The Curse of Diocletian 
By John McClaughry

It's been around for 1,700 years, and it afflicts us yet today. It's not a natural calamity, like herpes, but a man-made calamity. It's transmitted by ignorant or venal politicians eager to curry favor with certain constituencies. It's called the Curse of Diocletian.

The Emperor Diocletian ruled Rome from 284 to 305 A.D. Like many of his predecessors, Diocletian needed money to pay the army and to finance his grandiose public works spending.

Previous emperors had debased the value of the silver currency to the point that no one would accept it. Diocletian started over. He scrapped that coinage and introduced a new copper coin that quickly became worth essentially nothing. Prices of goods and services shot upwards.

So Diocletian decided to issue an edict declaring the value of practically every traded product or service in terms of his worthless coinage, and prohibit anyone from making his own decision about how much to pay for wool, wheat, drovers, and lawyers.

Of course, people were not inclined to accept a handful of worthless copper disks for a wagonload of wheat. The buyers and sellers struck their own private deals in the marketplace.

To put a stop to this illegal freelancing, Diocletian declared that anyone caught cheating on his price fixing system would be put to death. Withholding goods and services also became a capital offense. Mission accomplished!

Not surprisingly, the result was marketplace riots, killing of traders, hoarding, unemployment, hunger, and in spite of the death penalty threat, a rapidly growing black market.

Four years after the edict was issued it collapsed, and Diocletian was forced to abdicate.

But the Curse of Diocletian endures. It erupted in Montpelier again last week in the form of a bill (S.89) to impose retail price controls on milk.

This nitwit scheme, cosponsored by 16 Democrats, is the handiwork of Senate President Peter Shumlin and especially Sen. Bobby Starr (Essex-Orleans), surely the most determined advocate of dairy price fixing in modern Vermont history.

Intoned Shumlin, "The disparity between what our farmers receive for a gallon of milk and what Vermont consumers pay is unconscionable. We want to take the money that is lost in the middle (sic) and put it back in Vermonters' pockets."

That refers to Starr's "surplus profit margin" theory, historically associated with the writings of Karl Marx. The store price of fluid milk has been dropping for months, and it would be hard to find a consumer who views the current price as being suspiciously out of line.

So why the sudden passion for milk price controls?

Last year, Shumlin and Starr revived and expanded the Vermont Milk Commission, and directed it to find a way to jack up prices received by dairy farmers.

But the Commission couldn't find a way to do it that didn't end up gouging mothers buying milk for their children. To get around that problem, some on the commission (Starr) came up with Diocletian's idea of slapping price controls on the grocers.

That way the grocers couldn't pass on to their customers the cost that a new milk tax — labeled an "assessment" — would force the distributors to charge.

The retailers would have to absorb it out of their alleged "surplus profit margin."

But Starr didn't have the votes, the Farm Bureau and the dairy coops backed away, and this whole pernicious proposal fell apart. The Commission threw up its collective hands and called it quits.

Foiled by the Commission's refusal to do their dirty work, Shumlin and Starr now appear to want to punish the grocers who led the resistance to the Commission's milk tax proposal.

What is not yet clear is how slapping price controls on grocers ends up advancing Starr's perpetual goal of transferring somebody else's money to dairy farmers.

Democratic Sen. Dick Mazza is the owner of a family grocery in Colchester. Perhaps his Italian heritage includes some faint ancestral memory of Diocletian's price control folly.

When asked about the Shumlin-Starr price fixing bill, he replied, "That's totally ridiculous. That is the dumbest idea I've ever heard."

From a man who has served in the Senate since 1985, that is a pretty severe judgment.
 

John McClaughry is President of the Ethan Allen Institute.