“One thing we all know from experience is when you control the price of something, you end up getting less of it. Our most vivid memory of that was Rich Nixon’s gas lines.” – George Shultz
Price controls are popular and politically profitable for those campaigning. But in the real world they are the voters worst friend. They disincentivise investors and stall growth and make market-based economies dysfunctional. While price controls have a history of failure, politicians promise them to attract voters since Americans have a history of showing little resistance to price controls.
Attempts to control prices span recorded history. There’s no other economic policy that has done more damage to a society than price controls. In every mode of government and every economic system where price controls existed, they’ve had the same effect; they did harm and nothing good.
In Ancient Egypt, the Pharaohs tried to control the price of wheat. With no profit motive, the farmers produced less until famine set in and the economy collapsed. In Babylon, wage and price controls in the Hammurabi Code eventually brought down the empire. In 58 BC, Roman farmers fled to the city due to price controls on wheat and corn. This led to rationing that caused the fall of the empire.
During WWII, President Franklin D. Roosevelt rationed items needed for the war, which birthed the “black market” where people bought, sold and traded ration coupons. When Nixon restricted gas price hikes in the 70s, long lines formed at gas stations and gas was rationed. In cities where they passed rent control, property values and tax revenue have gone down along with the construction of new apartments.
“The only thing that price controls can guarantee to anyone is more shortages.” – Michelle McMurry
During an energy crisis, the first response from liberals is to mandate prices on energy, especially gas and oil. Although there is a long history that price controls lead to shortages and they destroy an economy, liberals do it anyway. Ready for déjà vu? The left thinks price controls will be a quick fix for the skyrocketing shelf prices that the Biden-Harris administration caused with “Bidenomics?”
It looks like the centrist facade of Kamala Harris’ makeover is beginning to wear off. Since the high price of groceries remains a top concern for voters, she announced her plan to ban “price gouging” in grocery stores. Her measure would authorize the Federal Trade Commission to impose exorbitant fines on grocery stores that they believe are increasing prices “excessively for profit.”
Harris has also vowed to go after price gouging by landlords, pharmaceutical companies and many other suspected capitalist corporate perpetrators by having the Federal Trade Commission enforce a vaguely defined “federal ban on price gouging.” This is soviet-style economics at its very worst.
Elizabeth Pancotti, of the Roosevelt Institute, says that grocery prices have jumped 26% since the pandemic in 2019 and skyrocketed during the Biden-Harris reign. As Biden’s VP, Harris can’t allow voters to blame her and Biden for the record high inflation that caused these price hikes. Therefore, as a true progressive, Harris has decided to point her finger at capitalists and their corporate greed.
“I plan to stop corporate greed by setting prices that are fair for the consumers.” – Kamala Harris
The New York Times reported that the nonpartisan Committee for a Responsible Federal Budget estimated Harris’ plan would increase the federal deficit by $1.7 trillion and increase it well over $2 trillion next decade unless balanced by large tax increases to bring in more revenue. They concede it could be much more since Harris’ policies are all financed by the government.
Harris is clueless of basic economics of supply and demand. Producer prices move in lockstep with consumer prices. Producers pay more to make goods, and distributors pay more to buy them. And retail stores pay more to sell them to consumers. That’s the economic end product of Bidenflation.
With so much competition in retail food sales, the last thing any grocer wants to do is raise prices.
Price controls won’t do anything except cause more economic misery and Harris’ rival Donald Trump is dead right to call it a “Maduro plan,” named after Venezuelan dictator Nicolas Maduro.
Harris’ plan to expand government will hurt every American even more than Bidenflation did.
“Its time we punish all corporations we suspect are price gouging Americans.” – Kamala Harris
Most educated voters knew this was coming, considering Harris co-sponsored Elizabeth Warren’s legislation in 2020 that would ban any “grossly excessive price increases” during any “atypical disruption” of the consumer market. As usual, no definition was provided for these terms, except the bill would empower the Federal Trade Commission to enforce bans using any metric they wished.
Harris’ ludicrous plan to implement price controls on groceries is being criticized by economists on every side of the political spectrum. Liberal economic columnist Catherine Rampell said Harris’ plan to control groceries prices like those in “Venezuela, Argentina and Soviet Union” don’t work. “It‘s not going to be markets or supply and demand that determines how much your grocery store charges you for milk or eggs. It will be some D.C bureaucrat who is clueless about economics.”
Rampell said the plan was “bad” for various reasons, from practicality to effectiveness. “Nobody can explain what price gouging means?” She argued that the idea of “excessive” prices or profit margins is highly subjective and thus “it’s impossible to pin down what this would actually mean.”
There’s “no upside” to Harris’ “Soviet-style” plan to federally set grocery prices. Her proposals are “extraordinarily vague” in addressing an economic problem that will self-correct in free markets. Her plan is similar to what Chairman Mao and Joseph Stalin did when they used food rationing to maintain loyalty to the communist government since people needed food to survive.
“Everyone imposes their own system as far as their army can reach them.” – Joseph Stalin
Ronald Reagan once said, “Government is the problem, not the answer.” In typical progressive fashion, what we’ve learned about Harris’ docket of economic reforms is all increase the size and scope of government, which increases federalism. Government has proven that they can screw up anything by taking it over when it’s working, such as free market healthcare did, before Obamacare. Obamacare increased premiums, copays, deductibles and lowered coverage for every American.
Americans have a history of buying into campaign promises if they think they will benefit them. Yet from the ruinous price controls that nearly brought an end to the American Revolution, to the 1970s, when Richard Nixon tried to conquer inflation with wage and price freezes, America suffered dearly from shortages and economic disasters brought on by these disastrously failed economic policies.
“Price controls almost invariably produce black markets, where prices are not only higher than the legally permitted prices, but also higher than they would be in a free market.” – Thomas Sowell
