Price Controls

~ Clarissa

I remember when Hugo Chávez in Venezuela tried that. Then citizens ran away and those who couldn’t ate rats and animals at the zoo.

What needs to happen for people to get it into their very thick heads that price controls don’t work?

To think we could have had DeSantis and avoided all this.

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Published by Clarissa

37 thoughts on “Price Controls”

  1. How come the capping of insulin prices HAS worked and no one is eating rats?

    Maybe stop with the hyperbole and red-scaremongering. There’s a role for government in parts of the economy, and it will be a dereliction of duty to not exercise it, where necessary.

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    2. Prices set by diktat with no real relation to production costs and fixed below market levels create scarcity. In the case of milk, for instance, price controls will motivate producers hoping to avoid losses to stop selling their product. The result is less milk in the market and higher prices (in the black market) for that which is available.

      Price controls on everyday commodities and food lead to shortages and racketeering without fail. Macroeconomics 101.

      Harris is a confirmed dud — the sad part is not only she can not come up with original ideas, she also seems incapable of learning from other people’s mistake.

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      1. It’s sad that this has to be explained to people. Price controls have been used in many different countries, and always with the same result. What will it take for people to learn that it doesn’t work?

        This election is very depressing.

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      2. “Price controls on everyday commodities and food lead to shortages”

        Many of Poland’s economic problems in the late 1970s came from price controls which led to bizarre situations in some cases…. bread was cheaper than animal feed and farmer’s fed it to their livestock…

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        2. We queued for hours for butter or milk in the USSR. Saw cheese only on New Year’s. Had to travel to Moscow to buy boots on the black market.

          Our prices were very low and completely controlled, though. Yay.

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    3. Big pharma price gouging is no doubt a real thing. With big farmers, it’s the quality of the product that needs to be investigated.

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  2. People really don’t learn from history. King Solomon said it best, “there is nothing new under the sun.” Generally speaking given a bit of time you can find where something has been tried before, even if slightly different or under a different name.

    The issue at least for America is our educational system has done such a poor job in the field of history, that people’s eyes start glazing over when you even bring up the subject.

    So for America at least it makes perfect since that these fix it attempts keep popping back up. As the old quote goes, “he who doesn’t learn from history is doomed to repeat it.”

    • – W

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    1. Right here on the blog we have a genius who says “there were no food shortages over insulin price controls, so why should food price controls have a different effect on food?”

      Headdesk.

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  3. “Price gouging”

    Oh, crap. I thought we had more time.

    The garden is great, but we are not producing anywhere *near* enough food for a price control situation. Neighbor just got goats though. It’s time to talk to the landlord about the possibility of chickens and rabbits.

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    2. Agreed that we need more/better FTC antimonopoly action.

      BUT, that is not what is causing grocery prices to go up. That’s inflation, and the source of the problem is the FED, and monetary policy, which no amount of trustbusting will solve. It’s happening because the dollar is worth less and less, and this tracks with the rise in prices across the board for basically anything not manufactured by slave labor in China: construction, real estate, used cars, medical care, insurance…

      Is it 100% inflation? No. There’s a lot of graft and unnecessary regulation in there too.

      But the biggest offenders there are autos and medical, followed by real estate. Nobody but nobody is talking about trust-busting Blackrock and Vanguard, or ending non-compete deals with hospitals, or cracking up the medical insurance cartel, or rationalizing auto regulations so that you can buy a Toyota IMV 0 in this country. Heck, we could have access to a whole range of budget vehicles that are cheap and common across europe and asia, if we could just use the same logical efficiency standard as everyone else: emissions per mile, instead of emissions per gallon.

      Who’s proposing any of that?

      (crickets)

      It doesn’t make sense to target *food* companies, the *least* affected by cartelization out of all those things that are poleaxing working people right now. Food prices going up is *mostly* FED policy, unlike car pricing and insurance and rents. It’s like saying– gosh people are driving way too fast around here, we should probably raise car taxes and limit auto sales! (instead of, you know, more traffic enforcement).

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      1. –yes, I realize that X blurb mentioned Rx drugs and housing as well. I’m all for capping drug prices for stuff like insulin. But I want to see the nuts and bolts of those proposals first. There is a world of difference between rightly breaking up REI monopolies with the trustbusting hammer of righteous wrath, and installing some weaselly rent cap scheme with twenty loopholes available to said REI firms that cannot be accessed by smalltime landlords, who will then be forced out of the market only to further consolidate rental holdings in the hands of a few enormous beastly corporations that don’t live anywhere near the houses they own, and don’t give a crap about the conditions their tenants are living in.

        I know which group of REIs is lobbying in DC, and it isn’t my local slumlord who actually responds to maintenance requests most of the time.

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  5. When prices fall in markets it’s because corporations felt like being less greedy. When they rise it’s because they got bored and decided to become more greedy for a change. Please give me control over the economy.

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  6. She’s playing all the the songs from the Financial Illiteracy Greatest Hits album.

    This one magic trick to increase existing home prices by $25K.

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    1. 1st generation homeowners, of course, means blacks and Hispanics. This is exactly the kind of policy that lec to the Great Recession of 2008.

      What can one do if people refuse to learn?

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      1. I swear, setting prices for food items is such third world shit that I’m embarrassed a politician, let alone the candidate for president, would dare to even think of it in america. Have these people no shame?

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        1. I honestly don’t know what else is needed for people to notice that this is a disastrous policy. Whole societies have collapsed as a result of it. And we’re going to import this problem? Are we obligated to import every problem that exists on the planet?

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          1. Americans are desperately naive about this, never having dealt with it in person. We certainly don’t teach it in school.

            I was that nerd who read *Forty Centuries of Wage and Price Controls* in high school. For fun.

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              1. Accident of parentage.

                I read it because it was in our house anyway 😉 This was before the internet really took off, and our local library didn’t have anything so arcane. Access is everything. And boredom. We did not have a TV.

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    2. The steep inflation in college costs since the introduction of Higher Education Act of 1965 should itself have been a lesson. College and universities view federal subsidies as money which is there for taking, and deliberately keep rising the tutition high enough to capture those funds. It is a vicious feedback loop which has led to the current morass we find ourselves in, where subsidies keep rising AND UG education keeps getting comically expensive with students ending up with six-figure debts irrespective of whether they go to Ivy Leagues or state colleges (only the leftmost digit changes not the number of digits between the two extremes).

      To try such strategies, which led to such persistent inflation even in a staid field like education, in an ultra-volatile housing market is nuts!

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        1. Also, there’s no doubt in my mind that this policy will be heavily racialized. Just like it was previously, leading to the collapse of 2008. Such a collapse will require another bailout, with more money getting printed, with more inflation coming our way. This is so obvious that a child should be able to understand it but we are permanently stuck in denying reality.

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          1. Even if it wasn’t, the results would be exactly the same as what happens to used car prices during tax return season. Sellers know that buyers have an extra 25k available to them, and adjust prices accordingly.

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            1. There are no easy fixes to the housing problem. No “just give everybody free money” will work. The economy needs to be moved in a different direction from the current one. It’s doable but nobody wants to announce non-populist, long-term policies because voters want magic and instant gratification.

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              1. Also, as soon as anybody on either side of the aisle announces anything that might lead to *prices* coming down (which is what MUST happen), they will get savaged by the investor class, as well as all the boomer nitwits who counted on using their houses as retirement piggybanks. There are tons of people out there my parents’ age who have responded to the rising theoretical value of their houses, by borrowing more and more money with their houses as collateral, counting on defaulting on it when they die.

                They will not be happy when the tap gets shut off.

                So right now we’ve got both parties essentially working for the interests of half-dead boomer retirees who have parked their arses in 3-4 bedroom suburban homes for life (when they could have downsized and taken a profit), while everybody under 45 gives up on ever owning a home at all, and makes family planning decisions accordingly.*

                There is, IMO, a special place in hell for people who treat residential homes as an investment, in this economic environment.

                *landlords can, and do, discriminate against families with children, using fire safety codes: you may be OK with putting three girls in bunk beds in the same room, but landlords can refuse to rent you a 2br house because “two humans per bedroom” even if said house is 1500 square feet and has 2.5 bathrooms and a “home office”. The difference between a bedroom and a home office is: whether or not it has a closet. By removing two closets in a 4br house, a landlord can legally refuse to rent to two-parent families with more than two children. Single parent gets a pass for up to three kids. This makes financial sense for landlords because children are often more damaging to houses than pets, and you can’t charge a “child fee” the way you can for dogs and cats. It’s a disaster for those of us who’ve been recently priced out of homeownership, and also have more than the average 1.8 children.

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