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For: Real America News Updated 19 Jan 2022, 11: 20 am EST
The constant rise in the prices of products, as well as fuels throughout the United States has led many to wonder if the government should establish a price control so that there are no more increases . This question was answered by an expert from the Massachusetts Institute of Technology (MIT), who said that doing this is a bad idea.
According to CNN, David Autor, professor of economics at MIT in a survey published by the University of Chicago said that price controls can manage costs, but they are a terrible idea for the economy.
With inflation at 7%, price controls already represent discussions on how to reduce prices, in case the measures that the Federal Reserve adopts in the coming months they cannot control inflation.
Price controls can be directed or imposed on a wide range of goods, establishing a minimum or a maximum. Experts suggest that limiting prices leads companies to produce less of a product, while making it more attractive to consumers. Supply falls and demand increases, which leads to scarcity as a result .
Although this is not a good option for global economies, various countries have implemented strategies of price control with the sole purpose of stopping the increases, already happened in the United States in the decade of the 70.
Isabella Weber, an assistant professor of economics at the University of Massachusetts Amherst, wrote in The Guardian that price controls they have a role to play in the United States, especially as politicians try to address the inflation that has been caused by the circumstances of the pandemic.
“Price controls would gain time to deal with bottle that will continue as long as the pandemic prevails,” he stated. But the expert added that this strategy is not a solution, since the inflationary phenomenon will not disappear on its own.
Regardless of political positions that can be had on the subject, the Federal Reserve is the only body that can deal with the issue of inflation because it is the body in charge of economic policy in the United States. In the immediate term interest rates are expected to increase as a first measure .
Another action that the government of President Joe Biden is undertaking so that prices do not hit consumers has to do with its strategy of helps meat producers so that there is a government subsidy and thus stop the rise in product costs without the need for control market prices.
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