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Should Governments Set Prices for Goods and Services?
Governments should set prices for goods and services.
This allows minimum wage increases to mean something.
The government has a responsibility to provide people access to basic goods and services.
This prevents inflation of prices due to "
supply and demand
Promotes economic activity by making goods/services more affordable.
If the price of a product is locked by government, the market cannot respond to a change in prices for the raw materials or labour required to create that product, which has serious negative repercussions for the economy.
Society, nature and the economy are complex interdependent systems that sometimes create unpredictable emergent patterns. Fixing prices will have
as the systems adapt e.g. eroding innovation, productivity and economic activity.
There is the potential to run out of supply to meet the demand.
People are likely to become lazy.
Governments will almost never have complete enough information to effectively set prices. This is evident in
examples from the antique Roman empire to present day Venezuela.
Price controls can lead to a
shift of economic activity to black markets.
It has the potential to cause smaller businesses to close due to costs.
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