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Every cat in my house will be relieved when the election is over. It annoys them when I shout back at political ads and interviews about misguided economic proposals.
One of the latest of these is price caps on everything from groceries to rent and even interest rates. Time and again, history has proven that price controls do not solve economic problems. Yet both presidential candidates have proposed them. Kamala Harris has called for caps on grocery prices and rents. Donald Trump has urged capping credit card interest rates at 10%.
Rent control is a textbook example of an idea that has been tried and has consistently failed. From New York City in the 1970s to modern experiments in cities like San Francisco, capping rent leads to fewer available homes, crumbling property conditions, and less construction. Rent controls remove the incentive for landlords to build, maintain, or rent out properties. Instead of helping tenants, controls end up creating housing shortages and driving up costs for everyone.
A recent Bloomberg editorial reminded us that Harris “wants the government to determine when food and grocery prices are too high.” But one of the clearest historical examples of failed price controls is Richard Nixon’s 1971 wage and price freeze. Initially, prices stabilized and inflation seemed to slow. But when the controls were lifted, inflation surged, shortages emerged, and gas lines stretched for miles. The outcome showed that price controls only delay and worsen inevitable economic corrections.
Trump’s proposal to cap credit card interest rates at 10% is another short-sighted and manipulative promise. Capping interest rates may sound like an appealing way to protect consumers from high borrowing costs. Yet history shows that such caps only dry up lending. Lenders stop offering credit to riskier borrowers because they can’t price loans according to the actual risk. For someone who claims to know business, Trump should recognize that capitalism works best when market forces determine interest rates. Artificial caps don’t lower borrowing costs—they simply make borrowing impossible for many, leaving only the wealthiest able to access credit.
Capitalism works because it allows prices to adjust to supply and demand. When prices rise, they signal producers to ramp up supply, which eventually brings prices down. But price controls interfere with that process, cutting off the signals that drive supply. Producers lose their motivation to supply more goods or services if they can’t charge enough to cover costs or make a profit. The result? Empty shelves, rationing, and a decline in quality as businesses scramble to survive.
What’s most frustrating is that politicians know these ideas won’t work and are unlikely to pass. Yet they propose them anyway to score points with voters, who are understandably seeking relief from high prices and who may not realize the damage price controls cause. Making appealing promises without the honesty to explain how such measures will ultimately hurt consumers is political theater at its worst. Even worse is the possibility that bad policies may be enacted based on such ill-conceived promises, and we all suffer the consequences.
It’s crucial to learn from the past so we do not keep repeating costly mistakes. Price controls offer short-term comfort but always lead to long-term harm. What we need is an honest discussion about the economy and real solutions that tackle the root causes of inflation, housing shortages, and the rising costs of borrowing. We would all benefit if our leaders focused less on pandering to uninformed voters and more on educating voters (and themselves) about the lessons of economic history.
Then I could do less shouting at political ads. The cats would appreciate the peace and quiet.
Related: Tariffs: The Hidden Tax Raising Your Checkout Prices