According to today’s Washington Post, on August 14 Vice-President Kamala Harris proposed price controls on food. Post reporter Jeff Stein, in “Kamala Harris to propose ban on ‘price gouging’ for food, groceries,” Washington Post, August 14, 2024, writes:
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.
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.
Liz Wolfe, over at Reason, writes:
Please stop talking, actually: For a while, politics watchers were wondering when in her campaign for president Kamala Harris would unveil an actual policy platform.
Now, she's unveiled some of it, and maybe it was actually better when we knew less.
I disagree. It’s better if we know more.
To be effective, price controls (of the ceiling rather than floor variety) must keep prices below what the market price would be. Because market prices are set by supply and demand, prices in competitive markets are roughly equal to the prices that equate quantity supplied to quantity demanded. So having government enforce prices below that level will cause shortages, situations in which willing buyers cannot get all that they want.
We saw that happen in the early 1970s with Nixon’s price controls. They began, as noted above, with a 90-day freeze of all wages and prices. Then the controls proceeded through various phases and were gradually eliminated over about 3 years.
I was a summer intern at the Council of Economic Advisers in the summer of 1973, when price controls, including on food, were in force. Here’s part of what I wrote about price controls in my 2001 book, The Joy of Freedom: An Economist’s Odyssey:
Many other economists at the Council of Economic Advisers thought price controls were a bad policy that would cause shortages. But—and this was my big disappointment—some of them defended price controls anyway. Council chairman Herb Stein, an excellent economist and one of the nicest and best bosses I have ever had, pushed for tough price controls on food and publicly defended them. In return, he got to spend a weekend at the presidential retreat at Camp David. Later that summer, [Bob] Tollison and I got a good laugh when Herb came back from the White House mess complaining that they didn’t have steak that day because the supplier wouldn’t supply it at the controlled price. But none of what Herb knew caused him to refuse to cooperate with Nixon on price controls.
All of Nixon’s price controls were removed by sometime in 1974 except for the ones on oil and gasoline. Those led to terrible line-ups and even some violence in lines when the federal government didn’t allow the prices to rise to fully reflect the increase in the price of oil engineered by OPEC in the fall of 1973. (The price rose from $3 a barrel to about $11 per barrel over just a few months.) Those price controls were kept in place until the first 2 weeks of President Reagan’s administration when Reagan ended them in one day. The shortages ended too.
Right on. Econ101, for those who have not taken the course.
Kamala Harris policies are the same ones from the last four years