Consumer Benefit or Profiteering Socialism?
In a purely capitalist market, when the government imposes price controls they are legislating regulations which set the maximum price at which goods and services can be sold. Price controls are nothing new to American capitalism. They were instituted during World War II in an effort to curb high inflation which arose from rationing. Price controls are also regularly used in times of peace in order to fight inflation, as the ones instituted by Richard Nixon were designed to do during the 1970s. When markets are restricted they often mandate price controls and the use of price controls is not always effective. Further, price controls usually create a black market in the goods and services whose prices are regulated by the government. Price controls are just one type of economic intervention on behalf of the government in order to control the economy. Interest rates, wage freezes, and devaluing the dollar, among other economic tools, also have an affect on the economy and allow the government to control free markets.
The public is divided when it comes to price controls. Many believe the government should take the traditional hands-off or laissez faire approach to industry intervention. Yet, many industries are often the target of intervention by the government in an effort to control the economy of the nation. One reason for this may be that public support seems to be growing in favor of the opinion that it is the government’s responsibility to help keep prices under control. The table below helps illustrates this growing sentiment between the early 1980s and the early 1990s:
Do You Think It Should Or Should Not Be The Government’s Responsibility
Definitely should not be 53 80
There is a very good reason why price controls are generally favorable to the American public. Price controls are touted as being in the best interest of consumers, a way of helpi...