I periodically share Mark Perry’s famous “Chart of the Century” to show that government intervention is a recipe for rising relative prices.*
Since economic principles don’t change when you cross national borders, one might expect to see similar patterns in other countries.
And we do. Here’s a chart from Matthew Lesh of the Institute for Economic Affairs in London. As you can see, overall inflation in the United Kingdom since 2000 has been 80 percent.
But prices have risen much faster in the sectors with lots of government intervention.
And prices have fallen, or risen at a slower-than-average pace, in the sectors where market forces dominate.
Here’s some of what he wrote to accompany the chart.
Prices have risen significantly faster than wages in the United Kingdom over recent years. The result has been a falling quality of life and significant hardship for tens of millions of households. Real household disposable incomes are now expected to be 3.5% lower in 2024-25 than their pre-pandemic levels… A useful starting point is considering which products have, and which have not, risen in price over recent years. …There have also been significant price increases in services and costs the government more directly controls, such as rail transport (+143%) – where the government sets around half the fares and heavily controls the sector – and council rates (+139%). …The products that have gone up most rapidly in cost include electricity (+425%), housing (+254%), and childcare (193%). Notably, these are sectors that have extensive state intervention through regulation and subsidies. …governments can and should change their approach to regulation. Cutting red tape in areas such as housing, energy, and financial services could reduce business costs and increase supply, resulting in lower costs for consumers.
This is spot on. As Ronald Reagan said more than 43 years ago, government is the problem.
And more government simply makes a bad situation even worse.
* Bad monetary policy is the recipe for overall increases in prices.
Now chart electricity prices versus the amount of so-called “renewable” electricity generated. Do the same for other European countries and states such as California. Then ask yourself: Why would anyone in their right mind (who isn’t compromised by corruption) ever want to do that?
Government is the problem, but the authoritarians will argue that the high rate of price increases for the government regulated items wasn’t caused by the government regulations. Instead, they’ll argue that they are regulated because of the their high rate of price increases, and if not for the regulations, prices would have increased much more than they did had they been unregulated. The British should be tanking the government for keeping a lid on prices.
Chuck Wright
Every layer between producer and consumer is another layer of added cost, added inefficiency which adds more cost. Our neighbors, friends..even ourselves, once part of the gov’t behemoth may call themselves public servants and some actually try to “serve” the needs of the public. But none do it for free…rather usuyally at higher cost than in the private sector where productivity drives wages…or used to.