Economic Theory

History proves consistently that price caps are disastrous

Matthew Lesh writes for CapX

Matthew Lesh, IEA Head of Public Policy, has written for CapX on the notion of price caps as a solution to the cost-of-living crisis.

Drawing analogies to historic examples, Matthew writes:

“Comparisons with the Soviet Union, like those with the Nazis, are usually ridiculously hyperbolic. But recent days demonstrate that the lessons of history are often ignored and bad ideas rarely die.

“This isn’t just theory. Every time, in every place that price controls have been tried they have been a miserable disaster.

“The sad truth is that higher prices are necessary to send a signal that the underlying cost of products has increased.”

Read the article here.