The failure of price controls to stop inflation and allow more access to goods has been well-documented.
As inflation in the United States has spiked to levels not seen in forty years, some progressive voices have become increasingly bold in their calls reform. Reasoning that inflation is, after all, due to firms raising their prices, these commentators have directly attacked businesses: complaining about price gouging and what they call corporate greed, threatening antirust legislation, and even calling for price controls. While limiting price increases seems like a straightforward remedy for inflation, a look at how price controls have worked in South America shows why such measures bring more problems than solutions.
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Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.
Alex Horenstein is an associate professor of economics at Miami Herbert Business School, University of Miami.
This piece originally appeared in The Dispatch