Election season is a safe bet to produce some of the worst policy proposals—the kind of ideas that history has already relegated to the trash bin somewhere with the label “Do Not Use.” And yet Vice President Kamala Harris, the Democratic presidential candidate, is bringing into play what looks like a plan to cap food prices.
Earlier this month, in a speech billed as an outline of her economic policy agenda, Harris promised that if elected, she would push for a nationwide ban on corporate price gouging in the food sector.
What exactly did Harris mean by a ban on price gouging? As with many populist proposals, the terms she used were flashy but offered little substance. But what she proposed sounded a lot like price controls.
The Biden administration is skeptical of corporate consolidations because they can lead to monopolies and higher prices, but outright banning, limiting or controlling the fees companies can charge consumers is another matter.
History has repeatedly shown how price controls can unbalance an economy. Let’s look back to Germany in 1923, where price controls were so ineffective that they led to hyperinflation. This contributed to the rise of fascism.
The disaster of price controls can be seen today in Venezuela. The regime of Nicolás Maduro expanded price controls, and what Venezuelans got in return was runaway inflation, which peaked at 130,060% in 2018.
Yes, you read that right.
Just compare that number to the highest inflation rate in the U.S. of 15% in 2021. That’s not to say Americans aren’t still feeling the pinch of high prices at the grocery store every week. Our price increase was caused by a combination of factors, including supply chain issues and the stimulus packages from the Trump and Biden administrations.
The finger-pointing is directed at President Joe Biden, and the Harris campaign is seeking cover. According to The New York TimesHer proposal is part of a “rhetorical attempt to shift the blame for high inflation onto the American economy.”
The Harris camp does not have a monopoly on bad ideas. The Trump camp openly supports protectionism in the form of tariffs on foreign goods, supposedly to help domestic industry. But such measures have failed in the past.
Yet former President Donald Trump is proposing a 10% tariff on all foreign goods. If this goes into effect, US consumers will pay higher prices. There is another word for this: inflation.
Today’s Republicans are unrecognizable from those of Ronald Reagan’s era, when the United States was committed to free-market principles. But in a populist turn, Republican vice presidential candidate JD Vance opposes free trade agreements and advocates more government intervention to support certain industries. This is not traditional fiscal conservatism.
Populist proposals come from both the left and the right. They may sound tempting in political speeches, but voters should be wary. Some ideas are not just weak – they are dangerous.
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