of goods and services and the creation of black markets) which are more evil than just allowing the market to perform its natural function in accord with the Law of Supply & Demand.

But there are circumstances where rationing and price controls are morally justified, and perhaps even morally required. For instance, in the event of a disaster, it makes sense to allow everyone to purchase small quantities of emergency necessities (food, gasoline, etc.) at or near the regular price for those goods and services. After all, it can be the case that lives are at stake if people can’t leave the area and find a safe place to stay. In such cases, and they should be rare cases, rationing and price controls make very good sense. They can be, literally, a matter of life or death.

At all other times and places, rationing and price controls generally do not accomplish whatever it was that government desired because of the natural tendency of people to get around any such laws by creating black markets and through similar things. Even in the case of greatly patriotic wars, like World War II, shopkeepers would generally keep a stash of rationed goods to sell to favored customers rather than “just anybody” who would show up needing something in particular. My parents and grandparents all had stories to tell about how they got around rationing, price controls, Prohibition, and other government mandated shortages of things people wanted to purchase.

And you can draw some clear analogies between Prohibition and the current ongoing war against drugs. When something is made illegal, that does not totally remove it from the market. It only inflates the price and shortens the supply. Accordingly, such actions by the government had better be strongly supported by the vast majority of the people for good and valid moral reasons or else the harm will be more than the good.

One of the most interesting battles going on now is the fight over medical marijuana. The federal government allows a few lucky chosen people to grow, possess and use marijuana as part of a treatment plan for a disease they have. Everybody else who wants to use marijuana under similar circumstances is subject to federal prison, even if their state has passed laws legalizing marijuana for medical use. So, it is easy to predict that, since the demand is obviously there, the black market will arise (which it has), and a free market in medical marijuana exists virtually in parallel with the criminal market for illegal drugs. This creates an extremely complex pricing model for marijuana.

But situations like exists for marijuana are not included within the usual meaning of “rationing & price controls.” We have seen rationing recently when half the supply of flu vaccine was declared to be unusable. And people went to great lengths and some to great expense to obtain flu shots anyway. And we see price controls every time a hurricane threatens the gulf coast as most gulf states have laws prohibiting the raising of prices by more than a small amount immediately before, during, or after a disaster. Those situations are, in my opinion, morally justified because they can be, literally, matters of life and death.

But in most other cases, we’ve largely learned our lesson that rationing and price controls generate more bad than good. So, we are reluctant to even try to implement such controls in the modern United States.

And that is a good thing.