The Fallacy of Government Control Over Prices from "summary" of Economics in One Lesson by Henry Hazlitt
One of the most common misconceptions in economics is the belief that the government can effectively control prices through legislation. This fallacy arises from a misunderstanding of the forces of supply and demand in a market economy. When the government attempts to fix prices below the level that would be determined by supply and demand, it creates a shortage. This shortage leads to a situation where consumers are unable to purchase the goods they desire at the artificially low price. As a result, some consumers may be forced to go without the product, while others may resort to illegal means to obtain it. On the other hand, if the government sets prices above the market equilibrium, it creates a surplus. This surplus leads to a situation where producers are unable to sell all of their goods at the artificially high price. As a resu...
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