Magaziner’s propensity to pander is too dangerous for him ever to be trusted to be governor.
Difficult as it may be to believe, the general treasurer of Rhode Island, Democrat Seth Magaziner, proposes to address the inflation wrought by the policies of Democrat White House occupant, Joe Biden, by — get this — flooding the market with easy cash and imposing price controls.
Each of Magaziner’s suggestions can be debated on its own merits for goals having nothing to do with inflation, but packaging them together specifically so as to address rising prices suggests a person without even passing familiarity with economics and the workings of money. One way or another, inflation means too much money chasing too few services and products. Adding more money to that equation will only make inflation worse.
Buying gift cards for all families with income up to $125,000 per year (!!) would mean fewer people feel the need to conserve or adjust their appetites to reflect the real availability of food. Prices will go up, and the most disadvantaged people will have an even harder time meeting their needs.
The same is true of Magaziner’s targeted-pandering suggestion of suspending the sales tax during this holiday gift-giving month. At this point in our tax regime, decreasing the government’s take is always a good in itself, but reducing prices by eliminating a portion that has nothing to do with production won’t help with inflation. Retailers will tend to increase prices to match what consumers had proven they were willing to pay. This may send some signal to producers to increase their output, but are toys really an area of specific concern, here?
Magaziner’s third proposal — imposing price controls on medicine — may not directly inflate the currency, as the two other parts of his plan would, but it would likely distort the market and perhaps reduce the supply. Prices are information, and the government risks massive harm if politicians assume the signal is always that some greedy executive wants more money.
Drug price increases could indicate that the manufacturers need to send the signal to their own suppliers or the labor market that they need more resources. They could indicate that innovators are coming up with new medicines that are expensive to research. Or they could indicate that many more people want the drugs than manufacturers can satisfy, so high prices force people to make more-careful decisions when balancing medicine against other things on which they might spend their money; the people in most desperate need will tend to choose the drugs, an option they might not have if people who didn’t need them as badly bought them up because they were cheap.
Whatever the specifics of current events may be, a civilization cannot address inflation by alleviating its symptoms. Attempting to do so can destroy the civilization as government pours more and more medicine down their people’s throats, making the sickness worse.
Of course, it may be that General Treasurer Seth Magaziner understands the likely effects of his policies very well but simply doesn’t care. He sees an opportunity to pander, so he’ll take it and (presumably) hope that reality intervenes with some stroke of luck to avoid the foreseeable consequences, or at least to provide some scapegoat to bear the blame.
Featured image of a Great Depression bread line from flickr.