Price control, bad idea

In the same absurd way in which the government of Andrés Manuel López Obrador decides to sacrifice tens of billions of pesos in public revenue because energy prices rise in the world, in the same way it is about to embark on a path that leads to the scarcity of basic products with that of wanting to control food prices, which also rise due to external circumstances.

The vast majority of Mexicans today have no idea what it is like to experience first-hand the ravages caused by price controls.

What this country does still have is a majority of citizens who remain hypnotized by the speech of Andrés Manuel López Obrador, who is very aware of how the presidents of the PRI had total political control in the last century, such as protectionist and populist measures.

So, there are a few who remember that when there was price control in Mexico, on the store shelves there were few alternatives to choose from and on many occasions there was a shortage of many products. But there are many who believe that if López Obrador says so, then it is a good idea to control prices.

If tax revenues are lost by subsidizing gasoline and now they want to control food prices, which are not set in Mexico either, it is because the 4T does not want inflation to affect the presidential image and that its political party does not suffer an electoral punishment. And it will be at any cost.

This is what the populist governments of the 70s and 80s of the last century did and the only thing they achieved was a crisis that lasted several generations.

Proposing price caps under the current circumstances would be a mistake that would quickly take its toll on this very government.

You may not know it in Q4, but there is an invasion underway in Europe, a conflict between two of the world’s largest grain producers. Perhaps less will have noticed that the prices of wheat, for example, had an initial impact of rising 100% in its price and that right now it accumulates a 30% increase in two months.

And ask the Bank of Mexico why wheat imports increased 60% last year and corn imports almost 70%. So, wanting to play price control against international benchmarks and when there is such dependence on imports is something, to say the least, not very intelligent.

Someone from the governing team must be clear about the devastating effect on the economy, on consumption, of setting controlled prices on products that are imported and set at international prices. With one who knows and can tell the President is enough.

But, if with all this information the control of food prices is insisted on, then we must prepare ourselves for a scenario that we have not seen in this country in almost 50 years. But let it be clear that the responsibility will have name and surname.

Back to the past

Error

Proposing price caps under the current circumstances would be a mistake that would quickly take its toll on this very government.

Crisis

The populist governments of the 70s and 80s of the last century implemented price controls that generated a crisis.

external cause

The rise in prices is an international phenomenon, the United States and Europe face the highest inflation in four and three decades.

War

Russia and Ukraine, which are leading the conflict in Europe, are major grain producers, production is at risk.

Memory

Very few remember that when there was price control in Mexico, there was a shortage of many products.

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