Why Forty Centuries of Price Controls?

Source: Cato Institute
by Ryan Bourne

“I’ve just recorded a Remnant podcast episode with the great Jonah Goldberg about The War on Prices. One question he asked has bugged me since. To paraphrase: if price controls have such a long record of failure, why have we used them so regularly over forty centuries? My answer on the podcast was pretty lackluster. I described how the impulse for price controls often stemmed from the public deeming it illegitimate for prices to increase after consumer demand spikes, rather than supply problems (see the Daniel Kahneman and Richard Thaler survey experiments in the 1980s). This helps explain the opposition to price gouging in emergencies, the skepticism we see about dynamic pricing, and the dismissal of the idea that excess demand‐​side stimulus drove inflation (rather than, say, greed being the explanation).” (05/15/24)