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Price Controls Are Usually Enacted In Response To What?

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Don Demarco Profile
Don Demarco answered
Price controls are usually enacted in a failing economy. That is why at the current time, the US is attempting to takeover the largest component of the economy. Nixon and Carter attempted this back in that time. Removing the problems is why Reagan was able to make the economy skyrocket.

When you attempt to control prices through enforcement, what it does is drive the economy away from that business. Why work in that business if you cannot make money. The systems like Medicare, attempting to control prices have actually had the opposite effect, drive prices up. Because those controlled prices, force those that provide the service to make up their losses in other areas.

Look to Austrian economics to get your answers. Either that, or look at totalitarian economic systems like North Korea to get your answers. Central planning of economics NEVER work because they force capital outlays or investment into areas that are failures.
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Don Demarco
Don Demarco commented
Also, think about what the prices of electronics have done over the last few decades. EVERY product goes down in price. WHY? Because there is little if any regulation. PERIOD!

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