I & I Editorial BoardWe’re finally getting some inkling of what the Democrats’ anointed presidential candidate Kamala Harris has in store for Americans when it comes to the economy. It’s not good. Indeed, it’s a disaster in the making, one that would set the U.S. economy back decades, destroy businesses, create shortages and lead to even higher prices.
Harris has a big problem. She’s the No. 2 official in an administration that many economists consider the worst in decades. How do you escape that? Of course, you deny it’s your fault, then promise radical, unworkable new policies to replace the old failed ones. The ol’ switcheroo.
“Harris won’t say it this bluntly in public,” left-leaning Axios reported, “but her advisers do so privately: She wants to break with Biden on issues on which he’s unpopular. First up: rising prices. This is part of a highly choreographed effort to define herself — in some cases, redefine herself — as a different kind of Democrat.”
Well, she’s not too “different,” if by that you mean replacing obviously failed economic policies with even worse ones. Democrats do it all the time.
What remains of the Biden administration is in no mood to accommodate the fantasy of her non-involvement. Biden spokeswoman Karine Jean-Pierre, as Gateway Pundit’s Christina Laila pointed out, “threw Kamala Harris under the bus and said she is indeed responsible for the inflation crisis.”
So how does Harris plan to avoid blame for the economic pain most Americans feel is due to Bidenomics?
By coming up with even worse solutions to the inflation problem that has left millions of Americans worse off than they were four years ago.
Harris now proposes a “first-ever federal ban on price gouging on food and groceries — setting clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries.”
Worse, as Fox News reports, “The proposal would give authority to the Federal Trade Commission and state attorneys general to impose harsh penalties on companies for setting excessively high prices.”
For those of a certain age, this is reminiscent of the 1970s, when both parties went in for wage and price controls to control inflation. They failed miserably, leading to rationing, higher prices and shortages, making the ’70s one of the worst decades in U.S. economic history.
Just what we need: Law-abiding companies — struggling with soaring labor and product costs, not to mention massive increases in theft as leftist attorneys general stop punishing crime — being scapegoated again for far-left Democrats’ repeated policy failures.
There’s one major reason for this inflationary mess: The Democrats’ utterly unnecessary $5 trillion spending binge during the COVID economic lockdown, massive supply-chain disruptions, plus the $1.2 trillion “Inflation Reduction Act.” Taken together, they injected trillions of dollars into a shrunken economy. The inevitable result: inflation, as more money chased fewer goods.
It had nothing at all to do with “corporate consolidation in the market.” It had everything to do with the Biden-Harris administration’s economic incompetence, on full display again with Harris’ plan to control grocery store prices and give first-time homebuyers up to $25,000 to buy a house and to spend $40 billion on “innovative housing construction,” whatever that is.
Problem is, grocery stores are not “price gouging.” Indeed, the average profit margin in the supermarket trade is around 1.2%, give or take a couple of points. To accuse store chains of gouging is a lie, straight up, as the chart below shows.
Price gouging? Absolutely insane.
So what happens if price controls do go into effect? Overnight, shortages will emerge, followed shortly by a black market. Stores cannot continue to sell products they lose money on. They’ll go out of business.
After price controls, inflation doesn’t go away. It gets worse, as formerly profitable enterprises go bankrupt and the supply of goods shrinks. Less supply = higher prices.
Someone reading this somewhere is thinking, “this is just right-wing (or libertarian) propaganda. By forcing stores to charge less, inflation will go down.”
In fact, almost all economists, left and right, disagree with that.
The World Bank, in a 2020 paper argued: “Although they are sometimes used as a tool for social policy, price controls can dampen investment and growth, worsen poverty outcomes, cause countries to incur heavy fiscal burdens, and complicate the effective conduct of monetary policy.”
Meanwhile, a recent Federal Reserve Bank of St. Louis paper, “Why Price Controls Should Stay in the History Books,” summed up the U.S. experience: “(E)conomic theory and analysis of history show that broad price controls would be costly and of limited effectiveness.”
If anything, that’s an understatement.
Even the Washington Post has thoroughly (and correctly) bashed Harris’ idea: “It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.”
There are lots of other bad ideas in Kamala Harris’ plan, and we’ll deal with those later, one by one. Suffice to say, forcing price controls on private companies is the worst anti-inflationary strategy possible. The big question is, does the Democratic Party ever learn anything from its disasters?
— Written by the I&I Editorial Board
In answer to your question — no, Democrats do not learn from prior experience. In describing the Mariel boatlift of mid-1980, Alexander Billy and Micheal Packard say
“we find the phenomenon comparatively increased property crime and murder rates; we also document weaker but suggestive relative growth in violent crime. Compositional features of the newcomers partially drive results; the disproportionately young, male Cubans’ characteristics highly correlate with illicit activity. However, the degree of prior incarceration and psychiatric institutionalization likely explains the majority of the observed effects.”
Now Biden-Harris repeat this experiment at larger scale with an open border with results to match. Who could have known?
Responding to the final question: Yes, they do. Unfortunately, what they learn is that they think they did the right thing by everybody, and they continue down the wrong path. Or as Rush Limbaugh used to describe it, “They are going down the dirt road of disinformation.”
It is difficult not to be ad hominem when describing Kamala’s projected policies. In this case, because of Kamala’s nearsighted belief that our inflation is due to “price gouging” (rather than due to the inflation her Administration and Senate votes created). So now she is willing to punish us all even more.
All her idea of price control will do is the identical thing to what rent control has done (in NY and in San Francisco). Rent control led to higher prices in rents because the supply of apartment houses was diminished. Less supply (especially when demand remains the same or increases-due to population growth) will lead to higher prices.
We are in the nether days of the USA-and if Kamala is voted in then these nether times are going to lead into a more pronounced trajectory: Into the destruction of American Culture, Capitalism, Society and Success. And democracy!
It is ironic that the person who damns President Trump as the “threat and destroyer of democracy” is the very same one who seems determined to destroy (with her foolish, demagogic prescriptions) democracy in America.