The Effects of Price Control In Japan

If supply is greater than demand, the damage of a product go away decrease. If demand is greater than supply, the p sieve of a product will development. This is a simple rule that determines the p sift of almost all consumer goods. But what happens if the expense is too high. What happens if there is a massive shortage or if a war breaks out and the price of everyday products such as edulcorate or bread skyrockets. Who will nurse the consumer? And vice versa, who will protect the seller.This is where the establishment steps in and imposes price controls. Price controls are compel to help or protect particular parts of the population which would be treated unequally by the unfettered price system. With todays technology, many farmers just about the world find themselves producing far more than they can sell or a bare(a) and this drives down prices. Therefore to support the farmers, many governments puddle created price floors to affix the income of their farmers who withou t them would fail to make a living profit. Nipponese rustic insurance so far has focused on maintaining agricultural income by price controls. During the 1960s, Japan was in a stage of inordinately rapid growth. But Japanese farmers still produced more crops, namely rice, and then they could sell, and this drove prices down and dwindled their profits. All the while, the industrial sector began creating massive profits. As a result, the income gap between the two was widening. Politicians knew that social and political zymosis would result if the situation worsened.And so they began to resort to price controls to protect agriculture. To increase the farmers income, the government placed price floors or price supports on rice and other crops. Therefore, the price of rice would not be determined by the free securities industry but by this set price. The Japanese government set the price floor higher than the equilibrium price or the price of rice in the free market. By doing this they were sure to increase the income of farmers. But this policy had its drawbacks. The price policy impaired the basic market mechanisms.The increased price drew away buyers, resulting in an excessive surplus of rice. In fact, rice surplus amounted to approximately seven million slews in storage, and that required three trillion yen of tax funds for its disposal. Although this policy helped farmers, it became a great strain on the government and taxpayers. The Japanese government began to implement a new policy. The only way to obviate surplus under such a high price policy is to limit production. Hence, a policy to cut back on rice acreage was introduced. But this policy also ran into problems.Reduced production was oblige onto the producers and served only to dampen their motivation to produce and to hinder their drive. Another bank check in price control is a segregated overseas and house servant market. The only way for the government to retain this kind of price policy and maintain agricultural income is by closing off its borders form imports. With this price control the government ran into many problems. It therefore abolished the Food raw material contain Act which implemented this price policy and replaced it with the New Food Staple Control Act in November 1995.This new act liberated diffusion and curb the governments role to just the purchase and management of rice reserves. In conclusion, Japans price control policy was created with the best intentions to improve agriculture income. firearm it succeeded in that aspect, the government and its people were hurt more by this policy. flush the farmers themselves who had their production limited became unmotivated. We see from this case scenario that sometimes the government involve to take a step back and play a limited role in the economy or practice laissez-faire economics.