A problem common to all governments
Entrepreneurs complain about price controls
in all countries where they apply. They argue that such controls constitute a
discouragement to production and generate scarcity because when applied,
producers and traders stop manufacturing and selling controlled products. And
they are right, that is really the consequence of price controls. But the other
true fact is that competition in the Market is not effective enough and the
tendency to speculate by unduly raising prices is a reality in all free
competition markets.
Given these two true and contradictory
facts, the big question that arises for those who have the duty to protect the
interests of the population, that is, for the political authorities of the
State is what to do to prevent speculation and guarantee the enjoyment of the
goods to all the citizens?
My answer is as follows:
- Price controls
are not effective because they are certainly not complied with in practice
and result in the disappearance of controlled products from the market.
- The solution is
Consumer Orientation and Education so that they do not buy products at
speculative prices. Obviously, there are the so-called inelastic demand
products, that is, products that the consumer has to buy at the price they
impose because they have no other alternative, for example, medicines,
which constitute an exception and would require a price agreement between
the State and producers.
- My essential
proposal is that Consumer Orientation and Education be carried out through
large public opinion campaigns developed directly by the State in the
media. If tomorrow, a product increases its price in an excessive way, the
State in its Consumer Orientation and Education campaign must denounce it
and ask consumers to stop buying that product and / or replace it with
another one until its price is adjusted and properly corrected.
- This implies
the existence within the States of evaluation mechanisms sufficiently
prepared from the technical point of view to evaluate costs and prices of
the different products in the Market.
- The proposed
idea would be the mechanism to avoid the imposition of price controls by
the State with its consequences of disappearance of market products and,
at the same time, a way to achieve a fairer relationship between
producers, merchants and consumers.