Every time we have to re-learn the same basic lesson -- price is the most efficient way to ration demand. That we have to re-learn it is because all too many think it is unfair, in some manner inequitable. Which, well, it quite possibly is but price is still efficient.
This time around it's the jump in international fuel prices as a result of the war affecting transport out of the Persian Gulf. Should that be happening, should the war be going on? I might not be the right person to ask -- the translator of an article of mine into Farsi was jailed for translating my article. I could, perhaps, be a little biased on the question of who should rule Iran.
But given that the closure of the Straits of Hormuz has happened, the prices of oil and gas (LNG) have jumped, what should we do then?
Well, we need to reduce our consumption of those items, obviously enough. What's the best way of doing that? Economists -- well, most of them -- insist that price is the most efficient way of allocating that newly scarce resource.
We are told that the Ghorashal-Palash fertilizer factory is closed for a bit. A very big user of gas, a fertilizer plant, and in a time of shortage, we'd probably prefer to direct what gas we have to cooking our lunch. Or, this time of year, iftar. The plant has a couple of hundred days of production in stock, it's not a problem if they cease production for a week or three.
We've the energy minister assuring everyone that supplies are normal which, well, it won't be only cynics like me who start to believe in shortages once they're officially denied.
We even have a scheme where people can only buy so much fuel each time. And that one, well, that has echoes of what the US did in the 1970s and that led to longer and greater queues than if they'd done nothing at all.
Because as soon as you say that a motorbike may only get 2 litres per visit, then people worried about shortages will make more visits to get their two litres.
Other countries, in those 1970s, allowed prices to move, not restricted volumes of purchases like the US. Those other countries did not get queues and lines at petrol stations like the US did.
Just allow prices to rise to whatever level the shortage -- if, unlike what the energy minister says, there is one -- creates and we'll find that only those who truly need the fuel will pay those prices.
This reduces the demand for fuel and the price will rise to where the demand meets the supply. This is the first two pages of every economics book ever and it's there because it works.
Now we shouldn't be too hard on the minister. A lovely thing I've been told -- and one so lovely that I've never really wanted to do the maths to check it, it's far too fun for that -- is that the petrol tanks of every car and bike in the country have a greater volume than the storage tanks of the oil companies and refineries.
So, if everyone fills up their tank on the same day the country runs out -- still plenty of petrol of course, just none at the petrol stations, it's all already in the cars. So “don't panic” is a very reasonable thing to say.
But, it's still true that if we want to restrict consumption, then price is the best way to do that. Some people will not commute to work -- take their holiday now perhaps. Others might work from home. Or take the bus. Or close a factory -- like the fertilizer one -- for a week or three.
Everyone gets hit by a price rise and so everyone changes their behaviour. Which is why price is efficient, because absolutely everyone changes their behaviour in the light of this new shortage.
So, why don't we just use price every time? The answer is because some think it unfair -- the rich can just buy their way out of trouble, the poor cannot. Which is true, but then who thinks that the rich are only going to be getting two litres for their motorbike at present? Or be going short of either fertilizer or iftar?
Let us put such cynicism to one side here. The real answer is that we've just tripped over one of the great faultlines of public policy. Efficiency and equity -- fairness -- are not, at all, the same thing. So it's always a constant battle between the two -- is this efficient, is this fair?
And, well, sadly, despite some thousands of years of thought on the point, no one has ever managed to produce a system that we humans think is wholly fair as well as what economists insist is efficient. Just one of those things.