Price controls are government restrictions that make it illegal for sellers to raise prices, or that cap how high prices may go. In the episodes of The Bob Zadek Show that treat the subject, price controls appear in two settings: as one element of an economy in collapse, and as a recurring policy proposal in the United States that economists on the program treat as both futile and harmful.
Price controls in Venezuela
In the 2017 episode on Venezuela, Fergus Hodgson described an economy in which the formal market had ceased to function as a free market. Hodgson said there was no stable currency and no property rights, with property subject to arbitrary confiscation, and that there were price controls on basically everything, in particular the exchange rates with foreign countries Venezuela on the Brink with Fergus Hodgson (2017). He attributed the expansion of state control to the Chávez regime, which he said expanded welfare programs to favored groups and broke down the rule of law, violating property rights at will and personally selecting places to be confiscated, sometimes on television. Hodgson reported that more than a million Venezuelans had left the country since 1999, with exile communities in Florida and elsewhere, and that every free-market principle he could think of was being violated, which he offered as the explanation for the absence of economic growth and investment. He also invoked Jacob Hornberger’s remark that the real free market is the black market, a formulation that recurs in the American discussion of controls below.
The thermostat analogy and the Nixon freeze
The most extended treatment of price controls comes in the 2022 episode with Don Boudreaux, recorded as inflation was rising and as some economists and officials were said to be considering wage and price controls. Boudreaux defined price controls as the government prohibiting sellers from raising prices, or restricting how high they may raise them, with fines or jail threatened for exceeding the limit. He granted that government can, with enough force, prevent people from raising prices, but argued that this does not control inflation Liz Warren’s Crusade against “Big Grocery (2022).
Boudreaux’s central analogy, which he attributed to Milton Friedman, compared price controls to controlling a heater that is pumping too much heat into a room by putting a metal strip in a thermometer to stop the mercury from rising. You can prevent the thermostat from registering the correct temperature, but that does not change the temperature in the room; worse, if the thermostat stops working, the heating system stops altogether and there is no brake on the heat being pumped in. Boudreaux extended the point with a second analogy: a mayor facing a rising murder rate who orders newspapers to report a lower number. The mayor may be able to compel the lie, but that does not change the fact that people are being killed. Price controls, in his account, are a command to every seller to lie to the economy about the real value of what they have to sell.
Boudreaux cited August 1971, when Richard Nixon imposed a nationwide wage-price freeze on all prices and wages in an attempt to control inflation. He called it a terrific failure, said Nixon himself understood it would not work and did it for political advantage, and stated that wage-price controls have never worked for any of the things they have been attempted to be used to do. He compared economists who propose wage-price controls to people with physics degrees proclaiming the possibility of a perpetual motion machine. He also recalled that Ronald Reagan eliminated price controls on energy in January 1981, after which energy prices spiked immediately and then went right back down because sellers returned to the market.
Price as information
Bob Zadek’s contribution to the 2022 discussion was an argument about the informational function of prices. He said that not allowing prices to reach their market level denies buyers and sellers the information they use to allocate resources and time. His illustration: a used car worth $25,000 on a functioning market that government controls permit to be sold only for $10,000. The owner will not sell, denying himself the money he values more than the car and denying a willing buyer the car; or the deal will go forward in an underground garage, in the black market, because people will find a way to perform lawful acts in the shadows if they cannot do them in the open. Zadek framed the choice as between denying people the freedom to do what they want with their time and property, and driving transactions underground.
Zadek also situated price controls in a political pattern he described as government looking for another demon when it is at fault. He said it is a standard device for government to direct public attention to a non-governmental actor and demonize it, deflecting attention from the real problem. In this instance the demon was grocery chains, and he noted that the same pattern would extend beyond grocery stores in the episode. He described the appeal of price controls as the governmental fallback: prices are too high, so by governmental fiat we will lower them, case closed.
The administrative state and the knowledge problem
The 2020 episode with Professor Richard Epstein on his book The Dubious Morality of the Modern Administrative State lists price controls among its topics, alongside the administrative state, the nondelegation doctrine, the New Deal, progressivism, labor law, the EPA and the knowledge problem The Dubious Morality of the Modern Administrative State (2020). The excerpt for that episode consists of a topic list and speaker identification rather than argument, so it establishes only that price controls were among the subjects discussed in connection with the erosion of the nondelegation doctrine and the economic consequences of centralized regulation, and that Epstein is identified as a professor of law at NYU and a senior fellow at the Hoover Institution.
The inflation diagnosis behind the controls debate
The 2022 episode’s treatment of price controls is embedded in a longer discussion of inflation’s causes. Boudreaux defined inflation as a reduction in the purchasing power of the money unit, caused by an increase in purchasing power beyond the increase in the amount of things to buy, which he said nearly always happens when government injects more purchasing power into the economy. He described the preceding two years as an unprecedented injection of purchasing power combined with a government-engineered obstruction of production, and said the inevitable result was rising prices. He explained that prices do not all rise at once: money is injected at particular points, those who spend it first buy at low prices, and the rise in prices is staggered, with wages usually lagging behind prices, so workers are made worse off for a time. He added that inflation creates uncertainty because entrepreneurs cannot tell whether a rise in the price of apples relative to pears reflects consumer demand or merely the uneven arrival of inflation, and that this uncertainty stymies investment and risk-taking. He cited Friedman’s statement that inflation is always and everywhere a monetary phenomenon.
This diagnosis is what makes price controls, in the episode’s framing, a category error: the controls address the symptom while the injection of purchasing power continues. Boudreaux applied the same reasoning to Elizabeth Warren’s attribution of rising grocery prices to greed and monopolization, which he called absurd, noting the competition among Amazon, Walmart, Target, Kroger, Trader Joe’s and Whole Foods, and saying that people do not spend greed units but dollars. Zadek observed that grocery prices in real terms had never been lower, and Boudreaux agreed, saying the amount of time ordinary Americans had to work to buy a pound of potatoes or broccoli or cans of green beans had shrunk for decades leading up to COVID.
Across episodes: the same question in different settings
The excerpts show price controls treated in two distinct registers rather than a developing argument. Hodgson in 2017 describes controls as an existing feature of a collapsing economy, one item in a list that includes confiscation, the destruction of property rights and mass emigration. Boudreaux and Zadek in 2022 treat controls as a proposed remedy for American inflation, and their objections are analytical and historical: the thermostat analogy, the used-car illustration, the Nixon freeze, the Reagan decontrol. Epstein’s 2020 episode touches the topic only in its topic list. No speaker in a later episode responds to or revises an earlier one; the Venezuela discussion and the American discussion do not engage each other, though Hodgson’s citation of Hornberger’s remark that the real free market is the black market and Zadek’s prediction that controlled transactions will move to underground garages arrive at the same observation from opposite directions.
What the sources do not cover
The excerpts do not describe the statutory basis of any price control program, the name of any bill, or the holding of any case. They do not state the outcome of the Nixon freeze beyond Boudreaux’s characterization of it as a failure, nor do they give figures for its duration or scope. The Venezuela excerpt ends mid-sentence in a section on the flight of the middle class, and the 2022 excerpt breaks off mid-sentence in Boudreaux’s closing remark, so the conclusions of those passages are not available. The Epstein episode excerpt contains no argument about price controls at all, only a topic list.