Price Controls Don’t Work

Ever hear that the fix is worse than the problem? Due in no small way to the ‘save the planet’ hysteria, bio-tech industries have driven the cost of basic foodstuffs up worldwide. That’s when, sure as gravity, the law of supply and demand inserts itself and the four, or six, or eight cylinder cars you drive begin to compete with your four, six, or eight family members for fuel/food.

And again, sure as gravity, politicians will call for price controls to ‘solve’ the problem. I am not aware that price controls have ever effectively altered the law of supply and demand. What they lead to is more shortages of supply. When the $20 loaf is forced to be sold at $2 via ‘price controls,’ that $2 loaf will disappear. IE. its $2 only if you can find one. Witness the empty supermarket shelves in Venezuela where the hemisphere’s idiot, Hugo Chavez, put price controls in effect for his oil rich country. That is exactly what Vladimir Putin will get when he does it. You can’t expect a communist to understand how markets react to supply and demand, but his motivations are more sinister. He is motivated by an upcoming election, not feeding his people.

Putin is just trying to save his administration’s popularity before the parliamentary elections in December.

Russia is introducing Soviet-style price controls on some basic foods in an effort to prevent spiralling prices from denting the Putin administration’s popularity ahead of parliamentary polls in December . . . to freeze prices at October 15 levels on selected types of bread, cheese, milk, eggs and vegetable oil until the end of the year.

He is more interested in himself and his party than his country. Not unlike the behavior of Democrats in Washington.

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