THE SIMPLEST OF LAWS..... SUPPLY AND DEMAND

Real World Examples OF GOVERMENT TINKERING

United States

A February 4, 2009 Wall St. Journal article stated, "Last month State Farm pulled the plug on its 1.2 million homeowner policies in Florida, citing the state's punishing price controls... State Farm's local subsidiary recently requested an increase of 47%, but state regulators refused. State Farm says that since 2000 it has paid $1.21 in claims and expenses for every $1 of premium income received." 

Venezuela

A January 10, 2006 BBC article reported that since 2003, Venezuela President Hugo Chavez has been setting price ceilings on food, and that these price ceilings have caused shortages and hoarding.[2] A January 22, 2008 article from Associated Press stated, "Venezuelan troops are cracking down on the smuggling of food... the National Guard has seized about 750 tons of food... Hugo Chavez ordered the military to keep people from smuggling scarce items like milk... He's also threatened to seize farms and milk plants..."[3] On February 28, 2009 Chavez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which he alleged they had been avoiding in response to the price caps.[4]

A January 3, 2007 article in the International Herald Tribune reported that Chavez's price ceilings were causing shortages of materials used in the construction industry. According to an April 4, 2008 article from CBS News, Chavez ordered the nationalization of the cement industry, in response to the fact that the industry was exporting its products in order to receive prices above those which it was allowed to obtain within the country.[6]