Kerby Anderson
Yesterday, I talked about why price controls are a bad idea, and I thought I might continue by looking at two policies being proposed to attract young voters: student loan debt and housing prices.
Let’s start with a simple statement about supply and demand. If you want to lower prices, you need to increase supply and/or decrease demand. Unfortunately, colleges aren’t governed by a free market of supply and demand. That is why the cost of tuition has risen twice the rate of inflation over the last few decades.
Demand for higher education might be going down due to one surprising demographic fact. Fewer children were born during the Great Recession years of 2008 to 2011. There will be a 15 percent decrease of potential students.
However, colleges won’t reduce their costs because both the federal government and state governments are giving students and their parents scholarships and loans. And President Biden has been cancelling billions of dollars in student loan debt, essentially signaling that students won’t have to pay back the loans they are taking out this year.
The principle of supply and demand also works in housing. When there aren’t many houses for sale, the price goes up. President Biden has called for building 2 million housing units, and Vice-President Kamala Harris has now called for building 3 million units.
To achieve this, the Harris campaign talks about offering expanded tax credit to home builders. The campaign, however, also proposes a $25,000 subsidy for first-time homebuyers. This would increase demand and not bring home prices down.
Giving money to students and giving money to home buyers seems like a good idea until you get back to basic economics. Understanding supply and demand is necessary to evaluate campaign promises.

Kerby Anderson
You only get one chance to make a good first impression. Americans were trying to get a first impression of Kamala Harris before the Democratic National Convention. Yes, they knew something about her as vice-president, but now she was running for president.
Her first decision about personnel for her future administration was to pick Governor Tim Walz as her vice-presidential running mate. He was one of the most liberal governors or senators she could have picked.
Her first policy statement was a speech on price gouging given the Friday before the convention. Her solution was price controls. The headline of a Washington Post op-ed was: “When your opponent calls you ‘communist,’ maybe don’t propose price controls.” On radio, I suggested she might want to give her speech in the original Russian.
Price controls were a failure in the Soviet Union, in Venezuela, and even in the US when President Richard Nixon tried it decades ago. Giving more “authority” to the Federal Trade Commission to punish grocery companies who charge too much won’t solve the problem of high prices. I suspect the speech was more about trying to placate the base and appeal to swing voters by showing she “cares about people.”
Price controls won’t happen, but this is a teachable moment. Why are price controls a bad idea? First, they distort the market. The aforementioned op-ed explained it “would lead to shortages, black markets, and hoarding, among other distortions.” Second, it is hard to find price gouging as the problem. Last year, profit-margins in the grocery industry were at a low of 1.6 percent.
Kamala Harris was trying to remove one of her liabilities before she sat down for interviews. Inflation is a problem, but price controls aren’t the solution.