COMMENTARY
Subjective views of price controls don't change economic law

By Stuart K. Hayashi

When citizens explain why new regulations defy rationality, politicians sometimes reply that there aren't truly objective standards of measuring the quality of laws, that everything is subjective.

Really? Then lawmakers can pass whatever decrees suit them, and if you object, that's only your inconsequential opinion, while in their equally valid view, their edicts are fabulous.

We see this attitude when Hawai'i's Legislature tries to put legal limits on gasoline prices, ignoring substantial evidence that government-mandated ceilings on commodity prices cause shortages when sellers are legally forced to sell at prices below what the market allows.

Ceilings on rents have created housing shortages in New York. Several years ago, when California put caps on what electricity retailers could charge their customers, the retailers had to sell at losses and go bankrupt, leading to power crises. Federally mandated freezes on all prices exacerbated economic stagnation in the 1970s under President Nixon and in ancient Rome under Emperor Diocletian.

It is said that Canada controls pharmaceutical prices and has more drugs available than does the United States. But it takes America's Food and Drug Administration 12 to 15 years to allow new medicines to be sold in our country, while Canada approves new medicines quickly and easily. U.S. regulations cost corporations more money to sell the same drugs in the United States than in Canada, while Canada's price caps remain far above the country's free-market price. If the United States retains its FDA and institutes ceilings on drug prices, shortages will develop.

Yet Hawai'i's Legislature dismisses economic realities as mere subjective opinion, refusing to acknowledge that they're as immutable as the law of gravity.

This raises the question: Can truth be objective, or is it all subjective?

There are objective truths, and the market's inviolability is one of them. Unfortunately, European, Asian and American social science professors at the University of Hawai'i, Oxford and elsewhere have blinded us to this axiom.

Professors say truth is subjective through the following analogy: Imagine that an elephant represents the nature of reality, and three blindfolded men examine it.

One grabs its trunk and says, "An elephant is like a snake."

"You're wrong," states another, feeling its leg. "It's like a tree."

The third feels its ear and proclaims, "You're both nuts. It's flat and flappy."

Subjectivists conclude that since all three men are correct in their own way, truth is subjective.

This is a "straw man" argument. First, if the men remove their blindfolds, they can objectively see what elephants look like. Furthermore, this scenario presupposes that elephants objectively exist, or the conversation is moot.

Even though people's perceptions of reality are subjective and fallible, the reality they perceive has an objective existence and objective, observable properties.

People, including scientists, can have subjective opinions on objectively existing phenomena, such as how time-space operates or whether global warming could actually be safe. But after we recognize a phenomenon's objective existence, we can make observations to gain some objective understanding of its nature.

Take gravity. People can be as subjective as they want about it, saying, "In my opinion, the Earth has no downward pull." Does this alter gravity's objective qualities?

Other people reply that objectivity can be applied to physics, but not to social mores. False.

It's an objective maxim that the less a government violates its citizens' private-property rights, the longer average lifespans the citizens will have. With Earth as our laboratory, the control group of America and the experimental groups of North Korea and the former Soviet Union confirm that.

Concordantly, history has repeatedly demonstrated the impracticality of price ceilings.

So the next time some University of Hawai'i-inhabiting intellectual declares, "We can be certain that we can be certain of nothing," ask him, "Are you certain of that?" If he says yes, he contradicts himself. If he says no, inquire, "Then why should anyone believe what you just said?"

It is objectively true that if I want to profit from selling gasoline in Hawai'i, price ceilings will discourage, more than encourage, me from business. Given that, will more gasoline be available, or less?

Stuart K. Hayashi is a research intern at the Grassroot Institute of Hawai'i.