Price controls

The Good Life with Eli F.J. Tajanlangit

It just might be the cynic in me but school opening this week revived in my mind questions about the wisdom of price controls. As the nation's young went to school last Monday, media had a field day reporting the prices of crayons, notebooks, pencils, pad papers, where the cheapest prices can be found, what the government is doing to ensure there is no undue profiteering over these items.

On the surface, these sounded reassuring, like things were really under control. Are they?

The incessant bombardment of these school-supplies-prices-stories just has the reverse effect on me; it has, in fact, raised questions. How effective are these price watch operations, really, or at the very least, how cost-efficient? In other words, how effective are our price watch operations and are they worth the money spent by government on them?

Most important: how exactly do these operations work? Aside from knowing how much things are selling in the market, do they really keep them down? Can they?

Price controls, I recall, were a mechanism that were famously instituted during the Martial Law years when all powers, including police, were concentrated on the State, it could truly dictate the prices. Without police powers, I don't think price monitors can really be effective.

I'm not saying we return to Martial Law, or use police powers, to keep prices down. What I am trying to say is, price control operations are effective, and should be used only during emergencies, like when we go to war or declare Martial Law. Price monitoring and price controls in normal times, such as we have now, are a pretentious political exercise -- it makes the government look good but achieves nothing. Because come to think of it, it's the profit motive that works in our capitalist system, and for as long as there are buyers, sellers will sell at prices they feel are commensurate to their efforts. There shouldn't be any law hampering this, because on the profit incentive does our economy depend for growth. Remove this incentive and business will suffer.

In normal times, I think what is needed is for everybody to know how much things are really selling so no one is cheated or duped into buying things that are priced abnormally high, so they pay only what is right. In the end, truly, the consumer has all the rights, especially the right to buy or not. In a truly functioning democracy, as what we have now, infirmities and all, it's the law of supply and demand that should determine prices.

I went to bookstores yesterday and found notebooks selling for as much as P2,000 each as well as notebooks that sell for P47 per and everything else in between. That, I thought, was democracy -- the range is such that there is something for everyone. If you are crazy enough to use a P2,000 notebook and you have the means, go ahead. Otherwise, there are plenty of choices available.

How much help, by the way, are these price control mechanisms? I guess this is the best time to review them, vis-à-vis their effectiveness. Who knows, it might just be better for government to channel its resources from having price controls and ensuring their implementation to subsidizing, outright, the purchase of basic school supplies such as paper and pencil and giving them directly to our public school students.*

For feedback, please go to www.lifestylesbacolod.com, check Bacolod Lifestyles on Facebook and follow @bacolodtweets on Twitter

back to top