How Federal "Bans", "Freezes", and "Price Controls" Spread Economic Chaos

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I have always been a believer in free market economics. Whenever a government tries to "fix" things, it often makes things worse, and more often than not, the law of Unintended Consequences is engaged. Prohibition of alcohol early in the last century is often cited, but some of the worst cases of Federal government intervention have taken place since the 1960s. Here are a few examples:

Roosevelt and Nixon Administration Wage and Price Controls
History has shown that wage and price controls (also called "incomes policies") are an exercise in futility. In the United States, wage and price controls were first instituted with marginal results by the Roosevelt administration during World War II, as administered by the Office of Price Administration. Eventually, employers and consumers find ways to work their way around these laws. In his book Government by Emergency, Dr. Gary North described the wage and price controls instituted by the Nixon Administration. North showed that the law was entirely ineffective at "fighting inflation." The only sure way to stop inflation is to stop the government printing presses and do away with fractional reserve banking. But still, governments all over the world have resorted to wage and price controls, usually with no real effect. Just two weeks ago, the outrageously inept government of Zimbabwe declared that it would jail anyone that raises wages or prices. Given the country's current inflation rate of more than 1,200 percent per annum, I seriously doubt that the law will be a success. But knowing how Comrade Mugabe and his henchmen operate, the law may result in a few "disappearances" or perhaps even a few executions.

The 1986 Private Machinegun Ownership"Freeze"
In 1934, under the Roosevelt administration, machinegun ownership in the U.S. became subject to some pretty draconian restrictions: Registration of the guns by serial number, a background check and fingerprinting of prospective owners, and a $200 Federal tax each time a gun is transferred--ostensibly justified by the Commerce Clause. From 1934 to 1985 machineguns could still be produced and purchased by private citizens that were willing to jump through the paperwork flame-filled hoops and pay the $200 transfer tax. But that changed in 1986. Through some backroom political deal-making, a ban on new production of machineguns was slipped into a larger legislative package of pro-Second Amendment legislation, and passed by a simple voice vote. This law effectively "froze" the number of transferable machineguns in private hands, and it has been frozen ever since. At the time that the freeze was enacted, a newly-produced Thompson submachinegun sold for $950, a M1919 Browning belt fed was around $1,200, an M16 was around $800, a flimsy Sten gun was $190, and a registered M16 auto sear (the key conversion part for an AR-15 to make it selective fire) was just $150. But time has marched on, and the law of supply and demand proved itself inescapable. More than 20 years have now gone by. There are now millions of gun collectors now in their 30s and 40s that were just kids when the freeze was enacted, They are now chasing after the same frozen supply of registered, transferable machineguns. Ever since 1986, prices have risen steadily, turning machinegun ownership into a hobby that is now seemingly reserved for the rich. Presently, a Thompson submachinegun made in the early 1980s is now worth $14,000, a M1919 Browning belt fed is around $18,000, an M16 is around $17,000, a Sten gun sells for around $6,000, and a registered M16 auto sear is $15,000 if you can find one! Unless the freeze is repealed, or unless there is another registration amnesty to flush out the more than one million unregistered machineguns in the country, it is likely that machinegun prices will continue to escalate.

The 1994-to-2004 "Assault Weapons" and High Capacity Magazine Ban
Thankfully now dead due to a 10-year "sunset" clause, the assault weapons ban of 1994 wreaked similar economic havoc. This ban froze the production on dozens of named models of paramilitary semi-auto rifles as well as magazines with more than 10 round capacity.

The U.S. 1995 Freon Ban
In 1995, the US EPA banned new production of one-pound canisters of Freon R12 refrigerant. (This is the type used by individual car owners to re-charge their car's air conditioning system.) Only larger canisters were available to "trained professionals", during a transition period as other refrigerants deemed "non Ozone depleting" were phased in. Soon after the ban was enacted, the price of R12 cans on the secondary market spiked from less than $3 per can to as high as $60 per can! The freon ban led to widespread Freon smuggling, which is reportedly still continuing today. (R12 is still manufactured in some countries--most notably Brazil--that did not sign up to the international treaty banning Ozone Depleting Chemicals (ODCs.)

The Pending Federal "Assault Weapons" and High Capacity Magazine Ban
As previously mentioned in SurvivalBlog, a scary new piece of Federal legislation was recently introduced that would reinstate the 1994 "Assault Weapon" and magazine ban. This new bill, H.R. 1022, is far worse than its predecessor. It is much more loosely worded--casting a wide net for any guns that even look vaguely paramilitary--and puts the final decision on whether or not any particular model is deemed an "assault weapon" up to the politically-appointed Attorney general. Thankfully, it still leaves a lot of existing ("grandfathered") guns and full capacity magazines. If it passes, I predict that its effect will be much like the 1986 machinegun freeze. Prices went up a lot during the 1994-to-2004 Federal ban, But this new one is much worse, so prices will surely skyrocket. My advice is to stock up, especially on magazines. Buy at least a dozen for each of your semi-auto guns. Buy hundreds more as an investment, if you can afford them. Again, based on the experience of the 1994-2004 ban and the 1986 Federal machinegun "freeze", I expect magazine prices to at least triple, and possibly go much higher.

The Beloved Grandfather Clause
One of the fairly dependable parts of the American legal system is the beloved "grandfather clause." This is the "weasel wording" that is typically written into nearly every piece of ban, freeze, or otherwise restrictive legislation, allowing existing supplies of any banned items or substances to continue to be owned, used, and in most cases transferred. These grandfather clauses are politically expedient, because they A.) minimize the political backlash against new laws, B.) minimize legal challenges to the new laws, and C.) save the taxpayers countless millions of dollars, since they side-step any challenges that a new law constitutes and illegal "taking." (The owner of a warehouse full of banned widgets would scream bloody murder if his existing inventory was banned from sale and hence became worthless. But with a grandfather clause, the company owner can sell out his existing inventory, usually at a tidy profit. In the end, however, the factory owner is still deprived of part of his livelihood. )

Re-Prioritizing Purchasing Plans?
Federal "bans", "freezes", and price controls" are contrary to normal market forces, and when they are enacted, they spread economic chaos. If we lived in a perfect world, they wouldn't be an issue. But sadly we live in a world where the majority of nation states run by politicians attempt such follies. As prepared individuals, the best that we can do is stand ready to compensate for the impact of such legislation. If the politicians are planning to ban items that we see as necessary for our preparedness, then it is in our best interest to stock up, muy pronto. If ban legislation seems imminent, then it might mean re-setting our purchasing priorities in the short term. For example, you might not have had plans to buy your "lifetime supply" of main battle rifles and full capacity magazines in the next six months. But events in the near future might necessitate doing just that.

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This page contains a single entry by Jim Rawles published on March 5, 2007 9:51 PM.

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