Reading the New York Times article, “With Venezuelan Food Shortages, Some Blame Price Controls,” written by William Neuman, I saw that when there are strict price controls in place, it can lead to people hoarding the staple grocery items. It also led to suppliers making and offering less product because their profitability has gone so far down. When Hurricane Katrina hit the United States, the bottled water was priced high. It kept people from buying more than they needed because it was expensive. If there had been price controls in place on the bottled water, people would have overbought water and there would have been a shortage. The idea of fairness comes into play with this situation because some people might not be able to afford to buy the water that is so expensive and water is necessary to live.
Prices that are low lead people to buy more than they need which can lead to a shortage of supply. When prices are not controlled and are high on items, people buy what they need and are move cognizant of the impact that the items they are purchasing have on their budget.
In Procon.org’s article, “Should the Federal Minimum Wage Be Increased?,” they discuss numerous pros and cons that are associated with minimum wage. The pros that stood out to me the most were #4 which says that minimum wage has not kept up with inflation and #12 which says that raising the minimum wage leads to a healthier population. The cons that stood out to me the most were #1 which says that minimum wage increases will force companies to lay off employees therefore raising the unemployment rate and #6 which discusses how raising the minimum wage puts unskilled workers at a disadvantage because people who had been previously going for the slightly higher paying jobs may now go for the minimum wage jobs.
I tend to agree more with the cons of minimum wage versus the pros stated in Procon.org’s article. In chapter 6 of our textbook they discuss that raising the minimum wage does not inherently help with wage inequality or unemployment.
My Journey into Macroeconomics 