85% of Top Economists Reject Elizabeth Warren’s Price Controls

(Brad Polumbo, Foundation for Economic Education) Senator Elizabeth Warren made a name for herself in 2020 as the progressive Democrat who “has a plan” for everything. But her plans are often not very well thought through, and the Massachusetts Senator’s latest “price-gouging” initiative is a similarly bad idea. 

Warren is one of the many progressive politicians who has pushed the bogus narrative that “corporate greed” is to blame for our ongoing surge in inflation. (As I explain here, this isn’t the case). In response, she proposed an anti-“price-gouging” law that would outlaw “unconscionably excessive price increases” at large companies “during all abnormal market disruptions.”

What’s an “unconscionable excessive” price increase? What constitutes an “abnormal market disruption?” And how could federal bureaucrats huddled in an office in Washington, DC possibly make these determinations for all the different industries in America and the literal millions of factors that influence market prices? 

Warren’s legislation offers no satisfying answers to these simple questions, which may be why an overwhelming majority of prominent economists just rejected a very similar concept out of hand. 

IGM Chicago recently surveyed a group of top economists, including many from the Ivy League, and asked them whether “it would serve the US economy well to make it unlawful for companies with revenues over $1 billion to offer goods or services for sale at an ‘unconscionably excessive price’ during an exceptional market shock.”

(Notice the language is very similar to Warren’s proposal). 

Weighted for confidence, an astounding 84 percent disagreed with the notion that such a plan would be good for the economy. As anyone who has spent time around economists can tell you, they’re a fickle bunch with a wide range of ideological influences, so this kind of consensus on an issue is quite unusual. 

The specific feedback individual economists offered was also illuminating. 

“This just seems unenforceable at every level,” said MIT economist David Autor. “What is unconscionable? Why only companies above $1 [billion]?”

“Totally impractical!” responded Stanford’s Robert Hall.