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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.
