Brian Albrecht on Kamala Harris and Price Controls
ICLE Chief Economist Brian Albrecht was cited by the Northwoods River News in a column about Vice President Kamala Harris’ price controls proposals. You can read the full piece here.
Writing on Substack after Harris’s policy pronouncements, Brian Albrecht, the chief economist at the International Center for Law & Economics, said her policy was just that — price controls.
“Some might argue that calling Harris’s proposal ‘price controls’ is unfair or hyperbolic,” Albrecht wrote. “After all, she’s not directly setting prices, right? Any policy that gives the government the power to decide what price increases are ‘fair’ or ‘unfair’ is effectively a price control system. It doesn’t matter if you call it ‘anti-gouging,’ ‘fair pricing,’ or ‘consumer protection’ — the effect is the same.”
When bureaucrats, not markets, determine acceptable prices, we’re dealing with price controls, Albrecht wrote.
Albrecht listed several reasons why that was the case. First, vague definitions lead to broad interpretations.
“Without a clear, objective definition of ‘price gouging,’ regulators would have wide latitude to decide what constitutes an ‘unfair’ price increase,” he wrote. “It typically refers to unfairly high prices during emergencies. This isn’t about emergencies. This ambiguity could easily lead to de facto price controls across a wide range of grocery items.”
Second, Albrecht wrote, enforcement requires price monitoring.
“To enforce a price gouging ban, the government would need to monitor price changes,” he wrote. “This creates a system where prices are effectively controlled by bureaucrats rather than market forces.”
Finally, Albrecht asserted, companies will err on the side of caution.
“Faced with potential penalties for ‘gouging,’ grocery retailers and suppliers are likely to be overly cautious about any price increases, even when justified by rising costs or changes in supply and demand,” he wrote. “This chilling effect is tantamount to informal price controls.”
That chilling effect rivals that of explicit price ceilings, even if not true ceilings, Albrecht asserted.
“If companies face severe penalties for ‘excessive’ price increases (however that’s defined), they’ll err on the side of caution and keep prices artificially low,” he wrote. “This informal price control can be just as damaging to market efficiency as a government-mandated price ceiling.”