One of the most under-appreciated laws of economics is “Something is worth only what someone is willing to pay for it.”
When this law is violated by price controls, less economic transactions happen and people are not able to benefit each other by trade as easily.  When prices are held too far up or too far down, people find work-a-rounds in order to trade.  Government is always trying to stop the work a-around to the detriment of overall trade, thus harming predominantly the poor. 

When price controls on wages occurred under FDR, employers added value in benefits, creating major harm.  When price controls on steaks happened, butchers created different cuts of steaks that did not qualify in the controls.  Work a-around government price controls were very common.  
Currently, price controls on labor over forty hours a week, limit many to only forty hours, when many need more hours just to make ends meet.   Obama care recently created extra expenses on employees that work over thirty hours a week, causing many businesses to limit any one employee to a strict 29-hour a-week limit.
In the great depression, price controls on milk created situations where millions of gallons were just thrown out.  Cattle and crops in the 1930's had price controls and production limits, creating massive disruptive effects.  Many cattle were killed in the fields to rot while millions had very little to eat.  The government economist back then knew that if you lowered supply, prices would increase.  What they failed to realize is that higher prices send signals for more people to produce that item, thus conflicting with the production limits.  
 


Comments

05/01/2016 1:52pm

I read this law first time and you can’t imagine that I am just out of my mind after reading this. Then I consider that the economics subject is made by a human brain not obtain from natures law or not did by nature, so it could be that type.

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Price control of the products and all sorts of services in the market is in the interest of the middle class and medium ranged salaried persons. It is the duty and responsibility of the state to control the higher prices of the products.

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    Bill Haley

      Bill Haley started Haley2024 in the spring of 2013 in an effort to his part in restoring freedom to America.

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