Monday, February 4, 2013

Starvation is better than Inflation?

Argentina puts in a price freeze on food.

From what I understand, the president of Argentina is a socialist/communist, so she probably doesn't understand basic economics.  Ignorance should not be an excuse for starving people, however.

Limiting the price firms can earn will mean fewer foods are going to be sold.  With firms not able to earn as much, they'll stop stocking products.  This is one of the more-disastrous proposals one could imagine, as food shortages will occur.  The exact same result happens with rent control - the quality and quantity of available housing decreases.  Given this is the entire country and food is at stake - this is far worse.

Tomorrow and Thursday my principles of microeconomics class will be learning about price ceilings.  This will be a timely (and sad) topic for us to discuss.

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