Meditations and Learnings

Meditations and Learnings

The Temptation of Price Controls During War

Despite a consensus that the rich should be deprived of their luxuries before the poor are rendered incapable of purchasing necessities during a national struggle, price controls on the latter are not the answer. If a government keeps the prices of a food product like bread artificially lower than would be determined by a free market, the bread producers suffer. The incentives push them to either break the law or start preferentially selling uncontrolled products that the poor could not afford in any case. The profits being greater in caviar production, given the scarce resources, the producers of luxury foods will pay more for them, and there will be less bread for everyone.