Are Price Controls Next?

Joe Biden is getting desperate, and when people are desperate they do especially stupid things. 

In a move that should worry everybody, Biden’s war on “shrinkflation” and “corporate greed” has him inching toward a regime of price controls.

You know, the policy that helped the Soviets keep their economy humming along, and that whipped inflation in the United States in the 1970s. 

Price controls don’t work. They take a bad situation and make it infinitely worse. 

President Biden has launched a new “strike force” to fight “unfair and illegal” corporate pricing.

But critics, including the @USChamber, say this is an attempt to return to government price controls.

Full story 👇https://t.co/32vJSl1kgu

— Andrew Moran (@andrewliberty23) March 6, 2024

Making things worse is a Biden specialty, of course, so we shoudn’t be surprised. Yet I often am, because my imagination is too restricted to conceive that anybody who lived through the 1970s would even toy with the idea. 

As part of efforts to clamp down on what the current administration calls greed-flation, President Joe Biden will launch a new joint “strike force” to fight “unfair and illegal” corporate pricing, the White House announced.

The latest task force creation will be led by the Federal Trade Commission (FTC) and the Department of Justice.

It will be co-chaired by FTC Chair Lina Khan and Jonathan Kanter, the assistant attorney general for the DOJ’s antitrust division.

“Corporate greed” is one of those all-purpose “explanations” that, when examined, explains next to nothing. Corporations are, by their very nature, driven by greed unless Blackrock is involved (then power comes first, not money). Hence, if there is a significant difference in corporate behavior, “greed” is not and cannot explain why. 

Greed is a constant. If the behavior is variable, something else is causing that variation. In this case, it is the flood of printed money that the Fed poured into the economy and the explosion of federal spending under Biden. Those are the variables that have worked their magic on the constant that is corporate profit-seeking. 

Geez. Do I really have to explain this?

“President Biden is committed to making sure corporations are held accountable when they try to rip off Americans, including when they break the law while keeping prices high,” the White House said in a statement.

The strike force plans to target “illegal corporate behavior” consisting of anti-competitive, deceptive, fraudulent, and unfair methods.

Regulatory officials will focus on vital sectors where corporations “may be violating the law and keeping prices high, including prescription drugs and health care, food and grocery, housing, financial services, and more.”

Inflation raged in the US economy in the 1970s, and as we all know, it was Paul Volker, more than anybody else, who tamed it. He did so by squeezing the money supply in the most painful and quick manner possible by raising interest rates dramatically. It was awful, but it worked, setting the stage for the Reagan recovery that propelled the US economy forward for decades. 

At the time, Reagan was viciously attacked for enabling “corporate greed,” but by 1984, inflation and unemployment were easing, and it was “Morning in America.” 

To put the situation in Bidenesque terms, Milton Friedman was in charge. When Biden entered office, he announced that “Milton Friedman isn’t running the show anymore,” and you see the results. 

Milton Friedman wasn’t pushing some right-wing ideology when he argued for a stable money supply; he was stating facts about how economies work. Money is a medium of exchange, representing value. If you start printing more of it without any underlying economic growth to justify the expansion of the money supply–increased productivity–the value of each unit goes down. 

It is a basic law of economics, and no government panel can change that.

So what happens if price controls get put into place? Simple: supply contracts, replacing price increases with shortages. This is why housing supply dries up where there is rent control. 

Biden’s war on “junk fees” is working the same way; if airlines are forced to quit charging for bags or seat assignments, they will raise prices to make up the difference, and consumers will wind up worse off on balance. Biden’s capping late fees on credit cards, as he just did, will result in less credit availability for lower-income people. 

But for Biden, “doing something” looks better than “doing nothing,” and since the solution to the problems he claims he wants to solve will involve short-term pain for him or consumers, he gravitates to doing the wrong thing. 

Always. It is the Biden way.