To Fight Inflation, Jamaal Bowman Says We Need Price Controls
Driven by inflation, the prices of basic goods are spiraling out of control. The Fed’s solution of raising interest rates will hurt average workers. Rep. Jamaal Bowman is proposing a better solution: price controls.
This summer, Rep. Jamaal Bowman (D-NY) introduced the Emergency Price Stabilization Act to address inflation through targeted price controls and investment in production. (Drew Angerer / Getty Images)
Brooklyn resident Jimmy McMillan made a crucial contribution to American politics with six simple words in 2010: “The rent is too damn high.” McMillan’s party — the aptly named Rent is Too Damn High Party — never won its mayoral or gubernatorial bids over a decade ago. But the phrase, which McMillan shouted from a bullhorn on many a New York City street corner, caught on, because the rent is, indeed, too damn high.
With inflation on the rise, the situation has grown damn more dire. According to Homes Guarantee, a campaign of People’s Action, rents rose over 14 percent year over year in June, compared to 2 to 3 percent increases before the pandemic. June 2022 saw the biggest one-month increase in rents since 1986.
You could adapt McMillan’s phrase for the rest of the basic goods. The groceries are too damn high. The gas is too damn high. The utilities are too damn high. That’s because working people are being slammed by inflation. According to a recent survey from LendingTree, “40% of Americans say they’re less able to afford their bills than a year ago,” and “62% of Americans struggle to afford at least one bill.” Over half of those surveyed overdrew their account to pay a bill, and a third have paid a bill late in the past six months. Not surprisingly, inflation — at a four-decade high — tops the list of concerns among people living in the United States.
“In my district and across the country, people simply cannot afford to live,” Congressman Jamaal Bowman (NY-16) said in a statement this summer. “From impossible rents and utility bills to soaring costs for food, health care, and other necessities of life, people in America are being crushed by the burden of high prices and wages that can’t keep pace.”
Bowman thinks the federal government should do something about it — something other than leave it to the Federal Reserve to employ its current anti-worker approach.
The Fed has been steadily raising interest rates all year with the aim of “slowing the economy down,” a euphemism for driving up the rate of unemployment, with an eye toward eventually lowering demand for goods and services. So this summer, Bowman introduced the Emergency Price Stabilization Act to address inflation through targeted price controls and investment in production.
These tools, he argues, are much more effective and equitable than the Federal Reserve’s modus operandi of fighting inflation “on the backs of everyday people” — particularly at a moment when landlords and corporations are taking advantage of an inflationary crisis to engage in price gouging.
“Business as usual is not delivering the basic things that everyone in a democracy should expect: a good job, a decent standard of living, financial security,” Representative Bowman told me over email:
That failure is by design. So we already needed to be talking about a new economic blueprint — and it’s especially important in a time of overlapping emergencies, when the ruling class is often able to exploit the situation to increase their profits.
Bowman’s bill would create a sub–task force to monitor and analyze price changes, investigate corporate profiteering and price gouging, and make actionable recommendations for regulating prices, which the bill grants the president temporary powers to implement. It also calls for public mobilization to aid in monitoring and regulating prices through websites, digital resources, and the establishment of volunteer networks.
The bill has nineteen cosponsors in the House of Representatives to date and a growing list of endorsing unions and grassroots organizations, including the AFL-CIO, the Service Employees International Union, International Brotherhood of Teamsters, National Nurses United, Food & Water Watch, Homes Guarantee Campaign, Working Families Party, and the Sunrise Movement. The dozens of endorsing unions and organizations provide a “powerful indication of the potential coalition we could have behind a price controls effort,” Rajiv Sicora, Representative Bowman’s senior policy adviser, told me.
“We’re living through extraordinary times,” Sicora explained. Yet in Washington, policymakers “still seem content to let the Federal Reserve do whatever it wants. There’s been very little critical discussion in Congress about the fact that we could have a much more fundamentally democratic response.”
Price Controls Can Work
At times in US history, price controls have been widely accepted as an effective response to inflation. During World War II, President Franklin Delano Roosevelt’s administration employed 160,000 federal employees in the Office of Price Administration to control prices on goods across the economy — “from scrap steel to shoes to milk,” according to political scientist Todd Tucker. Roosevelt’s Emergency Price Control Act also included strong provisions for national rent control and restrictions on the ability of landlords to evict tenants.
A less thoroughgoing and ultimately ineffectual attempt at price controls was made by Richard Nixon in the 1970s (and carried out by no less than Dick Cheney and Donald Rumsfeld, seemingly with the purpose of showing that price controls couldn’t work). But there are present-day examples of price controls in specific sectors — water and electric utilities, rent regulations in places like New York City, or the federal government’s recent provision of free COVID vaccines — in which the state directly negotiated prices with companies and delivered them to US residents for free.
But widespread price controls have fallen out of favor in mainstream discussion over the last few decades.
“Economic discourse has calcified in some ways,” Tara Raghuveer, housing campaign director at People’s Action, told me. “I think our imagination is increasingly limited about the role of the government.”
Instead, conventional wisdom assumes that the only tool at the government’s disposal is that of the Federal Reserve raising interest rates and with them the prospects of high unemployment and a recession.
“I don’t think that there’s enough public awareness,” Sicora argued, “of the stakes of letting unelected technocrats at the Federal Reserve decide whether we’re going to let wages keep rising or not.”
In the case of housing, increasing interest rates has the impact of driving prices even higher. Buying a home is put further out of reach for working people with high rates for mortgages. And as Raghuveer pointed out, by “forcing would-be homebuyers out of that market and keeping them in the market as renters, this puts an upward pressure on the price of rent, too.”
In contrast, policies like rent control and restrictions on evictions, like those that were employed in the 1940s, on top of an expansion of the affordable housing stock, would provide much-needed immediate relief. In the long term, they can also be paired with investment to build more public housing in order to shore up supply.
When it comes to food prices, the Federal Reserve’s strategy of raising interest rates is tantamount to “starving people in order to reduce the demand for food,” according to Mitch Jones, managing director of advocacy and policy at Food & Water Watch:
Food should be an inelastic market. People need to eat. Otherwise what ultimately changes is that some people can afford to eat. Some people reduce what they can eat. And some people eat less healthily in order to accommodate more expensive prices.
Economists, including those on the Left, have pointed out that price controls require a more sophisticated approach than the Fed’s simple and blunt tool of raising interest rates. But that doesn’t make them unnecessary. And Bowman’s bill smartly incorporates analysis and investigation to determine which targeted price controls can best reduce price volatility and how to most effectively implement those controls. The bill requires an extensive review of existing governmental authorities to regulate prices, in addition to granting new presidential authorities. It also pairs price controls with investment in production where government support could help to untangle specific supply chain stoppages.
In the long term, the policies contained within Bowman’s bill can develop the administrative capacities of the government to engage in more democratic economic planning. As Sicora put it, “One objection to price controls is that they’re hard to do, and that our government has lost the capacity to do that kind of economic planning. This bill allows us to start rebuilding that capacity.”
“During and after WWII,” Bowman explained to me,
when labor unions, women’s groups, and consumer activists came together and fought for the Office of Price Administration, they talked about it as a form of democratic control over our economy: it was a grassroots check on profit-making and a way of helping to steer investment, to make sure everyone had what they needed. Their opponents were terrified of how popular the agency was. We need that kind of democratic mobilization to guide our economy today.
Legislation as an Organizing Tool
Given Congress’s current composition, it’s unlikely that the Emergency Price Stabilization Act will quickly pass. Nevertheless, both Bowman’s office and the unions and organizations that back the bill see ongoing opportunities to build support for the legislation and for specific pro-worker policies contained within it. The congressman’s office incorporated input from endorsing organizations and economic experts when it drafted the bill. Now it’s working collaboratively with those groups and unions to advance the bill and specific price regulations around rent, food, and utilities.
The Homes Guarantee campaign sent a memo to the administration outlining the executive actions and agency actions that the administration could pursue to regulate rent prices. Raghuveer told me that it’s organized meetings between tenants and the White House administration and has had discussions with the National Economic Council and the HUD secretary:
We’ve done all the things that are within our purview from the outside to push for more meaningful action from the White House. We know that it’s more likely to be responsive when that kind of pressure is not just coming from outside groups but also coming from elected leaders like those who are in Congress.
National Nurses United’s political director, Kenneth Zinn, thinks that Bowman’s bill “should be seen as part of a bigger, multifaceted effort to call attention to these big systemic issues.” He explained: “That’s all for the good if you combine those efforts with the Medicare for All movement. Then we actually have a chance to deal frontally with the health care prices’ spiraling.”
The United Electrical, Radio and Machine Workers of America (UE), another supporter of the bill, has instituted a national education campaign around the issue of inflation. Kari Thompson, the union’s education director, has been running workshops for the union titled “Inflation: Why It’s Here and How to Fix It Without Losing Jobs.”
The goal, she told me, “is to change how people are talking about inflation. There were real losses during the pandemic, and the question is who pays for them.”
Shifting the discourse has practical implications for organizing efforts. UE members are thinking a lot about inflation, Thompson explained, but they’re also thinking about it
on the other end of things, in terms of what we negotiate for. We have had some pretty good contract settlements with wage increases over the past year that are higher than folks are used to seeing. But if you run the numbers, they don’t actually keep pace with what inflation is this year.
Bowman’s bill, many of its supporters expressed to me, could provide an organizing opportunity and present an alternative narrative about inflation. More than that, it pushes the envelope on what we should be demanding. Inflation has been used as a political weapon to beat back desperately needed public spending (as we saw with the transformation of Build Back Better into the Inflation Reduction Act). The Left needs to put forward an alternative economic path.
“It’s really easy to say that things are bad,” Thompson said. “And it’s so much harder to have an alternative. Bowman’s bill offers that alternative. There’s a better way to challenge the price changes that people are experiencing right now.”