“The Destructive Evil of Price Controls”

As a practicing economist I’m a little sensitive to the charge that economists fostered the Great Recession. Why didn’t we know more? Why didn’t we warn people?

Well, there were warnings, but for the sake of argument suppose there weren’t. And now suppose that, instead, every economist in the country spent ten years jumping up and down and screaming : about the problems in the economy,: about what caused other such meltdowns in the past: too much leverage and too many lies.

Question: would it have made any difference?

I contend that it’s at least doubtful. Here’s one reason why: economists have excellent theory and also excellent empirical evidence–drawing on examples spanning nearly 4000 years–about the effects of price controls. Unlike macroeconomic policy, there is essentially complete agreement among economists about the effects of price controls.

So, have they vanished? Are they dead as dodo birds?

Heck no.

 

Craig Newmark

Associate Professor of Economics, North Carolina State Univ.

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