3816 years ago, King Hammurabi of Babylon implemented one of the first government edicts for price controls. Known as “Hammurabi’s Code” the written laws had the opposite effect of the stated goals.

Merchants fled Babylon because they could not operate profitably.

Government mandated price controls always have the unintended consequences of distorting the market — ultimately creating less goods available to the consumer.

In 1970, Cambridge, Massachusetts, imposed harsh rent controls on residential properties. After years of suppressed investment and frustration, the citizens of Massachusetts banned rent controls in a referendum. The failure of these policies became obvious after they were abolished. Within a few years, investments in housing units doubled. (Isabelle Morales, atr.org)

Over the past 4,000 years there have been many examples of governments implementing price controls. Not just liberals and dictators, Republicans are guilty too.

On Aug. 15, 1971, President Richard Nixon told Americans: “I am today ordering a freeze on all prices and wages throughout the United States.”

After a 90-day freeze, increases would have to be approved by a “Pay Board” and a “Price Commission,” with an eye toward eventually lifting controls — conveniently, after the 1972 election.

Economist Milton Friedman correctly predicted the outcome of Nixon’s policies: “It ended in utter failure and put in place the conditions that led to runaway inflation.”

Gasoline shortages and lines at the gas pumps became common. Ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and supermarket shelves were empty because the supply chain was disrupted by government intervention.

The economic troubles during the Ford and Carter administrations were a direct result of Nixon’s abandonment of free market principles.

In 2008, President George W. Bush told us “sometimes you have to abandon free-market principles to save the free-market system” The 2008 economic crash was largely caused by the Bush administration’s bad economic policies. One such policy distorted the housing market by forcing banks to make risky loans. In 2024, we are still paying the price for those bad policies.

Economist F A Hayek: “Those who set price controls on food, rent and goods, don’t have all of the knowledge necessary to make the decisions that they make yet they proceed on the pretense that the information that they do have is all that is needed.”

Hayek continues: “The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

“Indeed, there is not a single episode where price controls have worked to stop inflation or cure shortages. Instead of curbing inflation, price controls add other complications to the inflation disease, such as black markets and shortages that reflect the waste and misallocation of resources caused by the price controls themselves.”

David Meiselman wrote in the foreword to the book   — “Beware the politician promising a better day when they push price controls or promise policies to ‘stop price gouging’ no matter if they represent Red Team R or Blue Team D.”