A top economist who served in the Barack Obama government is blasting Kamala Harris‘s price control plan—among other economic proposals—as being “not sensible policy.” Jason Furman, an economist and professor at Harvard University who served as the Deputy Director of the National Economic Council under Obama, is warning that Harris’s proposal to cap the prices of grocery items could pose significant market disruptions and lead to unintended consequences for consumers.
Furman noted that if prices are not allowed to rise with demand, companies could instead choose to constrict supply, meaning fewer goods will enter the market for consumers to purchase. “This not sensible policy and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,” the Harvard economist said in a recent interview.
What Furman details is a scenario that has played out in other countries that have engaged in aggressive price controls, which resulted in a drastic reduction in available food supplies. This has resulted in so-called breadlines in countries like Venezuela and the former Soviet Union.
Even the Washington Post‘s far-left columnist Catherine Rampell has panned the idea. “At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat,” she wrote. “At worst, it might accidentally raise prices.”
Price controls can also impact the market beyond just the cost of goods. The National Pulse reported last week that when former President Richard Nixon enacted wage and price controls in 1971, the economy went into what has been termed “The Nixon Shock.”
The aftermath saw the U.S. dollar plunge by nearly a third of its value during the 1970s, and stagflation crippled the U.S. economy throughout the decade.
