Nairobi — By vetoing the proposed price control laws, President Kibaki has taken a decision that must be viewed in its proper context rather than as providing the platform for a showdown between Parliament and the Executive.

The Price Control (Essential Goods) Bill passed by Parliament in June may have been well-meaning as a means of taming unscrupulous merchants.

However, as passed, the Bill was a retrogressive step. It would take us back to the old and discredited regime of government bureaucrats arbitrarily fixing the prices of goods without regard to the cost of raw materials and other production costs.

It would also provide fresh opportunity for rent-seeking by price inspectors who would scour the marketplace shaking down traders who refused to play ball as used to happen in the past.

The world long ago moved away from the regimented, State-controlled economy with all its attendant bureaucracy, inefficiency, corruption and shortages to a more liberal and flexible environment regulated by market forces.

It is true that greedy merchants have exploited Kenyans by setting unrealistically high prices for some basic commodities like maize- and wheat-flour, rice, petroleum products and sugar.

But price controls are, at best, a simplistic and populist measure that in no way addresses the real problem. The best solution would be to empower the Monopolies and Prices Commission to check unwarranted concentration of economic power, restrictive trade practices, and cartel-like behaviour.The President did not, however, reject the Bill altogether. He sent it back to Parliament with suggested amendments that would remove some of the more objectionable price control measures proposed.