Politicians have long been tempted by price ceilings. From rent controls to gas price caps, legally restricting prices has always offered an easy applause line: “We’re helping you, the little guy.” But every economics student quickly learns something very different: price ceilings do not make goods less scarce. They simply suppress the best means we have to cope with scarcity, producing harmful consequences.
A good illustration is the growing bipartisan bloc in Congress, led by Sens Bernie Sanders (I-VT) and Josh Hawley (R-MO), that is pushing to cap credit-card interest rates at 10 percent. It is marketed as consumer protection, but it would function exactly like a cornucopia of other price ceilings: it would create shortages, reduce access, increase hidden costs, and hurt the very people it claims to help.
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