In what American Commitment President Phil Kerpen called “a gutless sacrifice of principle,” last week the House GOP capitulated to relentless lobbying from big retail interests by stripping language repealing price controls on debit card use from the Financial CHOICE Act.
This is not only wrong because the effect of the price controls has been to increase costs for those on the margins of the banking system – the underbanked – but because price controls are always harmful. They distort the normal working of supply and demand and generally benefit most those whom they were not intended to help in the first place. Thus, for example, the debit card price controls were purported to help small merchants, but in many cases they saw their costs go up, as they lost access to deep discounts they had before the price controls were introduced (the price ceiling actually became a floor.)
That the House GOP could not rally against such a blatant interference in the free market is an extremely worrying sign. We are seeing similar things happen to the once proudly Thatcherite British Conservative Party, which included price controls on energy costs in its disastrous manifesto.
The last Republican administration to embrace price controls was Nixon’s, and the great economist Henry Hazlitt roundly excoriated it for doing so, in advice that proved to be prophetic. The fact that his speech was reproduced in the very first issue of Hillsdale College’s Imprimis publication should speak volumes.
Are Anglo-American conservatives so quickly forgetting the lessons of the past? It appears so. When it comes to toying with price controls, one of the copybook headings of economics, perhaps the so-called conservatives should remember the words of Rudyard Kipling:
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
A gutless – and foolish – sacrifice of principle indeed.