Economic update

Price controls aren’t a solution to inflation

Regular Economics Explored guest Darren Brady Nelson has republished some of his papers strongly criticising price controls, which some commentators are now suggesting as a solution to the accelerating inflation we’re seeing in advanced economies. Great points that Darren makes include the following:

The imposition of price controls to deal with inflation does not stop inflation. Rather it combines with inflation to produce a different and worse set of consequences than would inflation alone…

…Politicians have cited a plethora of reasons for introducing price controls – ie price ‘ceilings’ and ‘floors’. At the end of the day, whether they believe these reasons or not is irrelevant to economic outcomes. The outcomes are always bad. Price ceilings always lead to shortages and price floors always lead to surpluses, which often then lead to further government interventions such as rationing and subsidies as well as more taxation, regulation and money printing. Artificial government laws of price controls cannot overcome natural economic laws of supply and demand.

Check out Darren’s papers via the LinkedIn posts below.

Regarding inflation, I spoke about the UK’s highest recorded inflation rate in three decades in my latest livestream last Friday:

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