Friday, July 31, 2009

An Inconvenient Consensus?

If you go against the consensus of climate change scientists, then the left will call you a traitor. But the left has no problem ignoring the consensus view of economists that price controls cause shortages and minimum wages increase unemployment among unskilled workers.

The latest affront to Economics 101 to come from the Hill appears to be a move to limit price increases for health insurance. As mentioned above, price controls lead to shortages (or black markets, or the very creative use of loopholes like you see for apartments in New York). You would think that the D.C. crowd would learn from Florida's mistakes, where insurance price controls forced the state's largest property insurer to seek an exit from writing policies in the state.

Now, here is the real question: are politicians really this ignorant of economics, or are they fully aware but count on the popularity of the measures getting them re-elected and hope that the failures won't amass before they retire? I used to believe the former, but lately I am thinking it may be the latter.

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