Business and Labor

Those who favor government intervention in the economy often depict those who prefer free competition as pro-business apologists. This has been profoundly wrong for at least two centuries. Adam Smith, the eighteenth-century father of free-market economics, was so scathingly critical of businessmen that it would be impossible to find a single favorable reference to them in his 900-page classic, The Wealth of Nations.1 Instead, Smith warned against the clamour and sophistry of merchants and...

Price Ceilings And Shortages

When there is a shortage of a product, there is not necessarily any less of it, either absolutely or relative to the number of consumers. During and immediately after the Second World War, for example, there was a very serious housing shortage in the United States, even though the population and the housing supply had both increased about 10 percent from their prewar levels and there was no shortage when the war began. In other words, even though the ratio between housing and people had not...

Volitional Pricing

High prices are often blamed on the greed of sellers, as if they can set prices by an act of will. In some trivial sense, they can. Any of us can set the price of his own labor at a million dollars a year, but that will not make us millionaires. Obviously, it doesn't matter what we charge, unless others to agree to pay it. That is not likely to happen in a world ruled by supply and demand, except for individuals whose rare talents cause them to be in huge demand and in very short supply. Greed...