So I try to stay on top on economic news, and one thing that is confusing me is why government enforced price caps on products wouldn’t work? All I hear is about how strong the economy still is, record profits for corporations, and increasing wealth of the country’s most affluent people. Wouldn’t price caps cause: 1) more wealth for the average consumer 2) still profitable corporations (albeit not the record profits that they continue to reach) 3) more equitable wealth distribution?
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Not really. The logistical effort of putting a price cap on common goods is monumental; your average grocery store has something like 40k items. Keeping that updated and checking compliance is much easier said than done. And that’s just a standard grocery store.
An effective price cap would put some companies out of business; if you limit the price of pasta based on the mass-produced pasta, then the artisan hand-made pasta company will not be able to break even, much less make money. They would close up shop.
If you want to limit price-gouging behavior, then you would want to limit profit. Not price. Which is even more difficult to manage.
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