Government intervention can lead to unintended consequences from "summary" of Principles of Economics by Saifedean Ammous
Government intervention in the economy is often motivated by a desire to address perceived market failures. However, the consequences of such interventions can be far-reaching and unpredictable. One of the key reasons for this is that government actions are often based on imperfect information and are influenced by political considerations rather than purely economic factors. When governments intervene in markets, they typically do so with the goal of improving outcomes for society as a whole. For example, they may impose price controls in an attempt to make essential goods more affordable for consumers. While this may seem like a noble objective, the reality is that price controls can lead to a variety of unintended consequences. One common unintended consequence of price controls is the emergence of black markets. When prices are artificially suppressed below their market equilibrium levels, suppliers have less incentive to produce and sell goods at the mandated prices. This...
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