The evil of price controls

Posted on Jun 09 1999

Under enormous pressure from the legislature, the Department of Commerce recently decided to investigate the CNMI’s price system, ostensibly to determine if various island goods and services are offered at a “fair” price.

Who will decide what is a fair price, and how will this fair price be determined?

This we really do not know. Presumably, the bureaucrats and politicians will make price comparisons to other island territories, particularly Guam.

What happens if the government determines that prices are, in fact, “unfair”?

This we also do not know for certain, although we might surmise that price controls could very well be the order of the day, in which case: we can kiss the Commonwealth economy goodbye–and we might as well surrender completely to federalization.

Price controls represent the ultimate destruction of a market-based economy. No wealth can ever be derived from such a heavily regulated economy. The fact that our leaders are even hinting at such a possibility should send shivers down investors’ backs.

Who the hell is the CNMI government to tell private investors how much they can and cannot charge for their goods and services? The government has no moral or legal right to tell private enterprises how much they should charge for their goods and services. The government should not be in the business of legislating profit margins. It is none of their damn business.

Prices should be determined by the natural laws of supply and demand–by whatever the market will bear. If Mr. Gunslinger is willing to pay $400 for three hours of entertainment, Club Russian Roulette should be free to charge it. If a customer is not willing to pay that much, then he should leave earlier, or else frequent another nightclub altogether. The government has absolutely no business legislating a minimum or maximum ladies drink fee.

If the government really wants to reduce inflation, it can start by cutting taxes and regulations across the board, which would drastically reduce the costs of doing business and pass that savings on to the consumer. This could easily be accomplished by eliminating import tariffs, reducing licensing and other government fees, and scrapping such a ludicrous DOC price investigation in the first place.

Ironically, it is the Department of Commerce itself that is partly contributing to price increases, by proposing to raise the ABC licensing fees on adult beverages.

Leave the market price system alone.

Strictly a personal view. Charles Reyes Jr. is a regular columnist of Saipan Tribune. Mr. Reyes may be reached at

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