Why Do Governments Enact Price Controls?
If price controls have negative consequences, why do governments enact them? Let’s revisit our example of President Nixon’s wage and price controls in the 1970s.
If price controls have negative consequences, why do governments enact them? Let’s revisit our example of President Nixon’s wage and price controls in the 1970s. These price controls were popular, as is demonstrated by Nixon being re-elected after they went into effect. The public didn’t think that the price controls were to blame for things such as long lines at the fuel pump. Without knowledge of the economics behind price controls, the public blamed foreign oil cartels and oil companies for the shortages.
In this video we’ll also address questions such as: do price controls — like rent controlled apartments and the minimum wage — help the poor? Are there better ways to help the poor? If so, what are they? Let’s find out.
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Blaming gas lines on price controls may be correct in a narrow sense but it seems to me the root cause (and blame) still falls to the collusion of suppliers (the OPEC cartel) in controlling and limiting world-wide oil production. Without this imposed restraint on competition of production, there would have been no need (or even any consideration) of government intervention of any sort or by any policy, good or bad. It may also be true that "there are no shortages in free market" but this statement totally ignores that OPEC had already compromised free-market mechanisms..