( 174 ) 



A policy of low ceiling prices repeals the law of supply and 

 demand as far as supply is concerned. It restricts future pro- 

 duction. It also repeals the law of supply and demand as far 

 as demand is concerned. Low ceiling prices speed up the rate 

 of consumption. 



All Cannot Have More if All Produce Less 



The New Deal brought to life the age-old belief that the 

 nation could have more by a redistribution of wealth. This 

 general philosophy has a strong political appeal. Most of the 

 improvement in the standard of living of the common man 

 historically has been due to a rise in the standard of living of 

 all people rather than through a redistribution of the exist- 

 ing wealth. There is only one way to raise the standard of 

 living permanently, and that is through increasing produc- 

 tion of more goods and services. 



Since increasing production lowers price and decreasing 

 production raises price, there is a widespread belief that by 

 producing smaller crops, all can have more. We all know that 

 we are individually better off with a high price or wage. We 

 all know that a high price is associated with a small output. 

 Therefore many erroneously reason that the way to get more 

 is to produce less. This general philosophy may be sum- 

 marized as follows: 



Crop Price 5 Income 6 



80 140 112 



100 100 100 



125 70 88 



There is an almost universal belief that if the production 

 of a crop is reduced 20 per cent, prices will rise, say, 40 per 

 cent, 5 resulting in an income 12 per cent 6 above normal. On 

 the other hand, if the crop is 25 per cent above normal, the 



5 Erroneous assumption. 6 Erroneous conclusion. 



