Which is more competent to set prices in the free market? Should it be the companies that offer goods and services in response to consumer demand and consumer willingness to pay certain prices? Or should government intervene to set what it considers “fair” prices?
We don’t have to look far to see the effect of government price controls. Down in Venezuela, dictator Hugo Chavez has put price controls on basic goods to keep them “affordable.” But the result has been shortages, making those “affordable” goods “unavailable” because companies manufacturing them cannot recoup their production costs. That is just one example of many from the history of government price controls.
Yet now, our own Congress plans to set the fees that banks may charge to merchants that accept the banks’ debit cards. The rules will “save retailers billions of dollars” by letting the Federal Reserve set fees it considers more “reasonable,” The Associated Press reported. But when banks lose that revenue, they will just raise costs consumers pay for their other services. So Congress is only shuffling — not eliminating — costs.
That is not proper government business, and it’s bad economics.