Expect distortions with controls

Unfortunately, price regulation is price control.

If the Government energy czar does nothing, Cayman’s energy supply and demand will remain in balance.

If the Czar does do anything, Cayman can expect its energy supply and demand to go out of balance.

I remember full well living through the US energy crisis in the early 70s, when President Nixon brought in price and wage controls.

Almost every day, Nixon’s energy czar would make some stupid announcement or implement another stupid rule

For months, the Wall Street Journal had published many editorials saying they had calculated that the market would clear at 62 cents per gallon.

Meanwhile, gasoline remained in short supply, the pumps were closed at most gas stations, people were driving long distances to search for gasoline, they were carrying extra tanks in their trunks and were forced to plan their trips around finding gasoline supplies.

Sure enough, when the energy czar in his great wisdom finally allowed the price to rise to around 60 cents per gallon, the markets cleared.

Almost overnight, the gasoline supply matched the demand, all gas stations reopened and all the gas lines disappeared.

Nixon’s price and wage controls lasted long enough to cause severe market distortions throughout the US, and it took the US many years to fully recover from that stupid move.

That was an experience I would wish on no one.

So please beware when you invite Government to regulate prices or wages. It’s something that’s impossible for it to do.

And to the extent it tries, expect surpluses, shortages, market dislocations, market distortions to spread throughout the economy.

Gerry Miller

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