Price Controls Are Bad -- No Matter Who Demands Them

By Larry Elder

Price controls remain bad policy, whether proposed by people we like or do not like, Democrats or Republicans, Vice President Kamala Harris or former President Donald Trump.

Harris blames the inflation triggered by the irresponsible Biden-Harris government spending on "corporate greed." Without evidence, she accuses grocery stores of ripping off helpless consumers by jacking up prices. Biden accuses the makers of the Snickers candy bar of committing "shrinkflation" by charging the same price for a package but downsizing its contents.

Biden said: "The snack companies think you won't notice if they change the size of the bag and put a hell of a lot fewer -- same size bag -- put fewer chips in it. You get charged the same amount and you got about 10% fewer Snickers in it."

In response, Snickers parent company Mars said, "We have not reduced the size of Snickers singles or share size in the U.S."

Even the Biden-friendly NPR said: "Overall, shrinkflation affects a small portion of products, government experts found, and manufacturers are downsizing less frequently than they did a decade ago, although the changes can be dramatic. To explain themselves, companies tend to cite higher costs of making stuff."

Harris' "solution"? Attack the corporate greed by imposing the first federal ban on "price gouging" in the food and grocery industries. She said: "We all know that prices went up during the pandemic when the supply chains shut down and failed. But our supply chains have now improved, and prices are still too high."

Several states already outlaw price gouging, and conspiring to raise prices is illegal. Grocery store profit margins are between 1% and 3%, much smaller than those for other industries. Economist Larry Summers, the former Bill Clinton Treasury secretary who famously warned that excessive Biden-Harris spending would ignite inflation, called blaming businesses for high prices "bad economics."

Speaking of bad economics, Trump recently called for a cap on credit card interest rates. He said: "While working Americans catch up, we're going to put a (10%) temporary cap on credit card interest rates. We can't let them make 25 and 30%." The Wall Street Journal notes that such a cap is lower than the cap proposed by self-described Democratic socialist Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez (D-N.Y.) The WSJ wrote: "A 10% cap would effectively cut off people with less-than-pristine credit scores."

Then there's the Harris threat to impose national rent control. At her first rally since becoming her party's presumptive presidential nominee, she vowed to "take on corporate landlords and cap unfair rent increases." CATO, the libertarian think tank, writes: "A vast academic literature shows that when rent stabilization laws bite, tenants stay in rent-controlled properties for too long relative to their needs, landlords convert properties to non-controlled forms of tenure or let them fall into disrepair, and you get less investment in new rentable accommodation ..."

Minimum wage laws set the price of labor by government fiat rather than by supply and demand. California Gov. Gavin Newsom signed a $20-an-hour fast-food minimum-wage bill that went into effect on April 1. The law also established a council given authority to raise the wage annually. The Hoover Institute estimates that the legislation caused a loss of 10,000 jobs. This disproportionately hurts the young workers who are more likely to work in the fast-food industry, and the resulting food price increases disproportionately hurt those on fixed incomes.

Biden and Harris want to expand the number of those eligible to receive insulin at $35, a policy first implemented by Trump. But the answer to lower drug prices is more competition, not price caps. The American Enterprise Institute said: "The insulin market has long been in the crosshairs because of the frustratingly high prices many consumers face. Unfortunately, the latest congressional proposal to tackle this issue will likely do more harm than good ... this bill would likely undermine competition and raise costs more broadly."

The bottom line is that the government is growing bigger and bigger. The so-called entitlements remain on automatic pilot, with no reform in sight. And both presidential candidates fight to give people stuff and offer anti-capitalist plans that make Bernie Sanders look centrist.