Normally, when you think of price controls, you imagine some banana republic with economic malpractice. Like Argentina, where inflation is running at 140%. In yesterday's Argentine presidential election, apparently most people voted for some guy with a chain saw. He was threatening to “cut government to the bone”. His girlfriend is a nude model/online influencer. This is really true.
Biden is proposing price controls for America, even though our inflation rate doesn't yet make us the laughingstock of the northern hemisphere. Depending on who you ask, and what you look at, US inflation is either running at 4%, 8%, 20% - or impossible to calculate. Normally I'm a free market person – especially when it comes to wages, not just prices. I don't want to see wage caps (like Nixon proposed), and history shows us that price caps result in scarcity, black markets, smuggling, organized crime, and stupid plotlines for TV shows like “Law and Order – Airbnb Victims Unit”.
So why would I be IN FAVOR of Biden's price controls? Because they're more like a truth in labelling laws. He wants companies to stop ripping us off with “junk fees” that aren't disclosed at the time of the transaction. You know – like the Airlines do. Physical ticket fee, if you insist on one. Oversized carryon bag fee. Overweight bag fee. Checked luggage fee. Did you know that airlines collected nearly $7 Billion in baggage fees alone last year? That's probably more than they pay their baggage handlers. And they lose your luggage 20% of the time.
Airbnb is probably in the government's crosshairs too. The internet (Reddit in particular) is rife with horror stories about how unsuspecting customers ended up paying more than twice the advertised rental rate. Add-on fees for cleanup, laundry use, water use, parking, turning off the hidden cams in the bedroom . . .
A few years ago I worked for a bank - a big one – with thousands of branches. They got sued by the federal government. Here's the scam they were pulling: The bank would sort the customer's daily checks “high to low”, and post those BEFORE any deposits. That means that if the first check overdrew your account, the 5 others in line behind it would too – at $39 a pop in overdraft fees. THEN they would credit your deposit. The bank's legal department – in the lamest defense ever – said this was legal, or it should be, because it was all disclosed in several paragraphs of fine print on page 5 of the materials customers received when opening their account. The federal government thought this was BS. Rather than go to court, the bank agreed to an “MOU” - memorandum of understanding with the regulators. Which basically is LIKE a court order. The bank had to stop their crazy abusive practices, pay a fine, and file all sorts of special reports forever, to prove they were no longer ripping people off. And banks wonder why people hate them . . .
Transparency in pricing means things like the “Schumer Box” - that credit card disclosure that spells out the late fees, cash advance fees, return payment fees, overdraft fees, annual fees, ATM fees, currency conversion fees, and the 3 different interest rates you stumble into the moment you don't make payment in full. Imagine what life was like BEFORE senator Schumer got his bill passed for clear disclosure.
Then there's the “Monroney Sticker” on new car windows. It lists all the equipment, and prices for that equipment, on that vehicle. Because nobody wants to drive a basic car without heated and ventilated seats, which are always bundled with an 18 speaker BOSE sound system and LED fog lights. Time was, the bottom-line price on the sticker was the HIGHEST you could pay. If you had any chops, you'd talk the guy in the polyester sport coat down a bit. Now – in the post pandemic world - lots of customers end up paying a couple thousand ABOVE the sticker price. But even the dealer markup is transparently disclosed. The financing part is where you get ripped off. There are always bizarre fees for “documentation”, couriers to get your permanent tags, flat tire coverage, door ding insurance, ceramic diamond paint coating . . . you don't get to see THOSE surcharges until 5 seconds before you sign the financing agreement.
So I'm giving Biden some credit here. Go after all the Airline fees, Airbnb fees, Uber upcharges, bank fees, and possibly restaurant surcharges to pay waiters a living wage. My only other request . . . please fix the income tax system, so I don't need to spend $99 on software, and wade through 41 pages of questions and gobbledygook to find out if I was under withheld.
I'm just sayin' . . .
Biden Aims to Crack Down on Junk Fees, but Lobbyists Are Pushing Back (businessinsider.com)