Generally, supporters of price controls see them as a way to reallocate wealth from producers to consumers. Economists point out that manipulating the market price distorts the market by reducing producers' incentive to supply and increasing consumers' incentive to consume, leading to a less efficient outcome.

It turns out that efficiency isn't the be-all and end-all of all of society! The objective is not necessarily to maximize efficiency/production/have costs be as low as possible for every product under the sun!

And of course there are duals to price controls such as production subsidies that can smooth things out. And policies that can otherwise influence things. Money is fungible, after all! And thanks to taxation as a general concept, the universe of people paying for all of this is not necessarily the universe of people buying it, so it's not necessarily "the consumers pay in one way or the other".

Oh, for some value of $work that doesn't involve their ostensible reason, yes.

During a shock, when there exists sufficient productive capacity, price control together with forced production (as on fines for stopping it or worse) do really work.

For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war. Anyway, there isn't sufficient productive capacity either, so the shock importance is a moot point.

> together with forced production

a.k.a. slavery

> For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war.

No kidding.

But again, it depends on what the goal of the price control is. In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.

> a.k.a. slavery

On the case of war, conscription. It's disturbingly similar, but it's different. In peace times it's usually on the lines of "keep producing or your business will be closed", what is not that similar as the working people are not the ones facing the ultimatum (if it's ever done to a small company, then yes, it's like slavery).

> In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.

Economies are large complicated beasts that move all kinds of products. When governments intervene, they do it in more than one way and with more than one goal.

Price fixing also goes with rationing so that the population stays fed.

> > a.k.a. slavery

> On the case of war, conscription.

That works for getting labor for the military. It doesn't work for getting producers of things to produce more for less -- unless you put a gun to their heads, they won't do it, not even during war time.

Counterexample: WW2, where most of US industrial capacity was repurposed to win the war. Producers got paid, but the amounts they got were limited. They didn't get to just name their price.

They got paid more than their input costs. None were forced to go bankrupt, and most made a profit.

Right, and in times where price controls were imposed this principle (you can't force people to operate at a loss, but you can limit price gouging) have been applied.

During a shock is exactly when price controls are most destructive as they prevent an efficient allocation of the scarce supply to those with the greatest need (assuming willingness to pay is a proxy for that).

> assuming willingness to pay is a proxy for that

Hum... Does that assumption ever hold?

Willingness to pay is a proxy for your early earnings and ROI. It correlates very weekly to anything else.

>Hum... Does that assumption ever hold?

Never

In extreme cases, this does not work.

Eg. in a desert with a supply of 9 water bottles and 10 potential buyers. All buyers have the same need (buy a bottle of water or die of thirst). In an efficient market, the price of a water bottle would go to the amount of savings of the poorest person + 1 cent. The poorest person will die of thirst.

> the greatest need

and the greatest ability to pay. "Need" has a moral component, which the market does not price in.

But still i would argue that price control do more harm than good.

That depends on the claimed reason.

Price floors can work very well at reducing consumption.

Price ceilings also have a way of doing that (by limiting production, which therefore limits consumption).

I totally agree, it also works for limiting sales of existing goods.

If you put a price ceiling of $1 on paintings, owners will hold and not sell.

If you want to kill the market for paintings, this would be very effective at doing so.

You can imagine similar impacts of price floors or ceilings for real goods like land and housing.