Arg. I was afraid this was going to happen, and now it has. The Yemeni government has imposed a price cap on the price of wheat. These things never work, and yet they have a huge amount of support from the general public, at least at first. When the shortages hit, people start to at least think about how things work economically. With any luck, they’ll snap out of it before too long. I always wonder why governments choose to ignore all of the precedents that other governments have provided for them. Just in recent times places like Zimbabwe and Venezuela are poster children for how price controls don’t work. Even the US figured this out. Remember the “Oil Crunch” in the 70’s? Remember the long lines and shortages? There was never a world wide shortage of oil, but due to the price controls set down by the government, there wasn’t enough gas to go around. We haven’t had any experiments with price caps since then (excluding those damn “anti-gouging laws. They are so vague as to be useless, even as a cap), price floors are a different matter… My prediction is that there will be flour shortages by the middle of Ramadan…
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