Price Controls Reflect Utter Economic Insanity

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In the print edition of tomorrow’s (Friday’s) Wall Street Journal, Richard McKenzie and I explain some of the many unintended ill-consequences of the price controls proposed by Kamala Harris. A slice:

Price-control proponents often justify their position by claiming that grocery stores are monopolies. They point to a fantasy economic theory that purports to show how price controls in monopolized markets can lead to an increase in sales. But grocery stores aren’t monopolies—Americans can easily switch from Safeway to Whole Foods to Trader Joe’s. Even if they were, government intervention still wouldn’t be the answer. Monopolists are just as willing and able as are competitive firms to respond to sticker-price controls with nonsticker-price adjustments.

Economists Tyler Cowen and Alex Tabarrok describe a market price as a “signal wrapped up in an incentive.” It informs sellers and buyers of market opportunities so they can respond as productively as possible. Price controls, by contrast, convey distorted information, pushing buyers and sellers to pursue wasteful evasions. Ms. Harris should know better.