12: On Price Controls, dengism, and writing for the future

3..Notes from the Greats 🏆

Nassim Nicholas Taleb — essayist, mathematical statistician, and investor on writing for the future:

"If you want to be read in the future, make sure you would have been read in the past. We have no idea of what’s in the future, but we have some knowledge of what was in the past. So I make sure I would have been read both in the past and in the present time, that is by both the contemporaries and the dead. So I speculated that books that would have been relevant twenty years in the past (conditional of course of being relevant today) would be interesting twenty years in the future."

John Webbe, publishing partner of Ben Franklin, on the origin of freedom:

"Freedom is not a gift bestowed upon us by other men, but a right that belongs to us by the laws of God and nature."

Author Melony Beattie on having a grateful outlook:

"Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chao to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend"

2..Notes to Know 🧠

Munchhausen syndrome by proxy. Psychological disorder, marked by attention, seeking behavior by caregiver through those who are in their care. MSP is relatively rare effects primary caretaker often the mother, the person with MSP goal to get attention by seeking medical help for exaggerated or made up symptoms of a child in their care.

Dengism. The latest evolution of Communism, named after Deng Xiaoping, which adopts a facade of capitalism. Dengism is a Corporate-State model of Marxism where commerce is encouraged to be done by large corporations, monopolies, and cartels that have the blessing of the state. Citizens under Dengism are allowed to earn money, remain employed, and have access to basic services so long as they present acceptable views determined by the State.

1..Note From Me 📓 On Price Controls

What is old is new again. Price controls, an economic policy practice that dates as far back as Emperor Diocletian's Edict on Maximum Prices in 301 AD, are gaining popularity in today's election cycle.

Price controls — the government-mandated limits imposed on the prices of goods or services — became common in late medieval Europe. It wasn't until the 18th century, when economic understanding developed, that the West moved away from price controls.

That's to say, we've been down this road before and know exactly where it leads.

During the lead-up to the French Revolution, the Ancien Régime was beset by a struggling grain economy. Severe weather events and poor harvests contributed to massive supply shortages. Bread, the staple of the French diet, was becoming unaffordable for many.

An average Frenchman could expect to earn about 15-20 sous, while the price of a loaf of bread reached heights of 12 sous. The French Revolution shortly followed. The Ancien Regime was deposed and the royal family beheaded via the now infamous guillotine.

Of course, this didn't bring the cost of grain down or solve the underlying inflation. So the National Convention, led by the extremist Jacobins, implemented a familiar solution: the Law of the Maximum. At first, the law stipulated that the price of grain and flour in each district of France should be the average of the local markets.

As a result, farmers (the supply) kept their produce away from these markets, knowing they would not be able to get a fair price. Later that year, the National Convention decided that prices should be fixed at the local rates of 1790 + one-third. To ensure there was no price gouging.

But this didn't work either. These measures only further depressed the supply of grain since it forced farmers to sell their produce at a price below what it cost them to make it. Without any incentive to produce grain, the supply decreased further. As grain became exceedingly scarce, more people starved. There wasn't enough to go around - whether it was "affordable" hardly mattered. Those waiting in bread lines were sent home empty-handed.

While the poor of France continued to suffer, a black market for grain (and butter, milk, etc.) formed. The black market attracted what little available supply was left, yet with its high prices and illegality it was only available to the rich.

The attempts to artificially suppress the price of food were doomed from the start and ultimately had the opposite effect as intended. When faced with a constrained supply, it is counterproductive to limit the incentives (higher prices) to increase the supply.

This is hardly the only example of the disastrous effects of market manipulation through government price controls. In fact, author Robert Schuettinger details the history of this anti-solution in his book Forty Centuries of Wage and Price Controls: How Not to Fight Inflation. 

History has taught us quite clearly that a centrally controlled market ultimately ends with at least one (if not all) of the following: food shortages, black markets, higher crime, a starving population, riots, and revolution.

So why are some of today's leaders proposing the economic equivalent of blood-letting? Perhaps it's well-intentioned ignorance. A simplistic and misinformed attempt at helping people. Or, allowing for some cynicism, it is a hubristic perfidiousness that drives them to ignore the lessons of history in their own pursuit of power.

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A commonplace book is a personal collection of quotes, observations, ideas, and other bits of information that an individual finds interesting or inspiring. It is one of the most tried and true methods for learning & compiling information. Famously, Leonardo da Vinci, Marcus Aurelius, and Thomas Jefferson all carried a commonplace book.

This newsletter shares the notes from my own commonplace book and will add highlights to yours.