“Even the tyrant never rules by force alone,” wrote G. K. Chesterton, “but mostly by fairy tales.”
Alexander Lukashenko meets Chesterton’s description perfectly. Since 1994, he has kept himself in power as President of Belarus by stealing elections, mugging the press, and serving as Vladimir Putin’s most loyal stooge in Eastern Europe. In May 2021, he even forced a Ryanair jet en route from Greece to Lithuania to land in his capital of Minsk so he could arrest a leading dissident on board, Roman Protasevich. The least free nation in all of Europe, Belarus is cursed with a horrific human rights record thanks to the blood-soaked hands of its maniacal dictator.
The fairy tale side of Lukashenko is legendary. He boasts a fondness for the old Soviet Union, whose collapse he labeled “a disaster.” He champions state ownership of industry because he says it’s efficient, which not even the most moronic fairy tale would dare claim.
Last week brought news from Minsk that Lukashenko fancies himself a sort of economic sorcerer. Facing an annual rate of price inflation of nearly 20 percent, he angrily declared at a meeting of top officials, “All price increases are forbidden. Forbidden! From today [October 6]. Not from tomorrow, from today!”
At least for a moment, every dictator who prints paper money, stifles wealth creation, and wonders why prices subsequently rise must have thought, “Now why didn’t I think of that?”
A year from now, you can bet your life that no headline in the world will read, “Lukashenko’s Decree Miraculously Ends Inflation, All is Well in the Belarusian Economy.” The 9.5 million people of Belarus are about to experience the same painful outcome that price controls produce always and everywhere. Lukashenko’s fairy tale will be their nightmare.
If I could place just one book in the hands of every Belarusian today, it would be a classic from 1979 by Robert L. Schuettinger and Eamonn F. Butler titled Forty Centuries of Wage and Price Controls: How Not to Fight Inflation.
In his Foreword to the book, David I. Meiselman underscores the verdict that Schuettinger and Butler definitively provide in chapter after chapter:
The experience under price controls is as vast as essentially all recorded history, which gives us an unparalleled opportunity to explore what price controls do and do not accomplish. I know of no other economic and public policy measure whose efforts have been tested over such diverse historical experience in different times, places, peoples, modes of government and systems of economic organization…
The historical record is a grimly uniform sequence of repeated failure. Indeed, there is not a single episode where price controls have worked to stop inflation or cure shortages…
Many of the results of price controls, such as black and gray markets, are predictable and have the inevitability of mathematics and of many of the laws of the physical sciences. Nations that ignore them are no less periled than those that decree that two plus two must equal three….
Market prices are what they are because of a confluence of factors, chief of which are the supply of and demand for goods on the one hand, and the supply of and demand for money on the other. Prices send signals to both consumers and producers, telling them what and how much to produce as well as what and how much to consume. When prices are free to move, they act to bring supply and demand together so surpluses and shortages are ephemeral. When a tyrant simply decrees what prices will be, and enforces his order at gunpoint, it’s mindless to think that everyone will live happily ever after.
According to Schuettinger and Butler, the Babylonian king Hammurabi “smothered economic progress” with wage and price controls in 1750 B.C. Trade declined, and “the very people who were supposed to benefit” from the restrictions “were driven out of the market.”
For a time in ancient Greece, merchants were put to death for violating price controls, a fact which prevented them permanently from ever moderating price increases by adding to the supply of goods. “The Athenian government,” reported Schuettinger and Butler, even “went so far as to execute its own inspectors when their price-enforcing zeal flagged.” Inflation didn’t disappear as effectively as either the merchants or inspectors did.
Similar results occurred later in the Roman Empire. Diocletian’s famous price-fixing Edict of 301 ended in unmitigated disaster and the emperor’s abdication. Quoting Livy, the authors of Forty Centuries note that “State intervention and a crushing fiscal policy made the whole empire groan under the yoke; more than once, both poor men and rich prayed that the barbarians would deliver them from it.”
Printing paper money while declaring it to be “backed” by confiscated Catholic Church properties didn’t save the French Revolution in the 1790s. Even with the guillotine working overtime to enforce the “Law of the Maximum,” inflation raged, shortages and black markets mushroomed, and the French economy shriveled until Napoleon came to power and burned the printing presses.
The historical examples of price control failure are almost endless, and Belarus will soon join the sorry list.
Why is knowing economics and history important? Because without the knowledge these disciplines give us, we can be as stupid and as destructive as a Belarusian despot. And that’s no fairy tale.
For Additional Information, See:
Empty Shelves and Black Markets: What Awaits Belarus in the Near Future
Belarus Dictator Bans Price Increases with Immediate Effect by Jack Newman
Belarus to Stop Inflation by Simply Banning Price Increases by Tim Fries
What Price Control Really Means by Lawrence W. Reed
Price Controls Have Failed for 4,000 Years—and Humans Still Haven’t Learned by Jon Miltimore
Nixon Knew His Price Controls Wouldn’t Work by Emily Skarbek
Inflation, Price Controls and Collectivism During the French Revolution by Richard Ebeling
Forty Centuries of Wage and Price Controls: How Not to Fight Inflation by Robert L. Schuettinger and Eamonn F. Butler