BAD IDEAS NEVER DIE
Price controls are in the Hall of Fame of bad ideas. They have an unbroken record of failure, stretching back literally thousands of years. And yet, they remain alluring to people with no knowledge of either history or economics, or–probably more relevant–to failing governments.
There was a time when Britain’s government was known for a certain level of financial sophistication. No longer:
[British Chancellor] Rachel Reeves is pressuring supermarkets to cap food prices in an attempt to limit inflation unleashed by the Iran war.
The Iran war has nothing to do with it. The inflation rate on grocery prices in the U.K. is lower than in mid-2025, and the world has plenty of oil. A temporary disruption of a single channel of transportation will have no impact on gas prices beyond a couple of months:
The proposal being floated by Keir Starmer’s government would cap prices on around 20 food items. The government is invoking the incoherent theory of “price gouging”:
Before the announcement, Ms Reeves unveiled plans to hand new powers to regulators to stop firms from price gouging during times of crisis.
This would include allowing the Competition and Markets Authority to name and shame companies that it believed to be raising prices more than necessary.
The Chancellor said on Wednesday that she would be willing to go further if needed, including potentially fining companies if they engaged in “exploitative pricing practices”.
The ignorance on display is enough to make you want to cry. Or maybe to require a test of basic economic literacy as a qualification to serve in government. Or, better yet, to vote.
Reeves’ proposal has gotten very bad reviews:
Helen Dickinson, the chief executive of the British Retail Consortium, a trade group, said price caps represent a return to the failed policies of the 1970s.
“The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets,” she said.
“The challenge facing retailers is a combination of higher energy and commodity costs resulting from the Middle East conflict, and the soaring cost of the Government’s domestic policies.
“Rather than introduce 1970s-style price controls and trying to force retailers to sell goods at a loss, the Government must focus on how it will reduce the public policy costs which are pushing up food prices in the first place.”
Britain’s suicidal “green” energy policies are an obvious culprit.
Others have been blunter in assessing Reeves’ proposal:
The governor of the Bank of England has warned ministers against “artificially moving prices” after the Treasury held talks with supermarkets about freezing the cost of essential goods.
Andrew Bailey said price freezes were “not a sustainable thing”, while food producers and retail bosses described the proposals as “completely preposterous” and “embarrassing nonsense”.
Well, they are. But the episode is a good reminder that even an advanced democracy is never more than one election away from horrifically incompetent policies.
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