Intro to Austrian Economics – 4 of 4 – Price Controls

Austrian Economics: An Introduction, presented at New York Polytechnic University in 1972.

4. Price ControlsPrice controls – triangular interventions – occur when an intervener (generally government) either compels a pair of people to make an exchange or prohibits them from making an exchange. Although ludicrous, price controls are instituted because a product appears to be in short supply, e.g. oil – while price controls create artificial shortages of the product. The conservation movement ties in with the attack on comfort and consumption and humans in general.

Source: Intro to Austrian Economics – 4 of 4 – Price Controls – YouTube

http://www.readrothbard.com/intro-to-austrian-economics-4-of-4-price-controls

TRANSCRIPT
0:00for this lecture I’m going to drop my

0:02usual mask of cool by civic fashion

0:05dispassionate value-free

0:09sciences because I’m having to be

0:12huffing man and the thing which makes me

0:15humping my mother the two conditions for

0:18making me hopping mad one is a monstrous

0:20injustice being done and which is almost

0:24always act I can’t think of any other

0:25counter examples almost always by the

0:27government and and secondly that

0:31everybody’s in favor of it

0:32their words of no voice please no voice

0:33that I read or hear comes out against it

0:37so I mean no voices I guess released to

0:40condition of equals so that’s how I sort

0:42of get it activated my anger glands is

0:45little being on the grammar and the

0:48little Abner sort of thinks are getting

0:49not getting moving high speed well it so

0:53happens the last two last two things

0:56that are activated my anger glands have

0:57been both connected with the topics of

0:59tonight which is basically price

1:03controls and it’s dependent dependent

1:06evil the last time ago is Tiffany’s a

1:09black day of August 15 1971 when

1:12President Nixon and pollie imposed price

1:15controls for the first time since the

1:17Korean War and really basically

1:18different kinds as World War two some

1:21even for clients both peace time after

1:25many years was saying he and his oral

1:26economic advisors put together saying

1:29climate again is that we’ll never impose

1:30control those of them work as parable

1:32and appears a free enterprise and so

1:34forth so that was a piece that was it’s

1:37the sound we’ve had we’ve had many

1:38phases some of which I’ll talk about now

1:41another which have worked

1:42phase one two three three and a half and

1:46four and now we have the leads of the

1:51final sort of conclusion business when

1:53pricing approach suite or those of us we

1:56market economics are predictors in many

1:57years and after piping cold comes

1:59shortages and so first we have shortage

2:01all around us now

2:03of a place and after shortage of come

2:05rationing and there was sort of the

2:06icing on the cake and the thing that’s

2:09got me helping man now for the

2:10announcement of imminent gasoline and

2:13fuel rationing and as the announcement

2:17came pouring off the presses as

2:19President Nixon made is and that’s on

2:22the subject it for some incredible

2:24reason which really understand and I

2:26think you need a cycle pathologist model

2:29an economist for some reason this just

2:32buoyed up to his credibility which would

2:35reach about zero on – the nine of

2:37something president’s credibility and

2:40it’s rallied the this enchanted masses

2:43of the market for the next week look

2:45Steve McQueen banner in fact he gets on

2:47television tells everybody have to

2:49tighten their belt and supper and stop

2:52stop using electricity and turn down the

2:54heat and and stop using gasoline or less

2:56of it some reason some reason this sort

3:00of planner and activates the CGT

3:01mentality which which is somewhere in

3:05the American psyche and everybody says

3:07yes we have to rally behind my cause of

3:09the wreath the great strong statement to

3:11make and yes sir we got to tighten our

3:13dollars that’s what’s now in the nearly

3:17here phase one of both tightening is

3:20always a voluntary both tightening

3:21that’s what everybody touch that you

3:24heard him go out there and tighten your

3:25belt and I think that of course never

3:28works some early field enthusiasm

3:31voluntary above mine and you haven’t

3:33turn down the heat some wising reporters

3:37a day after the mixing statement went to

3:39the White House and several other

3:40federal of Burlington and the

3:41thermometer and checked on a sign a

3:44thermometer the temperature range in 71

3:46to 74 that the oils of the 68 you’ll see

3:49or 68 degrees and that’s been imposed

3:51yet and so of course it’s probably White

3:53House’s there come back to this as well

3:55take several days of summer sample

3:58change the temperature so so your and

4:04ahem go out there in sacrifice that’s

4:05sort of a phase one or phase two of the

4:07furnace doesn’t work and then you turn

4:09this to the coercive arm of the

4:12government will make sure everybody

4:14sacrifices and everybody puts a shape up

4:16and with it usually with the course of

4:17arm everybody says yes yes you’re right

4:19voluntary methods don’t work we have to

4:21move on the coercion and first we’re in

4:23the process of moving on a Croatian

4:25already well this sort of run which sort

4:29of ties in a little bit really Galbraith

4:31softly pack on affluence of a billion by

4:33last week and I’m going to get back to

4:35the whole conservation movement later on

4:37after we float about capital and

4:39especially my private property in

4:41capital because the conservation the

4:44conservation movement environmental

4:46movement in general is really jokes on

4:50the current job my collective that my

4:51second favorite movement or what my

4:54first favorite movement is I don’t know

4:55becoming like Genghis Khan or

4:57restoration of a haps very something

4:59like that the and a ties in with the

5:03with the attitude and this I think ties

5:06in with everybody rolling up their most

5:08heightened early proclaim willingness

5:09the belt heightened it ties in with the

5:12attack on of not only appellants attack

5:14them on comfort on consumption on any

5:20sort of any sort of really have human

5:24survival but they’re consistent from the

5:27first level otherwise really attack on

5:29man period if you think this is

5:32overdrawn attack on human beings period

5:34if you think it was over the one we get

5:35back to that soon later and if you think

5:39it’s over going read some of the

5:40conservation movement literature it’s an

5:42instructive some years ago I had to as

5:45part of my job to read some of it and as

5:48an instructive constructive

5:51lesson because what really animates the

5:54conservation of the environmentalist

5:56movement is not sustaining not really

5:57worried about sulfur dioxide and sort of

5:59stuff this is this stuff is only risk to

6:02the mill that something has latched on

6:04to what they really against their people

6:06because they’re always talking about man

6:08the destroyer man

6:09garbage-can sort of stuff man the

6:11polluter manly evil whatever and the

6:14theme is basically the nature before man

6:17exists that everything was great he was

6:19terrific make sure everything make sure

6:23was harmonious and balanced and

6:25ecologically everything over the animals

6:27reading each other to the proper optimum

6:29and all that and a plant through

6:32whatever the plants do and everything is

6:35going great as adenosine and it was

6:37circular world I like to put it in other

6:39words with the planets run around with

6:41Sun and them and everything would sort

6:43of balance nothing much happened I’ll be

6:44doing the three boring world but we have

6:46to worry about your know people are you

6:48like their work to concept with boredom

6:50they’ll even come into the picture so it

6:52was a pretty low right here everybody

6:54was sort of happy and contented in the

6:55robot would be room doing diva ring and

6:58all that and then into the pleasant

7:01unhappy ecologically balanced picture

7:02people enter right evil man enters will

7:06takes you’re an evil man is entering the

7:08picture not having any instincts not

7:10having us not accept not looking within

7:12the environment environment not bound by

7:15the temperature of the where we have to

7:17be born in moving around changing the

7:19environment chopping down trees or

7:21catching fish and all the other stuff

7:24altering the environment in a linear

7:26manner in other words a man of progress

7:29let’s put it that way the old-fashioned

7:31words design out of fashion so the man

7:34progresses from a tape man and dying at

7:37the age of 21 or whatever then stop

7:40those factories those are increasing the

7:43standard living both capital equipment

7:45those medical techniques and all the

7:47rest of it and survives and prospers and

7:50flourishes and this isn’t a linear thing

7:53by doing that the you know the beaver

7:55tend to die on the trees are chopped

7:58down only level of Fisher fish nor only

8:01the terrible things that happen to those

8:03of the other species

8:05I confessed life right here I have a

8:08value judgment I am a human show

8:10children us in other words right if it’s

8:12a choice and little I spoke with these

8:14people and caribou I’ll go for the

8:17people anytime and I

8:20think I think it’s when we put us I

8:22think right a bizarre take the other

8:24position that if there’s a choice

8:27between the people accountable they will

8:28like both get dumped with people in your

8:30bring in the caribou but I really think

8:33that this is a given subtly the duck or

8:35the environmentalist movement and so

8:38anytime anytime there’s any kind of a

8:40clash between the interests of human

8:42beings in one hand because of trees

8:44plants fish caribou aesthetics in other

8:48words the landscape on the other hand

8:51people always work to lose out and this

8:53is what very relevant one the energy

8:55crisis general told about sick people

8:56doesn’t know anyone

8:59so the getting down of the price control

9:05this is what this is a topic which often

9:08saw a couple of years ago I was up to

9:10two years ago it’s not a good price ago

9:13the sort of thing I’d told Judy it was

9:15sort of like the only end of whole days

9:16I give them stories about back in the

9:18old days of World War Two but none of

9:20the kids remember World War two back in

9:22the early age World War two that was

9:24hikes controlled and something called

9:25the OPA and was rationing everybody line

9:27up around my blocking confine anything

9:29that’s old a horror story that was going

9:31on that and they sit there gaping and to

9:33them was just about as well ability and

9:35when I talk about ancient Rome and how

9:36the same thing happened then but so it

9:39was a sort of sort of Neanderthal I

9:42playing this with me for as aquarium

9:43story about what happens we have prices

9:45going rationing unfortunately

9:47antiquarian ISM is now very relevant

9:49directly coming up and we’re back in the

9:52old younger the old business it’s one of

9:56the interesting things about studying

9:57history by the way is if you see the

9:59same old junk of going on 100 years ago

10:0120 years ago the thousand years ago I

10:03was going on now and if I say the cooks

10:06you to deal with it get a sense

10:07perspective any rate the serious price

10:13controls it’s fairly clear and fairly

10:15and fairly simple and as a father I know

10:17it’s not really contested by anybody

10:19even even the economists so don’t say

10:21anything or favorite bicycles and come

10:23in basically going out a figure five we

10:28have our supply demand curve

10:30products spices my y-axis the quantity

10:34purchase and the x-axis this falling

10:38demand curve and the rising supply Perot

10:41or could be a vertical supply lines

10:42within the short-run equilibrium point

10:45of intersection with Liam price as you

10:48remember we have this as a favorite

10:50feedback arrangement a built-in feedback

10:51arrangement and the more on the

10:53pre-market so that any temporary

10:55shortages Eliminator the price rises and

10:57any temporary surpluses eliminated very

10:59quickly to the by school so the

11:01equilibrium free market level where the

11:04man is equal with supply or the market

11:06is cleared so then what happens if some

11:08outside agency mainly the government

11:11there’s really no other it’s possibly

11:14done voluntarily by businesses those

11:17very unlikely

11:19an outside agency using coercion namely

11:22the government that’s in the prevents

11:24this process from working nowhere

11:26preventively markets are leaching the

11:28equilibrium acquaintance well let’s take

11:31a lately above market price say that we

11:38have a price above the market the

11:41government says thou shall not sell

11:43below X amount and the thing is if you

11:46think this is rare doesn’t result in a

11:47minute so the government says it forces

11:51a minimum price floor minimum height

11:53control above the was immolates above

11:58them free market price below the same

12:00artifice somebody it doesn’t matter in

12:01other words if somebody says the

12:05government passes immediate saying thou

12:07shalt not the General Motors thou shall

12:08not sell Cadillacs for less than $500

12:11new Cadillac’s is not going to it’s not

12:13gonna make an imprint on the market

12:14release of a dead letter rule it’s on

12:17the episode so the only relevant

12:20edict is minimum price controls above

12:22the market then these is on pointing on

12:24issuing the other one so we have a

12:25minimum price until above the market you

12:27have a long a line at our bottom line

12:29loves equilibrium price what happened

12:31is that that minimum price the public

12:35only by this much

12:38after the a after point a and lead but

12:44being pouring out a marketing and the

12:47sponsors right those high prices a

12:48amount being you see much greater we now

12:52have a unsold surplus the gap between a

12:55and B which show which the market

12:57doesn’t let see the agent black market

13:00illegal activities is little olive rare

13:02with a for minimum price the governor is

13:07now by a strike warships which is

13:08preventing this natural equilibrium

13:11process with these correlating processes

13:12taking place

13:13so what your hands an is a situation of

13:15a permanent unsold foot plus you’re

13:18sitting there and with a government

13:19saying okay thou shalt not sell widgets

13:21for below $10 a cater option else else

13:23we beans from below X dollars of which

13:25or whatever so what happens that is

13:28really have a unsold service which

13:30somehow since they’re aggravating the

13:32situation something has to be done about

13:33it

13:36the most famous example of the unsold

13:40surplus following unofficially the

13:43theory that we’re getting to that

13:44so that’s so in other words the minimum

13:46price control lanes of that a permanent

13:48aggravated chronic miserable unsold

13:52search box

13:52oh I haven’t when the prices sets the

13:56lower the free market price and we have

13:58a maximum price control

14:00below the free market again a maximum

14:03type in home of the three mortifies

14:05would be meaningless so in this

14:08situation when the price is when the

14:09price is set below the screen market

14:11price a government saying thou shalt not

14:13sell a delightful more than five hundred

14:15dollars and it sounds like then you have

14:17some trouble alright and the opposite

14:19kind of humble then three markers

14:21against prevented from reaching the

14:24erbium point meet some clearing the

14:26market including the manor supply now we

14:29have a permanent until a permanent

14:31shortage permanent excess the man

14:33oversupply we have the man grain being

14:36criminally greater than supplied the

14:38case of maximum price control ISM supply

14:41permanently greater than the man in

14:42cases minimum I

14:44we have those a chronic miserable

14:47permanent shorter people clamoring to

14:50get Cadillacs the government says how

14:52much and our final and all you can’t

14:53tell them for more than that where are

14:55they well I want my candle light I want

14:57the final account ain’t god I’m sorry

14:59not there today so we’re so on there’s a

15:01sudden disappearance at alike so price

15:05is a nice and cheap but you can’t find

15:06anything to buy this cutter a go cheap

15:08flight and we’ll see what happens with

15:11that and then you have this chronic

15:14shortage problem okay this the minimum

15:21for the famous example of permanent

15:22minimum price control which apparently

15:24is just this year going to be eliminated

15:27I don’t really believe it now I believe

15:29in like seeing that that way famous

15:32cases League there’s also cases minimum

15:34wage ball but we’ll get salaciously a

15:36little later it’s very similar the

15:40famous cases of course the the for the

15:42Americans our other plan programs upon

15:45Pike support program the palm flight

15:49support program began while her

15:52collaboratively stories is is socially

15:58really a world war one variable and

16:01before i doing World War one

16:03the American former how the biggest

16:04Bonanza in his history because he’s in a

16:07situation where European countries were

16:09blockading each other and then they were

16:12war with each other didn’t they didn’t

16:13buy from each other

16:14the real European countries turned to an

16:16American performative other wheat in the

16:18cotton so forth it was an enormous

16:19increased demand for American

16:21agriculture so the American farmers I

16:23have the biggest to say the biggest

16:25sometimes biggest blooming part of life

16:27in the period and since then of course

16:30when the World War one was over I was

16:32knowing the European country sawdust

16:34coming from trading with each other

16:35again on the farm fight and collapse the

16:37big the big farm bonanza was over so

16:40ever since then ever since 1919 the

16:42American farmer has been trying to force

16:44the rest of us to go back to the good ol

16:46days which is called parity the nice

16:48name for it the back has a good old

16:50laser with and he has the same price

16:53relationship no what’s wrong title is

16:55the same

16:56Oshin in relationship to other sites

16:58with non-farm prices they were on the

16:59middle-aged Mikey 14 and of course this

17:03is a certain idiotic demand because of

17:05economic conditions are not the same as

17:07they were then you don’t have a peculiar

17:09wartime boom in also the chronic

17:11situation with farms in general is

17:13obviously part of the world 1718 I

17:16almost everybody was a former neither

17:18everybody was a former the selling farm

17:20product we had 95 percent of the

17:23population is former then of the world

17:25progresses and the industry comes in and

17:27services come in or rest of it people

17:30leave the farm and y’all go to the big

17:32city spend the city

17:33do other things and and so yeah you know

17:36we now have a situation we’re quite four

17:38set of Americans a former something like

17:391% well I mean I suppose I suppose an

17:42expense it’s too bad if you’re if you’re

17:43an agricultural romantic which I’m not

17:46so if you’re I guess automatically get

17:48upon for the good old lazily you know

17:49the old days will illumine the city

17:51Illman that’s I mean you know you know

17:54you willing to pay the price to this

17:56place largely being smashing always with

17:59the productions been going on 150 years

18:01and going back to a production condition

18:03of your farm where I’m afraid most of

18:06the public would die out we can’t we now

18:09gear to a population the population and

18:12assisted in our economic level a

18:14standard of living is geared to a highly

18:16industrialized world another world the

18:18old dirty yeoman farmer so the farmers

18:20tend to die at now what usually happens

18:23is not so much of the old red you know

18:26leave the farm at the age of 60 it

18:28settings and the order is coming up

18:29throwing up leave the farm and go to the

18:31big city a usual process by which labor

18:34migration takes place so you can’t

18:37freeze this you can’t say we got to have

18:38as many farmers we had 1910 and all the

18:41rest of it however this is this is the

18:44farmers great green to restore the world

18:45with old major parity apparently 1928

18:49Herbert Hoover one of most disastrous

18:51more president was elected and pledges

18:54to an act of farm block program we’re

18:56going to form price support he promptly

18:58did important thing here is it was an

19:00accident before the depression most its

19:02throwing it gives a little blur they

19:03tend to think of the farm price support

19:05program of the spa

19:06the Great Depression wasn’t with an

19:08accident in March or February 29 early

19:11April and the impression came in October

19:13so I was not hinted that means this was

19:16a boom but the active form is one of

19:18their they want to do it a bit middle

19:20day so we have a farm price supports

19:24Hoover’s start off especially in wheat

19:26and cotton we divide them a big big one

19:28and talking to that has the most

19:31political clout and so the government

19:37the federal government established grain

19:38stabilization corporations and other

19:40things is headed by the federal farm

19:41board established a federal forum board

19:44to buy up leading cotton and people off

19:46the market you know increasing the man

19:48curve artificial easily Occam’s razor

19:50spike right that’s the theory laser the

19:54man curve

19:54well what happened there was resumed

19:56leader the desired level on the parity

19:58level while they found out there’s a

20:00problem

20:00miss Melly who was who has made who was

20:03responsible for the farm loss program

20:06pump I support Boreanaz model ever sent

20:09two groups at the beginning as a third

20:11group I plug it back one of the large

20:13farmers I want to I’ll go back to that

20:15in a minute because with small farmers

20:16the thing is always I’ve pushed reforms

20:19programs and pushes it have to help out

20:22the chorus farmers performance is

20:23suffering there in iOS a helper map

20:25actually a poor farmer that nothing to

20:27do this program gets very little out of

20:28it

20:28if the large farmers get one out of it

20:32number one and number two the farm

20:35equipment manufacturers the

20:37manufacturers of combined tractors nor

20:40less of it who is receiving will see why

20:43they get there especially subsidizes of

20:44exercising large farmer and the

20:47beginning the origins of the farm block

20:49the farm block program farm price report

20:51begins in 1921 with George peak and

20:55general a huge onsen both of whom were

20:56channel aboard and president of the

20:58Moline cloud company the second biggest

21:00farm equipment manufacturer and then

21:03head of the first head of the federal

21:04farm board 1929 was Alexander lucky who

21:07was a camera the board of the

21:08International Harvester which is the

21:10major farm equipment made nitrate so

21:12it’s before my equipment manufacturer

21:14that usually don’t get talked about it

21:16Plus collage farmers get back to that

21:18anyway so they buy they redo the main

21:20critical weakened continent buying up

21:22like man but something is a problem here

21:24the problem is the market being fairly

21:26intelligent realizes there’s they’re

21:28sitting there the photo perform Boris it

21:30American women tonight a weakened cotton

21:32they’re scared they might sell it

21:33someday animal market will collapses it

21:36sort of them oklet’s is hanging over the

21:38cotton wheat market as a result nothing

21:40ever happened the pipes kept schooling

21:41and then the depression comes if I kept

21:42going even more so that didn’t work it

21:48began to growing and we’re going to fund

21:51them and on the palm block there’s only

21:53one way in which they can government can

21:55raise the prices but they gotta buy

21:57those wheat and cotton up and so forth

21:58and keep it somewhere off the market and

22:01they have to start doing something about

22:03restricting production in other words

22:05some of the unsold surplus is piling up

22:08which they realize it’s piling up we got

22:11to do something to cut production cut

22:12off supply for at a later point a while

22:16they’ve been trying out for long timers

22:17Center hasn’t really worked since they

22:20try the guess what

22:21voluntary method this is a typical

22:24Herbert Hoover flim-flam Herbert Hoover

22:26specializes doing things which are

22:28really coercive and on the guise of

22:29being voluntary so he sends people at

22:32respondent secretary agriculture

22:34separate country telling all farmers

22:36look here’s a situation he didn’t use

22:38these turns up essentially a so you got

22:39an inelastic demand curve for week I

22:42mean the manager for each each formula

22:44is almost horizontal but so weed in

22:46general is inelastic but you all you

22:48guys get to get on cut production by ten

22:49percent of twenty percent or whatever

22:51and sorta every fourth peg and that sort

22:54of stuff you will raise the price and or

22:56you’ll benefit you’ll have you share a

22:58much higher income in other words a

23:00classic cartel situation will get the

23:03cartels later – there anyways obvious

23:05how that happened we tell you there’s

23:07something in country telling it will

23:08reform is saying yeah yeah great right I

23:10shall we understand this a little puff

23:12it up to my twenty percent and then you

23:15see what would happen is a foreign oil

23:16Israel go back a little back home after

23:19this meeting if they hey moron those are

23:22those for cutting punch it by putting

23:25let’s double our production take

23:26advantage of a higher price so what was

23:29hit so right other drugs throughout

23:32they’re cutting their production and

23:33causing the pipes of leader cotton go up

23:35we’re going to double our you know how

23:36to play take advantage of so each farmer

23:39for the same way and result was a

23:40collapse of a voluntary program

23:42production went up instead of down so

23:46and then they thought of the by the end

23:48of the Hoover administration in the form

23:49holiday movement thought advance

23:52I’m save on vigilante activity that are

23:55trying to look like burn the tobacco

23:57nightriders in tobacco country going

23:59around burning in the back of those keep

24:00those farmers who refusing along with

24:02with tobacco cutting and they dump the

24:05milk didn’t did they do that it just two

24:07years ago so milk striker they don’t

24:09follow people’s milk other words of

24:10cyber violence the private criminality

24:13as opposed to the usual government

24:15criminality and that didn’t work either

24:17it’s a big country and then there’s a

24:18lot of farmers a lot of smother back on

24:20a lot of milk so that didn’t work

24:22so there’s only one thing left I was the

24:23parent of the government it sorts of

24:25formats or cut production so enter the

24:27New Deal by this time Roosevelt under

24:29the picture but the thing is by that

24:31time a mover administration is going to

24:32go along with us it was not the Hoover

24:35people it was sort of at the logical

24:36step the next module of voluntarism goes

24:39in working at the parent of course so if

24:41FDR wasn’t very willing to turn to

24:43coercion and we have a nexus a Phase two

24:45of the program the AAA cultural Minister

24:48administration headed up by essentially

24:51by farm equipment manufacturers Eagle

24:54that sort the farm block in general and

24:56so they say they time introduce those

25:00six classes were piling up there’s

25:01always a big problem is it put them off

25:03an embarrassment right here’s the

25:05depression people are starving the city

25:07and out there on the farm the

25:08government’s plan on warehouses piling

25:10up all this people with hogs and pork

25:13and wheat and cotton that’s going up

25:15it’s running away and what do you do it

25:17it looks bad and so they see the fact

25:21that it’s in the extreme west me

25:24correctly coined the term poverty in

25:25this aplenty mica he has all the

25:27government piling over all the sweet

25:30incontinent

25:31all that stuff that’s not being used and

25:33here’s people in cities are starving

25:34it’s something wrong with assistant well

25:36you don’t like there’s something wrong

25:37with this and they’re looking capitalism

25:38it was the government obviously so so

25:43then they well the next that was with an

25:44easy source of controls on production

25:46limit production well the thing is they

25:48couldn’t exactly there’s too many

25:49parties it couldn’t say okay from now on

25:52there’s only a certain number of bushels

25:53that we can be producing you using you

25:55produced in 1% of that it couldn’t they

25:58couldn’t introduce production controls

25:59in a letter because we didn’t have a

26:01manpower to enforce it I mean how can

26:03you control honey which is a week or

26:05whether is producing almost impossible

26:07you have a vast 10 million Mangus stop

26:09both going to each farm and checking out

26:11so the only practical ways in which they

26:15could do it was composed a create

26:17control there’s a VG’s of a County

26:18Agricultural agent around on the car and

26:20see how many acres ol Ezra has under the

26:23plow how makers of the vote of the wheat

26:25know makers will follow all that so the

26:28New Deal imposes they create control

26:29which we still have i well I’d be going

26:31to happen to this year imposes a pH

26:35control and it’s it’s back okay now

26:38we’re going to this is in a limited you

26:41know going to push the supply curve over

26:42to point a and we can be happy copies

26:44and it put in this program this sort of

26:48program consumer is the average American

26:50summers to way one except residually all

26:53of Susan’s kept local markets the wheat

26:55in the continent and the meat so forth

26:58couple of the market he suffers from the

26:59restriction of supply and a price goes

27:01up these servers as a consumer and then

27:04each other’s taxpayers actually have to

27:05pay for the fees to pay the government

27:06taxes in order to pay for them get the

27:09money to buy their wheat in the cotton

27:10and the meat each store somewhere have a

27:12right so it’s a double it’s a double

27:14burden on the average America so who who

27:18who suffers most for only averaging

27:20market who benefited from it well

27:22precisely the smaller farmers who always

27:25important held up as about this year

27:27didn’t really benefit one of those it’s

27:30really the subsidy government pay was

27:32propounded per bushel so if you had to

27:35really be a large weak form or a large

27:36continent former planners are really

27:38benefit from this and as a matter of

27:41fact the HOH control coming in

27:44and limiting eight-acre is now putting

27:46our number later as a former can have

27:48under cultivation the result of that was

27:50what are the farmers do all over those

27:52partners very shrewd okay I have a

27:55thousand acres and the making me cut out

27:56two hundred he wanted to do I’ll pick

27:59the 200 acres of rocky lam it doesn’t do

28:01anything anyway how to say oh my access

28:03on the best landed but the 800 and

28:05mechanize and put in more fertilizer and

28:07butter and then ladies production anyone

28:09which is what they did so they cut out

28:11the land and they raise production on

28:13the they went out with more production

28:15they had before so classics got piling

28:17up this was instantly help us by the

28:20federal government he was interesting an

28:22interesting example political clients at

28:24work the Department of Agriculture

28:27paying farmers not to grow wheat and

28:31paying them handsomely to take the week

28:34and put it on a story so still we’re

28:39happy hey I’m not to grow wheat the same

28:42time another wing of it upon agriculture

28:43down the whole paying farmers a lot of

28:45money you that fertilizers the

28:47mechanized as our irrigation the dry

28:50land and so they can provide more a week

28:51now you might consider this is

28:53irrational you looked at some point you

28:55lookin humor as important to a pure

28:57logic if they’re rational why is it upon

28:59my or how it’s done in one hand paying

29:00the farmer to grow more weak doesn’t

29:01have hangers or rustled Leslie he’s

29:03pretty crazy right that’s not crazy I

29:06wasn’t want of you with two groups of

29:07people one way bureaucrat for the power

29:09of agriculture they are doing right you

29:11need two divisions with no divisions

29:13before and secondly it’s also crazy

29:16somebody with plumber he’s raking in and

29:18getting paper more wheat unless week so

29:22the former Harvard benefits is really

29:24large former but it was as a smooth as

29:26the foremost contracted the acreage and

29:28mechanized they kicked off our land the

29:31sharecroppers the performers of tenant

29:34farmers were who were now become seen a

29:39stumbling block obstacle in its right to

29:42concentrate and mechanoid so we have

29:45that as an earth the result of this is

29:47the famous sharecropping problem with

29:49South pickling negro sharecroppers knew

29:51your attendance in the south as is over

29:53between enormous immigration of negro

29:55southern Negro

29:56copper’s who now unemployed this employ

29:58kicked off the land becoming north of

30:01the city so a large part of the famous

30:03legal migration of the thirties is

30:05directly caused by the New Deal farm

30:08program suppose it’s supposed to benefit

30:10the small farmers actually did this the

30:11reverse well eventually as we get to the

30:17fifties the point where the former’s

30:20they don’t leave okay we take the land

30:21now as we need cotton will put into

30:22something else another soybean lettuce

30:24whatever happens would be corn as they

30:27do that but supply curve let us corn

30:29soybeans increases the fight school

30:32another headache where we knew about a

30:33soybean bikes going down so then the

30:36iodine administration we had a brilliant

30:37idea the so called soil bank the Greeks

30:40praise a sort of art had wings with

30:41twisting in alright and the policy would

30:46shoes thank you learn men was the

30:48government was paying the farmers like

30:49take the land on it we didn’t keep it

30:51out of anything don’t grow anything on

30:52it call this a little bit so that’s what

30:55they did they got paid for not producing

30:58week that paid for operates in cotton

31:00and so forth the senator each one for

31:02many years as a large cotton planter

31:04Mississippi

31:06week two handsome fortune out of a

31:08horrified farm quite hunting flight

31:10support program which uses from Medellin

31:12keeping on the books so one another

31:16group of people infinitely yeah I

31:18mentioned the form of Quitman

31:19manufacturers and large cotton early

31:20formers now that we’re very interested

31:22in leave the Pecha waiting upon pipe

31:24supports both program as loop which is

31:26not usually mentioned of another

31:28warehouse operators the cumin settle

31:30with wheat and cotton I don’t know what

31:32to do with

31:32they nationally they rented from private

31:35warehouses we speak of guarantee the man

31:38I mean they’re forever so if you’re

31:41right if your warehouse operator you’re

31:42in great shape ever things I’ve been

31:44always using always renting out your

31:45space and so the warehouse operator the

31:48grain elevator men on the case of wheat

31:49uh or one of the big lobbyists for the

31:5115 uniformed part program well I like

31:57saying well the result of the supports

31:59the Keith farm prices up and when we had

32:01Lee the 1971 the phases coming and the

32:05plugin tyson court program we had an

32:07interesting situation but farm prices

32:10food prices were both on the minimum and

32:13on the maximum price control the what

32:16happened was that what he was praised

32:18one came is remember everything was

32:19frozen but that of course the one

32:22approved prices on the on the formal

32:25exempt processed food by foreign argue

32:27and not exempt from the free which has a

32:29situation where we’re food prices on the

32:31farm which is poor totally psycho stank

32:33allowed to keep going up contest food

32:36prices are frozen and of course you see

32:37what I mean I can see what’s going to

32:38happen very quickly to processed food as

32:40I saw disappearing so this was a lot

32:45that lets us be basically the farm price

32:49support program and the one of the

32:50results of this and this ties and a lot

32:53of other stuff is the was the famous we

32:58feel with Soviet Russia wheat here which

33:02is one of the big things gave a great

33:04impetus of the current 1973 food price

33:07room who price inflation or call it the

33:11we do is consummated the summer of 1972

33:13and I say sold the Soviet Union

33:15I put Solon quotes so Rizzoli in four

33:18hundred fourteen hundred and forty

33:20million bushels a week many is thirty

33:22percent of the average annual wheat crop

33:25almost one-third well this one she

33:29doesn’t have the money to pay for this

33:31was Italy the other US taxpayer kicked

33:33in seven hundred fifty million dollars

33:34in place of it listen Ellie is a typical

33:37foreign aid

33:38hehehe the essence of the foreign aid

33:40program this is a funny program zmr

33:43American taxpayer hey gets to talk a lot

33:46of money the money goes to the American

33:47government our government takes out a

33:48handling charge for operating the

33:51program your class salaries hey shift

33:54some money to some foreign government a

33:56foreign government that takes Fargo I’m

33:58gonna take some money and uses a

34:02non-american export product either one

34:04of these or computers or wheat or

34:06whatever cotton or whatever there’s

34:08other this and they take out their

34:09handling charge the foreign government

34:11result of all this process is the

34:14American taxpayer has subsidized the

34:16American export industry with

34:20why sure Cropsey learn and learn away

34:22for their handling courses the American

34:24government on foreign government so this

34:26is what happens here the taxpayer pays

34:32to this process beginning of this of

34:36course kicks off enormous increase in

34:37types of weeks those slides box by

34:40one-third and it is also an enormous

34:43increase after that if I the livestock

34:45that livestock eat the week is a part of

34:47the feed grain so those the restrictions

34:49applied for livestock those purchases

34:51the left and farmers start killing a

34:53little cattle as a very young age and so

34:55it’s stopping getting rid of them

34:55there’s always hope processes it was a

34:57big food price boom there are other

35:00causes of it but that was a major one in

35:0273 so the thing is the reason why we did

35:05a program to begin with is undoubtedly

35:06this took the weeks to process of piling

35:08up and blow boy because you have these

35:11surpluses I say they’re an embarrassment

35:12and so the American the American

35:14government’s attitude hoster focus all

35:16the time since 1933 is this let’s get

35:18rid of some way how do we get rid of

35:20more dumping give it away or sell forget

35:23the taxpayers what anything that gets

35:24get the stuff war for warehouse and get

35:27the wearing out and other more wheat

35:29into the warehouse there are other

35:33causes of the food high school that was

35:36basically I think the major one there

35:38was the other SAE a sort of temporary

35:43things as a shot decline in the Peruvian

35:46fishermen reductions it’s not the same

35:48on the anchovies left the Peruvian coast

35:50on Furies is everything all I know it’s

35:53figured out and so far that’s also cause

35:55is often animal feed there was a that

35:58was the basic also another one is

35:59something to get to later the full of

36:02the value of the dollar the famous

36:03devaluation of the dollar in the foreign

36:05exchange market leading American exports

36:08becoming cheaper and therefore

36:09stimulating exports and all sorts of

36:11stuff including wheat well okay

36:24that’s a sort of that’s the sort of the

36:26minimum price control program that is

36:29also the maximum price control program

36:31which is more beloved you know are there

36:32is a lot of minimum prices all here and

36:34there but the nice one price control

36:36programs of when you really go all out

36:40you say what it sets up is a shortage

36:42and the certainly several reaction is

36:44sure first like the man is ready to

36:46supply means the let’s say the shortage

36:48how do you allocate or whatever shortage

36:50is available whatever the scarce supply

36:54of big avail well the various ways of

36:56allocating usually in the three markets

36:57allocate about a price system either

36:59other ways to allocate it feels less

37:01produced now or even less than there was

37:03romance various ways come up and doing

37:07oneness there’s favoritism classic

37:11method during World War Two and the pea

37:13channel becomes very relevant when we

37:15had meat rationing there’s a big meat

37:17shortage always a big eat yours you’re

37:19always laying on the war effort and

37:20people swallow this and totally war was

37:22over and still meet shortage then you’re

37:24going to get edgy so there’s a busy the

37:28hiking trails on meat was way below

37:30equilibrium market price and so uh

37:35favouritism is one way of allocating

37:37other words example during a war during

37:40World War two if you were the old he had

37:43only labor hood butcher looking courses

37:45before days of the impersonal

37:45supermarket he had neighborhood butchers

37:48you know labor hood butchering newly

37:50overrated neighborhood butchers meals a

37:52you know good customers then he racially

37:54allowed you under the counter the hot

37:56meat those figures I got a lease down

37:59here don’t show anybody and for you this

38:01is so install you know me

38:03let’s tell you than me so that’s one way

38:05favorite cousin because you had a

38:08butcher if you had a button but your was

38:09a brother-in-law so better and an

38:11unlimited meat supply get all over that

38:14was has fires in the butcher of business

38:17and so forth so that was the favoritism

38:21is one classic method of allocating

38:24scarce we go and incidentally one of the

38:26one of the consequences of price control

38:28we’ll see later we get the rent control

38:30also follows while the consequences of

38:33this is racial religious discrimination

38:35is aggravated by pricing

38:37so because which is it which is doing

38:39here instead of the consumer being king

38:42so instead of the seller supplier

38:44quoting the consumer advertising market

38:47research or less of a now seeing you

38:49have a permanent shortage due to the

38:50price control now that fella is in the

38:53driver’s seat and the consumer so

38:55begging to the seller please sell me

38:56some meat and so forth as many as people

38:59the people who sell on the drivers he

39:00doesn’t have to court the consumer any

39:01more against public consumer to our

39:02house and then in his favoritism will

39:04come in ok I’ll only sell me one to my

39:07relatives

39:07- to the racial religious Google Michael

39:09mind and favor up because now he can

39:11allocate so a room for producer control

39:14situation out comes into the picture so

39:17favoritism is a big one way of rationing

39:20other way is queuing up of a classic

39:23method lining up the line comes into the

39:28picture and we’ll see labs rationing

39:30come via loveable line process syndrome

39:33in line up all right the the during

39:36World War two for example of a cigarette

39:37rationing the cigarette showed up I

39:39think every Tuesday morning something

39:41like that everybody was allocated only

39:43one packs in person or whatever any

39:45right the long formula around will block

39:48around 4:00 in the morning and then the

39:50by 8 in the morning or something and if

39:52you happen to be 1/3 of the line or ever

39:54you just to get by clear it so easy rate

39:57attitute of the line comes into the

39:59picture

39:59one way of ration well I mean so the

40:02first guy of get to that why Oklahoma

40:04patients so oily energy has a Sam enough

40:07the stay there all night by the need or

40:10by the gasoline or hand the other people

40:12are out of luck the little lady has

40:13passed the humble upper somebody’s on

40:16the night shift it was in great shape

40:17but others lose out the low lady who has

40:21come can’t stand up for a long time that

40:23can’t buy anything on the stock the

40:25little lady has had it so what you have

40:27is a different allocation of instead of

40:29allocating my monetary demand you know

40:31allocate by whoever if you can get a

40:32little head of the line first there are

40:35processes the Neo Lay’s example

40:40Metropolitan Opera I used to have keep

40:42their various reasons both I think

40:45[Music]

40:46internal and and/or legal ordinance

40:49would eat the cake there

40:50places a ticket way below free market

40:52price this is almost impossible to get a

40:54ticket

40:55and love these things out there’s a

40:56person this audience tonight who used to

40:58send one with Saturday night online we

41:01need for the you know the off so both

41:03you get the Adam Paulin ticket this sort

41:06of phenomena this is no longer true

41:07because now I guess the price has been

41:08up to up to more less between market

41:11level for this sort of service – almost

41:14lining up queuing up as always there’s

41:17always a phenomenon always an attribute

41:18of government activity government of

41:22pricing control it comes with pictures

41:24of form of rationing our case well

41:28favoritism also comes in by the way

41:30allocation who didn’t get this the

41:32government rationing comes into the

41:33picture he’s a hooligan afar is going to

41:35get it we’ll get back to that government

41:37favoritism another process is a hidden

41:41well I just a decline in quality because

41:48the coin in quality and very very

41:49different on the police it’s not too

41:51difficult police in price you know you

41:53give the OPA you over PA or the current

41:55IRS which sources a grocery store the

41:59supermarket’s to put the posted price

42:00the type of legislation but check up on

42:03quality an extremely difficult task you

42:05can be a multi-million man Gestapo of

42:07experts in the field then you have to

42:09have a super gustaba to check up on the

42:11expert on being bribed the fantastic any

42:14we know the implication that had for

42:16example when a phase one came on the p1

42:20with the payments freeze everything was

42:21closing closes was a three month and if

42:24nothing that was the change will be

42:25they’re sitting on a Reaper well the

42:28first thing to happen first people

42:29embrace Lee the trees I was by my

42:34decline in quality or the heroic

42:36ice-cream manufacturers New York City I

42:38set my hat two of them they I am I think

42:42that will have to be a fan of caramel

42:44almond crunch ice cream there are two

42:46brands which are named the conspicuous

42:49random cementing to make them in both

42:51cases about a month after they face

42:53freeze came into the picture and I

42:55quality can be adjusted but suddenly it

42:57wasn’t any almond omits como lo encontre

42:58today

42:59glioma there I want on them to court

43:02satisfy our technical requirements the

43:05almonds have photos disappeared now

43:07who’s going to check how you have a good

43:08stop out checking up on them

43:09how many almonds you got there leave a

43:13candy bars we’re going to have more air

43:14in them you know those of your penny bar

43:17plans

43:17where’s what you know we were whatever

43:20leave you ruthless where is it so we

43:23it’s ugly that over the size of the

43:27product horse bottom began to appear in

43:29various lotion bottles and things of

43:31that sort so if a new improved lotion

43:33bottle that turns out less ounces

43:35because the premises under the as a

43:38fourth bottle so all I saw then another

43:41another group of broke book freezes

43:43heroic impairment of New York the

43:45dangers of the repairman we began to

43:48find for example the landlord’s are

43:50called painters in for paint a room the

43:52painters would charge much more comfort

43:54when 27:37 more they didn’t in July

43:57before the freeze and said hey you can’t

43:59do this is a little price freeze and the

44:02painters are here sure but this is a

44:03different this is a different room

44:04because a plaster was over the premise

44:06and the thing is that it’s much tougher

44:08so it’s a different quality job who can

44:11check out Bob how do you know where them

44:13you have to be expert painter I’m going

44:14to figure out what the plaster is really

44:16over the premise of your expert opinion

44:17you’re in the painters Union you’re

44:19you’re talking to the public so and the

44:23heroical camera a TV and radio repair

44:25men

44:26it takes a TV or radio to repair be

44:28repair they say they charge your young

44:30considerably more than before the frizzy

44:32say hey wait a minute this was free at

44:33the yeah but this time a condenser is

44:35wrapped around those of those per tube

44:37length of work so it’s a much tougher

44:39job but it’s different and all that and

44:41so and this way the service industry

44:45pioneered and breaking the price freeze

44:48who is the crimes and quality I think

44:52almost impossible to enforce it I think

44:54began to have a sort of situation with

44:56the relationships begin to change from

45:00the so called freeze setup

45:04and also quietly sources of black market

45:08white market is lean market with the

45:11market popping up again it’s a hot

45:14that’s the hot meat it’s but when you

45:16say well as those those are meat

45:19shortage you can’t find any question you

45:21know but you’re willing to pay separate

45:22you know certainly more than telling

45:24anybody here’s a meat so the black

45:26market shows up now thing about the

45:29blight with several things about a black

45:31market

45:31even the lumber boards but is first of

45:36all is not other the sort of people who

45:38engage in black Mari the black market

45:40entrepreneurs and not the same people as

45:41with same walking the preneur because

45:43they’re more that people are more attune

45:44the illegal activity and so the quality

45:49of product has to be a little little

45:50shaky sometimes you can’t really be sure

45:53you are willing on the brand name second

45:58of all I can’t they can’t advertise they

45:59can’t take a full-page app and the times

46:01they talk meet available so they have to

46:06they have to go some sort of shady

46:07challenging because quarterly in the

46:09consumer camp finance yes me sort of

46:11personally knows where the hot items are

46:13located you know most most of the public

46:16that don’t know this they’re sort of

46:17exclusive from the black market second

46:19thirdly there’s a heavy cost involved

46:22not only because there’s no advertising

46:23a little because have to pay off a cop

46:25and payment of the cops ads on the cuts

46:28the supply or even with by see how you

46:30wind up with something like this it take

46:33a vertical line up from me from the

46:35intersection point of the maximum price

46:38into a boy nemesis to me they point C

46:42and the supply curve and revert the line

46:45up from it you see more or less of the

46:47black market price will be hit mister

46:49demand curve of the black market price

46:50so the black market prices could

46:52certainly higher than a free market

46:54price and again so the public is misled

46:56and they and say well it’s you can’t as

46:58we can’t eliminate price control because

47:00only then the item will go all the way

47:03up with skyrocket what wouldn’t

47:04skyrocket that much because the bike

47:06market price so these these various

47:07reasons is considerably higher than the

47:09free market price

47:12all right so you have the black Morgan I

47:14say buying market only is really

47:15patronized that people know about these

47:16things of it so it cuts down a lot of

47:18the public the consider black market

47:25activity during World War two is

47:26patriotic the war effort was and so that

47:34it wasn’t the illegal illegal activity

47:37going on one of the things that happens

47:39when you have well the way of price

47:44controls finally eliminated World War

47:45two at all and had annoying hundreds of

47:47thousands low P eight people and forth

47:49in stocks or ten price control even our

47:52beloved president began got it started

47:54life as a as an entire rationing

47:57division of general PA might be certain

48:01symbolism there honey right the so there

48:06are hundreds of thousands of people

48:07working and saying enforcing the

48:08regulations so forth even so those I’d

48:12say there were lots of black markets and

48:14after the war was over their lemonade

48:16some of the price controls with the

48:17because because the timer went off to

48:19the shortages Superman is the way

48:21couldn’t blame on the world well

48:23particularly a meat shortage big beef

48:25shortage that was this year for short

48:28time but big insurance and it’s just

48:30impossible finally one of the things I

48:33should mention here price controls and

48:35jump before I get to that is it usually

48:37price controls for that equilibrium

48:39point the idea is well prices are going

48:41up too much it’s a freeze them as they

48:43are this is what having always 1571 you

48:46please heart free spike well the thing

48:48what happens is the next day when people

48:50wake up on August 16th seems like

48:52nothing has changed is no problem those

48:54shortages or you guys are alarmist

48:55because the next day the equilibrium

48:59price on August 16th is not much

49:00different than it was equilibrium price

49:01almost 50 so for a real while for short

49:04period of time it looks as if the

49:06pricing clothes are working he probably

49:07has a mistaken sense of euphoria I don’t

49:11then what begins to happen is as if as

49:13the time goes on as an increasing

49:16discrepancy between the official price

49:18of fixed price control and a free market

49:20price which keeps changing

49:23can either go up or go down you

49:24inflation area very important free

49:27market price keeps going up because the

49:29demand curve keeps going up as as more

49:34money as imported as a system by the

49:36government and so you have a sort of a

49:37secular increase in demand curve and as

49:42a demand curve keeps going up over time

49:43the shortage starts developing s worse

49:46and worse it means that after the price

49:48control ISM is in action for a few weeks

49:50a few months a year or something the

49:52whole thing is before for more more

49:54shortages all more black markets in

49:56other words the more the more the price

49:58control continues enforced the worse

50:00things get so by in the world war 2 the

50:03publican had it and it slightly excuses

50:05the war is now over

50:07and so by 1946 Lee there’s a fantastic

50:10meat shortages meat was couldn’t could

50:13not be found at the point where and

50:15someone looking the brown for diabetics

50:17and so forth so President Truman the

50:21clamor came out with eliminate price

50:24controls blue meanie info and I know an

50:27enormous hysteria came up for example

50:30the New York Post I remember very

50:31vividly I for those who not New Yorkers

50:35a highly liberal paper was hysterical by

50:39you must not repeal OPA if you repeal

50:41OPA prices will quadruple quintuple you

50:45know go up two hundred fold with

50:46separate as a fantastic fear of freedom

50:48developed what happened can’t can’t

50:50eliminate prices girl it’s part of the

50:52American heritage and then Isis was the

50:54gouging gouging the entrepreneurs with

50:57charged incident prices and so forth

50:59even though this local disc jockey is

51:02upon relate Martin block early payment

51:05of disc jockey this period was never

51:06involved in politics at all suddenly

51:09came on the air I remember this vividly

51:11personally and pleaded everybody to Mike

51:14letters he of Congress going to keep OPA

51:16because otherwise prices go through the

51:18roof

51:18the even this jockeys are becoming a

51:20political pundit get on Mike pundits

51:22at the time well so Truman was faces the

51:24following choice which is this is a

51:26choice Italian TV reporter his public he

51:31said well there was no need to be found

51:34what he gonna do about it well he said

51:36he would say to this short with a choice

51:37of

51:38mobilizing the National Guard grassing

51:41and sending the truth coin that scoops

51:42out and nationalizing the meat industry

51:43going out into the farm instead of a

51:46sort of confiscating all of the eat

51:50Packers you know though it would have

51:52been easy but admittedly he couldn’t

51:54that wouldn’t make much point with a

51:55meat packer and how many meat either and

51:57Swift enormous other than animal meat

51:59they couldn’t nationalize them they said

52:02well I would have had to go mobilize the

52:03troops and nationalize all the farms go

52:05out there in national nationalize the

52:07ranches and livestock farms and drag the

52:09cattle out he said he gave serious

52:12thoughts of this and so Wow he figured

52:16was impractical fortunately for the

52:20American public fortunately for freedom

52:21was election year 1946 congressional

52:24election year the Democrats are in grave

52:25trouble the imagine what will happen on

52:27the farm rope

52:28it’s the suddenly publishes with fixed

52:31bayonets to come in and see the cattle

52:33so with great reluctance President to

52:35and report a while because it was

52:37impractical and probably a public woman

52:39liked it so much I hereby give up the

52:42solar I hereby eliminate price controls

52:44on meat and within a week the whole meat

52:46shortage is over only to reappear course

52:49this year when my controllers came back

52:51again so one would have thought that was

52:55a lesson for the government but for

52:57economists but I guess memory is fairly

53:00short hold the whole area one of the

53:05things of that when price control

53:06breakdown and when is shortages increase

53:08in our black market um the well lately

53:13the temptation of government the

53:14government is faced as my late mentor

53:16professor von Mises would say or

53:18government intervention of the market

53:19creates extra problem does it solve

53:21anything finally facing some more

53:23problems and then the government has

53:24intervene more of give up the whole

53:26business so two minutes people’s faces a

53:29sort of crunch

53:30either sudden the troops that

53:32nationalize the farmers or grass

53:35performers or something like that or

53:37give the whole thing up eliminate the

53:39whole control regulation which is what

53:41the government hates to do so usually a

53:44temptation is to escalate enforcement

53:46but penalties are only ten years in jail

53:49and make its thirty years

53:51execute them kill them Portugal why you

53:55think I kid you on this but another

53:57another govern other climes and other

53:59cultures which did not have the the

54:02American reluctance to inflict the sort

54:05of punishment

54:06all bets all cops were pull out the

54:09famous cases of example of the Emperor

54:11Diocletian late Roman Empire who was

54:15inflating like mal get to the cause of

54:16inflation later on of these inflating

54:18the current of the currency by clipping

54:20coins that was was the ancient primitive

54:22method of doing it and so prices kept

54:24going up a finally Emperor Diocletian

54:25issued a decree freezing everything all

54:29right from now on so and so is the three

54:31drachmas and such as I just two denarii

54:33you know they had a completely very

54:35detailed list even has things like

54:37writing of the first quality v and re

54:39writing as a second quality speed in

54:41Aria decide how well they know the

54:43quality of the writing interesting point

54:46Annie right he has a whole detail list

54:50and he said he made no bones about he

54:52wasn’t limited by any simple American

54:53Civil Liberties Union or the First

54:55Amendment he said anybody does disobey

54:58this regulation desk beyond immediate

54:59need capital punch and he kill a lot of

55:03people but it didn’t work even the death

55:05penalty could not hold back the tide of

55:08black markets and the price controls

55:10finally fell apart and so forth and then

55:13he had to give it up in the subside heck

55:15with it

55:16that was the Emperor I was a big example

55:19in pricing so unfortunately that was not

55:20heated very well either

55:23we all know about the guillotine in the

55:24French Revolution when the Jacobins were

55:26killing off people aristocrat but we

55:28don’t know what we what isn’t focused in

55:30on as a probably majority of these

55:33killings were killing not novelistic

55:34rats and Tories and Bourbons but for

55:37merchants were violating the price

55:38control regulations the government was

55:40inflating like mad at time paper money

55:42and maximum allure of a maximum price

55:45control regulations on food etcetera

55:47and there was a shortage of food in the

55:50cities do this and then regions are

55:52starving and rioting and all that and of

55:54course who gets blame the poor merchants

55:55special oopss purpose them all to

55:57loop-the-loop the stores and merchants

55:59get rid of all the food and then what

56:01next step then you shoot

56:05those 80 guillotine merchants for

56:06violating price control regulation

56:09engaging in black market activity so in

56:11the Jack events try the guillotine that

56:13didn’t work for very well easy the more

56:16recent example for escalated enforcement

56:20ropal Chiang kai-shek in China one of

56:26the reasons for so-called loss of China

56:27as against something which only

56:30eponymously know about the Chiang

56:32kai-shek was engaging a very severe

56:34inflation money supply pumping in money

56:37like mad and prices were engaged in a

56:40runaway escalation upward and as if that

56:45we’re not bad enough Chiang then imposed

56:47very severe price control no no we have

56:48to free spices with such a level and

56:50then it didn’t work and they have black

56:52markets and price controls of being a so

56:54basically for escalated the enforcement

56:55as all of this was really food didn’t

56:58get to the urban areas and the urban the

57:00urban areas of starving Lee and the

57:02peasants couldn’t get manufactured goods

57:04and so forth and holding economic

57:06processes breaking down and then in

57:09order and then he Chang kept escalating

57:10the punishment finally he decided to

57:13shoot the merchants in the public square

57:14of Shanghai any shoe gold light

57:16marketeers line them up as a public

57:18example well I’m at that store that was

57:21about is because the merchants the last

57:24support of a Chiang kai-shek regime then

57:26figure well coming us I going to be

57:27worse than this

57:28shooting it also the Communists are

57:32quite shrewd on this and when they come

57:33and they took over an area they

57:34something plating the money supply and

57:36inflation problem was licked so this is

57:39one of the one of the key reasons for

57:41the kind Chinese a worth of confident

57:45Russell and Chang’s credibility is equal

57:47other than that was learning it had it

57:48as a matter of fact using this insight I

57:52think it was like again I went to was

57:54about three four years ago I think when

57:56Marshall he was on the head of a South

57:58yet no I’m proud of shooting merchants

57:59in the square Saigon for disobeying the

58:02bicycle regulation a figure that was

58:04that even he’d had it I was the end of

58:06the pen Compton paper because he was

58:09following almost classically the Ruth

58:11the chiang kai-shek has followed so

58:14escalation so even if even if we going

58:16to wind up and forcing the gas rationing

58:17with you know def immediate death on

58:19site if I could it’s not going to help

58:21the situation I gotta help enforce the

58:23situation another interesting story

58:25about price control is a Hitler of

58:30course high price control during World

58:32War Two we pebble we want to follow the

58:33modern economic science and when when

58:37American forces of occupation came in

58:39and occupied Germany the American

58:42theoreticians the idea that crime the

58:44so-called morgenthau plan that the

58:46industrialized Germany punished Germany

58:48by turning Germany backyard pastoral

58:50actual country so as a for as a method

58:57as a method of doing this the conscious

58:59method of the industrializing Germany

59:00turning it back to a Paschal society the

59:03imposed severe fight controls it was the

59:05same economists and clear additions well

59:08in favor of price control in the United

59:09States in order an order close the play

59:11of capitalism unquote we’re doing the

59:13same thing in Germany order to crush it

59:15smashed Germany forever more so the

59:19imposed severe price intro they try to

59:20raise prices back to 1939 level and of

59:24course prices going way up seeing market

59:27prices going way up since back as all of

59:29this is the following I guess you all

59:33know the stories only I don’t know maybe

59:35I’m maybe I’m the only one hold up

59:37remember them the stories about buying

59:39girls with candy bar that serves fucking

59:41German well because we Germans were

59:43starving the reason why the Germans were

59:44starving is not because the German

59:46industrial machine and collapsed it was

59:48because all the stuff that had been

59:50produced before the war in or was before

59:521939 was a fantastically the price

59:55control as a way way below the free

59:56market price and had suffered severe

59:58financial losses of producer as a result

60:00the general is doesn’t make any

60:02introducing a food and make any handy

60:04bargains and make any closing or any of

60:07the necessary instead of that they only

60:09produce a shift of their resources but

60:11using goods which were new and which

60:13therefore we’re not not under any price

60:15control regulation there’s a pointing to

60:17a regulation usually has a you know a

60:18sorrowful base we freeze it as August

60:2015th or whatever it is or freeze it

60:22as of 1939 but the new product wasn’t

60:25around all this of sneek or wasn’t

60:27around I can hear you now how do you set

60:28the pipe report as a result the new

60:31product for free of price control and so

60:32the Germans are producing toys like mad

60:35also to leave toys hula hoops whatever

60:37instead of reducing its food clothing

60:39shelter and cetera so in 1948 after 2-3

60:42years of this horror ah finally sanity

60:47of one out largely through the influence

60:51of a couple of students has put them on

60:53me matter of fact and they said luckily

60:56the only way can ever call the German

60:57economy situation is repeal the price

60:59control and which they did and very

61:02shortly after that the whole shortage

61:03was over girls are no longer available

61:05for candy bars and you have a so-called

61:07economic miracle West Germany following

61:09shortly after that so once again place

61:13controls with a villain but here are the

61:14interesting interesting sidelight is

61:16that we did it consciously to crush the

61:18German economic system okay the what

61:34phase one came in as I said there was

61:37the reaction of the caramel almond

61:41crunch and Lee and service – pepper the

61:44controller obviously in price as well

61:45obviously there have not worked very

61:47well be clear

61:48phase 1 everybody so hailed as perfect

61:51fantastic beautiful strong president all

61:54over the Milwaukee and then after a

61:57while thing against the things begin to

61:59happen so the freeze wasn’t working so

62:01well we went over to phase 2 which was

62:03sort of a moderate control program you

62:04allow certain increases again of course

62:08politically allowed and then what

62:13happened was for example and phase 2 is

62:15that you have things like this while you

62:16you know the government will allow a

62:18business the raises price if it was

62:20making low profits this on the other

62:22hand was like any high profit you’re

62:23forcing the lower the price so what

62:25began that happened with phase two is if

62:28firms began to look around desperately

62:29for ways not to make profits that’s easy

62:32not to make profits you just sort of let

62:33it rip

62:36and what and Business Week would report

62:39it doesn’t mean tell me I recommended an

62:40awkward position as a news magazine

62:44logical reviews Business Week reporter

62:48well firms will have the do some things

62:49like that first of all the old expense

62:50account I’m rolling back well live it up

62:53Jim because you know we only make

62:55somewhat high profits to go to the go to

62:57the pave on whatever and you know and

62:59help means a separate of go first class

63:02on planes etc also also this is a sort

63:06of having their annual meetings in the

63:09Bahamas instead of them New York as one

63:11as one executive side well if we have to

63:13we have to be in efficient we may as

63:14well enjoy it so that sort of attitude

63:17times and of course it means something

63:18it’s a crack and say three that comes in

63:21which is a little bit better than taste

63:23for once pastry and a half freezing

63:25everything Emma but a look control with

63:27the after the inflation of food prices

63:32and unless severe freeze coming in in

63:341973 at a time when the economy is

63:37booming and scarcely any way and as as

63:40over which we certainly have a beef

63:41shortage can’t find any beef something

63:42gasoline shortage we have begin to have

63:44then we going to face for which is

63:46slightly better than phase three and a

63:48half and none of those phase three and

63:50whatever we still want a situation with

63:52heavy price controls throughout the

63:55system and one of the run the ways in

64:05which is shortage which say always

64:07appears with pipeline of – still is hell

64:09for a while

64:09underneath the equilibrium point one of

64:12the ways of allocating the scarcely the

64:13government rationing which of course

64:15we’re now beginning to see a gasoline

64:17separate a rationing such that is only

64:21and just thinks the Michigan we saw in

64:24World War two

64:28rationing is very peculiar cups and

64:30first slice it means that you have a

64:32second money miss person various resort

64:35that’s just in that point of view

64:36instead of just having money I mean

64:38usually if you want to buy something

64:40here’s a price you know what the prices

64:42if you have the money you buy it if

64:43you’re willing to spend the money or if

64:44you don’t you don’t buy

64:45now in addition to having the money in

64:47the yoga have ration tickets the ration

64:49tickets or tuck and a parallel money

64:52also the ration ticket means that the

64:56government is allocating the resources

64:57by phone favoritism by political favors

65:01you you and your example during world

65:04war two the big thing was to be an

65:05essential world worker if you want to

65:06such a world worker engaging essential

65:08world work then you get unlimited amount

65:10of vast amount of ration tickets if the

65:13other hand you were pushed shuffle

65:14nothing much to do with the war effort

65:15you starve or whatever there’s for

65:20example on the gasoline front there was

65:23several kinds of ration tickets

65:25everybody supposed to share equally

65:27suffer equally that was always a program

65:30of the ration errs well there on the and

65:33World War two people suffered an unequal

65:35way because there were several degrees

65:39of ration tickets which the poor the

65:40average citizen had a taste a ration I

65:43get which entitled one very little

65:44gasoline as a map I bought it like this

65:46is the point of mild interest the

65:48government highlighting the speed limit

65:50and forth during World War two with 30

65:5235 miles an hour we might see that again

65:57who knows been any right the the a

65:59ticket for just a few gallons a week the

66:02louder the person then there’s a B and C

66:04was sort of munificent and the X ticket

66:07was unlimited the first type of

66:08Congressman over 200 Congressman asked

66:12for and received from the OPA the X

66:14Brando with unlimited gasoline for

66:16congressman absolutely Boyer obviously

66:18engages that your war work the top

66:20priority

66:23second of all the U has things like the

66:28truckers had unlimited amount or so

66:31there’s a tea ticket and the truck at

66:33the end of cell reacts that’s their

66:35excess he tickets other people you’re

66:37going to have leakages this is Henry has

66:39on a great novel the economic political

66:43novel called the rate ID it’s now for

66:45crime alone back has a whole story about

66:47thoughts that were the communist system

66:49of the future and why ends up with a

66:50free market my logical deduction to do

66:52and the first thing that happens is some

66:54some brain in the coming assistance okay

66:57why don’t we allow people exchange their

66:58rations

66:59because of a new big new thing why don’t

67:02we allow the people don’t smoke

67:03cigarettes or e-cigarettes I guess for

67:05the guys that don’t eat and chill visas

67:06something it’s probably anchovies

67:08tickets and then Sookie will be better

67:10off and they start with that and after

67:12several chapters you wind up at a free

67:14market interesting thing is of course

67:16the government doesn’t allow anybody

67:17exchange our ration tickets are

67:19predictors personally on the gasoline

67:20rationing won’t be able to change your

67:21gasoline ticket if each person is

67:24allowed 20 gallons a week or something

67:26and you’ll drive your car you not

67:28allowed to sell your 18 gallons but

67:30somebody else will drive more so because

67:34I was benefit both people the exchange

67:36be the market they the ugly head of the

67:38market would suddenly rise up again we

67:39got to clamp down so as a result of this

67:44yes

67:45truckers illegally selling a surplus tea

67:47tickets you have things like the sea

67:51people or you have things like sea

67:52tickets were given them through um let’s

67:55say the sharpies we get the sea ticket

67:57over the average the average Joe would

67:59have as a ticket and we have a few

68:00gallons a week a shop is Heather almost

68:02certainly a Burnett munificent sea

68:04tickets and the times of the news with

68:06print pictures of what kinda awkward

68:08dark without parking lot filled with sea

68:11tickets it’s quite a lot of class and

68:16the resentment then you have things like

68:20he has things literally OPA and

68:22sportsman they just went out and checked

68:23off everybody would see you weren’t

68:25supposed to drive get a see tickets a

68:27useful could only drive it will only

68:29supposed to stop at a gas station you

68:33know sort of man you only took the walk

68:34ten feet beyond the gas I said no more

68:36and you literally had it by an OPA spies

68:39going around checking up on you your

68:41park near a theater that means you’re

68:43going to the theater to have a seat

68:44again I wanna go to the theater and

68:45they’ve gone there you’re a plant fan on

68:46your Russ jr. take your seat together

68:48ways you tear up your C ticket some of

68:51us

68:53I was literally going on an interesting

68:55book by Richard Lehman called you know

68:57there’s a war on which talks about what

68:59was going on is not an analytical book

69:01but I think this has helped ugly stories

69:05were actually happen well one of the

69:07things that happen was its ration ticket

69:10system well first of all I was saying it

69:14just on ration figure I think whole

69:15thing is absolutely monstrous

69:16totalitarian as despotic nobody should

69:20have a right to tell me about something

69:21how many think sublimely how many likes

69:24to turn on I mean I watch TV poster have

69:26a room at all rest of it so it’s

69:29totalitarian monstrous whatever or any

69:32any value judgment you think oh I along

69:34with on that one of the things that

69:36happened was a heroic mafia came to the

69:38picture World War two to relieve as a

69:43leading the people struggle leading

69:46people struggle against gas rationing

69:51and they kit the counterfeit an enormous

69:54number of see figures it was easy to

69:58counterfeit see figures until account it

70:00was estimated 15% of all gasoline so

70:03America was proposing a counterfeit see

70:05tickets and 30 percent of New York so

70:14these things are things to remember I

70:15was rationing pools in honest there’s

70:25also the wife my wife Co grandma when

70:30she died was the source of embarrassment

70:32of a family I find out that she had

70:33innervation aromas not sugar after the

70:36old this is good this is the great the

70:38great people’s revolutionary movement

70:40sugar hoarding during the war we were

70:42told never buy sugar because somehow

70:44that our boys rely on your not buying it

70:46this well let’s go into the thing this

70:55time ago into the energy crisis and

70:57exactly what highly energy provides a

70:59first of all if there isn’t the extent

71:02that there is an energy shortage obvious

71:04solution to it there will not be assured

71:06if you allow the fight to go up if you

71:08allow the pipes to go up it will ration

71:12the existing amount to those who will

71:14ration it voluntarily to those who

71:16willingly want to spend more on it those

71:19who the third more important and so

71:21forth you have a smooth form of

71:23voluntary rationing where the most say

71:24that those who are most interested in

71:25buying your gasoline heating oil will

71:27buy it but secondly by allowing the

71:31price ago I will simulate more supply

71:33hour after a while more more well

71:37marginal local coming oil wells will

71:39come as a path of production

71:40distribution will be speeded up etc so

71:51by allowing the price of variety was the

71:54air supply supply curves on the left by

71:57allowing this a free pricing system my

72:00own in fact go up it was these two

72:01things one you will Valen

72:03a ration so consumers accordance with

72:05who is most interest for the most

72:08important use by the material for most

72:11important use will voluntarily ration

72:14themselves and according to the higher

72:16price and also this will stimulate an

72:17increase in supply so the least you will

72:20allow you only be anymore shortages

72:22won’t be anymore market won’t be any

72:23more need for rationing and so forth

72:25that’s the first thing to do

72:27the second thing remember what I was

72:29growing the energy crisis the government

72:31by various methods has created it as a

72:34restricted supply increase the man or

72:36officially and so the thing to do of

72:37course is eliminate that well think only

72:42in the oil caper it starts with the

72:49operation Law Corporation was began in

72:53America and approximately 1931 32 when

72:57enormous oil fields were discovered vast

73:00and super abundant oil fields was

73:02covered in Texas and Oklahoma ray Texas

73:04Oklahoma fine

73:05as always wished the price of crude oil

73:07plummeted straight down the oil industry

73:10gets cut relic Estela all about this and

73:12call upon the state for bail amount this

73:17is known as a partnership now government

73:18and industry not world not all oil men

73:22but enough oil mendon that account so

73:25the classic cartel situation comes into

73:27practice government the first thing

73:29government is a state outlaw for the

73:31production of oil so we can straighten

73:33the whole thing out they call it a

73:35little moratorium and to enforce the

73:37moratorium the governors of Texas and

73:40Oklahoma declared martial law put the

73:41troops out into the oil field especially

73:44it because at night you feel a lot of

73:46the guys were wild counting drilling

73:47their own oil and hunting up taking the

73:49hot oil out and so they came in with

73:52fixed bayonets and guns that they’re

73:54ready to shoot all any Wildcat oil

73:57driller was willing his own oil getting

74:00out of the ground and shipping it out

74:01they did shoot some people with the the

74:04governor Oklahoma’s a colorful business

74:06or colorful half of Bill Murray

74:08Wild Bill awesome Bill Murray

74:11so there’s a lot more attorn that

74:12straighteners it’s not production person

74:14in it about that and then the states and

74:17a federal government and collaborating

74:19set up oral probation laws operation law

74:22works something as follows the Texas for

74:26example is the largest oil state there’s

74:28a user usually retired general there’s a

74:32head of a something called Texas

74:33Railroad Commission as far as I know has

74:35nothing to do with railroads it’s only

74:36involvement or selling oil maximum oil

74:38quotas every month the old geezer

74:41besides how much oil is allowed to be

74:43produced next two months and he said

74:44okay from now on next month that you can

74:46only produce whatever million barrels of

74:49crude oil and then each or each oil well

74:53in Texas has a quota like you know

74:54you’re a point or oh five percent of the

74:56oil oil in Texas and then you’re

74:58restricted to that so in other words the

75:00supply curve oil pushed massively to the

75:03left the price of crude oil is raised

75:05this of course pushes the supply of

75:07gasoline and heating oil with stuff to

75:09come out of crude to the left and raises

75:11their price this is been going on since

75:131932 and every month you’ll deserve puts

75:16out that’s maximum quota and the excuse

75:19for that means that for economists

75:21excuses laughable if they well we need

75:24the Texas Railroad Commission do this we

75:26have to they have to adjust supply to

75:27the man you know there’s only that’s

75:29what the market supposed to be doing is

75:31definite supplied on that no no they

75:33need this because otherwise otherwise

75:34what otherwise too much will be produced

75:35the price of crude oil apparently of

75:38that so that’s the first that’s the

75:41first conic saying a very basic chronic

75:44thing it raises the price of crude alone

75:45limits the production now this is none

75:48of the name of conservation I’ll get to

75:49that conservation caper later on but

75:52some of the name of conservation well we

75:54want less to be produced because then

75:55the future generations will have a more

75:57like yeah however along with the oil

75:59production or proration Wars came all

76:02import restrictions keep foreign oil out

76:05if you’re really interested in

76:07conserving American oil and keeping a

76:08lot of oil in Texas then you then you

76:11might encourage the importation of

76:12foreign lowing man

76:13right right however if they did not they

76:16kept on foreign oil thereby shifting

76:17supply for whether the left

76:20starting with tariff 1/2 of oil import

76:22quotas for the northern import oil you

76:24have to buy somebody else’s proto right

76:26so in other words if shale oil had five

76:29or ten say ten percent of the imports a

76:311950 something whatever the thing came

76:32in if you’re a new world oil importer

76:35you can’t import it well you have got

76:37the right the illegal you have to buy

76:38the ten percent of the Super seven shell

76:40that of in a high price this is what

76:42keeps out competitors and keeps as a

76:45each the oil imports and coming in this

76:48I think has been repealed by a year ago

76:50but when this has been the basic policy

76:52for quite a while so this uh that’s

76:56that’s that’s the that’s the restriction

76:59on on domestic and foreign oil as an

77:02initiative that the government has

77:03sitting the federal government United

77:04States is sitting on an enormous amount

77:06of well enormous then sitting on it for

77:08fifty years now and nothing has been

77:11done was cool conservation or something

77:13cold withholding from the market they by

77:15raising the price the elk Hills reserved

77:19I think in California which has God

77:21knows how many billions and billions of

77:22barrels and there’s a teapot dome which

77:25of course is the famous famous face in

77:26American history where the poor guy was

77:28crucified was they want at least get the

77:29oil at he might have been a crook

77:31everything is kinda producing oil or

77:33finally President Nixon is latest

77:35species you know start producing a

77:37little bit in the elk Hills reserve at a

77:38point has been kept off the market all

77:40the time thereby raising the price of

77:42crude oil and price of gasoline in the

77:44whole business and restricting and

77:46supplied then in addition is this then

77:55in addition this goes for all the

77:57shortages I’m not timing ice over the

78:00other product yet there the

78:04environmentalist the environmental is

78:05crazy whose life like to call them how

78:08that stopped have stopped it’s the

78:10absolute determination and and will have

78:15kind of probably gamma product a strict

78:17production anywhere they can find

78:18they’re going to get their hands on

78:19sellers over this oil refineries can’t

78:22be produced

78:23from Tilly years because God knows why

78:25they pollute the air or the face of the

78:28landscape whatever so they cut down on

78:33the production of oil refinery also of

78:35course a lastin pipeline which is with

78:37supply by filling in barrels a day which

78:39is pretty hefty then held out for many

78:41years because the environmentalists but

78:43finally getting going but held up for

78:44many many years as far as I can make out

78:47the Alaskan paper notes I’m reading in

78:49the Alaskan question the

78:53environmentalist problem can be twofold

78:55one of the defacement landscape in other

78:57words a beautiful unmarked unmarked my

79:00man that is Plateau and steps in whether

79:04they got up there and last it would be

79:05the face by the Faculty of pipeline

79:07running so it’s really it’s really tough

79:10and I know that the logical implication

79:12is amiss if the conservation of the

79:14environmental have been in control in

79:161776 we never have anything beyond 40 on

79:19a tip of Manhattan it couldn’t chop down

79:21a tree you can do anything so that’s one

79:25follow there’s a scenic problem which is

79:27something that I do not find a grabber

79:29I’ll put it that way

79:30the second problem was a caribou the

79:33caribou like a walk across the tundra

79:35and if you have a pipeline which has to

79:39be dug down deep because of a thumb or

79:42whatever heating in the soil then the

79:45poor cattle will be able to walk or

79:46thing to confuse things I add I swear

79:50that’s the and then the oil company said

79:53ok we’ll build a ramp or get bridges

79:55across the high fly to the Campbell can

79:57walk with anything we have any wine that

79:58looks like he knows me mean the caribou

80:00wouldn’t like the bridge they like the

80:01tundra

80:02was awesome and for this we have to

80:05suffer in that I haven’t got gas

80:07rationing the Alaskans themselves are

80:11rather annoyed as this whole thing is

80:14the editor of the Anchorage Daily Times

80:18wrote a letter and so 300,000 people in

80:20last at least one of ninety nine

80:21thousand a very bitter about this holing

80:24up they only see the Alaskan pipeline on

80:28the other people he said the other

80:29thousand quotes feel a kinship a little

80:31cuckoo want to lock up Alaska some sort

80:33of permanent wilderness 15 is pretty

80:36clear the people in Alaska I want to

80:37have no 111 a permanent hundra okay so

80:46that’s the that’s the the oil caper then

80:50a very related sort of thing is example

80:52we the crippling of natural natural gas

80:56and coal natural gas was a substitute

81:02for oil and heating well natural gas for

81:05the last 25 years was obscure reason

81:08only thing sure to me

81:10has been regulated the price of which is

81:12a regulated the wellhead and interstate

81:14commerce by the federal Power Commission

81:15way way below the free-market level of

81:17courses is inflation for ceases being

81:19further below the why it’s been done

81:22that way whether done probably a logical

81:24reasons of the gas buyers on it I don’t

81:26know or combination in any rate is the

81:29created an increasing shortage over

81:31years a natural gas especially in

81:32interstate commerce plenty of natural

81:34gas in Texas itself Oklahoma because

81:36there’s no pipes info into interest

81:38state there’s others list there’s lots

81:42of natural gas reserves everybody knows

81:44is what’s a natural gas on on the ground

81:45but nobody’s looking for it because it

81:47doesn’t pay anybody look for it because

81:48the pipe is a hell way below the free

81:50market as there’s always an increase in

81:52natural gas shortage as a natural gas

81:55towards people turn to oil you have a

81:56wrist cut on the supply natural gas and

82:00increase the pipes of oil increases

82:03demand for oil artificially which

82:07absolutely oil problem and as it created

82:15a few oil the heating oil shortage of

82:17say four last year will continue so

82:20natural gas was crippled when actually

82:22after artificially crippled by the

82:23government this raises of the man for

82:25oily oil shortage same thing happened

82:28the coal coal wasn’t crippled in many

82:32races lots of coal around to lots of

82:34coal caused a couple in several

82:35directions first place Jonah Lewis was a

82:38beloved leader of the coal Union for

82:41many years was a very good economist he

82:43understood exactly what was going on he

82:44knew geniune pushed off wage rate was a

82:47course on employment you got very well

82:48this is brilliant economist then the

82:50hang is a favor of it since he was in

82:53the Union and his comrades were being

82:57members for a long time

82:59okay this employer nya he’ll love them

83:02they’re not union members there you

83:03prentices or whatever as as well as what

83:05you have a and they did this in

83:07collaboration a lot of the large mine

83:08owners one of the disemployment editors

83:11as all of what you have a deliberate

83:13policy reminding workers union for many

83:15years since the thirties the Crippler

83:17coal industry to shift the supply curve

83:19the left to raise the wage rates for

83:21those remaining as oldsters and cooling

83:23coal does everybody else’s in Appalachia

83:25are living in hillbillies or drop back

83:27for strata methylation well those cuts

83:30but a lot of the coal supplies I’m one

83:32factor second factor is a stripling

83:35environmental is crazy is back again in

83:38two directions one sorry over strip

83:40mining

83:40a strip mining is quite cheap it’s the

83:44forty percent of the method coal – strip

83:46mining there’s a problem with private

83:49property of the former down the road on

83:51the hill and strip mining but the basic

83:53the basic I think charting the aesthetic

83:56you strictly a strip mining for there’s

83:58an ugly landscape a hill was jung-woo

84:01forever or whatever it is again this is

84:04another sort of thing I saw a problem I

84:05find a grabber

84:06I think more important to have coal one

84:09fuel so the cities and factories there

84:12is to worry about the Kentucky hillside

84:14at any rate the strip mining history

84:17accord with laws

84:18ask the restrict strip-mining Crippler

84:20and so forth and a second

84:22environmentalist trust there was the air

84:24pollution there is a dirty coal dirty

84:26fuel

84:27so first poured into the air and so

84:29forth um and then the Clean Air Act of 8

84:321970 rapidly federal Clean Air I

84:35gradually lower the supply of coal which

84:37means people have to shift the oil for

84:39heat it raises an answer oil and again

84:41you have intensify the oil shortage I’m

84:43not really a favor of air pollution I

84:45don’t know much about it I think I think

84:48the public media is really even the one

84:51side of the fact that we’ve only heard

84:53the environmental side of the story

84:54the anti environment was claimed as the

84:57software really disappears pretty

84:58quickly hasn’t any harm anybody but in

85:00any way certainly the restrictions came

85:02on awfully fast after that way and

85:04hopefully suddenly and also we severely

85:06and again closing the effect proposed

85:10and cripple natural gases and crippled

85:12by government action and also electric

85:15power electric power a couple first of

85:19all electric utilities can’t fill

85:22nuclear power plants because they’re

85:24people worried about nuclear radiation

85:26that although the experts claim is a

85:28real problem

85:30secondly they can’t example con Edison

85:33has been trying to build with Glenn Kane

85:34plant for god knows how many years up

85:36the Hudson environmentalists have

85:37stopped it because it ruins the Huskie

85:39the thinking mountain view is foiled

85:43again it’s not something I was not an

85:46argument to which I feel like a new

85:47clothes out so this is this is spotless

85:50granting plant for many years absolutely

85:53to finally get up a public thing up a

85:55lot cuts down supplying electricity

85:56raises look like II suffer the energy

85:59keeping the energy shortage and finally

86:02is the whole problem what the real

86:03utilities anyway electric utilities are

86:06compulsory monopoly you can’t you can’t

86:09compete with Carnot Khanna has a

86:11monopoly each each electrical industry

86:13terminus area as a monopoly granted to

86:16us by the government of this area you

86:18can’t go in a competition having a push

86:20for a monopoly and secondly you have a

86:21fixed rate of return guaranteed fixed

86:23rate of profit guarantees of the

86:24government for the radius set by the

86:26government action fixed closing rate of

86:29profit of set that’s very high the other

86:31hands guarantee

86:32they make big difference Sony’s there’s

86:35no competition in the electrical

86:36industry means research and development

86:38like all sorts of technological

86:40improvements in electrical industry cut

86:44out is eliminated restricted and also

86:47relate us the latest set is the fixed

86:51rate of return of capital other words

86:52let’s say six percent so this means that

86:55the latest that in such a way you have

86:57certain profit per rate of thermal

86:59capital

87:00this means a higher your capital a

87:02better off you are so thoughtless of

87:04weather example is any good or not as

87:06those other that’s the electrical

87:07industry is our the ever speciation it’s

87:11equipment its be created something very

87:13very slowly because why do it if you

87:15have your ten thousand machine which was

87:17half dead so to speak doesn’t mean he

87:20just misses list eight thousand dollars

87:21on the books Hamlet here you get your

87:23profit rate determine on that basis as

87:26over which is a while IBM for example a

87:28very possessive company he appreciates

87:31that took in a very fast saying ten

87:32years ATP and coned depreciated

87:35equipment over fifty years

87:37hang on their obsolete equipment to the

87:40last possible ounce of squeezed out of

87:42it

87:42thereby again which we pressing and

87:44restricting and crippling technological

87:46ones almost improvement of productivity

87:48in the utility industry in general well

87:51right of course ask the energy shortage

88:01right we have political rationing as I

88:06say with the congressman building

88:08installs the unlimited para gasoline and

88:12so forth but also see you also already

88:15seen rationing in Airlines flight which

88:18is beautiful cuartel arrangement where

88:19the government of CHD Civil Aeronautics

88:21Board totally Airlines going to cut out

88:24your airline flights on you know the

88:26airlines of course receives that

88:28information with enormous enthusiasm

88:31they’ve been competing even though that

88:34competition is fairly limited we’ll get

88:36to later on of CHD by the existence of

88:39the CA be still they were competing and

88:40ahead they found out that they’re not

88:42every flight look like

88:43an old car no this the Eagle MBC is a

88:46renowned boy oh boy we’re picking off a

88:47going on with cutting out half our price

88:49every car every plane will be packed but

88:52once again you have the government of

88:53cartellis a strictly Airlines

88:56competition service separate but we’ll

89:00get more of the airlines in the cartel

89:01thing later I have to why not this

89:05homily on ice and : rationing little

89:09quote I can’t find it yeah from a column

89:17a column of a generalist hoola there’s

89:20not a specific let’s go to say he’s not

89:22distinguished as an analyst as a

89:25knowledgeable on the market but he’s got

89:27a great spirit listening relations and

89:29government this is a P Hamill column

89:31Monday New York Post few miles from but

89:35he’s reacting viscerally distinctively I

89:38think correctly to lead to the

89:39government blackout energy and gas

89:41rationing or lessening so now they’ve

89:43even taken away our skyline it has an

89:46hour since that day 1945 only always to

89:48the rooftops of Brooklyn the fields

89:50Linnaean lights blink on again dazzling

89:52joyous triumphant unbelievably beautiful

89:54singling signaling to us that the war

89:56was over I remember a woman crying it

89:59was top that time knowing is a long

90:00night of the Second World War was

90:01finished at New York was blazing again

90:03most electric beauty the blackouts and

90:05dim house or behind us the two shifts

90:08would soon be home New York skyline

90:09hours forever and now it’s gone again

90:12moving along the city’s highways as a

90:14doorless center two feet in north on the

90:16town

90:17it is this a malignant hand of Richard

90:19Nixon and reached out from a bunker in

90:20Camp David and pull release switch on

90:23all of us letting his personal darkness

90:28the Empire State Building is a blinking

90:30red light of the dark a great pile of

90:33downtown buildings Truman Capote’s

90:34diamond iceberg is a hole in the night

90:36sky and then by the end of this thing

90:38because we are overdue for venting at

90:42the corrupt criminal government in

90:43Washington and now we have one

90:44opportunity to make that robe onion over

90:46turn on all y’all white drive 55 miles

90:49an hour

90:50we want to follow order airstrike on the

90:52latest pop up refused to turn now some

90:55of that I want you to know we made them

90:57again for a lawyers and let’s get back

90:59our skyline there’s a assemble a lot of

91:06shortages instead of just the energy

91:08shortage its intently on the energy well

91:10yeah footnote on the energy shoulder

91:12greatest thing is is that they’re

91:14planning to outlaws might just have

91:16gasoline rationing but by planning it

91:17out war fund a pleasure driving and

91:20we’re getting back to World War two

91:22thing the horror stories I was telling

91:23you last week about the OPA spice

91:26checking out of the see if your Park

91:29near movie it should employ you’re a

91:30pleasure trip it’s the same sort of

91:33thing how they get our forces if they

91:35sign one for thought warning pleasure

91:36driving enemy advanced Gestapo one way

91:38LM making sure every Colin Sunday is

91:41really going to the back-and-forth of a

91:43hospital and everything else is in the

91:46ER commands like clamp that on and then

91:48they also then they say or well maybe

91:49it’d be easier to enforce it by just

91:53simply closing out all the polling

91:54stations they don’t deal with a gas on

91:56Sunday that suppose is a cute trick in

91:58the other hand what happened to this

91:59book Oracle intial driving that it’s

92:00probably 100 miles for the hospital or

92:02the emergency room and run out of gas

92:04and Kathleen is an outlaw and like I get

92:06you bad instead of allowing the PI

92:09system to rationally and oh yeah oh cool

92:13here’s the material so we getting more

92:16and more to that order for our situation

92:17the other shortage is clearly their

92:20particular several shortage that might

92:21mention now is steel eel suffered from

92:27us deal with subplot the only a few

92:28years of dollars would be so-called her

92:30closest feel if he is a foil a that was

92:32so cool shortage the things happen

92:34obviously very rapidly in the steel

92:35business what happened with a steel

92:39industries that there were severe phase

92:414 pie stealing the current with the

92:44current pipelines of heaven severe pike

92:46phase two and three and a half or so

92:50risottos or which was that the price of

92:55steel is how old has been how way below

92:57the free market site and as on you how

92:59to feel shortage

93:00of course a living Council for example

93:02in its wisdom refused to grant a price

93:04increase because the excuse let see the

93:06profit lower have been said we’re high

93:08if you look at the profit ratio you say

93:11hey the profits are pretty high

93:12firstly compare that I can fifty nine

93:14seventy one of the recession the

93:16processing fees quite a bit then you say

93:18well we don’t allow the price increase

93:20not realizing of course the whole point

93:21of prices moving up in there is that to

93:24allow a rate of profit but the allocate

93:27supplying the man in the coincident

93:28watter clearing those shortage no strip

93:31clubs set up as a matter of fact the

93:34thing that just happened today November

93:37the 20th the today there was the latest

93:41issue human dimensions come at the wrong

93:43a report from a speech by C Jason he

93:48Jackson racist a see Jack I was like mix

93:50that up who only a couple of years ago a

93:53short couple of years ago was ahead of

93:54our own got pricing coal program it fell

93:57out of literally attack an old – racial

93:58code saying won’t work because the

94:01shortages causes the hidden upgrading of

94:04workers all as older all sort stuff I’ve

94:07been telling you in hearing

94:08so unfortunately least I got great when

94:11they’re out of power is there any power

94:14that’s so hot the same thing happened 20

94:18years ago only the oldest citizen here

94:20remember this is a useless

94:21gentleman’s a head of the IRS the

94:23Internal Revenue Service and he Coleman

94:24Andrews from Virginia when he was after

94:27he retired from the IRS he he stumped

94:30the country’s men are attacking income

94:32tax in the foreword to the repealed in

94:33compact amendment so as I say out of

94:37power and I get the alerts and

94:39experience of someone I serve an there’s

94:46also a statement that I found from the

94:50executive vice president of American

94:51Standard incorporated a certain bikes

94:53and rant who said quote as long as we

94:55have – code it’s hard to assess the true

95:00price and availability of alternative

95:01materials it’s like playing with cards

95:04when you can’t read the numbers on them

95:05the the summation is what happens in

95:08other loci system no friiskiwi

95:10fluctuating prices going to allocate

95:12he dresses and so that that was a real

95:17problem also cause of the big big

95:20shortage in paper really big big my

95:24brother-in-law happens to be a printer

95:26the staff and he has enough paper only

95:28because he brought up a lot of paper he

95:30squirreled away a lot of paper in the

95:32last six months or years he’s sort of a

95:33paper shortage emerging the problem why

95:38is there a paper short for several

95:39reasons and one of the biggest factors

95:41against Tyson cold what happens again

95:44you see one of the phase 1 TT PMP and a

95:46half of cetera came in at a time during

95:49doing a recession when when profits were

95:54low and so forth and then the prices

95:57would have chosen in literally low

96:00profit margin and then profits go up in

96:03there and the government’s doublethink

96:05offices now increase will allow you and

96:07increase prices and so we’re stuck with

96:09a paper have priced way below the screen

96:11market and this generates it and to

96:13generate the famous paper shortage the

96:17there is no shortage by the way on

96:19lumber and plywood only a paper part of

96:21the industry the right half a lemon

96:25reply was a healthy pouring off of

96:27residential mortgages probably billing

96:31crunch in 1973 so that’s been an

96:33interest rate going up so that so the

96:35shortages are of our function again of

96:37the pipes in coal

96:37set up again not exactly creating a

96:40shortage but by causing paper to be much

96:42much less plentiful supply declining of

96:45supply again we have a very very heavily

96:48in the picture of the environmental

96:49crazies and I mentioned last week who

96:51because paper is certainly the most

96:53probably the most polluting the world

96:55industry as there was a massive closing

96:59up of paper mill all the old paper mills

97:02in Wisconsin and other areas in England

97:05and cetera were shut down and that’s

97:07what that led to a wrapping off of shift

97:10to the left of the supply curve of paper

97:12which of course created more of a

97:14shortage if you have because the

97:15pre-market pipe the mccain even higher I

97:18thought of a born Louis gave this week

97:21last week um

97:23I c-can’t roads which I may as well are

97:26here also which is the explaining it

97:31just has something scarcity in shortage

97:33within the shift of the supply curve of

97:34the left and as shortage which means you

97:36can’t get anything with always up

97:38existing price Rembrandt’s for example

97:41are very very scarce and nobody ever

97:42talks about a Rembrandt shortage if you

97:44want if you want to buy a limb blast

97:46there’s always that they’re always

97:47available so those two million or

97:48whatever you are kick in before it the

97:50point is even though very very scarce

97:52and not likely to increase in supply

97:55[Music]

97:57nobody worry there’s no bright thing

97:59about Rembrandt shortage because if you

98:00tell you the stream walking prices

98:01analysis supplies demand also there’s a

98:06cement shortage which again the two

98:10things involved again we have almost a

98:12litany here you know what the three

98:13things are what a spicing pro quos doing

98:16a career recession

98:17walked in with a very low rate of return

98:19and so forth and preventing new plants

98:23from the noble cement plant a second

98:26leave our medalists who worried about

98:28the pollution caused like cement plants

98:33eating it was closing down a lot the old

98:35mint plants and decreasing the supply so

98:38we’re we’re also of course another thing

98:41is a final sort of icing of the cake is

98:43a cement factories have to use a lot of

98:45natural gas as fuel and as a big natural

98:47gas shortage caused by the government

98:48ice regulations so a little old thing

98:51something about the market is everything

98:53hinges and everything else all right I

98:57come now to a couple of special areas of

99:01price control which apart from you

99:03familiar from the current

99:06disaster a certain areas of high suppose

99:10have been going off for many years and

99:11we have where we have shortages sort of

99:13the permanent fact of life in America

99:16and almost always accept it as such

99:18because people really gotten at this

99:20point don’t know any better there is for

99:22example New York City we have a special

99:24it believes a path a special permanent

99:27shortage which most of the public

99:29doesn’t know about in America at the

99:31apartment shortage you can’t find

99:35apartments very easily if at all the

99:41apartment shortage in Manhattan or

99:43chronic apartment choice this is the

99:45only office approximately nineteen forty

99:47are came in is not coincidentally with

99:51the uncontrolled all just passive the

99:52playing part York City is one of the few

99:55cities in America has record for a few

99:57others of the night is fashion just put

100:00it in put it in again last year but all

100:02the other cities in the country and

100:04removes it at the end of World War two

100:05we kept it kept it continued on with it

100:08result of the result of rent control

100:12again it’s very efficient Airy period so

100:14the demand curve keeps going up for the

100:15same market rents keep going up the

100:18government under decreases the rest

100:19remain the same as one has has been

100:22before just means over the years as a

100:24banker keeps going up because of

100:26inflation and the rest is frozen of the

100:30old rate as a bit of a gap between

100:32demand and supply keeps increasing the

100:35apartment shortage other words shortage

100:37of apartments space which is what I

100:40think so long right market keeps

100:43decreasing and active being aggravated

100:44well what happened was at the before I

100:47like to tell a story this is a story

100:49which I told my kids much I’m sure

100:50enough there’s nothing to be repeated

100:52nor life Scott my so life isn’t a story

100:56about like you know queuing up behind

100:57the butcher shop and I’m pretty sure

100:58this is going to be repeated but the the

101:00other story I’m afraid is not going to

101:02be repeated that’s the story of New York

101:03City in the golden age of four 1940 when

101:07everybody moved every year incredible

101:09situation every year there was a

101:10one-year lease and I probably the first

101:12of some reason early release was up and

101:14every L ma where are we moving this this

101:16year well I think we’re moving up C

101:18blocks down and watch over and it was a

101:21magnificent and beautiful thing of

101:22agencies all over the place every income

101:25level and every size apartment so just

101:28great it’s terrific and and people moved

101:31every other and so every October the

101:33first of the moving vans with a no

101:34streets of Gaza moving vans moving from

101:37one compartment of the other immediately

101:40Bangkok Rosa my controller on bingos is

101:42the disappearance of a great moving away

101:44to Cobra first movie effect nobody moves

101:48anymore

101:49very very rare event the and and the

101:54knowledge of this you know that has

101:55disappeared from New York Life and the

101:59QWERTY Hughes given my establishment was

102:01ballast or so much apartment shortages

102:03population is growing up well first ice

102:05populations not suddenly I often a

102:07number of first nineteen forty one of

102:08those bases roses past a second place I

102:13the same place population New York City

102:16is not going up peppermint has remained

102:18about the same for about the twenty or

102:20thirty years playing seven points X

102:22million whatever it is really remarkably

102:25custom so uh again we put we sealed the

102:30control devil at work what happened was

102:33that after I can come about 1947 I think

102:38it was and other people much more expert

102:41on this area I am here tonight

102:44the what happens is this the easier the

102:48polishes that with them look around like

102:49fine out and over those no new houses

102:51being dope oh no before Manhattan is

102:53peculiar thing during the twenty to

102:55thirty lots of apartment houses please

102:57bill I’ve come here we aren’t a big post

102:59World War two boom ain’t no houses in

103:02billa’s dawned on them that maybe is a

103:04sin relationship there’s been uh heavy

103:07right control me big short a big gush

103:10only less below three market right in

103:12the FAC another houses being built it is

103:14by the way much easier to get a course

103:16of a public the idea is a control a

103:19price control will cause of a drop of

103:21future supply that’s so difficult to get

103:23over a really difficult thing to get

103:25over is that even given the supply price

103:28control below the market price quarters

103:30with shortages in them and this

103:32allocation so that’s much more difficult

103:33get over but the idea this no new stuff

103:35will be doses it’s fairly easy to

103:38comprehend apparently so what happened

103:41is they the administration the time

103:43decided aha here’s what we’ll do well

103:46induce what will induce new housing to

103:48come in by having a free market a new

103:49houses no one controlled for new housing

103:52of course is no life market a little

103:53offense knowing either that’s causing

103:56one of the biggest also spilling Boone

103:58policy the world I last 20 years that

104:01everybody should turn

104:0240-story monster and and so okay well

104:08have a room will have free market for

104:10new apartment houses keep the only

104:12license for Olaf under royal the

104:15suddenly New York City has an housing

104:17housing market a split in two was

104:19bifurcated and used to market the easily

104:21disconnected so now we had the old

104:24housing market he still has a big

104:25shortage going bigger and bigger for

104:28over quarter building the old apartment

104:29buildings local for 1947 I knew a

104:32partner of the link with free market and

104:34result of this was since the people

104:37couldn’t find the old apartment

104:38apartment

104:39this increases a man curve is like

104:41substituting I have two markets it’s

104:44increasing demand curve for new has

104:45newest but just like shutting off

104:49natural gas and putting by putting a

104:51maximum price control on that increase

104:53in man curve for heating oil so this

104:55means is increase the demand curve for

104:57new apartment and this increased the

105:00method of three market rent for the

105:01apartment was much higher than it would

105:03have been without my control system he

105:06has a huge gap you have a situation

105:08where the example on old with eight room

105:11apartment on West End Avenue is very

105:13surly dope goes like a fortress the

105:16large rooms and so forth would be going

105:19something I 125 all the months the other

105:22hand new a new building those ups both

105:24of them are jellies those fashion and

105:25purse a municipal a clean little

105:28apartment was where you can hear the

105:30person down the hall turn the light

105:32switch

105:33this goes for $500 a month something

105:36like that you have a thermos and a crazy

105:39disparity between rent because I mean

105:43the demand was forced in with channel

105:45into the new be cool apartments and of

105:48course then people think as well so if

105:50we allow

105:51eliminate rent control in the older

105:52Foreman and the Restless skyrocket up to

105:54what it is in new apartments for that

105:56innocent it’s not true what would happen

105:58we arising Lee press-on the old

105:59apartment enough for Levin new

106:02appointments of the equalization

106:03tendency toward that was going back of

106:06the old one housing market

106:07interconnected market before the split

106:12Wow I happen is and let us continue on

106:15peg go long

106:17more or less in this fashion oh by the

106:20way one of the things that happened one

106:21of the ways in which the housing

106:22shortages of men affect an apartment

106:25shortage is that you have things like

106:28queuing up equivalent of queuing up

106:30favoritism black market only things show

106:33up in New York City apartment

106:36for example queuing up your waiting

106:41lists example on the building in which I

106:42live which happens to be one of the old

106:44world the lingo opening types if you

106:48want to move to a seminarian apartment

106:50but they have gone on rural waiting list

106:52three-year waiting less of something

106:53like that

106:54appointed what moves you up to the head

106:56of the waiting list the Lord knows the

106:58lap of regard this this however you

107:03happen to be a brother more of a

107:05landlord or under the landlord or some

107:07certain amount of money changes hands

107:09either with a super or the landlord the

107:12supernovae come from left out some of

107:13his own he gets allocate the property

107:16then you go up you chew up on the

107:18waiting list

107:18Bolton starts to happen you also have a

107:21situation where for example listen this

107:25happen there’s France

107:26I think that’s juvenile study if I can

107:28fall in France same sort of thing is

107:30happening here is that everything was

107:33fog related you begin to horthy of a

107:35funeral parlors entirely

107:37people turn to the ghouls in other words

107:40for example you see a friend of mine who

107:44possibly say sort of lacking in and

107:46would taste an appointment anyway call

107:51me I break finally one day he was a

107:53Saturday afternoon or something like

107:56that but hey his fantastic thing opera

107:59singers died I’m a equal apartment of

108:01Broadway because there’s an article

108:03about heard of time as family she

108:05doesn’t live in April apartment and she

108:06wasn’t she wasn’t married or anything

108:08it’ll be up living there and he’s going

108:09to rush over an hour and grab the

108:11apartment idea partner from the super or

108:14whatever the transaction is going to be

108:16so so we rushed over there the thing I’m

108:20not hampered by

108:22hit the finalists wife over there yeah

108:26he found out about five couples ahead of

108:28me is Wade Wade analyst Goulet Lewis

108:32comes with a four year course like who

108:34died here an hour ago

108:35I won’t probably have running are you

108:38watch over and Paris apparently has a

108:41regula regular systematic kind of thing

108:44when you put you know when you put a

108:45super audit or landlord on a retainer

108:47you put the funeral calls on retainer so

108:49the funeral director of the coffin it

108:52comes in or the course comes in check

108:54out your cool you up give you a quick

108:55call tell you about the apartment just

108:58just open up so this thing this this

109:02sort of unhealthy I think we all agree

109:04kind of system is generated by the right

109:06hand control process is also as I said a

109:11black market and one of the common

109:13customers on the west side of Manhattan

109:14which is sort of a key probably the most

109:16most biggest gap in the country between

109:19the pre market pricing and I controlled

109:21price you put the super’ a retainer you

109:23going on right to Billings you put the

109:24super’ own retainers they call me up at

109:26that sort of rate come and practice one

109:30of the things that happens is that the

109:33people people get lost in if you’re in

109:34there if you happen to be in the in the

109:36in a spread control apartment and the

109:38gap keeps increasing with the

109:39translation here you are if you’re

109:41locked out of something like Cisco so

109:43what you have quickly in West Side of

109:44Manhattan you have the following kind of

109:45scenario a couple a couple moving with

109:49two or three kids moves into an atrium

109:51apartment at Central Park West

109:52what’s then a view in the 1930s and the

109:54partners don’t know 85 a month and then

109:58unless its while what happens is they

110:00they decided to complete this story they

110:03decided to a city decide well we can’t

110:06leave leave the rest exactly and I think

110:0740 levels a little too much will be

110:10blatant it will allow a 15 percent

110:12increase every time somebody moves out

110:13some other family moves in you can

110:15imagine what happens then economic

110:17analysis of that then you have a

110:19fantastic class struggle is initiated

110:22seeing Orlando was trying to get the

110:23pennant out another 10 a 10 because 50

110:25percent rise or every time you do that a

110:27tenant I could stay in

110:28so this instead of the land the

110:30recording the tenant to trying to get

110:32more tenants in

110:33try to keep the tentative era is this

110:34and I’m taping it alright man who

110:37improving the amenities of the place

110:39the landlord’s trying to get the old

110:40pennant out until the amenities –

110:42lieutenant I get the lieutenant out and

110:44you have custom reshuffle so you can get

110:46somewhere out to the free market price

110:48anyway in a situation of a couple or

110:50three Street kids moving in the 1930s it

110:54has 80 files a month so the rent I was

110:56up a little bit but the couple stays in

110:57they’re locked in children grow up and

111:01move away the husband dies you have a

111:03laurel widow a neat little apartment

111:05paying other than $20 a month between

111:08Walker rate is something like 500 so the

111:11thing is the widow can’t move because if

111:13she move any any other apartments ain’t

111:15a new building available arm behind one

111:18room for 300 a month something like that

111:20so the low lady’s locked anyhow that’s

111:23happy what there was space courting so

111:25to speak

111:25certainly first school I mean I think

111:27that’s the situation market right young

111:29girls getting married

111:30or new people coming in from out of town

111:32have to go to the or caveat a First

111:35Avenue in Portland pay the sport at all

111:37the tools you have a tremendous

111:40misallocation of or a new family just as

111:43their new because I knew what Lully

111:45arrival ischemia penalized there’s an

111:46old family sort of like circle no family

111:49type of seniority in your there forever

111:51another thing that happens a little

111:53peculiar there’s a lot of fame here is a

111:55what the rent is truly depends on

111:58whether person how many people move in

112:00and out so you can have on the same same

112:03house with floribunda mister though you

112:06can have a same apartment one going for

112:07$85 a monthly other going 300 depending

112:10on how many clock people move out you

112:11have a system situation where ladies are

112:14hanging on a really low price that has

112:17people moved in and out a lot and have a

112:19much much higher feeling it really

112:20insane kind of how the allocation me

112:22nobody nobody can possibly defend this

112:24than he could have that he kind of II

112:27get out like sensible so again the

112:30reports a result in control

112:32what fire what happened then was some

112:35the late sixties are thinking what

112:37together around the middle of late

112:39sixties and you know the city government

112:41of this wisdom password a new improved

112:44building law Zoe was always designed to

112:48help the public get fresh air and graph

112:49everything what sort of a bluish federal

112:53New York City matters and insurance

112:56first they do that they can propose

112:57drastic restrictions only how much how

112:59much for the build a pre setbacks every

113:01few feet as a result those cuts balance

113:03of five new houses this is of course is

113:05not taking a consideration presumably by

113:07the city planners so because you might

113:11be if you could only build a building

113:12with you know work within the schools a

113:15lot a very expensive law taking up a

113:17grass or something but you might have

113:19beautifully grassy building the other

113:21hand might have might not having too

113:23many buildings at all as a result of

113:24this imposition anyway so V the real

113:29estate business was given several years

113:31greats in summer years warning there’s

113:32any more than going to effect in a few

113:34years as of course there’s a fantastic

113:36rush the building quickly building new

113:39partners the lengths to get in before

113:41the crazy zoning law comes in on a whole

113:43foothold housing market Lee Robert

113:45forevermore so this big bulge

113:47supply a sort of a sudden better live

113:50sixty two supply curve to the right in a

113:53new house new plumbing what is that for

113:57the first time probably last time of

113:59history of New York City we had a full

114:00and less than new billing only a cycle

114:04ago later 1930 not quite but it was sort

114:07of a trailing clouds of glory from the

114:10past for example 1830 the way arrests

114:14the way you cut rents you know you don’t

114:16start off by cutting rest is pretty

114:17drastic what you do is you or for a

114:19concession otherwise you offered one

114:21month or two months or three months free

114:22rent for the person to move in at start

114:24of two or three year lease this is a

114:26sort of rent cut it’s kind of sort of a

114:28official so that we can retract the

114:30confession much more easily you can Jack

114:32the price up again so so they thought it

114:35was Lube builders are also a concession

114:37regular concession for the first time is

114:39like in thirty is a beautiful thing to

114:40watch

114:40they’re actually vaguely sees and finds

114:42a vacancy size instead of

114:46another table will rise that sort of

114:48stuff well last question only a

114:53temporary bonanza

114:54because then comes a zoning law and

114:56bingo the supply new houses for sir

115:01almost zero and it means a supplier or

115:04new houses shifts to the left and it

115:07race suddenly as weather was a result of

115:09the learning more kind of situation so

115:12the result of this is that when a lease

115:13is come up to three year leases come up

115:17for the new for the post 1947 housing or

115:20the sudden the free market fight has

115:22gone way up there was because of this

115:24version and voted the other way actually

115:27building more one to effect as a result

115:29of the the lieutenant when new building

115:32times whereas we’re very happy when I

115:34our rent increase on the landlord’s

115:36fifty percent some cases thirty percent

115:38or whatever so hysteria then hit of

115:41course the free market was blamed for

115:43this see if you have a free market

115:44houses a landlords will gouge you and

115:46raise the rents incidentally and all

115:47that sort of nonsense you can’t trust

115:51them walk in ahead and move the link

115:54tenants many of whom were quite wealthy

115:56of course I mean it is sort of a but

115:58sort of a sort of a knee-jerk response

116:01of tenants are always poor level is

116:02always worth a lot of not a lot of

116:05little old ladies have like one one

116:07apartment building apartment building

116:09with two families you’ll get some more

116:11like come out of it now lots of very

116:13very wealthy tenants the rock Johnson

116:16Rockefeller you could be a tenant before

116:17we call camming and Berlin co-op so

116:20another really bleed to the tenants or

116:23say so so the tenants of enormous

116:28pressure on the city government to do

116:31something about this but and city

116:33government responded sounding a pen on

116:35let’s control on a new building so first

116:38class of 1947 and I only have two

116:40different types of price of rent control

116:42we have the only layer I control 347

116:45they really rugged one and you have a

116:47secure thing called rent stabilization

116:49for the new buildings where you’re

116:51allowed 15 percent in Mexico fifty

116:53percent increase per year something like

116:54that so of course it was over this was a

116:57totally cropper new build new rows

116:59villain who in blazes here on a

117:02construction construction business who

117:04was the residential billion or allow

117:06when you can easily build an office

117:09building and nobody gonna be free from

117:12my control forevermore

117:13in contrast so while finally in 1971 a

117:19little bit of sanity hit the housing

117:22situation only thing that first thought

117:24report was issued the New York state

117:27housing Commissioner John Rashad who

117:30said we’re really the whole problem of

117:31our maturity of New York City is the

117:32like control and he I guess he would

117:36have liked have gotten rid of Records

117:37role together I was politically

117:38impossible so he doesn’t be pushed to

117:40the legislature so for vacancy control

117:42law which he controls a CD controller

117:46which he controls apartments as soon as

117:49they become empty of course and

117:51continues the old I select 15 percent or

117:54whatever some other formula to see the

117:57old severe uncontrollable if your tenant

117:59stays stays in there of course this has

118:01set up a fantastic class struggle

118:03because that means if you’re able to

118:05kick the tenant out the whole thing you

118:06go up to the free market rent as a

118:08tenant cleans room for dear life

118:10he stays there here she stays at our 40%

118:1330% below so as a result they pass as a

118:17wharf a special hotline housing bureaus

118:22or stay up and play for wiser they have

118:23something and make sure you cool off

118:24whenever landlords the dumps garbage in

118:26your window or whatever

118:29so what happened this has not really

118:33been tested very well because as soon as

118:34no the thing the more was only in to

118:36expect the lazy control was only aside

118:38for about two months from has a Nixon

118:40passes for his fries and then federal

118:43line controls came in and then

118:45everything I’ve messed up I’m not really

118:47sure what’s going I think now for the

118:49last six months or a year or so it legis

118:51the state makes the D control lawyers

118:53and use in practice I don’t know I don’t

118:55know the effect of except as all of us

118:57Elliott I’ve eliminated altogether and

118:59go back to the old one control which is

119:01essentially the current choice so anyway

119:04we’ve managed to have a thirty because

119:06of what time a shortage of n shortage of

119:09course is blame my wartime as well as

119:10population the wars been over an hour

119:13what who’s been over for what is it

119:14almost thirty years an emergency rent

119:17control will remain of course and of

119:20course the shortage maintenance force

119:24all right there are other areas well

119:26well I should let you mentioned France

119:29also on passing Brooke found a juvenile

119:31or actual act a little pamphlet on rent

119:34control in France Italy in Paris and you

119:37were in 1948 and apparently situation

119:39more like the same now and it has the

119:41same sort of situation except more

119:43severe where events to remain Webster

119:47much higher than one 1914 in prices

119:49astronomically higher and so people are

119:52won’t be pushed this example might pay

119:541% of income and rent or one dollar a

119:57month or something like that for a

119:58recipe the whole thing is over this you

120:01can’t read any problem at all and you

120:02buy an apartment which is which is

120:05valleys happening in West Side of

120:06Manhattan also where you simply the

120:08building goes co-op in quotes so there’s

120:11instead of renting apartment they have

120:12to buy it the result of this gets

120:14completely a from under my control or

120:16there’s no ice control on a co-op so I’m

120:20buying the whole whole apartment

120:21that means there’s plenty of a promise

120:23available if you have the money to buy

120:24it

120:24so the porters coming so he elected so

120:26originally supposed to come in help poor

120:29tenants help out the for tenant now

120:31we’re getting more and more situation

120:32the only time you can be a tenant so to

120:34speak is when you’re not a tenant we

120:35have coming up to scratch to buy the

120:37whole apartment like you you’re kind of

120:39or reverse effect any right the coming

120:48on to actually say also in Europe my

120:51control is very severe and an avian

120:53countries and France Israel forth those

120:57of which is an employment short injury

120:58severe correspondingly severe there are

121:04other areas where it’s not quite as

121:06obvious my control does its work in

121:09causing causing shortages for example

121:12we’ve had a problem for quite a few

121:14years of airport congestion particularly

121:17at peak peak hours and here I commend

121:21the committee or attention an excellent

121:23pamphlet on Airport clipboard suggestion

121:25something like that by Royal Secord’s

121:27put out by the American Enterprise

121:28Institute what happens what happens is

121:32so what you have is is a shortage of of

121:35airspace they’re on the escort right so

121:38what’s going on here why there is

121:39shortage again of course we always look

121:41for government the case of airports

121:43imports the Union in for the universally

121:46only money

121:47oh my mystical government apparently

121:50it’s become part of the American

121:52heritage you can’t have a private

121:53commercial airport I understand the Pan

121:56Am undermine works for Pan Am so hmmm

121:59several years ago trying to get

122:00permission of New York City – Billa its

122:02own Airport in New York area which would

122:04have relieve congestion which you that’s

122:07the first own plane was denied as the

122:09evil we know immoral whatever so the

122:13tradition is a lot you have that

122:14doubling and for airport the government

122:16as we’ll see later as we get the

122:18government in general as I see what

122:19keeps wiping away a government the

122:21lavender that as we get along with the

122:23greater more and more government has no

122:26particular reason for maximizing profits

122:29or the I get elected in conference today

122:31to we’re offering operating efficiently

122:34or anything that store their pricing is

122:36a place them whatever way they want to

122:38for political reasons because whatever

122:40happens the taxpayers gonna pick up the

122:42tab for any deficits

122:45there’s no competition so the way we

122:48have what happens is the imports the

122:51price their services are a really

122:53bizarre there’s our way which no private

122:56Airport would ever do what they problem

122:58comes in the fact that the places the

123:02shorter be sure it is in the runways the

123:04problem comes in the fact of the price

123:06of the runway over the landing sea and

123:08takeoff see is extraordinarily low

123:09something like a $5 for a landing and

123:13it’s equal for every plane that comes in

123:15where there’s a few hundred passenger

123:17airliner of a private plane zooming in

123:19on one person in it and it’s equal for

123:21the time of day doesn’t matter was rush

123:23hour or midnight so the result of all

123:27this is a demand for if with runways

123:29much higher in the rush hour periods and

123:33would be much higher mean it’s certainly

123:35ten hour you willing to pay a lot more

123:36than the Joe Blow as private plane for

123:38landing there’s all of that

123:40fantastically push the ice of runways

123:42way way below the free market price and

123:44cause congestion these points I mean it

123:47also means honey how do you ration sure

123:50- just a short kind of shortage ration

123:52by queuing up this case so chewing of

123:56course from the airlines is backing up

123:58to the Pan Am circles for an hour so the

124:00two private planes are having to get

124:02there first those that look like a line

124:04you can’t reserve your space ham can’t

124:07say I reserve runway five of our Kennedy

124:10Airport the five o’clock no no you take

124:12your chances if you get there happens to

124:13be two private planes zooming in ahead

124:15of you is just tough luck so this sort

124:18of rather so this here we have a system

124:20congestion being the shortage of space

124:23brought about by this crazy pricing

124:26policy pushing ething Airport only label

124:29in the market price the accurate Tampa

124:31those are the whole discussion of what

124:33happens what happens for example we’re

124:36numb when Kennedy Airport I think raises

124:39price for it was landing fee from

124:41something like $5 something like twenty

124:42one all I really a final is pretty small

124:45to but yet just this the length crease

124:47pushed out enormous they relieve

124:49congestion was a pushed out a lot of the

124:51private planes it wouldn’t pay I mean

124:53saying a fourth guy has a private plane

124:55is pretty brief pretty rich

124:57it’s going alright extra $20 of the

124:59stuck in his craw and they tended to

125:01shift from Kenny if or does a little a

125:02sports in Westchester except for with

125:04which is designed for private planes

125:06they’re supposed to handle these people

125:08but of course we want to land in

125:10Westchester we can land the Kennedy and

125:12nip in the needs of Manhattan very

125:13quickly but that extra $20 or the

125:15finally get intensive up to do that to

125:17spend $5 of land in Westchester so just

125:20that and that’s required Lee a market

125:22clearing price increase but that itself

125:25wasn’t a point of the way also of course

125:27the ideas of charging passengers example

125:32higher fares and rush hours and an

125:33office hours

125:34rain tolerant as an intelligence thing

125:36and would help the problem too

125:38however the really the really get the

125:40really depth of the thing is as if here

125:42the runway caper which is still almost

125:45so label Rolly seem like a trouble and I

125:50said what happened to say what happens

125:52is it says Pan Am is much more willing

125:53to pay us say $100 even and then put a

125:56single person pleasure pleasure of

125:58flying on Sunday or any other time the

126:03pleasure fly about the Westchester and

126:05having young for and then and take

126:07remember to come into the city

126:09why a meantime while they’re doing this

126:12the airport’s also have another peculiar

126:14pricing system they give monopoly

126:16concessions to a lot of concessionaires

126:18a concessionaire is then charged

126:20monopoly prices so and Eckerd so there’s

126:24a whole study been done for example the

126:25price of a sandwich at an airport

126:27restaurant and you know comfort let’s go

126:30very close by it gets sort of like and

126:33the import thing which is a much higher

126:34price probably also poor and quality

126:36over difficulty some of the scholar to

126:41gauge but so the point is you have a

126:44heaven you have this monopoly you have a

126:46monopoly concession the concessionaire

126:49charges the monopoly price under the

126:50concessionaire shares a monopoly game

126:52with the airport we’re clear for your

126:55like a kickback to the airport itself

126:58and then the import expects to get most

127:01of its money to recoup the bake even or

127:03make money on from the concessionaires

127:05and whatever it doesn’t whatever it’s a

127:08lesson and

127:09our deficit has in the concessionaire

127:11business that that’s what a charges for

127:13the runways instead of charging a market

127:15clearing price for the runway simply

127:17charges as little as it can look at what

127:20the customers have left over having them

127:22in thoughts of a crummy sandwiches so uh

127:25any insurance and other all sorts of

127:28concessions and airports which resign

127:30the charge monopoly price so again if we

127:35have five at airports and so visa law we

127:37can’t have five at airports this is the

127:39sort of piping system would not be so

127:42that the going on it’s not an of course

127:45very prominent for them of shortage a

127:48congestion even more prominent than the

127:52airports and that’s traffic congestion

127:55big city rush our New York City to

127:59anyone for any our Manhattan refuges

128:02when you have again as a shortage of

128:05traffic shortages speak space and of

128:08course this is not unrelated to the fact

128:10of the owners of the street and

128:11violently and everywhere our government

128:14how does the replace the streets roughly

128:17they place in a very rational manner or

128:19that way not in a market clearing manner

128:22if they did there wouldn’t be any it

128:23wouldn’t be a custom congestion the

128:25pricing government excuse excuse is that

128:28pilots are like they’re pricing and buy

128:31used by the user tax on gasoline so the

128:33tax of the pay per gallon gasoline goes

128:36for the highways and lot sort of stuff

128:37so it all balances out the first place

128:39it doesn’t really bout that but aside

128:41from that the point is you’re spending

128:44as much money then what we did for you

128:48to drive of course you as much a drive

128:50around upper Westchester at 3:00 a.m. as

128:54a does the drive around midtown

128:55Manhattan 5:00 p.m. so the fact that

128:58you’re spending money per gallon doesn’t

129:00really mean a darn thing it doesn’t

129:01quite a market clearing kind of kind of

129:03price no private speedo no there’s like

129:05more of a price in that manner so what

129:09kind of pricing with AD well obviously

129:10that the kid we can’t predict in detail

129:13how to market operate obviously being a

129:15way that charge land money for in

129:17congested streets and then for non

129:20congested Street for outlying areas

129:22there can be all sorts of devices to do

129:24this there’s various the economist by

129:26the way your nan market got an interest

129:28in this area that sort of intellectual

129:30gain a high caucus operate come up with

129:32interesting suggestions one way to have

129:35a special sticker I mean like a license

129:37instead of having just the regular

129:38lights we have a sticker on window

129:40whatever which which you have to pay for

129:43either per week it for mother per day

129:45whatever can be always adjusted which

129:47would be very expensive and allow you to

129:49drive around in the town area for for

129:51the fix or something like that and the

129:55price will be charged a market market

129:56clearing letter the same thing can be

129:58done for parking or parking fees of

130:01course parking is mostly handled by

130:03government and street parking certainly

130:06and Augustine is a very peculiar

130:08enviable a underpriced way label in the

130:11free market price and there’s a big

130:14fucking party space shortage plus the

130:20fact that I cannot secure your way sale

130:23it then very often if I thought you

130:26waited your subsidized for spending less

130:29time there in other words your points

130:31for four hours of course your less per

130:32hour if you park for a half hour of

130:34course if you want to get you want to

130:35have a high turnover and clear the

130:37earlier clear the market for parking you

130:40should do just the opposite charge you

130:41more for a longer period and yet try to

130:43induce the guy to get out the new clock

130:45and come in the government’s almost

130:47never do that so what you would have and

130:51the thing is what the government does

130:52its typical government activity either

130:54they subsidize talking to the prices

130:56dual effect almost virtually zero for

130:59walking after Street space it would say

131:01you have tremendous congestion and then

131:03there was a or they say wow what we have

131:05to do is no getting around we have to

131:06ban all caused from that hat

131:08become a hat prohibit them stop them

131:10shoot anybody who comes in the that was

131:13in the 42nd Street several government

131:14kind of activity or easy it from either

131:16something that’s freely subsidizes that

131:18was completely for your I’ll just

131:19prohibited altogether

131:21obviously the market would do if some

131:23work it will allow in the situation is

131:24to gauge this thing and then you know

131:26that I have a price it at such a price

131:28in such a way to clear the market

131:30everybody will be happy to be no

131:31shortage of parking space be fairly

131:33expensive perhaps so that’s the way it

131:35should be since that would be

131:36allocating scarce space of intensive the

131:39man I don’t know what the price of

131:42course would be but it would be

131:43somewhere you know it’s somewhere in

131:44between zero and being prohibitive

131:48so someday if we ever get this kind of

131:51market pricing we have we have private

131:53streets we will get market pricing the

131:55funny thing is mostly we’ll think of the

131:56owners somebody advocates privately

131:58owned streets but the assumption is that

132:01the government is operating it should be

132:02so beautifully as they own us on proving

132:04as a market that handlers on a personal

132:06advocate the market alternative it

132:09should be just the opposite certainly

132:11New York City the streets are miserable

132:12dirty and littered and and congested and

132:16that’s what I will see how any private

132:18Street company can do any worse just as

132:20this is just an empirical grounds when

132:22we think they would try it so we should

132:28we should tend to look then as things

132:29not just sort of obvious things like the

132:31nails and cement we’re shortages can be

132:33caused by Pike Central also only sort of

132:36hidden areas where people don’t think in

132:38terms of prices such as Airport space

132:42such as traffic space and so forth we’ll

132:46get later on and we’ll get on the

132:49question of conservation go back to that

132:50the whole thing about scarce capitals

132:54here special resource show and also the

133:00whole question of private property in

133:02general and different hidden areas of

133:03the state we’ll get to later on the hope

133:05there’s a final prompting Arizona nobody

133:07thinks in terms of private property such

133:09as radio TV channels when we get to that

133:13later on

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