Against price control
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| Author: Patrick Crozier |
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I am against price controls because:
- they involve force which I am against
- they tend to lead to rather bad consequences such as queues, overcrowding and poor quality products, depending on the situation
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Q&A
Why the bad consequences?
- It's all to do with supply and demand. When prices are low no one wants to supply but everyone wants to buy. When prices are high exactly the opposite is true. Somewhere in the middle supply and demand are equal. That is the "natural" price [Economists probably have a formal term for this, it's just that I don't know what it is]. When the government moves the "natural" price (usually downwards) by means of price control, for example, it moves the situation to one where demand outstrips supply. Thus you get queues, or (in the case of trains) overcrowding, or, if the supplier can't restrict the number of customers, a lower quality product.
Some examples?
- Fare control leading to overcrowding on the railways
- Rent control leading to thuggery and poor quality accommodation
- Control of bread prices leading to lower quality:
- "As a native "Parisien" (born in the the 14th arrondissement), and a bit of bread connaisseur, there was a time when I had to go out of my way to get good bread. You see, there used to be price controls on bread, and so, the incentive of making a really good baguette was pretty low, since you could not charge more for it. Many bakers would just make "industrial" baguette (too soft and tasteless) and only a few would put real effort into it."
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Comments
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