Editing Incomes policy (section)

==Theory==
Incomes policies vary from voluntary wage and price guidelines to mandatory controls like price/wage freezes. One variant is "tax-based incomes policies" (TIPs), where a government fee is imposed on those firms that raise prices and/or wages more than the controls allow. Some economists agree that a credible incomes policy would help prevent inflation; however, by arbitrarily interfering with [[price signal]]s, it  provides an additional bar to achieving [[economic efficiency]], potentially leading to [[shortage]]s and declines in the quality of goods on the market and requiring large government [[bureaucracy|bureaucracies]] for enforcement. That happened in the United States during the early 1970s.<ref name="pbs" /> When the price of a good is lowered artificially, it creates less supply and more demand for the product, thereby creating shortages.<ref name="argmax">	 
{{cite news	 
| last = Irons	 
| first = John
| title = Price Controls and California Electricity	 
| work = ArgMax Economics	 
| date = 2001-06-24	 
| url = http://www.argmax.com/mt_blog/archive/2001_06_price_controls.php
| archive-url = https://web.archive.org/web/20071020150908/http://www.argmax.com/mt_blog/archive/2001_06_price_controls.php
| url-status = dead
| archive-date = 2007-10-20
| access-date = 2008-11-06 }}</ref>

Some economists argue that incomes policies are less expensive (more efficient) than [[recession]]s as a way of fighting inflation, at least for mild inflation. Others argue that controls and mild recessions can be complementary solutions for relatively mild inflation. The policy has the best chance of being credible and effective{{Citation needed|date=November 2008}} for the sectors of the economy dominated by [[monopoly|monopolies]] or [[oligopoly|oligopolies]], particularly [[nationalised]] industry, with a significant sector of workers organized in [[labor unions]]. Such institutions enable collective negotiation and monitoring of the wage and price agreements. Other economists argue that inflation is essentially a [[monetary]] phenomenon, and the only way to deal with it is by controlling the [[money supply]], directly or by changing [[interest rate]]s. They argue that price inflation is only a symptom of previous [[monetary inflation]] caused by [[central bank]] money creation. They believe that without a totally [[planned economy]] the incomes policy can never work, the excess [[money]] in the economy greatly distorting other areas, exempt from the policy.