Thursday, March 20, 2008

Got Milk? The Kentucky House Wants To Regulate It

Hey, Kentucky House members, what are you -- socialists or something? WKYT.com reports that House Bill 623, which would "create a state dairy commission and possibly regulate milk prices in Kentucky", has passed the House "by a vote of 90 to 5":

Bill sponsor Mitchel Denham, Jr. says the legislation would protect dairy farmers in his northern district, and in the long run could stabilize milk prices for consumers across the state. Denham says one of the reasons milk prices are on the rise, is because Kentucky imports so much milk from other states.

"We want to find why that is occurring, you know what can we do keep our dairy industry from evaporating," Denham said.

The bill calls for a study to determine whether price regulation is necessary.

We can answer that question without spending any taxpayer money on a commission: price regulation is not necessary. As anyone who lived through the crazy wage and price controls of President Richard Nixon (the pseudo-conservative who claimed "we are all Keynesians now"), price regulation doesn't work. It just leads to shortages of goods. The extreme example was the Soviet Union, where grocery stores were constantly bare of essential products.

We seriously doubt that price supports are truly necessary to "keep our dairy industry from evaporating", as Denham asserts. More likely his protectionist measure would simply prop up inefficient producers that should go into other more profitable lines of agriculture. That is what capitalism is all about, and why Denham's bill is directly contrary to a central tenet of free competition, which is to reward successful producers who help drive down the prices of goods for consumers.

And if milk prices are currently "on the rise", as Denham contends, then that increase will simply incentivize producers to supply more milk, which in turn will stabilize prices without the need for any government intervention. In short, we don't need the Kentucky legislature to pass a new law when the law of supply and demand already exists to redress Denham's concerns.

Thank goodness we have a Senate where Denham's hare-brained proposal hopefully will go to die.

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