Monday, November 28, 2011
Price Controls Don't Work - the Evidence from Venezuela
"The law of supply and demand is a lie," said the chief of an agency that was set up to administer Venezuela's new system of price controls. Au contraire. As this article (the source of the regulator's quote) attests, the law of supply and demand is alive, well, and rapidly proving why price controls are not effective against inflation. When the market price of goods exceeds the regulated price, people will hoard, supplies will run short, and prices will keep rising in the black market.