Elizabeth Warren Seizes the Stage Again
Sen. Elizabeth Warren has grabbed the spotlight with another foolish idea: price controls. She calls it “Anti-Price Gouging.”
Why are Price Controls Bad?
Those of you, who are old enough, will remember waiting in line, for hours sometimes, to fill up your gas tank in the late 1970’s. Why did that happen: price controls. What happened when price controls were abandoned: no lines. This isn’t complicated. Anyone who manages to make it to the mid-term exam in the first micro-economics course can explain why. Draw a demand curve and a supply curve. Where they intersect is the market price. Now draw a line horizontally across below the market price at the controlled price. Note the difference between the quantity demanded, at that controlled price, and the quantity supplied. That difference is the shortage you have just created with price controls.
Anti-price gouging has no meaning, unless it means imposing price controls.
Who is Pushing for Price Controls?
Warren wants to combat “price-gouging.” which means she either wants to engage in meaningless political posturing or she wants the FTC to impose price controls. She has some allies in the Senate and House. The legislation is cosponsored by Senators Bob Casey (D-Pa.), Sheldon Whitehouse (D-R.I.), Bernie Sanders (I-Vt.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Tammy Duckworth (D-Ill.), and Dianne Feinstein (D-Ca.). In the U.S. House of Representatives, this legislation is cosponsored by Chairman Jerrold Nadler (D-N.Y.) Rep. David Cicilline (D-R.I.), Val Demings (D-Fla.), Katie Porter (D-Calif.), Ro Khanna (D-Calif.), and Bobby L. Rush (D-Ill.).
If you follow the Centrist Independent Voters Rogues Gallery of candidates (ones we would find it difficult to ever endorse) you will recognize many of these names.
For the purpose of completeness, I will be adding Warren and her co-sponsors to the list, most of them, including Warren, all already there.
Great post – in the 70’s I was selling electrical supplies (copper, and the zinc for galvanizing were price-controlled) . The price controls eliminated the need for my job. Fortunately, my employer kept me on, but my job was now to allocate the amount of material the companies we represented were able to supply to our best customers and to build relationships – lunches, bottles of hooch, baseball games, etc. – with the factories near Pittsburgh so that we could coax a larger share out of them.