price controls on
It is a great folly constitutionally establish price controls as its immediate effect is the scarcity of the product on the market.
Section 335 .- The State shall regulate, monitor and intervene, when necessary, in trade and economic transactions and punish the exploitation, usury, hoarding, simulation, brokering speculative goods and services as well as all forms of economic rights and the public and collective goods. The State will define a pricing policy aimed at protecting domestic production, establish mechanisms to avoid penalty practice private monopoly and oligopoly, or abuse of dominant position in the market and other unfair practices .
Price controls that a government makes some products that are sold in the market bring disastrous consequences in an economy. The official prices are prices that political or bureaucratic prices generate scarcity when trying to lower the price artificially to a good whose price has increased due to the influence of various internal and external factors of a country.
demagogic decrees, full of good intentions, end up affecting people with fewer resources and tend to disappear altogether from the market.
Alberto Banegas Lynch, adjunct scholar at the Cato Institute, explains clearly given this economic phenomenon. Then, to explain selected to cover milk 1 lt as the product involved whose official price of $ 0.60 while the market price of 0.65 cents.
1) When the government reduces the price of milk decree increases the number of people who want to buy it, which causes an expansion of demand. 2) The increase in demand does not mean that supermarkets and shops have their display cases and racks full of milk, just the opposite: it begins to dwindle. And the shortage is the effect of an increasing number of consumers of milk. 3) From the producers of milk, there are some that are more efficient than others. If one of these do not cover production costs will inevitably close their business. Thus, the supply begins to contract. 4) The expansion of demand was limited, and the contraction of the offer even more marked. 5) The product controlled throw lower operating margins, while other goods and services bring, artificially higher profits. This shifts resources to the less popular areas, which are a waste of capital, which leads to cutting the wages and incomes in real terms, since they depend on existing investments. 6) The above errors and imbalances cause the emergence of black markets. In these the price is much higher, since those who operate them must cover their risk.
is for each citizen to decide whether it is an effective measure to control or harmful rising prices of staples presidential decrees. One of the major causes of rising prices is the significant increase of public expenditure is estimated at 10.33 billion in 2008. There is a growth of 563 million in just one year. Raise a constitutional standard economic fallacy is detrimental to the welfare of society. It is absurd but its applicability to some outdated is simply XXI century socialism.
Mail: emiliopa@gye.satnet.net 
0 comments:
Post a Comment