When Politicians Raise Prices on Purpose

Businesses want high prices for the stuff they sell. Consumers want low prices for the stuff they buy.

And, sometimes, politicians find a sneaky way to satisfy the businesses… without the consumer noticing.

In the mid-2000s, Congress passed a law requiring that gasoline contain biofuels like ethanol. But … there were problems.

For starters, ethanol is neither an efficient nor a clean fuel. Second, it meant far less corn was available for people and livestock, driving up food prices across the board … so much that it touched off an international food crisis.

How has such a bad policy endured? Because it’s also been very good for people who grow corn … who’ve made it their business to keep that policy in place. Economists call this the problem of “dispersed costs and concentrated benefits.” And once you’re aware of it, you start seeing it everywhere.

The tariffs on steel and aluminum that began in 2018 created about 1,000 new jobs in those industries … at the cost of 75,000 fewer manufacturing jobs being created.

Similarly, car dealerships lobby to maintain laws that give them monopolies on local sales … even as these laws add thousands of dollars to the cost of your vehicle.

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