The Colorado House has advanced a bill to bar companies from using personal data to set individualized wages and prices.

As The Gazette reports, House Bill 26-1210 is a reincarnated version of a similar proposal that failed last year. It’s yet another import by some of the Capitol’s majority Democrats of legislation adopted or under consideration in about a dozen other Democratic-ruled states.

The bill’s progressive proponents allege algorithm-driven business practices must be regulated to prevent “economic exploitation” and “gamified pricing.”

Not so fast.

Regulating “data-driven pricing” is merely a modern manifestation of price controls that restrict how wages and prices are set — a policy that has failed for thousands of years.

From Roman Emperor Diocletian’s “Edict on Maximum Prices” — which capped prices on more than 1,000 goods in 301 A.D. — to President Richard Nixon’s wage and price controls, governments have proven time and again that interfering with price-setting makes businesses and consumers worse off.

As economist Milton Friedman put it, price controls are “an alleged cure for inflation” that is “far worse than the disease because its effect is to repress the system (and) the consequences of the more basic force.”

Although HB 26-1210 doesn’t outright cap prices, it dictates how they are set by limiting information that can help set them — undermining the same market forces that price controls always distort.

“The market dictates prices and wages, not algorithms,” the Bell Policy Center’s Joshua Mantell told The Gazette. Mantell insists the bill would restore supply and demand in determining pricing. 

Yet, attempting to restrict price-setting algorithms will do the opposite — separating prices from supply and demand.

Businesses are likely to allocate resources less efficiently while customers receive fewer discounts or targeted offers. Meanwhile, the goods or services they want will be harder to come by. When demand rises and supply is limited, prices go up.

HB 26-1210 also ignores the market’s checks and balances. If prices or wages become truly exploitative, customers won’t return and competitors will win them away.

Algorithms don’t change that; they’re just a new and more precise tool for assessing a lot of the same old kinds of information businesses always have tapped in setting prices.

The lawmakers behind the bill in fact are flying blind. They have no idea what factors are considered in pricing in a particular industry or how businesses might be using algorithms to do so.

A more fundamental question is whether there even is a problem that needs solving in the first place.

Co-sponsoring state Rep. Javier Mabrey, D-Denver, told The Gazette the bill will end “the use of surveillance data to figure out the maximum price you specifically will pay, or the minimum wage you specifically will accept.”

But solid evidence that “surveillance pricing” is widespread simply doesn’t exist.

As the Chamber of Progress’ Kouri Marshall told The Gazette, “No one has demonstrated that consumers are being systematically overcharged through personalized pricing.”

Mabrey claims consumer data influences ridesharing prices, offering a study that purports to show drivers were offered different prices for the “same ride” 63% of the time. Yet he doesn’t specify what kind of data is used, such as drivers’ ratings of their riders.

This bill would interfere with businesses using new software for what they’ve always done — strategic pricing — while stifling the very innovation that expands choice and cuts costs.

It freezes new software and data tools that improve efficiency and competition before even understanding their benefits and drawbacks.

Government regulation almost always lags behind technology. Intervening now risks baking in flawed assumptions and holding back innovation.

That isn’t progress. It’s hubris dressed up as consumer protection.