I’ll be the first to admit that economics has its limitations. Economics as such can’t tell you what is good and what is evil. It can’t tell you what values, tastes, and preferences to have. In spite of these limitations, economics has a lot to teach us about the effects of policies governments enact in the name of promoting good or punishing evil, or in pursuit of our values, tastes, and preferences.

We enter into a fundamental confusion when we base our discussions of policies on their stated goals rather than their likely effects. I doubt that many people seriously disagree that feeding the hungry and clothing the naked are worthy objectives. A lot of the policies we enact in the name of these goals have unintended and positively counterproductive consequences. Here are just a couple of examples of the unintended consequences of interference with prices.

The unintended and undesirable consequences of attempts to implement rent control and minimum wages are pretty straightforward. Rent control and laws against “price gouging” create shortages. Minimum wages create unemployment, particularly for those at the margins of society.

Read the full article