The New York Times ran a just-the-facts story about Argentina’s increasingly egregious price controls—beginning in browbeating, moving to controls on beef, spreading to all consumer goods, and ending in export bans—that somehow failed to report any information on central-bank policies, as if price increases and the money supply have nothing to do with each other.
Ah but the story was balanced because the reports added: “Orthodox free-market economists regard price controls with distaste. They argue that such measures, though meant to benefit the poor, distort market forces and, as producers are forced to absorb increased expenses without compensation, lead to reductions in supply and investment that end up hurting not just the farmer or factory owner, but also the consumer.”
There are many things wrong with that paragraph, including the suggestion that this opinion is that of some sort of religious tribe that adheres to doctrines regardless of the circumstances, as well as the idea that the producers themselves bring about shortages because they aren’t being sufficiently compensated at the controlled price. Greed!
But what is especially interesting is the failure of the reporter to make the proper connection between the country’s “remarkable” growth rates—wow, 9% annually for three years!—and mysterious appearance of rising prices. A click through to the Argentina Central Bank shows M2 increases of 36%, 33%, and 25% in 2003, 2004 and 2005, with the latest data showing 20%+ increases.
