Skyrocketing oil and gasoline prices have some Americans calling for a return to the pricing controls of the 1970s.
Joseph Brusuelas, principal and chief economist for RSM US LLP, discussed price controls in a new blog post this week and outlined exactly why they are a bad idea.
What Are Price Controls? Price controls are government actions taken to manipulate free market prices. While many people may think of price controls as a rigid policy such as rent-controlled housing with a hard cap on rent, Brusuelas said price control policies actually fall on a spectrum ranging from mild to severe.
Brusuelas said the mild end of the price control spectrum would be the actions taken by the Federal Reserve, including interest rate changes and quantitative easing and tightening.
The severe end of the price control spectrum includes the actions taken by the U.S. Office of Price Administration during World War II. The OPA set prices and imposed rationing for a …