Another popular form of intervention is the so-called social prices that the state sets for political reasons, supposedly making certain goods and services “more accessible.” In our context, such prices apply to housing and utilities, and to bread, among other things. The impact of these prices is twofold.
First, I think there’s no need to explain that we still pay the full price for “social” goods. The state produces nothing; it funds its “social prices” with resources taken from us. This goes unpunished because we can easily see the low price of a “social” product, but no one knows how to measure the state’s extraction of value—it happens invisibly. The tax system captures only part of this extraction; far more is taken. Look closely, and you’ll see that not only do we compensate for “social prices,” but ultimately we overpay significantly.
Second, “social prices” severely distort competition. An ordinary entrepreneur using real resources at real prices cannot, all else equal, compete with a comparable “social” product whose artificially low prices are subsidized by the state. Thus, society ultimately spends more resources than it would without price regulation, since the actual production costs of “social” goods remain completely unconstrained by competitive pressure. Moreover, no economic mechanism exists to correct this on its own—the situation will persist as long as the state can extract sufficient value from society to fund “social prices.”