Government intervention distorts incentives from "summary" of Free to Choose by Milton Friedman
Government intervention distorts incentives by altering the costs and benefits that individuals face when making decisions. When the government provides subsidies or imposes taxes, it changes the relative prices of goods and services, leading individuals to make choices they would not have made in a free market. For example, subsidies for certain industries may encourage firms to produce more of a particular good than consumers actually want, leading to inefficiency and waste. Similarly, when the government sets price controls, such as minimum wage laws or rent control, it distorts the signals that prices send to both producers and consumers. Minimum wage laws may lead to unemployment as employers cannot afford to pay workers the mandated wage, while rent control may lead to housing shortages as landlords ha...
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