Thomas DiLorenzo over at the Ludwig von Mises Institute has an outstanding article on the 4000 year history of price controls. He notes that throughout history price controls have always led to economic downturns and devastation.
The case against price controls is not merely an academic exercise, restricted to economics textbooks. There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls. This record is partly documented in an excellent book entitled Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler, first published in 1979.
He outlines some of the history covered in the book going all the way back to Hammurabi 4000 years ago in Babylon. The Greeks, the Romans and even the struggling American colonies made the error of resorting to price controls and severely damaged the war effort as a result. As DiLorenzo points out the Continental Congress of June 4, 1778 adopted a resolution stating “Whereas it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purpose proposed, but likewise productive of very evil consequences–resolved, that it be recommended to the several states to repeal or suspend all laws limiting, regulating or restraining the Price of any Article.”
That our present day legislators don’t know their own history and seemed determined as well as condemned to repeat it is bad enough. But we have even more recent examples to learn from.
Price controls were the cause of the “energy crisis” of the 1970s and of the California energy crisis of the 1990s (only the wholesale price of electricity was deregulated there; controls were placed on retail prices). For more than four thousand years, dictators, despots, and politicians of all stripes have viewed price controls as the ultimate “something for nothing” promise to the public.
He finally concludes:
This is what the economically ignorant among the American public is clamoring for Congress to do with regard to today’s energy industry. Let’s hope that the recent “hearings” in Congress on the topic of gasoline prices were just another public relations charade.
Let’s hope indeed. Whole article here.