Veronique de Rugy on Harris's Price Controls

 See President Harris. Same as Senator Harris.

"In a relatively substance-free election season, the few policy ideas we hear are terrible. But now VP Harris has come up with the dumbest policy of them all: federal price controls.

Here’s the story, from the Washington Post’s Jeff Stein:

In a statement released late Wednesday night, the Harris campaign said that if elected, she would push for the “first-ever federal ban” on food price hikes, with sweeping new powers for federal authorities . . .

Noah Rothman has a great post about this.

It is crazy. I can’t think of an issue that has as little support among economists on the right, the center, and the left as price-control regulations (including rent control, which was pushed by Biden a few weeks ago, anti-price-gouging measures, and similar policies). It is especially silly as a way to fight inflation.

The economic literature is full of examples showing how attempts to cool inflation with price controls caused economic calamity. From the ancient Roman Republic, as Dominic Pino reminds us, to modern-day Venezuela, price controls bring the same disastrous results.

It is also politically idiotic. As Catherine Rampell at the Washington Post notes, a federal price-control policy isn’t such a great message to run with when you have Donald Trump and J. D. Vance breathing down your neck. She writes:

If your opponent claims you’re a “communist,” maybe don’t start with an economic agenda that can (accurately) be labeled as federal price controls.

Here is what Rampell thinks of the policy:

It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Some far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.

At best this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat. (There’s a reason narrower “price gouging” laws that exist in some U.S. states are rarely invoked.) At worst, it might accidentally raise prices . . .

Noah Smith isn’t too thrilled either:

Price controls on food are a really terrible idea. . . .

Harris explicitly said that price controls on groceries are something she’d do in her first 100 days as President, and candidates tend to be serious when they say that.

It’s also a very bad sign that Harris intends to use executive power to implement price controls. . . .

Anyway, the real tragedy here is that price controls on groceries are completely unnecessary. Inflation has already been pretty much defeated, and grocery store greed was never the culprit behind price increases in the first place.

Now, that announcement isn’t bad for everyone. Ryan Bourne of the Cato Institute has a fantastic book, which I highly recommend, called The War on Prices that came out a few months ago. Great timing.

David Henderson thinks that Harris’s timing is good, too:

Her timing is impeccable. Why? Because she announced the price control policy on the eve of the 53rd anniversary of President Richard Milhous Nixon’s August 15, 1971 price controls.

This type of overbearing intervention has never worked as marketed. President Nixon had to lift the wage and price controls two years later.

As for me, despite the reassurances we have gotten from her staff in the last few weeks that she is moving to the center on a bunch of issues, this announcement tells us that if she becomes president, Kamala Harris will probably be very much like who she was as a senator. Rampell notes: “Harris co-sponsored similar legislation with Warren in 2020, when Harris was a senator.”

While you may be thinking this is good for Trump, I say, only if he doesn’t come up with an equally bad idea. But that’s too much to ask. He has announced that he would enact 20 percent tariffs on U.S. allies."