The ALP doesn't understand markets

Kevin Rudd, and his socialist Industry Minister, Kim Carr, are again showing some very strong hints that they plan to further regulate and assert government control over some very important and sizeable Australian markets.

Kim Carr is threatening to ramp up protectionist policies and the euphemistically named "industry assistance" for Australian car manufacturers.

A Productivity Commission review of the phased reduction in tariffs is due next year. But Mr Carr said an independent review of the state of the industry was needed now because the assumptions that underpinned the 2002 policy had changed …

The Labor Leader, Kevin Rudd, repeated yesterday that he did not want to lead a country that no longer manufactured anything, and “making things means still having a viable automobile industry in Australia”.

(hat tip: Catallaxy - which points out that the Productivity Commission is indeed an independent body)

Kevin Rudd continues to hint at a groceries watchdog, as well as increased government monitoring of petrol prices. These two markets are highly competitive and form a huge portion of the Australian economy.

Rather than focus on the specifics, I will leave my readers with this quote from John Jewkes "Ordeal by planning" which I feel best summarises the ignorance and mindset of the ALP when it comes to markets and prices (hat tip: Diogenes Lamp).

Something has already been said about the morbid fears in the minds of many planners about the true operation of the price system.

In the last analysis, the planner’s attitude towards the price mechanism may arise out of a feeling that such a mechanism deprives him of some part of the gratification of exercising control…

Most planners are obsessed with the need for price stability. A price is essentially an indicator, by reference to which producers and consumers regulate their action…the stability of general prices is impossible if specific prices cannot change in order to bring about readjustments within the economic system.

The planners feel that when price changes take place, that something is going on for which they are not responsible, that the economic system is playing queer tricks with them.

Whenever I see a political party attempting to tamper and regulate with markets, I will describe it as authoritarian and meddlesome. After all, they are interfering in transactions that would have otherwise occurred between 2 consenting parties.

The Liberal Party do more than their fair share of meddling. Why do the ALP feel the need to out-do them in this respect ?