Holy damn, more econ books should be like this: relatively short, packed with examples (about 40 centuries worth), and just about the clearest exposition of the issues with 0% fluff. Spoiler alert!! Price controls don't work and as the authors show, never have. Furthermore, they are the surest way to ensure inflation is exacerbated.

As you will learn, price controls refer to centrally mandated (read: government) policies for fixing not just the price of goods (such as meat, corn, steel, etc), but also wages, rents, and exchange rates. It is the politicians' favorite tool for combating inflation while seeming to be of the people, for the people, while actually benefiting themselves and hurting those whom these measures are supposed to help. But more on that later...

While these measures sound great in times of rampant inflation and can appear to be salutary for a short period (in economies information travels at the speed of price, not light), they have the long-term effect of widening the gap between supply and demand, thus making matters worse.

In the case of price caps for goods, a price that is below that of what producers/suppliers can get as a fair-market price deincentivizes them from producing more, thus lowering the supply of these goods. At the other side of the market are consumers who are incentivized to buy more (and in some cases hoard), hence driving up the demand for these goods. So we have high demand coupled with low supply, which is then reflected in actual prices going up, regardless. An ugly externality of this dynamic is the rise of "black markets" where these goods can be bought at a premium (benefiting criminal enterprises), and in the reduction of quality as producers attempt to resist the profit squeeze. Furthermore, the resulting inflation also leads to leads to underemployment of resources and uncertainty, discouraging investment and causing misallocation of resources.

So why might governments want a little inflation here and there? Because it allows them to finance expenditures without raising taxes, and reduces the real value of national debt:

Inflation is, in Friedman’s words, 'irresistibly attractive to sovereigns because it is a hidden tax that at first appears painless or even pleasant, and above all because it is a tax that can be imposed without specific legislation.' According to the same author (in Essays on Inflation and Indexation) government directly 'profits' from inflation in three ways. First, the additional government-created money will pay debts and finance expenditures over and above what the government collects in revenue. Secondly, government-induced inflation pushes taxpayers into higher income brackets and thus leads to taxpayers paying unlegislated tax increases."

As for rent controls, the authors tell us:

"Governments have three main reasons for imposing rent control. The first is the fear that those who can pay will get all the housing and the poor will be left in the cold. The second is that landlords benefit too much from rents which can be indefinitely raised. The third is that a rise in rents is a form of inflation, and so should not be allowed."

But the solution to housing shortages and lack of affordability must be more housing, right? Not simply just artificially low rents:

"The ultimate solution of a housing shortage must be the construction of new property, and nobody will construct new houses for rent if he is denied, through rent control, an attractive return on his money. As for the third argument, that high rents are a form of inflation, it must be observed that one does not keep prices down in an economy merely by taking commodities off the market, as rent controls do."

What else do rent controls succeed in doing?

"As the capital stock deteriorates, slums are born. Since no economic incentive exists for owners to repair run-down properties in declining areas, the blight spreads. As the blight spreads, more and more buildings become uninhabitable. The effect of rent controls is ultimately to remove once-habitable dwellings from the housing stock."

...and:

"Rent control reduces mobility by encouraging tenants to stay put. It also encourages people to occupy more space than they otherwise would. It offers the landlord incentives not to provide adequate services; he must be forced to do so by law, leading to endless litigation."

As for minimum wage:

"Legislative bodies have the power to legislate a wage increase, but unfortunately, they have not found a way to legislate a worker productivity increase. Further, while Congress can legislate the price of a labor transaction, it cannot require that the transaction actually be made. To the extent that the minimum wage law raises the pay level to that which may exceed the productivity of some workers, employers will predictably make adjustments in their use of labor. Such an adjustment will produce gains for some workers at the expense of other workers. Those workers who retain their jobs and receive a higher wage clearly gain. The adverse effects are borne by those workers who are most disadvantaged in terms of marketable skills, who lose their jobs and their income or who are not hired in the first place."

The impact of these minimum wage measures disproportionally hurt the youth (they are low-skilled or marginal because of their age, immaturity and lack of work experience) and racial minorities:

These workers are not only made unemployable by the minimum wage, but their opportunities to upgrade their skills through on-the-job training are also severely limited."

Ultimately, what the author's succeed in showing is that inflation is the result of poor monetary and fiscal policies, not the wickedness of capitalists and their denizens:

"The notion that there is a “just” or “fair” price for a certain commodity, a price which can and ought to be enforced by government, is apparently coterminous with civilization. For the past forty-six centuries (at least) governments all over the world have tried to fix wages and prices from time to time. When their efforts failed, as they usually did, governments then put the blame on the wickedness and dishonesty of their subjects, rather than upon the ineffectiveness of the official policy. The same tendencies remain today."

Perhaps worst of all, the effect of price controls and the destruction of capital that results from inflation, only serve to signal to unsuspecting citizens that prices are an objective measure that can be efficiently and fairly controlled by a centrally controlling entity who must be relied on if things are to get better. Only they can fix it...

Highest possible recommendation!