Spain's Podemos pushes price caps to curb inflation

Podemos' price controls and the ghost of Diocletian

Podemos' proposal to tackle rising inflation is simple on paper: cap the prices of the shopping basket and fuel. In practice, the measure runs up against history. The Edict on Maximum Prices, the great precedent for this recipe, is usually remembered as a failure: when a state sets prices without touching the production process, supply tends to disappear.

Critics need no embellishment. If prices are capped without controlling the production chain, the likely result is empty shelves, queues and rationing. Cuba and Venezuela appear as a warning reminder. And there is an uncomfortable detail: the biggest beneficiary of price increases is the state itself through taxes, something worth keeping in mind when official discourse is full of concern for the citizen.

What can go wrong when the law sets the price

Economic theory is stubborn about price ceilings: if the price does not cover the cost, the product vanishes from the market. Defenders of intervention reply that there are exceptional situations, with inflated distribution margins, that justify the exception. But the historical precedent works against them, and the project's own keyword does not help.

Topar, according to the dictionary, means to crash, to ram, to collide. Nothing to do with the Anglicism top. The initiative, in that sense, is true to its name: it clashes with the evidence accumulated over centuries.

A plan that arrives late and badly dressed

Some dismiss the proposal for political reasons. It is argued that the party no longer has real weight and that the measure sounds more like headlines than public policy. Distrust of the plan has less to do with inflation figures than with the credibility of those who sign it.

Meanwhile, inflation continues its course. The trio formed by a real problem, a textbook solution and a history of failures rarely ends well. This time, moreover, the textbook is written in the same old letters.