by Mitch Kokai
Senior Political Analyst, John Locke Foundation
One of the more foolish ideas in an era that is full of them is that price controls will somehow help “cure” inflation. In fact, what they do is create or increase shortages. To put it very simply, introducing price controls discourages producers from producing and retailers from selling, and is an invitation to black marketeers to set up shop.
That they appear, one way or another, to be creeping onto the policy agenda is firstly an admission on the part of policy-makers that they have lost confidence in their ability to deal with inflation and secondly a revelation (not that one is needed) that they are looking for someone to blame. In many cases, of course, price controls come with the argument or implication that someone is making an “unfair” profit.
Over at the Wall Street Journal, Andy Kessler sounds the alarm:
“It feels as if price controls are coming. Don’t trust my Spidey senses? Joe Biden’s own words from March 16: ‘Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.’”
And this is the same president who is, he claims, encouraging U.S. oil and gas companies to ramp up production. They may not be that willing to do so at a time when they are coming under political attack, especially if that attack is supplemented by increased taxes. Increase their taxes and there will be less cash to invest in future production and, as the post-tax return falls, even less incentive to do so.
As Kessler notes, it’s not only oil companies that are in the sights of the Left, but for Biden to say what he is saying at the current moment seems . . . unwise.