Featured Scholars:
John Cochrane, Richard Epstein, Milton
Friedman, Daniel Heil, Lee Ohanian,
Russ Roberts, and Thomas S
ARE A FACT OF LIFE, AND SO IS COMPLAINING
about them. You probably prefer lower prices on just about
everything, but especially when buying a house or paying for
college, and you wish for higher prices when it comes time to sell
that house or negotiate your salary. Complaints aside, however,
prices are actually the key to widespread prosperity.
Prices contain vital information. They show us how scarce
resources are. They indicate what consumers want. Entrepre
neurs and innovators rely on prices to decide what to make
and how to make it. But not all prices are meaningful. Too often,
governments interfere. In an attempt to protect consumers, poli
ticians mandate lower prices. Other times, governments push
prices up to benefit certain industries. These efforts might be well
intentioned, but they distort the information that prices convey
and tend to make us poorer.
3
Why are prices so important, and what happens when policy?
makers forget this lesson?
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