excerpts from BASIC ECONOMICS: A Citizen’s Guide to the Economy by Thomas Sowell

To understand the effects of price control, it is necessary to understand how prices rise and fall in a free market. There is nothing esoteric about it, but it is important to be very clear about what happens. Prices rise because the amount demanded exceeds the amount supplied at existing prices. Prices fall because the amount supplied exceeds the amount demanded at existing prices. The first case is called a “shortage” and the second is called a “surplus”–but both depend on existing prices.

Simple as this might seem, it is often misunderstood–sometimes with disastrous consequences. A closer examination shows why shortages persist when the government sets a maximum price lower than what it would be in a free market and why a surplus persists when the government sets minimum prices for farm products higher than these prices would be in a free

Please read the rest here and be prepared for the howls of “we need more cheap [tax payer subsidized] labor” from Bush and the sell-out politicians that is coming soon.