… is from page 9 of the 2009 Revised Edition of Thomas Sowell’s Applied Economics: Thinking Beyond Stage One:
Like other price controls in countries around the world and over thousands of years of history, Nixon’s price controls led to a reduction in the amount of goods supplied while the lower prices led to an increase in the amount of goods demanded – producing shortages.
DBx: Price controls are government-dictated lies. By imposing price ceilings, the government forces markets to broadcast the lie that price-ceilinged goods and services are more abundant (and, hence, less valuable) than they really are. By imposing price floors, the government forces markets to broadcast the lie that price-floored goods and services are less abundant (and, hence, more valuable) than they really are. Market actors – producers and consumers – thus operate with less, and less-reliable, information. The inevitable results include shortages (in the case of price ceilings) and surpluses (in the case of price floors), waste, and corruption.
Yet inordinate numbers of self-proclaimed “progressives” – people who pride themselves for their alleged devotion to science and connection to reality – cheer statutes prohibiting “price gouging,” celebrate minimum wages, and – now – cheer on a major-party presidential nominee who features price ceilings as a key part of her economic ‘plan.’
