Sure, but then it causes shortages. High prices are both a disincentive for consumers to consume things, and an incentive for producers to produce things. For instance, high gas prices can make people choose more fuel efficient cars. They can also make certain costly forms of oil extraction profitable. These are both good for supply.
I buy milk by the quart because I rarely need more than that and it costs $2.00. If it cost $.25 a quart, now I might end up getting a gallon and more milk ends up getting consumed (read: spoiled). Except now you have millions of people doing this…*where’s all the extra milk going to come from*? The answer…nowhere. Milk is going to sell out and you won’t be able to find it.
Inflation is what happens when people spend more money. Since there’s no new stuff to buy, the shelves get wiped clean. To account for this, businesses raise prices.
So if we fix the price too low, then the economy becomes limited by how fast we can make something, and if we fix the price too high then people complain that the price is too high and corporations walk away with a ton of easy money.
Can you really not see any challenges with that concept at all? Cost of raw materials would be an obvious place to start. And every govt in the world would have to agree lest you just start importing from elsewhere. No pay rises ever even after becoming much more skilled at your job. No motivation for competition to provide better quality or lower cost. It makes no sense whatsoever.
Latest Answers