Price Controls Will Likely Make A Comeback – Even Though They Don’t Work

As anybody who lived through the oil crisis of the 1970s (and the stagflation that resulted) will likely tell you, using price controls to try and alleviate Americans’ pain at the pump (and with their heating bills, and their grocery bills and, well, all their other bills) is, at best, a band-aid on a bullet wound, and at worst, a hair-brained policy response that does nothing to solve the underlying problem (in fact, it only exacerbates the problem).

While America’s left-leaning millennials weren’t around for the 1970s, some of the people who served in government during the 1970s are still around, and one of them is Philip Verleger, president of PKVerleger and an analyst who specializes in commodity markets. Over the years, Verleger has authored more than 100 articles and books about commodities. He also worked on energy policy during the Ford and Carter Administrations after getting his PhD in 1971.

It’s this first-hand experience that gives him special insight into why price controls don’t work, and also why it’s only a matter of time before the Biden Administration brain trust moves to bring them back.

The problem with price controls, as Verleger explained during a recent MacroVoices interview with Erik Townsend, is that they create “distortions” in the market which feed through and influence producers’ willingness to ramp up production, effectively exacerbating the underlying cause of high prices in the first place. – READ MORE