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Price fixes cause shortages. There is never a time in history when this is not the case.
by polski-g 3y ago
Price fixes cause shortages. There is never a time in history when this is not the case.
- tzs 3y agoThat's only true when raising prices can lead to an increase in supply. There have been times when that is not the case, such as in the United States during WW II.
- MichaelZuo 3y agoCan you link a source?
- tzs 3y agoI don't really have anything specific. I'm just remembering a few things I read about what happened to the economy during WWII. With a large number of people leaving the workforce for the military, and with many goods being diverted to the military, there were both labor shortages and goods shortages for civilians. Normally when shortages cause prices to rise that is suppose to attract new producers or get existing producers to increase output, thus alleviating the shortage. Same with rising wages and labor. But with the war taking so much people didn't have the resources to actually start new factories to make civilian goods or excess capacity to increase production--if they had it would have went toward increasing military production. In that environment wage and price increases don't lead to significant labor or goods availability--they just shuffle things around. This can lead to a wage and price spiral where wages and prices just keep going up without any meaningful change in the supply of labor or goods. To stop that in WWII they implemented wage and price controls for key industries and goods.
- MichaelZuo 3y agoEventually the spiral would have plateaued as people from other countries would become willing to take even heavy risks and rush to fill the jobs, regardless of the prospects of legal immigration. So the principle would have still held, though obviously deleterious to the average consumer in terms of pricing.