Study Guide to Man, Economy, and State with Power and Market

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Chapter Summary Price control occurs when the intervener attempts to influence the terms on which products or services exchange. (In contrast product control is a coercive influence on the product or service itself, including the individuals who sell it.) A price control is ineffective if its penalties do not apply because the market price falls within the legally permissible range. The rest of the analysis assumes an effective price control. A maximum price control occurs when the intervener threatens violence against anyone caught selling a good above a particular price. The immediate effect is a shortage. “Nonprice rationing” then comes into play, including queues, favoritism for certain customers, and discrimination against unpopular groups. A minimum price control threatens violence to prevent sales of a good or service below a particular price. This leads to a surplus. An example is the mass unemployment caused by minimum wage laws. Outright prohibition leads to black markets as suppliers sell the product outside legal channels. The reduced supply leads to higher prices, but also to an inferior product as the sellers cannot resort to economies of scale and name-brand advertising. By prohibiting sale of a good or service except for a privileged group, the government confers an artificial monopoly (or 189 CHAPTER 3 TRIANGULAR INTERVENTION
190 Study Guide to Man, Economy, and State with Power and Market oligopoly) grant. All of the alleged effects of free market cartels and monopolies do apply to government cartels and monopolies. Following are examples of typical monopoly grants: Compulsory cartels occur when the government forces firms in an industry to restrict output. This helps inefficient firms and hurts consumers. Licensing is a threat of violence that limits the permissible producers to particular groups (those who have obtained the license). The ostensible purpose of most licensing is to ensure quality and safety for consumers. Even so, the intervener necessarily eliminates the option of lower-quality but cheaper services. On the free market, sellers of adulterated products could be prosecuted for fraud and/or injuring the buyer’s body. A tariff is a tax placed on imports in a particular industry. It directly injures domestic consumers and foreign producers, and it indirectly injures domestic exporters in other industries. Immigration restrictions confer a restrictionist wage to the domestic laborers, raise prices to consumers, and distort the location of workers and capital. Child labor laws raise wages for adult workers and reduce total output. Compulsory school attendance lowers utility even more than a mere prohibition on work. Conscription reduces the supply of able-bodied adult laborers, distorting production and raising wages. Government unemployment benefits slow the transferral of displaced workers to new jobs, and help mask the harmful effects of unionism and other restrictionist policies. Antitrust laws stifle efficient mergers and penalize those firms that gain market share by satisfying customers. Conservation laws defy the time preference schedules of individuals and confer gains to particular factor owners. On a free market, owners tend to maximize the present discounted value of their assets.
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CONTENTS INTRODUCTION . . . . . . .
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In June of 2004, I became convinced
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Introduction ix appropriate, I have
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Chapter Summary In a money economy,
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Chapter 4: Prices and Consumption 4
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Chapter Summary In the evenly rotat
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Chapter 6: Production: The Rate of
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Chapter Summary This chapter explai
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Chapter 7: Production: General Pric
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Chapter Summary Entrepreneurial pro
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Chapter 8: Production: Entrepreneur
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Chapter Summary Consumer preference
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Chapter 10: Monopoly and Competitio
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Chapter Summary Like all goods, the
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Apriorism, 1, 9 Ability-to-pay prin
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Index 251 Equilibrium, 47, 104 macr
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Index 253 Medium of exchange, 27, 3
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Index 255 See also Economy, Evenly
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