Prominent New York Times economic columnist Paul Krugman has done it again. Standing against accepted principles in economics, he comes out in favor of universal wage and price controls. Price controls have been thoroughly debunked by history and economic theory. In fact, one of the first lessons in a standard freshman introductory microeconomics class is explaining how controls on prices (and wages, hereinafter, just “price controls”) cause shortages and surpluses. Whenever a price is set below or above a market clearing price, it creates an imbalance between quantities demanded and supplied, leading to either a shortage or a surplus of the commodity in question, whether it is gasoline, milk, or low-skilled labor.
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