The 4,000 Year Old Econ Lesson

What is the 4,000 year old economic lesson? It is very simple. Going back to the Babylonian Empire and continuing forward the simple lesson is this—price controls don’t work. You can not simultaneously control the price and quantity of anything. If you try to control the price of an item or service, the result will be reduced quantity and quality. In other words waiting lines will form.

Let’s look at price controls in another way. You know what an equal sign (=) looks like. Now imagine that on one side is price controls. The question is what is on the other side? The other side of the equal sign is income controls. When governments introduce price controls they are really introducing, through the back door, income controls. When you control a person’s income, you in essence control them.

The above is important because the recently passed Obama Care national health plan will inevitably lead to price controls on health care and income controls on providers. The results are predictable—less choices and reduced quality of health care.

You can not fight history.