Colin Risdahl

Amihai Glazer is actually an economist, an emeritus professor of it at the University of California, Irvine.

And for producers, price caps might mean deciding a product isn't worth selling at all.

then it doesn't even cover my costs.

So I would lose money by selling some of the goods.

You see where this could go, right?

Fewer goods, more shortages.

But in reality, price caps don't always follow theory, in part because they're often paired with other policies.

Let me give one example.

World War II, which the price controls were effective.

There were also wage controls back then and rations on all kinds of things that were subject to price controls.

Meat and dairy, clothing, gas and car tires.

And if someone saw his neighbor have four brand new tires, he would look askance at that neighbor.

How did he get it?

What connections did he have?

Why is he doing that?

Meg Jacobs agrees that the social dynamic was part of why those World War II price caps worked.

It was seen to be patriotic to relinquish your ration coupons when purchasing these scarce items.

And because of that, price caps did keep inflation overall low.

Back then.

Then is not now.