The good news is that the economy offers us some proven ways to make consumers better off. They are mainly about allowing competition and allowing greater supply. Trump did some of that while he was president. Harris as vice president showed no signs of moving in that direction. Yet many of the policies both propose would do the opposite.
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One method that appears to lower consumer costs but actually increases them is price controls. When the government keeps the price lower than what the free market price would be, a shortage occurs. This causes people to waste valuable time in line trying to get their hands on goods that are in short supply. When price controls on oil and gasoline in 1979 kept the price of gasoline at 80 cents per gallon, energy economists at the newly created Department of Energy estimated that ending the controls would cause the price to reach about $1.00 per gallon would amount to. At the time, I estimated, based on the average worker’s wage and the average time spent in line, that the time cost of obtaining gasoline was about 40 cents per gallon. The actual cost to the consumer was therefore about $1.20 per gallon, which was 20 cents above the open market price.
The above quotes are from David R. Henderson: “How to reduce costs for consumers,” Defining ideasOctober 4, 2024.
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