Harris's price caps could work in Canada

As economies around the world grappled with inflation after the pandemic, one idea spurred both interest and controversy.

- JIM STANFORD

Prices for some essential goods rose far faster in 2021 and 2022 than their costs of production, as companies fattened profits to their highest level in history. That was the leading edge of economywide inflation.

The traditional medicine for this problem is to forcibly slow the whole economy with high interest rates. But that further punishes the victims of this profit-led inflation. Could government instead use preemptive price caps on strategic commodities to prevent those shocks from spreading into economywide inflation?

The idea has been debated for years. Now, Kamala Harris's surging presidential campaign has seized on it. She pledged last week to strengthen existing US. laws against price-gouging (which already exist in 38 states), especially for groceries.

In Canada, the NDP's Jagmeet Singh has also called for price caps on essential foodstuffs. In other countries (including Spain, France, and the UK.), price controls have been established for food, housing, energy and other strategic commodities to help reduce inflation.

Price regulation has been ridiculed by conventional economists as a return to Soviet style central planning, sure to cause a breakdown of the market economy. Donald Trump claimed Harris's proposals would turn America into Venezuela.