Dear Australians,
It’s not my fault!
I begged Jim to read the chapter on the dangers of price capping.
But back at school, which is the last time he thumbed through any of my pages, he skipped the whole chapter, no yellow highlighter in sight. Skipped monetary policy, Chicago and Austrian Schools too, all the good stuff.
Of course, every single word on Keynesian economics and taxation is highlighted yellow. And Das Kapital next to me on the bookshelf, entirely coloured with a busy pink highlighter. Pink. Apt. I knew something was suspect from the start with this kid.
But I’m still on his hallway bookshelf fighting the fight.
Every morning as he walks by, I implore him, “Jim, don’t interfere with the free market. Don’t do it, son.”
What does he go and do?
Gas and coal price caps. Straight out market interference.
Says he wants everyone to have electricity at a fair price.
Darnation!
What can I say? He was a C- in economics at school.
Day after relentless day, I challenge Jim: “What do you think happens if you artificially restrict prices below the market rate?”
Sometimes he slows down and turns to me as if he’s finally heard something.
Then I seize the moment, “Everyone will want to buy. Demand spike, Jim. A surge in demand.”
He doesn’t stop to listen for long.
When he comes home in the evening and walks by, I drive home the point, “And do you think companies are going to want to supply the market when the prices are forced low by you, Jim?”
“Not likely, right? Jim? JIM??
He switches off all the lights in the evening, unbeknown to him that’s good practice for the blackouts he’s causing down the track and, with exquisite timing, I yell out “Shortages, Jim. People will miss out altogether, your fair price be damned. Then soaring prices the moment you release the cap in 12 months because of the lack of supply, Jim. It’s all there on page 147 if only you’d highlighted it!”
He doesn’t sleep well at night right now. Maybe my words are subliminally getting through. I dumb it down for him as best I can, “Jim, price caps below market rate = demand up + supply down = shortages!”
What can I say? C-.
It’s not my fault.
I guess Das Kapital will only be read during daylight hours in the future.
Yours sincerely,
Jim Chalmer’s High School Economics Textbook