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13 January 2009
Could price controls make a comeback in Britain?
Roy Hattersley recently "expressed amused bewilderment. . . that as a minister in the 1970s he was responsible for the price of bread." The fact that he felt that way probably says more about the NuLabour Party and its long march from its collectivist roots than it does about the actual policy itself. Especially now that the economy has tanked, government are going to find that the old policies are often the best ones.

Policies don't get much older than price controls over bread. Originally each district had its Bread Assize that set the weight and cost of a loaf - in the London of Samuel Pepys the price was 1d for a nine and a half ounce loaf. The reason for this was fairly simple: if the poor could not afford the staple then hunger would drive them to riot.

Today that truism applies in many countries throughout the world where the staple food is still subject to strict price and weight controls. In Arabia it is bread, in Mexico and Central America the tortilla, but in both regions the governments make damn sure that the pricees are kept low enough to remain within reach of the whole population.

In Mexico the tortilla price is probably the one regulation that is enforced efficiently. If a bakery raises its prices then literally within the hour the local inspectors will arrive to close it down for a week or so as punishment. For that reason they don't try it on.

Occasionally a group of them will get together and chance their arms with a price hike, but the result is always the same: they are closed down and the local government then distributes tortillas itself. Each district has its local government run tortilla bakeries and they go into overdrive to meet the some of the demand. The rest is met by shipping in tortillas from other bakeries in other parts of Mexico City.

Will the bread assizes ever return to Britain? It doesn't seem likely at the moment, but as the country sinks into a third world mire anything is possible. Just remember that price controls are what governments use when the alternative is a city on fire.

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The price of tortillas is NOT controlled by the state in Mexico. Price controls were abolished in the 1990s.

How bizarre that you should just invent these kinds of facts. Not only does it completely undermine the point you've been trying to make, it also has the bonus of making you look very stupid.

Mexico leader in tortilla pledge (BBC, 2007)

Mexican tortilla prices 'up 18%' (BBC, 2008)

13 January 2009 at 16:34  

Oh for fuck's sake... The old federal control vanished a long time ago, but what you have now in Mexico City at least is a price cap beyond which a kilo of the things cannot be sold.

How things work in the states I have no idea, but I imagine that it is the same.

It all means that the feds can adopt a hand-off policy in public at least, but it is only smoke and mirrors. They cannot allow the price to spiral out of control.

I do accept that the posting is not 100% clear on the subtleties of the arrangement, but I didn't think it important at the time of writing.

13 January 2009 at 17:32  

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