We have a weird, but illustrative, series of events leading up to the planned closing in 2019 of 45 Party City locations, largely based on a worldwide shortage of helium.
In this case, that translates into the loss of work for perhaps a few hundred full- and part-time employees.
Why the Helium Shortage?
We have to look many years back to before World War I to find the origin of the helium shortage. Airplanes were in their infancy, and lighter-than-air vehicles like blimps seemed promising. Helium, the second-lightest element, doesn’t burn, which is a huge advantage over the highly flammable hydrogen, which is the lightest element; thus, helium became of strategic value for national security.As a result, the United States created the Federal Helium Reserve in 1925 and began to deal in and stockpile helium.
By the 1950s, helium was being used in a much larger number of ways in science, weather monitoring, and even the space race, so demand evolved. To fix it, Congress passed the Helium Act Amendments of 1960, which created incentives for natural gas producers to sell their supply of helium to the U.S. reserve, which had still been active since the 1925 Helium Act. As a result, the United States stockpiled the majority of the world’s helium.
As things continued to evolve, it was decided that the U.S. government shouldn’t be in the helium business, so to fix that problem, Congress passed the Helium Privatization Act of 1996. This act was intended to get the government out of the helium business after more than 70 years of buying, storing, and refining helium, and directed that the helium be sold to recoup the government’s investment.
Central Planning Woes
This is a textbook example of the problems of central planning much like you find in a socialist-run economy. The government identifies a policy that has unintended consequences, and each time they “fix” the problem, it gets worse, rather than letting private-sector market forces find equilibrium naturally.Having myself worked for the federal government for 25 years, it’s something I have seen in action many times, although the swamp is hard to explain.
It’s hard to believe there are people who think socialism is a viable economic model when it fails under almost any circumstance.
Let it be a lesson to those who are out of a job at Party City and anyone paying attention: Government interference in the private sector is a high-risk, low-gain venture and must be minimized.