In the files of Congress there is a bill that proposes to invest the President with authority to regulate the market place. It is known as the “Stand-by Controls” bill. During the past two sessions the Administration has pressed for the passage of this bill, and continued pressure may be expected during the present session. It might be well to consider what the proposed legislation undertakes to do and what it will or can do.

The argument for controls is that the Executive Branch should have power to impose limits on prices, rents, interest and, possibly, wages, so that a condition of general scarcity—an “emergency”—cannot drive these prices and rates upward beyond the reach of many consumers, causing widespread distress. The emergency might be a period of runaway inflation, when people lose faith in money, prefer things, and dump currency into the market place as soon as they have it; this scramble for goods pushes prices up at a precipitate rate. Those whose income does not keep pace with prices will be outbid by those in a more fortunate position, and a large number of people will have to go without. Possibly that is the situation against which the Administration would guard. But more likely, the “emergency” contemplated is war, or the imminence of it, when the siphoning of goods and manpower into the military machine depletes the stock available for civilian consumption and thus tends to push prices to prohibitive heights.

The government proposes to alleviate the consequent distress by fixing prices at levels which people of average or low incomes can pay, so that there will be an equitable distribution of the short supply. But a fixed price is wholly impotent as a mechanism of allocation or distribution, for it is no longer a price satisfactory both to the buyer and the seller. A price control law prevents people from doing what they want to do or compels them to do what they do not want to do. That is, the government undertakes to control people, forcing them to buy or to sell at prices unconducive to trade.

Such a law says that it is not permissible for Mr. A to ask more than ten cents for a cup of coffee, or for Mr. B to pay more, regardless of any private agreement between them. The law would say that trade may not occur except at ten cents, and that the bidder and asker shall abide by the law under pena1ty of punishment. What is called price control is but a stricture on human behavior.

Let us assume that both seller and buyer are law-abiding citizens. Mr. A, the seller, finds that the price he may charge for the cup of coffee does not cover the cost of supplying it; that is so either because the government has neglected or is unable to fix the price of the ingredients and services involved, or has depreciated the purchasing power of the dime (by inflation) so that it will not buy these ingredients and services. To comply with the law, Mr. A resorts to defining the undefined “cup of coffee,” by serving a demitasse or by charging for the sugar and cream which Mr. B expects when he orders a “cup of coffee.” That is, the price is what the government says it is, but the commodity has changed. Has the price been fixed?

Should the government undertake to define a “cup of coffee” so that Mr. A cannot legally alter the commodity, he will be forced to pay the costs which the ten cents do not meet by digging into his savings, his capital. He is compelled to make a gratuity to his customer. Even if he does so, there will come a time when he will have no capital to hand out, and then he must cease selling cups of coffee. He will go out of business. In that case, Mr. B will have to go without his cup of coffee. There will be no sale and therefore no price. The proposed legislation will not fix the price of coffee; it will prevent Mr. B from satisfying a desire and stop Mr. A from making a living.

Thus, when you put the microscope of reality to a price control law, you find that its purpose is not really to control prices but to control persons.

I see by the papers that Messrs. Khrushchev and Bulganin were very free with their promises of economic aid to India. Copycats!

The promises seemed to have been taken at face value. There was little questioning of the ability of K & B to make good. What have they got to give? Is it possible for a collectivized economy to produce an exportable surplus? Perhaps slave labor under strict surveillance will turn out a lot more than their subsistence requirements; but then there is the vast army of nonproductive overseers to take care of, in proper manner, to say nothing of what the Soviet military machine consumes. That’s quite a chore for peons. Come to think of it, the papers (capitalistic, of course.) report that Russia isn’t producing enough to pay for what she is importing from those countries silly enough to accept her orders; her “unfavorable trade balance” is considerable. If so, what can she give to India, or anybody?

Putting that question aside, some of our people, in the “higher echelons,” are reported to be disturbed by the prospect of competition in giving. Why? Let them give, and the more the better. If the Russian economy is as low as it is reported to be, and as reason tells us it must be, then the more they give the more imminent its utter collapse. That would go hard on the Russian people, but it should result in both their freedom and the removal of the threat of war. Prudence would suggest that we withdraw from the field, giving Russia a chance to bleed herself as she chooses while we build up our resources.

Perhaps, however, the clever “Commies” made these promises for the purpose of scaring us into giving India more than we have given. It is well-known that communist strategy contemplates the collapse of capitalism, which an accelerated give-away program would hasten. If that was their purpose, they seem to have calculated well; for a few weeks after the aforesaid promises were made, Washington reported that $10 million worth of railroad equipment had been earmarked for shipment to India, and that total American aid to India in 1956 will amount to $60 million.

Just before the present Congress convened, a flying political saucer appeared in the skies. It was clearly identified as coming from the planet Administration, and on its sides were painted this legend: “We need $5 billion more for foreign aid.” The newspapers carried long and learned explanations for this phenomenon; the explanation sounded like rewrites of mimeographed sheets that had been dropped from the same planet. Some congressmen, 1ooking skyward, said the saucer was the real thing; others, looking earthward, cried “fake.” This left such as we, who have to fork over the $5 billion, somewhat bewildered, asking “why.” Here is an answer.

To understand most proposals initiated from within the government, one must begin with an inquiry: in what way will this proposal add to government power? As far as any government is concerned, its interest, all too often, is to increase its power. If people want limited government, they must provide the limitations. So the way to examine a government proposal is to test it for power.

In the present case, “foreign aid” is a paying occupation for thousands of administrators, pliant professors on leave, permanent and borrowed economists, linguists, traveling specialists, experts in geopolitics, and so on, each with a complement of clerks. It takes a lot of people to spend $1 billion; it takes more to spend $5 billion. Obviously, these people are very jealous of their perquisites and have therefore convinced themselves that “foreign aid” is a good thing, not for themselves but for their country. So, they are all for continuing their work; if the paying public has any doubts about the usefulness of “foreign aid,” it must be set straight with mimeographed sheets and a spectacular flying saucer.

Supporting this vested interest is another one, of more sinister character. It consists of a goodly segment of the population—the industrialists, financiers, farmers, and workers who sense an opportunity to profit by “foreign aid.” Since every dollar appropriated to aid foreigners is spent in the United States (a dollar does not buy a thing abroad), it is obvious that some good American citizen will lay his hands on it, by way of dividends or wages.

So the dollars will stay at home, passing from the pocket of one taxpayer to the hand of another, while the government gains power and all of us lose goods and services as they flee the country.

The law enforcement agents, in 1954, seized 22,913 illegitimate whiskey stills. The capacity of these stills is estimated at over 35 million gallons of moonshine, which is about a quarter of all the whiskey legally made and sold that year. The Licensed Beverage Industries, Inc., which vouches for these figures, reckons that the number of stills seized in 1954 is at least equalled by the number that escaped the agents. If this is so, then between a fourth and a third of all the liquor sold in the United States bore no taxes. The illegitimates did a sizeable business.

One can draw a number of morals from this fact, but the economics of it is quite obvious. Whenever the price of a commodity rises, for any reason at all, the tendency is for a substitute product to take its place. In the case of whiskey, the price for the legitimate kind, including taxes, puts it beyond the reach of many consumers. The moonshiner comes to their rescue. He is spawned by the law of supply and demand, over which the “revenoors” have no control.

In point of fact, the moonshiner is the creation of the government. If there were no taxes on liquor, or if they were so small as not to bother even the drinker of low means, the illegitimate operator would disappear. So would the law enforcement agents, thus further reducing the drinker’s tax load.

A few years ago there was a great to-do over the Reconstruction Finance Corporation. This lending agency, set up by Herbert Hoover to relieve a “temporary emergency,” managed to live on for over 20 years by congressional extensions. Finally, its profligacy with the taxpayers’ money plus the corruptive practices of its personnel turned the agency into an “issue,” and Congress voted for its demise. Rather, it was only partially killed. Some of its life was breathed into a new agency, the Small Business Administration. The capitalization of SBA was limited and so were the loans it was permitted to make, the idea being that Uncle Sam should come to the rescue of the “little fellows” whom the big bad banks considered poor risks.

A few weeks ago the Senate passed and sent to conference a bill increasing the SBA’s lending authority by $35 million to $210 million and giving it greater latitude in taking on risks.

This sort of thing can go on and on until man again learns, as once was known in America, that the force of government may not properly be applied to lending or to other transactions involving a buyer and a seller.