Europe is considering price caps to control inflation. CEOs are shaking their heads in despair
Europe is considering implementing price caps to combat inflation, a strategy that has historically led to shortages. The U.K. is exploring price controls on essential goods, despite pushback from business leaders. Critics argue that such measures may not address the underlying economic issues and could hinder growth.
- ▪The U.K. government is looking at capping prices of essential items like bread, milk, and eggs.
- ▪Business executives have criticized the proposals as impractical and detrimental to the market.
- ▪Historically, price caps have led to shortages and increased inflation, as seen in Venezuela.
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When the supply of toilet paper started running out back in 2013, the Venezuelan authorities came up with a novel explanation. “95% of people eat three or more meals a day,” the president of the National Statistics Institute, Elias Eljuri, said at the time. The suggestion appeared to be that if only Venezuelans ate less, there would not be a shortage of materials to clean backsides. Recommended Video What the statement failed to mention was the use of price caps by the president, Nicolas Maduro—a forlorn attempt by the country’s leader to shield the public from the effects of a broken and corrupt economy. As any high-school economics student knows, it is applying government controls to markets which creates shortages, not eating too much.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at Fortune.
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