Harris' price control plan is an ugly case of bad economic policy

One of former President Donald Trump's tricks is to invent nicknames for his opponents, which are usually not flattering.

As his new Democratic opponent in the presidential election campaign, he has decided to call herself “Comrade Kamala Harris.”

Trump wants to portray the vice president as a candidate who is as left-wing as one can be.

Fortunately for him, Harris' new, fact-based plan for the economy, which she unveiled on Friday, plays right into the hands of the socialist stereotype.

There is much to criticize about their agenda for a strong state and their costly ideas.

One of the worst proposals is Harris's proposal to impose government price controls on private companies. Democrats like to blame “greedy corporations” for all the country's ills, but the reality is much more complicated. And by forcing government even further into the private market, they will make things much worse for Americans.

Price controls have been tried in various forms around the world for centuries. (Not to give too much suspense away, but they always fail.)

Even Republican President Richard Nixon tried to control price increases with price controls in the 1970s, but this only made inflation worse.

Will we never learn?

Harris has a Biden problem

What is happening here is that Harris is trying with all her might to distract from the negative effects of high inflation during the Biden-Harris administration.

Furthermore, it tries to deflect blame for the government's role in this incident.

Even though Democrats are trying to make this presidential campaign about what a wild boar Trump is and how much they support expanding abortion across the United States, they cannot shake off voters' unease about the economy and inflation.

And unfortunately for Harris, she and Biden are responsible for the current economy. They both tried to sell “Bidenomics” before realizing that wasn't the best idea.

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Inflation soared after Biden and Harris took office. Some of the price increase was directly due to the impact of the COVID-19 pandemic, but there is no doubt that their policies and continued high spending exacerbated the problem.

Inflation has hit many industries hard, but we all feel the impact of high food prices at the checkout counter. That's exactly what Harris wanted to focus on when she proposed a federal ban on “price gouging” in the grocery and food retail industry.

Due to the US Federal Reserve's decision to set high interest rates, inflation is already slowing down, including in the food sector. However, the result will be higher prices for a long time to come.

That’s why price controls don’t work

Harris' price control plan is not very substantive, so for more information it is helpful to look at the bill drafted by Democratic Senators Bob Casey of Pennsylvania and Elizabeth Warren of Massachusetts, among others, whose proposal Harris has supported.

It is true that food prices rose by 25% between 2019 and 2023, rising more than the prices of housing, medical care and other categories. Only transportation costs rose more.

But are the prices the result of a shameful conspiracy by corporations that want to harm their customers? No.

Even the Department of Agriculture under Biden and Harris blames factors beyond the control of corporations – from market disruptions caused by Covid-19 to the war in Ukraine.

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Harris may want to give the impression that she is “doing something,” but government intervention is not the solution. And that is exactly what price controls would do in practice.

“It's going to create shortages,” Scott Lincicome, a senior fellow at the Cato Institute, told me. “It's going to reduce investment in this area. In the long run, that's going to lead to higher prices.”

“If you don't get a good return on that investment or just have to deal with the hassle of bureaucrats telling you how to run your business, you're going to invest less or not at all in that industry,” Lincicome said. “Over time, that means less supply, less competition, and that's worse for consumers. And you know what? We have centuries of evidence of that.”

Biden has also put forward his own price cap plan, which Harris supports, and last month he announced a proposal to limit rent increases by landlords.

But just like price controls, rent caps lead to housing shortages and other problems and are condemned by a wide range of economists. Even a former economic adviser to President Barack Obama told the Washington Post, “Rent controls have fallen out of favor like no other economic policy.”

The free market beats the government every time

Harris' price control plan may not be communism light. But it's still a bad idea, and it's worrying that it was one of her first major policy proposals.

“You don't have to call it communism,” Lincicome said. “I mean, it's just bad economic policy.”

Harris' price control plan is an ugly case of bad economic policy

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