Economic illiteracy

Mahmoud Ahmadinejad -- Democrat?

When Ahmadinejad was elected, he campaigned as a Robin Hood, promising to redistribute Iran's oil wealth from the rich to the poor. One of his first edicts was to order banks to lower interest rates to 12 percent, from as high as 17 percent. The order, like others, backfired, making loans harder to come by.

In another case, Ahmadinejad decided that the price of cement was too high, so he ordered it reduced. Rashadi, the economist, said the decree frightened away investors who had planned to build new cement factories around the country.

Rashadi also said the president's constant insults aimed at the stock market had undermined investor confidence, which he said encouraged people with money to invest in real estate, driving up property values.

I'm not sure I'd go so far as to call the resemblance uncanny, but there are definite parallels. When Democrats -- and some Republicans -- don't like the outcomes generated by the free market they attempt to use government power to correct these alleged errors. Rent too high? Pass rent control laws (which makes less housing available). Gas prices too high? Blame greedy oil producers and call for an "excess profits" tax (while simultaneously opposing expanded drilling to increase supply). People make too little money at their jobs? Pass minimum wage legislation (thus making employees more expensive and less likely to be hired).

It helps to remember at this point that the free market and its outcomes are the results of literally millions of people making decisions designed to best serve their self-interest. When legislators pass economic regulation they implicitly state that their knowledge is superior to the collective knowledge of the marketplace, which if you stop to think about it is really a breathtaking level of arrogance.