Kamala Harris promises us that when she’s president, the government will crack down on greedy businesses that practice “price-gouging.” Donald Trump tells voters that he’ll put a cap on interest rates charged by greedy credit-card companies on unpaid balances.
Let’s see, is there any experience in human history with governmental edicts intended to keep prices down?
Yes, roughly 2,000 years’ worth, as Robert Graboyes observes. Roman emperor Diocletian issued a price-control edict in 301 a.d. The Roman coinage had been losing purchasing power for many years, owing to the government’s policy of debasing it (less and less silver in each coin). Solution? Threaten to punish merchants for charging too much. It did not stop the inflation of prices (deflation of the currency’s purchasing power), but it did mess up commerce.
Will it be any different with the proposed price controls under Harris or Trump? Of course not.
Graboyes:
As in Rome, American sellers have no choice but to raise prices in response, and buyers have to pay more to sellers or go hungry or threadbare. American inflation is largely a function of Federal Reserve policies. The Fed, like those officials stamping coins in Diocletian’s time, determines the rate of inflation. Vilifying and threatening landlords, credit card companies, and grocers won’t stop American inflation any more than waving the death penalty at sausage-, cloak-, and lion-vendors did in Diocletian’s day. But as in the days of Diocletian (and Richard Nixon), price controls will undermine rule of law, disrupt commerce, and give license to further currency debasement by rulers.
Just imagine how Harris and Trump might respond to questioning by someone who actually understands economics.