They’re from the government and they’re here to help:  From Fox News,
Free Market Meltdown? Economists Fret Over Return to Price Controls

State officials across the country are proposing price controls to help fix the economy, riling economists who warn they can harm the economy and even destroy cities.

The downside of government-controlled prices:

“Economists widely agree that price controls often lead to shortages. There are many examples throughout history, and we have seen more recent demonstrations of this principle of economics in Venezuela and Zimbabwe,” said Dr. N. Gregory Mankiw, a Harvard University economics professor and former chairman of the Council of Economic Advisers under President George W. Bush.

Dr. Edward Glaeser, a Harvard economics professor who researches the effects of rent control, said price controls have “a whole litany of problems that make them among the most foolish forms of economic populism known to man.”

“In a free market system,” Glaeser said, goods go to the people who value them most; in a price-controlled system, goods go to whoever is lucky enough to get them. As a result, people hold on to rent-controlled apartments even if they barely use them.”

Nonsense, say big-government types–it’s for the people:

“The housing affordability crisis trumps any theoretical recommendations of economists,” New York State Assemblyman Jonathan L. Bing, a sponsor of many of the rent-control provisions pending in New York, told FOXNews.com.

Didn’t the government’s attempt to provide affordable housing get us into this financial mess in the first place?  Fannie Mae, Freddie Mac, anyone?  But, hey, let them do it again because they’ll do it right THIS time.

How well has rent control worked in the past?

“In New York City, the Bronx basically fell to pieces because of rent control. You even had the extreme of landlords burning down their houses.”

The South Bronx lost 40 percent of its housing stock in the 1960s and ’70s, largely due to arson. Many buildings were suspected to have been torched by the landlords themselves, who found that their buildings were literally worthless: There was no way to make a profit due to rent controls, and nobody would buy a building that could not make a profit. Burning the building allowed them to collect insurance money and pay off debts.

“The reason people ask for [rent control] is that those with contracts gain in the short term … It’s a way that politicians can buy votes,” Lindbeck said. “But the policy really hurts people entering the market — young people and immigrants.”

Just following in the footsteps of their hero Hugo :

CARACAS, Venezuela  — Venezuelan President Hugo Chavez is threatening to take over food company Empresas Polar, a company that makes the country’s top beer, but it could be an unpopular move.

Faced with inflation that reached 30 percent last year and tumbling oil revenues, the socialist leader has stepped up confrontations with food businesses through state takeovers, new regulations and warnings he may nationalize Polar if it does not produce food at lower prices.

Short-term political gain vs long-term economic misery.  Any guesses which one politicians will opt for?  They can always blame someone else when things go wrong.

Thanks to The Loft

Advertisements