We have a long history when it comes to price control. Price control is exactly what people love. After all, is everyone complaining about the increasing costs of living? But over and over they are failing. So what is the history of this?
One of the first examples of the failures of price control is the Roman empire. While many say that the Roman Empire collapsed due to internal conflicts and alcoholism of the political leaders. This, off course, is no sign of good governance. But it was not the real reasons all imploded. The end of the Roman Empire was caused by government fraud with its currencies. This was needed to finance the wars and the welfare state they founded.
Soon the silver coins contained just 0,2% of the Silver it once had. So prices went up to compensate for this. So people could no longer finance the day to day expenses and the Roman empire had large shortages. Soon revolution started and the Roman empire collapsed. So where did the price control work?
So let’s move to modern days.
Rent control is another form of price control. A control which has unprecedented effects in big cities with shortages. Take New York. A town with tough rent control. Controls which result in tenants having unprecedented rights.
When we look at the effect of the New York rent control nothing more and nothing less than ruining wealth. Prosperity is reduced with those policies. To get rid of tenants amounts of over million are paid.
Another modern-day example is the situation in Venezuela. Together with other failed attempts to solve the problems of the country, they posed maximum prices on a day to day expenses. It resulted in a flourishing black market.
When we look at the real solution, then it is very easy. We simply need to allow the market to function in a completely free method.
So when will politician stop with failing policies and begin with working policies? A working policy which simply returns in a nice method to get rid of all those government employees.