counterproductive. Price controls are government laws that serve to regulate prices rather than allow the

various markets to determine prices. There is an old proverb: “Don’t kill the messenger.” In ancient times,

messengers carried information between distant cities and kingdoms. When they brought bad news, there was

an emotional impulse to kill the messenger. However, killing the messenger did not kill the bad news.

Moreover, killing the messenger had an undesirable side effect: Other messengers would refuse to bring news

to that city or kingdom, depriving its citizens of vital information.

Those who seek price controls are trying to kill the messenger—or at least to stifle an unwelcome message that

prices are bringing about the equilibrium level of price and quantity. However, price controls do nothing to

affect the underlying forces of demand and supply, and this can have serious repercussions. During China’s
104 4 • Labor and Financial Markets
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