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Vernon Smith On Price Controls

In response to this letter, my emeritus Nobel-laureate colleague Vernon Smith sent to me the following e-mail, which I share here in full and with Vernon’s kind permission:

WWII price and wage controls had the unintended consequence of incentivizing the use of non-wage supplementary benefits like healthcare and insurance to induce workers to move from one job to another. Thereafter these programs became linked to employment limiting their availability to women and others not in the labor market.

DBx: Indeed.

People who think that price ceilings are an effective way to help buyers specifically, or to improve the economy more generally, are people who do not think seriously.