I’ve written nearly 6,100 columns for International Liberty, but only one of those columns has focused on Lebanon.
That was back in 2018, when I explained how the nation could have avoided a fiscal crisis with a spending cap.
Now it’s time to once again write about Lebanon, though maybe today’s column is actually more about media bias.
That’s because this story in the Washington Post, authored by Sarah Dadouch, shows how journalists have far too little understanding of economics.
Lebanon’s worsening financial meltdown has been accompanied by a dire shortage of imported fuel. Roads in cities like Beirut and Tripoli are now lined with cars queuing for hours to get their allotted amount of gasoline, at most a third of a tank. …smugglers have discovered there’s good money to be made by buying gasoline in Lebanon at the heavily subsidized price and then selling it on the black market in Syria, which has a debilitating fuel crisis of its own. …Many Lebanese politicians blame the gasoline crisis partly on smuggling… In April, Lebanon’s caretaker energy minister said the disparity in gasoline prices between Lebanon and Syria means smugglers can make huge profits next door. …The Lebanese army, which has received more than $2.5 billion in aid from the United States since 2006, has made concerted efforts to curb the illicit commerce.
The smugglers aren’t the cause of Lebanon’s energy crisis. They’re merely a symptom of the real problem, which is that the country’s politicians buy votes from motorists by subsidizing gasoline.
Get rid of those subsidies and smuggling will disappear overnight.
The moral of the story is that bad things happen when politicians interfere with prices. We have forty centuries of evidence showing price controls don’t work. When politicians try to curry favor by rigging prices, bad things happen.
- Rent controls lead to shortages of housing.
- Anti-gouging laws lead to shortages of all affected products.
- Minimum-wage laws lead to shortages of jobs.
And the second moral of the story is that journalists don’t understand the first moral of the story (not that I’m surprised, given the shaky track record of the Washington Post).
P.S. I’m flabbergasted that American taxpayers have sent $2.5 billion of foreign aid to Lebanon’s army, which gives the government fiscal leeway to pursue bad policies such as gasoline subsidies!
P.P.S. While gasoline subsidies are an insanely foolish policy for a nation enduring a fiscal crisis, fiscal policy isn’t even Lebanon’s biggest problem. As noted in this video, the country does even worse on trade policy, regulatory policy, and rule of law.
P.P.P.S. The post-war German economic miracle was triggered by the removal of price controls.
[…] this year, the Post blamed smugglers for an energy crisis caused by Lebanese price […]
[…] this year, the Post blamed smugglers for an energy crisis caused by Lebanese price […]
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Following from Arre and Wagner … a 1% gain comes really close to erasing a 1% loss. A 10% gain recoups 90% of a 10% loss. A 50% gain only makes up half of a 50% loss.
Maybe it’s more interesting when looking at tax impact? When the top US income tax bracket was dropped from 70% to 50% and then 28%, someone who used to keep 30 cents of each marginal-dollar earned was instead keeping 72 cents of the marginal dollar … a 140% increase in after-tax income.
“journalists have far too little understanding of economics.”
Where are these “journalists” of which you speak? All at WaPo are fellow traveling, leftist narrative pushing propagandists. There are a few actual jouros loose in the wild…none at any of the left’s propaganda outlets though.
Now if you want to know what the far Left’s narrative on any subject it…
Ah I see it now .Thank You!!
THANKS to John Wagner for answering Arthur Arre’s question.
Arthur,
In case Mr DiMeo doesn’t see your question, I’m sure this is what he means:
A 20% loss would reduce $100 to $80. From the new level of $80, it takes a 25% gain to get back to $100, not 20%.
“…who believe a 20% gain offsets a 20% loss.”
Mr. DiMeo please explain because I don’t get it and I’m not a “journalist”.
A related problem is that a great many writers are relatively innumerate. It’s not unusual for a journalist to be unable to respond correctly to the question “How much is 20% off $100?” It’s also commonplace to find writers who believe a 20% gain offsets a 20% loss.
The problem with Journalist and historians in understanding economics is that they try to fit what is considered :good: economics into their political beliefs. They try to force the ideas that more governmental interference and higher taxes will make the economy better, when the exact opposite is true.