Basic Economics Is for Losers

By Noah Rothman

Tuesday, September 03, 2024

 

When it comes to the scourge of “price-gouging,” Kamala Harris is on an island. Save the usual suspects such as Paul Krugman — who defended the vice president’s price-fixing scheme by insisting that it’s not really a price-fixing scheme — or professors James Galbraith and Isabella Weber — who argue that anti-price-gouging measures are necessary because firms in the sectors the vice president is targeting have (in the distant past) engaged in anticompetitive practices — it’s hard to find an economist on Harris’s side.

 

Ryan Sweet, the chief U.S. economist at Oxford Economics, could attribute “very little” price instability to opportunistic companies’ “gouging.” “It just sounds to me that we’re creating even more burdensome regulations that will actually raise prices for consumers,” University of Maryland finance professor Michael Faulkender observed. “This is not sensible policy,” chairman of Barack Obama’s Council of Economic Advisers, Jason Furman, said bluntly. “The biggest hope is that it ends up being a lot of rhetoric and no reality.”

 

Team Harris could not care less. The campaign is forging ahead with the claim that all that stands between American consumers and the pre-pandemic prices they once enjoyed is “corporate greed” and that Harris will put an end to that scourge after she is installed in the White House.

 

The vice president’s latest ad, “Focused,” is devoted to that theme.

 

This 30-second spot is tailored to get significant airtime as part of what the Hill reports is “the Harris-Walz campaign’s staggering $370 million digital and TV ad reservations, set to run from Labor Day to Election Day, building on the campaign’s $90 million media blitz for the last few weeks of August.”

 

This might be an effective pitch to voters, but it’s not harmless. If this ad and its promises contribute meaningfully to a Harris victory in November, she will have won herself a mandate to pursue a disastrous policy. If she wins but declines to pursue price controls, she opens herself up to critiques from enterprising populists who will seek to peel off disaffected members of her coalition. Even if she loses, Harris will have bequeathed to us a Democratic Party in which many of its elected officials are now on the record supporting price and profit controls in the absence of any emergency save the Democratic Party’s declining electoral prospects.

 

“What this gouging does is pivot the blame from the Biden administration, which Harris was part of, to corporations,” the economist Gary Hufbauer observed. “It’s a pretty successful political argument. It has no economic basis.” Some might be tempted to forgo such a dishonest electoral tactic, but Kamala Harris is not that sort of campaigner.