Interventionism-minded politicians (which is to say, the great majority of them) need bogeymen to justify their plans to substitute government programs and controls for the voluntary action that comprises civil society. Orwell understood that very well. In 1984, Big Brother had the imaginary villain Emmanuel Goldstein, which the masses were whipped up to hate every day for two minutes.
American politicians of the left like to blame rising prices on business greed and their nasty habit of “price gouging.” Kamala Harris is making that the centerpiece of her economic program — get tough on business people who raise prices too much — with federal bureaucrats empowered to decide how much is too much.
In this AIER article, economics professor Michael Munger takes a look at the claim that government can slow or stop inflation with rules against price gouging. He finds that it won’t help a bit but will put us on the path (or further along the path) to Venezuela-style government control over the economy.
Here’s a key slice:
Now, for the bad surprise: the US seems to be well on its way this summer, traveling down “The Road to Venezuela.” In a speech right here in my home town of Raleigh, North Carolina, Vice President Harris announced on August 16 that she would place controls on grocery prices.
“As attorney general in California, I went after companies that illegally increased prices, including wholesalers that inflated the price of prescription medication and companies that conspired with competitors to keep prices of electronics high. I won more than $1 billion for consumers. (Applause.)
So, believe me, as president, I will go after the bad actors. (Applause.) And I will work to pass the first-ever federal ban on price gouging on food.”
Problems with a federal law on “price-gouging” have been pointed out by others. That would require a benchmark of what the price should be, and a limit on how much grocers could charge. The proposal is also likely a violation of the Tenth Amendment, which reserves “police power” (which surely includes retail point-of-sale prices), to the states, rather than the federal government. On the other hand, interstate commerce might be expanded to encompass these kinds of sales, for large companies at least.
I doubt that there is anything that the Chavez-Maduro regime has done that would elicit disapproval from the zealous interventionists who run the Democratic Party these days. To people like Harris and those who control her, there’s no bridge too far when it comes to federal power, no policy that they’d say, “We shouldn’t do that because it will have bad economic consequences in the long run.”
Under the logic of interventionism, every problem calls for the exercise of still more power by the state. Civil society rapidly unravels, just as in Venezuela.
Munger concludes, “Ten years ago, Venezuela set out on a path to economic ruin and grave shortages of basic consumer goods, because of price controls on groceries and other products. Is the US really going to travel on the same road?”
We’re dangerously close.