When Rationing Comes; L.E. Read

These are conditions of life into which they were born and to which they have grown accustomed. Ra tioning is no more deplored by Russians than are speed limits by Americans. Why are Americans so Iittle dis turbed by the threat of rationing? Partly because we have had so little experience with this type of repressive law, but mostly because rationing laws have rarely been obeyed or enforced here. There was some rationing during World War I and much more during World War II; but obedience, such as existed, was cushioned by the patriotic fervor that attends some wars. I repeat, rationing has worked slight hardship because it was never made "to work" in the U.S.A. As with all nonsensical law - prohibition, for instance~Q1 392 THE FREEMAN July rationing has resulted in mass "underground" movements. Black markets thrived. And otherwise first-rate citizens by the millions became lawbreakers, schemers, liars, and looked upon their depar tures from rectitude with approval and humor - as an outguessing game!

Painless, yes; costless, no! The long-run cost would be far less had we obeyed and suffered the pain of these politico-economic outrages. Had we obeyed, we would now despise and fear rationing and would do all in our power to avoid a recurrence of this ultimate in authoritarianism. We chose the painless but costly course: a lower ing of the exemplary standards. Hardly any virtue --- not even hon esty - remained sacred. And this is disastrous: to abandon every thing sacred is to forego the pos sibilities of a society in which in dividuals thrive best. A Shocking Contrast People who have no fear of ra tioning - the vast majority - can be said to lack a politico-economic turn of mind. Obviously, such per sons cannot relate what they do not understand to-that which has not happened. Only a sharp and shocking contrast could bring this horror acutely to their apprecia tion. Let us imagine an instant transplant of a typical American fam ily from Omaha to Omsk - take them from where they are and from what they are accustomed to and drop them suddenly into that authoritarian situation of which rationing is a logical and inevit able part. The first order of busi ness would be to secure food.

Mother would have no phone; but that \vould not matter, for there are no deliveries. She is without a car to go shopping; cars are rationed to commissars and their aides. No taxies! So she walks to a government store and lines up at the end of a queue. At long last, it's her turn. What are the choices? She can either accept or refuse the rationed items and in the quantities set by government. What a contrast from yesterda~ in the U.S.A.! Mother, in that case would understand what rationin! means. Shocking, to say the least No need to labor the point Father would experience the sam thing, as would the children. Fo anyone who can read the langaug of economic cause and effect, rl tioning is failure on pa.rade! Why are most goods and servicf rationed in Russia? Because tl Russian economy is a failure; is not productive. Why will gool and services be similarly ration in the U.S.A. if we continue t present course? For precisely t same reason that the last bar: 19'11 WHEN RATIONING COMES 393 of water is rationed on a ship lost at sea: short supply - that is, not enough to go around. Socialism the planned economy and welfare state - is woefully lacking in pro ductivity; it results in scarcity.

When we in the U.S.A. substitute socialism for free market practices to the extent the Russians have, our failure will match theirs; pro ductivity will be no greater here than there. There won't be enough to go around. It Can't Happen Here! The attempted rebuttal runs thus: Americans will no more heed rationing regulations in the future than they have in the past. No gov ernment can ever do this to us we think! Such optimistic fore casting is naive. When the real crunch comes, there will be no choice. Americans could flout rationing in the past and get away with it because there was private owner ship. Sugar or gasoline or what ever was always obtainable for some black market price. Such markets, however, presuppose something more than a barrel of water for a lot of thirsty people; they presuppose each having some thing of his own to trade! When and if real scarcity ob tains in our country, as in Russia, rationing will be made "to work."

There will be no alternative except to abandon the entire socialistic rigmarole. Otherwise, any political hierarchy too tenderhearted to use the required violence to en force rationing will be run out of office by those who are indifferent to human life. The worst, as Hayek says, will get to the top.! Given real scarcity, it has to be this way. Why do people accept rationing? Those who envision its debilitat ing effect on individuals may wish to explore its antecedents in se quential order. For causes cannot be removed until they are known, which is to say that rationing is inevitable unless we know its deri vation. Rationing is the effect of a cause" but that cause is the effect of a prior cause, and so on. What then is the cause that immediately pre cedes rationing? Scarcity, as al ready suggested! Scarcity a Fact of Nature Now, scarcity is one of the facts of nature, in the sense that life is always a struggle. Largely by trial and error, some men at some times and in some parts of the globe have hit upon specialization and trade, voluntary cooperation in market fashion, to make the best 1 See "Why the Worst Get on Top,"

in The Road to Serfdom by F. A. Hayek (Chicago: The University of Chicago Press, 1967),pp. 134-152.

394 THE FREEMAN July possible use of scarce resources. In other words, they have devel oped the principles and practices of private ownership and free trade, with government limited to keeping the peace - no man-con cocted restraints against the re lease of creative energy: freedom! But not all men subjected to the competition of the market are con tent with the results. And their efforts to by-pass the market, or do away with it, result inevitably in what I would call a contrived scarcity. This is what we witness in Russia and will experience here short of a turnabout. This kind of scarcity emerges from coercive in terventions in the market: state ownership and control of the means as well as the results of production. Socialism! Contrived scarcity, the cause of rationing, is itself an effect of still another cause. What is its im mediate antecedent - that is, what are the components of coercive in tervention? Wage, price, produc tion, and exchange controls !

A few samples will suffice to make my point. Import embargoes and their variants, quotas and tariffs, make for scarcity. Impose embargoes on all exchange, domes tic as well as foreign, and every one, except the few who could sur vive by foraging, would perish. Contrived scarcity! Minimum wage laws and arbitrary labor union wage rates make for unemployment and, thus, lower production. More contrived scarcity! Paying farmers not to farm is an instance of production control - a political contribution to scar city. Medicare, where government, not the patients, pay the ever increasing prices, is already mak ing for a scarcity of hospital beds and, as socialized medicine pro gresses, there will be a scarcity of doctors. 2 Holding Prices Down These and countless other polit ical interventions are a form of price control-contrived scarcity driving prices upward. Sooner or later, as this trend becomes in tolerable, government will "come to the rescue" with the opposite and generally accepted concept of price controls -.limiting prices, that is, holding them down. Rent control falls in this latter category.

Merely observe - whether such controls are invoked in France, Sweden, or New York City - that a housing scarcity follows. 3 This form of price control can 2 See "Why I Left England" by Dr. Edward L. McNeil, THE FREEMAN, May, 1971. 3 For an enlightening study of rent control and its effects in France, see No Vacancies by Bertrand de J ouvenel. Copy on request.

1971 WHEN RATIONING COMES 395 no longer be taken lightly. Con gress has given the President powers to invoke these counteract ing controls at his discretion. Al ready, threats of such imposition have been directed at certain "key" industries. As prices continue to soar, we can expect the applica tion of controls to all aspects of the economy. So long as present trends prevail, there is no political alterna tivee Controls are invoked to cope with the constantly rising prices of which consumers complain. What, it may be asked, brings on these inordinate prices? Seeking the cause which is pushing all prices upward we come to the next antecedent, inflation. The Nature of Inflation Inflation is a dilution of the medi urn of exchange, an artificial expansion of the money supply. Inflation differs from counterfeit ing in that it is legal and, also, it is an .act of government rather than of individuals. But. whether the money results from inflation or from counterfeiting, a dollar is a purchase order, and no one in quires into its source. A transac tion involving counterfeit or in flation dollars is not an exchange of goods. and services for goods and services but an exchange of paper money for goods and serv ices. As the volume of paper money increases and as the quan tity of goods and services de creases, everything else being equal, prices correspondingly rise.

The equation is simple: Assume goods and services to be what they are now. Double the amount of money and prices will be twice as high. However, inflation itself is the effect of a cause. What is its ante cedent? The answer: excessive governmental expenditures! Whenever governmental expen ditures rise beyond the point where it is no longer politically expedient to defray them by di rect tax levies, governments have only two choices: (1) go into non repayable debt or (2) inflate the money supply. The latter, a means of siphoning personal savings into the coffers of government, is the better political expedient because it is less understood and, thus, not so much opposed. Added to the billions collected by direct tax levies are these additional billions of expropriated private property. This is how overextended govern ments "balance" their budgets. Testimony to the general aware ness that inflation. depletes private savings is the attempt by millions of citizens "to hedge against in flation."

Overextended government is the weightiest of all the causes of scarcity for it lies at the very root 396 THE FREEMAN July of the formidable and dreaded ra tioning that looms ahead. Govern ment doing the wrong things is the origin of all the aforemen tioned effects. Does out-of-bounds government, in turn, have a causal antecedent? If so, it cannot be stated with any more precision than a reference to the vagaries of human nature! Why is it that human beings behave as they do? Vagaries of Human Nature As this is written, I read of many distinguished men, reputedly free enterprisers to the core, who are pleading for Federal aid to bail out their ailing industry or community, or to compensate them for losses inflicted by droughts, or whatever. It seems that "private enterprisers" in trouble are, with few exceptions, as prone to turn to government as the socialists who revel in utopian dreams!

The tendency of those who say they favor private enterprise and related institutions is to blame socialists, communists, liberals, welfare staters, and the like for our deteriorating situation. Yet, when the chips are down and the going gets tough, the critics can hardly be distinguished from those they criticize. The former run to the Federal trough and turn the U.S.A. toward socialism as much as the latter. Such observations pronounce ·a harsh but humble verdict: we are well advised to look to ourselves as a major part of the problem. Why do we behave this way? Doubtless, there are more explanations than anyone knows, but here are a few sus pected reasons. • The tendency to satisfy desires along the lines of least resist ance, regardless of where such a course leads; in other words, a breakdown or failure of moral discipline. • An inability to reason from cause to consequence, from means to ends.

• A failure to understand that government is essentially or ganized force, the uses of which are limited at best; in brief, no discernment as to what is or is not the appropriate role of gov ernment. • The naive assumption that gov ernment has funds of its own a bottomless pot of gold - avail able for the asking. • The notion that feathering one's own nest at the expense of others· is not robbery if it is legalized or has political sanc tion. • The wishful thinking that others have a moral obligation to cover our mistakes and satisfy our wants; that wishes are rights. • A faith in socialism because the alternative is unknown, which is to say, an ignorance of the mira1971 WHEN RATIONING COMES 397 cles that are wrought by men functioning freely in the mar ket. • And then there is the tug of tradition, the heritage of politi cal authoritarianism which with rare and brief exceptions, has featured human existence since the dawn of social organization.

It is the ageless urge for se curity sought from a king; it is the reluctance to take the risks of self-responsibility, the refusal to become one's own man. Perhaps there is nothing better we can do about the current di lemma. than for each to openly acknowledge: "The fault is mine." For who among us adequately un derstands and can competently ex plain the freedom way of life we would uphold. Not one! I have tried here to pose the likelihood of rationing if we con tinue on the present course, and then to examine the cause of each effect - going backwards, so to speak, to where we now are. Ad mittedly, cause and effect are not always as precisely ordered as I have made them out to be; they are confusingly intertwined at times. But generally they follow in this sequence: (1) the vagaries of human nature ranging from "I want to be king" to "I want a king," (2) excessive government, (3) inflation, (4) controls, (5) scarcity, and (6) rationing with its stifling of individual growth and creativity, its smothering of the human spirit.

A recognition of where the pres ent course leads should be enough to bring about a change in course, to do away with these numerous layers of intervention, to put gov ernment in its proper pla.ce, and to restore a reliance on the free market. Men free to produce and trade as they choose need not rely on rations for subsistence. ~ IDEAS ON $ LIBERTY Thoughts and Details on Scarcity OF ALL THINGS, an indiscreet tampering with the trade of provi sions is the most dangerous, and it is always worst in the time when men are most disposed to it: - that is, in the time of scarc ity. Because there is nothing on which the passions of men are so violent, and their judgment so weak, and on which there exists such a multitude of ill-founded popular prejudices. As presented by EDMUND BURKE in 1795 to the Right Hon. William Pitt w. H. GRAHAM I Pledge Myself to Help Strengthen America 1 will honor God.