Recently presumed Democratic presidential candidate Kamal Harris said she recognizes consumers are hurting because of high grocery prices. She says if elected she will pass legislation to limit the amount of price increases. She says this is necessary because corporations are price gouging.

Since January 2021, when the Biden-Harris administration was sworn into office, prices for all goods and services have increased 22%. Many grocery items have fared much worse. Eggs and margarine, for instance, have increased by 54%. She will stop these large price increases by making them illegal.

Harris throws around the term price gouging. The common definition for price gouging is raising prices to an unfair level. The real definition says price gouging occurs when the market price of a product is higher than someone thinks it should be.

Corporations set prices based on their cost of production and the demand for the product. As long as the resulting price yields a profit high enough to justify the investment, the product is made. When their costs increase, they must raise prices to maintain profit margins. Without adequate profit, corporations will simply not produce.

The inflation experienced since 2021 is due primarily to three things: rising energy costs, rising labor costs and excess demand. The inflation, in total, is not due to supply shortages. Why?

The economy completely shut down in March 2020 due to the pandemic. By July 2021, the economy, in total, was producing at the same level as before the pandemic. While specific markets, like computer chips, may have experienced shortages, we did not have a supply problem in total.

Kamala does not want to reduce inflation by examining the causes. Rather, she wants to reduce inflation through legislation. Not only won’t this work — it will make the problem worse. History shows this.

In 1971, oil-producing nations which had formed a cartel in 1960, decided to restrict the supply of oil. By doing this, oil prices skyrocketed. That meant consumers were paying more for gasoline. Prices rose rapidly and there was no end in sight.

On August 15, 1971, President Nixon said, “I am today ordering a freeze on all prices and wages.” That meant gasoline prices could not increase.

Holding the price down discouraged producers from supplying more gasoline. At the same time, the below-market price meant consumers would buy more gasoline. The result of less supply and more demand was that there was a shortage of gasoline. To help with the shortage, the U.S. government rationed gasoline by restricting the days that a consumer could purchase gas.

When the price freeze ended, gas prices saw a large increase, but the shortage was illuminated. This should serve as an example to Kamala as to why price controls are a bad idea. They will always lead to shortages, and after the controls are lifted, prices will soar.

She will probably try to tackle the shrinkflation issue. This occurs when production costs have increased, but consumers are reluctant to pay higher prices. To maintain profit margins, corporations are forced to offer smaller quantities at the same price.

This has happened with ice cream. Ice cream, traditionally sold as a half gallon (64 ounces) for, say, $6 is now sold in a 52 ounce package for $6. This is not because corporations are greedy by rather because corporations must maintain profit margins.

Instead of attacking corporations and fouling up markets, Kamala should propose policies that will reduce inflation. That means energy costs must fall. Instead, she is proposing actions that will limit the supply of energy, which will drive prices up.

She is offering programs to help households pay for childcare, healthcare and to buy houses. Those programs may appear to be helping some people, but they will make the inflation problem worse. Those programs will increase demand while doing nothing to increase supply.

Besides, those programs are all taking money away from people who earned it and giving it to people who for whatever reason have not earned it. That can’t be a good idea.

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Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.