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