In the world of economics, there are certain fundamental principles that no government, no matter how powerful, can simply wish away.

The law of supply and demand is one such principle, a harsh reality that Pres. Bongbong Marcos Jr. seems to be conveniently ignoring with his recent foray into price control. It’s likely because he didn’t complete college, and he naively believes he knows better than those who truly understand what they’re doing.

We all remember the campaign promises, or rather dreams, of a P20 rice championed by then-candidate Marcos Jr. While his ardent supporters may cling to the hope that he can magically deliver on this pledge, the truth is that he now finds himself appointing himself as the head of the Department of Agriculture (DA) in a desperate attempt to lower rice prices and appease his base.

However, the sad reality is that when prices are artificially restricted, the consequences are far from what his blind fanatics envision. When you cap prices, the demand for goods often skyrockets, far exceeding the available supply. This imbalance inevitably leads to shortages as producers lack the incentive to increase production when they cannot raise prices to meet rising demand.

In other words, his utterly comical price control policy will inevitably lead to more problems. Bongbong is either dishonest or foolish, but as the saying goes, “Never attribute to malice that which is adequately explained by stupidity.” Either he’s intentionally creating a crisis to justify further “solutions” that would worsen the problem, or he and his “advisers” genuinely lack understanding of what they’re doing.

Take your pick!

To ensure that his Executive Order No. 39, which dictates rice price ceilings of P41 per kilo for regular milled rice and P45 per kilo for well-milled rice, is enforced, Marcos Jr. has created the ‘Bantay Presyo Task Force.’

This task force includes not only the DA but also other agencies such as the Department of Trade and Industry, the Department of the Interior and Local Government, the Philippine National Police, the National Food Authority, and relevant local government units. Their mandate? To check if these price ceilings are being adhered to in the Cagayan Valley region.

What will happen to violators, you ask? If there’s a preventive or draconian law in place, it effectively criminalizes the behavior or act being prevented. This means that violators of his EO could face arrest and imprisonment!

While Marcos Jr. claims that this move is aimed at stabilizing rice prices, it fails to address the economic reality that price controls often do more harm than good. It has unintended consequences!

Furthermore, such actions are a clear indication of a failing economy and a government resorting to draconian measures to appease its political base.

The task force will also gauge public reactions to this executive order, but let’s not forget that the real impact of such policies will be felt in households across the nation. The burden of these price controls ultimately falls on the ordinary consumers who may find it increasingly difficult to access affordable rice.

As an alternative, agriculture officials are advising the public to consume other rice alternatives such as cassava, gabi, sweet potatoes, bananas, and corn. While diversifying food sources is a sensible idea, it should be a choice driven by preference, not necessity due to misguided government intervention.

EO No. 39 is presented as a weapon against hoarders, rice cartels, and illegal price manipulators. However, history has shown us that price controls rarely achieve these lofty goals. Instead, they create inefficiencies, hinder free-market competition, and distort the economy.

In the end, no matter how fervently Marcos Jr. and his supporters believe in his presidency, they cannot suspend the laws of reality and economics by simply passing a law. The Philippines deserves more than naive and impractical solutions to complex economic challenges. It’s time for a rethink of these policies and a return to the principles of sound economic governance.

Price controls or price caps can have several unintended consequences, including:

1. Shortages: When prices are artificially restricted below the market equilibrium, the quantity of goods demanded often exceeds the quantity supplied. This can lead to shortages as producers have little incentive to increase production.
2. Black Market: Shortages can result in the emergence of black markets where goods are sold at higher, illegal prices. This undermines the intended goal of price controls.
3. Reduced Quality: Producers may reduce the quality of goods or services to maintain profitability when prices are capped. This can result in lower-quality products being available to consumers.
4. Reduced Investment: Price controls can discourage investment in production or innovation since there’s limited potential for profit. This can hinder economic growth and technological advancement.
5. Hoarding: Some sellers may hoard goods when price controls are announced, anticipating future shortages or higher prices once controls are lifted. This can exacerbate shortages.
6. Inefficient Allocation: Price controls can lead to goods being allocated inefficiently. They may not reach those who value them most, and consumers may waste time searching for available goods at controlled prices.
7. Rent-Seeking Behavior: Firms or individuals may expend resources to influence policymakers or engage in rent-seeking behavior to obtain exceptions or benefits under price control regimes.
8. Reduced Supply: Producers may reduce supply since they can’t command higher prices. This can result in reduced production, job losses, and economic inefficiency.
9. Distorted Incentives: Price controls can distort incentives for both producers and consumers. Producers may not have a strong incentive to innovate or increase efficiency, while consumers may overconsume goods or services at controlled prices.
10. Administrative Costs: Enforcing price controls requires administrative resources, which can be costly. Government agencies may need to monitor markets and investigate violations.
11. Ineffective Over Time: Price controls are often seen as temporary measures, but they may persist longer than intended, distorting markets for an extended period.
12. Unintended Consequences: Policymakers may not accurately predict how price controls will affect markets, leading to unintended and unforeseen consequences.

Marcos Jr. needs to understand that while price controls may address short-term concerns like inflation or affordability, they often come with trade-offs and can create more problems in the long run. Economics teaches us that supply and demand dynamics play a crucial role in market efficiency, and interfering with these forces can have unintended negative consequences.