Viewpoint: The Price Blackout
More than any other profession, journalists are aware of the value of open communication and a free flow of information. Certainly no group is more adamant in its condemnation of politically inspired censorship. It is therefore surprising to realize that journalists routinely report sympathetically on a certain kind of political censorship.
The censorship I have in mind is a result of government restraints that block the free flow of price information. In our highly specialized society, market prices communicate crucially important information—to consumers, about product availability; and to producers, about consumers' choices. This price information permits coordination between the plans of consumers and producers that promotes both economic productivity and social harmony.
Government policies that force prices above or below what they would be in a free market thus involve censorship. They violate the right of free expression just as if the government dictated the content of the daily newspaper. And, as with any censorship, such policies impose genuine harm on people, often the very people that supporters of the controls want to help.
Our minimum-wage laws, for example, make it illegal for an unskilled youth to communicate effectively with a potential employer. Many youths would like to tell employers, "I have few skills, and college is out for me. So if a low wage is all you can manage I am willing to work for little now, while I have few financial responsibilities, in order to acquire on-the-job experience and training." Without the censorship of minimum-wage legislation, thousands of unemployed youth could be productively preparing for their future in jobs that are now denied them.
Agricultural price supports are another example of this kind of government censorship. It victimizes all consumers, but particularly those whose low income makes hunger a real concern. May a poor family communicate through the marketplace its willingness to buy milk at the lowest price that dairy farmers would be willing to accept? No. That communication is currently illegal in the United states, where milk prices are propped up by the government. Journalists have the opportunity both to strike a blow against censorship and to rally to the cause of the poor. Unfortunately, most journalists see less connection between hunger and price-information censorship than they do between hunger and comments by Ronald Reagan.
Other examples of censorship that journalists seldom recognize as such are rent controls, equal-pay-for-equal-work legislation, tariff duties on imported goods, and still-existing price controls on natural gas. But by censoring market information, these restrictions impair communication that is in some respects more important than that protected by freedom of the press.
Journalists could fill newspapers with stories of jobless teenagers and write compellingly of the need to expand employment opportunities for our nation's youth. But the effectiveness of this information would be nil in comparison with lower wages, which would serve to tell employers that teenagers are willing to work for less. Similarly, if consumers want access to natural gas or nicer apartments, expressing their demands through uncensored markets will be vastly more effective than writing letters to the editor.
This is not to argue that we should be happy with low wages and high prices. Low wages inform us that productive skills are lacking, and high prices tell us that important products are in short supply. But bad news, whether from the market or elsewhere, is no excuse for suppressing the news.
It may be objected that freedom of price communication discriminates against those with fewer financial resources. But if this is so, then traditional freedom of speech discriminates against those with less savvy or intelligence. Although those who are knowledgeable and articulate have in many respects a great advantage over those who are not, clamping down on the free press is not justified in an effort to protect the ignorant. Nor is denial of freedom in market communication justified in hopes of protecting the poor.
Indeed, censorship would work to the long-run disadvantage of both the ignorant and the poor. Just as free verbal and written expression offer the best hope for developing intellectual skills, so does free market expression offer the best hope for developing economic skills.
We cannot, of course, depend on free-market communication being always honest and accurate. Some firms will have the market power to distort prices in their favor. The unscrupulous will often be able to misrepresent their products to the disadvantage of the unwary. But who is prepared to deny that analogous distortions and misrepresentations often creep into the news, books, magazines, and so on?
Such imperfections can never be eliminated; they can be moderated and countered by maintaining open communication. The best way to control the harm of misinformation is with the competition of free expression. And this is just as true with information expressed through prices as it is with information expressed through words.
As advocates of freedom in communication, journalists should find government attempts to control prices just as abhorrent as they find government attempts to control the news. Neither has any place in a free society.
Dwight Lee teaches economics at the University of Georgia.