Chapter 6: Price Control 113
“Shortages are bad.” It is this that enables us to move from premises to conclusion. In general, you need an ought statement in the premises to justify an ought judgment in the conclusion. A value judgment will also do the trick.
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Give examples of value judgments. |
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“Since value judgments are subjective, no ought state- |
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ments can be backed up by reason.” Evaluate this claim. |
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Some philosophers deny that you always need an “ought” |
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in one of your premises to get to an “ought” in the con- |
clusion. Find out who some of these thinkers are, and give a brief account of their arguments. Why wouldn’t their views require us to modify our conclusion about what follows from “price controls cause shortages?”
MUCH ADO ABOUT VERY LITTLE?
Haven’t we made too much fuss over a very minor point? After all, who doubts that shortages are bad? Perhaps some misanthrope enjoys depriving others of the goods they want; but, barring exceptional cases such as this, aren’t we home free?
Indeed, don’t we have here a partial solution to the so-called fact-value gap? Just add an obviously true value judgment. Compare the following:
•(1) YOU DO NOT WANT TO DIE BY POISONING
•(2) THAT GLASS OVER THERE CONTAINS POISON
•(3) YOU SHOULD NOT DRINK THE CONTENTS OF THAT GLASS
Premise (1) is a value judgment, but it is none the worse for that.
114 An Introduction to Economic Reasoning
WHY WE ARE NOT HOME FREE
Unfortunately, we have not yet arrived at a good argument against price control. Can you see the problem? From “shortages are bad” and “price controls cause shortages,” it does not follow that price control ought not to be instituted.
Why not? Let’s consider a parallel argument:
•(1) DENTISTRY CAUSES PAIN
•(2) PAIN IS BAD
•(3) DENTISTRY OUGHT TO BE OUTLAWED
Obviously, something has gone wrong. Even though something has some bad results, it may still be worth doing. Its good consequences may outweigh its bad consequences. Thus, few advocates of price controls will welcome shortages. But they may think that the badness of shortages is outweighed by the alleged good effects of lower prices. Or they may try to cope with the shortages by other means.
An example of this strategy emerges in justifications of rationing. During wartime, consumer goods are in short supply. Some people think it is “unfair” to allow prices to rise; and to prevent shortages, the government issues ration books. You must have a ration card, in addition to the requisite money, in order to purchase what you want.
1.How did rationing work during World War II in the United States?
?2. A useful technique to help analyze arguments is to construct a parallel argument: Give some examples of this technique.
3.Is it “unfair” to allow prices to be bid up to the market price?
Chapter 6: Price Control 115
HAVE WE PAINTED OURSELVES INTO A CORNER?
As you will long since have gathered, I support the free market and, as such, oppose price controls. But what am I now to do? It appears that our point against price controls—they lead to short- ages—does not of itself suffice. Must opposition to price controls be classed as simply an arbitrary value judgment?
One might in response elaborate a political philosophy showing that the judgment is not arbitrary. Fortunately, we do not have to
follow this complicated path here.
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Read Murray Rothbard’s, Ethics of Liberty (New York: New |
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York University Press, 1998). How would the rights frame- |
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work elaborated in that book handle the morality of price |
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controls? |
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LUDWIG VON MISES TO THE RESCUE
Ludwig von Mises discovered a way out. As he noted, those who complain that prices are “too high” do not think that shortages are a suitable “price” to pay for lower prices. They contend that prices can be lowered without shortages.
And here economic theory shows them mistaken. Thus, we can say that price controls, from the point of view of its own supporters, fails to achieve its goals. It is thus irrational.
Ludwig von Mises 1881–1973
116 An Introduction to Economic Reasoning
?1. How does Mises’s argument apply to rationing? (Hint: rationing is a measure to limit consumption.)
2.Why is it a strong argument against a view that it cannot secure the aims of its advocates?
