Unintended Consequences of Trade Distortions and Price Controls: A National Tragedy provides a Teaching Moment
The tragedy at Valley Forge during George Washington’s military encampment in the winter of 1777-1778 provides a vivid lesson in economics. Trade disruptions and price controls - mistaken policies of the nascent republic, consistent with the political philosophy of the times - were contributing factors to death of nearly two thousand soldiers camped at Valley Forge. In this paper, we employ a fundamental supply and demand analysis, and then we illustrate a price ceiling and subsequent shortage. The glitter of British entertainments in Philadelphian society and the harshness of the Continental soldiers’ meager existence twenty miles away provide a sharp contrast and sparks the imagination for any student of economics.
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