Prices: The Free Market or the State?

It’s a topic of long debate and longer longevity: “Who should have the authority to set prices, the free market or the state?”

Although many people could spend hours thumping fists on the table about this, there is actually a very simple answer: If the state had the power to set prices, it would only set them to benefit itself.

That’s it. Now, elaborate.

If the state arranges prices according to its own benefit, it would not benefit the customer, the every day citizen. But if the free market were to regulate prices, it would benefit the consumer because businesses cannot survive without customers. The state can afford to regulate prices selfishly. Businesses cannot.

If you let the state regulate the prices you get that dreaded system, the one we claimed to have so much against and yet are falling into—socialism. If you let the free market regulate the prices naturally, you get a normal, reactive market in which to buy and sell according to demand. With state price regulation, you get a bubble; and a bubble can only last so long before it pops.

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