By Noah Rothman
Thursday, August 15, 2024
On policy, Kamala Harris is starting to put some meat on
her campaign’s otherwise bare bones. Her earliest attempt at setting policy
involved brazenly appropriating Donald Trump’s plan to eliminate taxes on
income derived from tips, which enthused neither progressives nor anyone else who understands how
broad-based income tax relief actually works. But the vice president’s first
real effort to expound on her own economic thinking is no less vacuous. Ahead
of what her campaign is promoting as an economic policy speech on Friday, Harris
previewed her plan to reduce consumer prices. So far, it seems her plan
consists of simply ordering prices to be lower.
“Vice President Kamala Harris on Friday will call on
Congress to pass a federal ban on price gouging as part of her economic
platform to lower grocery prices and everyday costs,” Politico reported on Wednesday night. This float is
light on details, but the dispatch indicated that Harris would enforce her plan
to impose price stability on the market by decree via the Federal Trade
Commission, which would be empowered along with state attorneys general “to
investigate and levy penalties on food companies that violate the federal ban.”
That sounds a lot like a series of proposals Joe Biden outlined in his February State of the Union address, during
and after which the president attacked companies that raise prices in response
to macroeconomic conditions or attempt to meet demand by reducing the amount of
product available for the same price — what Biden deemed “shrinkflation.” You
remember that, right? Of course, you don’t! Because nothing at all came of it.
It was a rank pander to the economically illiterate. And despite the presence
of many who fit that description in the federal legislature, there are enough
members of Congress who understand that allowing the executive branch to
functionally set prices is a braindead idea that would only hurt
consumers in the long run.
Harris is, in effect, attacking high prices for being
high as though they increased in a vacuum. She is not addressing the economic
inducements that lead to upward pressure on prices. Her formulation is that of
Elizabeth Warren, who has had an outsized influence on the Biden White House’s economic
thinking. In the progressive imagination, prices increase because rapacious
corporations seek to maximize profits (a theory that has no explanatory power
when prices decline, but consistency is a hobgoblin and all that).
That’s not what inflation is. Simply put, inflation is
too much money chasing after too few goods. Rising prices are a market signal
that creates incentives for firms to meet specific demands, which is why “the
cure for high prices is high prices” is a truism. High costs (coupled with
increased borrowing rates) limit demand to meet existing supplies, creating a
cycle that eventually yields price stability. Distorting the price mechanism
may keep prices low, but it also eliminates incentives for companies to meet
demand where it exists. The result is a hopelessly dysfunctional economy
typified by artificially low prices for goods that are poorly distributed and
harder to find. By specifically targeting sectors like food production, which
operate on thin margins even in the best of times, this policy would increase
pressure on those firms to downsize. In the end, the Harris plan would yield
less opportunity for individuals and limit the prospects for economic growth.
In short, Harris’s proposal is not legislatively viable.
It, like her no-tax-on-tips plan, is a ploy to misdirect the attention of the
press away from the Biden administration-backed fiscal policies that
contributed to inflation in the first place. The odd thing about Harris’s
maneuver is that, despite his best efforts, that act of deception didn’t work
for Biden.
The swing voters who mattered most to his electoral
fortunes still blamed him for inflation, not just because he presided over the
worst bout since the 1980s. “People will continue to pay more money on everyday
expenses unless the government becomes more fiscally responsible,” read a
statement with which a staggering 71 percent of independent voters agreed in an October 2021
survey. Voters who aren’t merely observing their partisan roles understand that
fiscal policy and price stability are linked.
Still, Harris’s proposal is valuable insofar as it
exposes her pivots to the center as fraudulent and opportunistic. We
haven’t heard Harris articulate a conversion narrative that explains why she’s
now all in favor of tough border enforcement, robust domestic-energy
exploitation, the preservation of the rights of gun owners, and so on. By
contrast, some of the first words from her own lips having anything to do with
policy will be devoted to popularizing a zombified left-wing shibboleth with
one political value proposition: It just might redirect the anger consumers
experience over high prices away from the public sector and toward producers in
the private economy.
This approach bombed for Biden, but Harris seems to think
she can do the exact same thing and enjoy different results. I wish we had a
word that describes thinking that is divorced from reality.
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