Edit/correction: actually, the USDA doesn't operate price floors anymore. "Eventually, the USDA decided it had had enough, ending the price support program in 2014."[1]
You're acting like your family has to buy milk by the tankerful or flour by the palletful.
More examples from daily life: The electricity market, board lots vs. odd lots in stock trading, fractional shares, restaurant supply stores.
If that's not price fixing the other way, I don't know what it is.
Like the comment next to mine says, it is likely to ensure stability.
The problem is with smaller countries, where your local milk will be more expensive (and you less taxed) but your neigbor countries' subsidized milk will still be cheaper, and you'd buy that and in the process, destroy your local milk industry.
That's called a monopsony: https://www.investopedia.com/terms/m/monopsony.asp
"A single buyer dominates a monopsonized market while an individual seller controls a monopolized market."
That's true in some markets, but not all.
Also: generic shortages. Generics are a low-margin business with maybe 6 suppliers workdwide. If one facility goes off-line for this or that reason there's going to be a shortage, and slack capacity is punished by the market. Right now the cisplatin shortage is in the news, and again the market is no help.
Your comment is correct except this sentence. In reality, if the US implemented price controls, it would simply reduce the negotiating power of European countries. Prices in the US would go down, and prices elsewhere would increase. The pharmaceutical profits would decrease on net, but there would still be plenty of incentive for R&D (much of which is already derisked by the massive amounts of public money spent on it with zero expectation of return).
I don't know why people rail against Pharma when healthcare like hospitals have huge returns on investment in comparison.
https://www.morningstar.com/etfs/arcx/xph/performance
look how much pharma index trails healthcare
When we discuss price controls, we tend to be talking about situations where the supply of goods is provided by the private sector. Then price controls often lead to supply shortfalls and black markets. It's easy to understand if we make labor to be the good with a price ceiling. Many american companies would love programmers at $20/hr, but they can't find any. Imagine that the government caps said salaries at $20: We'd see fewer people going into the field vs something easier, or that just was allowed to pay more. The companies that still get $200+ worth of value for programmers would still want to pay more, but without the supply, they'd try to skirt regulations by becoming more competitive in indirect ways. Maybe your benefit package would include a mansion, and an expensive company car, and a live-in staff. Keeping prices down when demand vastly exceeds supply is very hard.
There is such thing as excessively high prices though, via monopolies and regulations that force waste. I think that's a bigger reason for the US' healthcare pricing problems than the magic of government healthcare. What socialized medicine does is make sure that even the poorest can afford it, which can be seen as a valid objective onto itself.
Reserve bank doesn't want to talk about its roll in credit/ monetary expansion during the pandemic, gov doesn't want to talk about its policies to do the same and not wanting to address inflation through taxation or fiscal policy, business wants to pretend its not self interested and profit seeking, consumers don't want to admit that they might actually have to make some price-elastic decisions or change behaviours based on how much things cost, and everyone wants to pretend that we weren't responsible for fucking up housing over the last 20 years of policy or that there will be real repercussions from the boomers aging out.
So instead we get economic discussion that looks more like the multiple spider-man pointing meme.
If companies are able to raise prices for long periods and make large prophet, that means something is completely broken.
Competition would bring in new people that offer the same goods or services at lower prices. Government regulations controls, etc stop that and interfere with natural markets.
Russia had a long history of price controls, and it never worked well.
Right now, prices are growing, mostly due to an increase in profit margins. If the market can't optimize those profit margins down, it's the government's job to take and redistribute that surplus.
Look at the signs:
- increased immigration during a housing crisis.
- pay rises for the masses to push them into higher tax brackets.
- slow gradual rate rises below inflation levels to avoid crashing the markets and to allow debtors to exit their positions without triggering a recession.
They want inflation. In a high inflation environment the entities that win have income generating assets (in this case tax payers) and high levels of debt. The debt essentially gets inflated away.
They are too scared to do anything and risk losing the next election, despite the fact that they literally just won one, and they are too uncoordinated to do anything useful. It's easier to literally sit there and do nothing and put all the blame on the RBA and hope that it magically fixes itself somehow.
The debt has to get paid somehow in order for the government to meet its ongoing financial obligations.
When I say ongoing obligations I am referring to welfare and Medicare.
Yeah, this worked very well for every country/government that tried this.
Price controls are always either a no-op (if supply meets demand below the mandated price), or lead to shortages.
For the good and simple reason that, if there's 100 units of X and people want 120 units, you have to have some algorithm to decide who doesn't get as much X as they want. With no price controls, businesses see X is selling quickly and raise the price (hopefully before the inventory hits zero all along the supply chain). Long-term, the high price encourages suppliers to produce more; the price provides a feedback signal that says "make more of this."
With price controls, that doesn't happen. The product simply sells out because there's not enough to go around, and the 20 unlucky people who don't get their X are whoever happens to walk into the store when the shelves are empty, or are at the back of the line when a shipment comes in.
It does not ask or legislate for prices to not go up.
What seems to be happening in Australia is companies are taking the chance to pump their prices. Presumably this results in high profits.
I guess there would be stats that should if profits have been going up during this period of inflation.