Kamala Harris may want to look like she’s ‘doing something’ about the high cost of groceries, but government interference isn’t the answer.
Kamala Harris reveals economic plans for homeowners, new housing
The vice president will call for a $25,000 credit for first-time homeowners at a speech in North Carolina.
Cheddar
One of former President Donald Trump’s shticks is to come up with nicknames for his opponents. They aren’t usually complimentary.
The one he’s landed on for his new Democratic opponent in the presidential contest is “Comrade Kamala Harris.”
Trump wants to paint the vice president as a candidate who’s about as far left as one can get.
Lucky for him, Harris’ new light-on-facts blueprint for the economy, which she outlined Friday, plays right into the socialist stereotype.
There’s lots to dislike about her big-government agenda and costly ideas.
One of the worst is Harris’ proposal to impose government price controls on private-sector businesses. Democrats love to blame “greedy corporations” for all the country’s ills, but the reality is much more complicated. And if they force the government further into the private marketplace, they’ll make things much worse for Americans.
Price controls have been tried in various forms around the world for centuries. (Not to give away the suspense, but they always fail.)
Even Republican President Richard Nixon tried price controls in the 1970s to deal with high prices, but he succeeded only in making inflation worse.
Won’t we ever learn?
Harris has a ‘Bidenomics’ problem
What’s going on here is that Harris is trying mightily to deflect from the pain of high inflation during the Biden-Harris administration.
She’s also trying to deflect any blame for the administration’s role in it.
As much as Democrats have tried to make this presidential election about what a boar Trump is or how much they want to expand abortion around the United States, they can’t shake the unease voters feel over the economy and inflation.
And unfortunately for Harris, she and Biden own the current economy. They both tried to sell “Bidenomics” before realizing that wasn’t the smartest idea.
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Inflation skyrocketed after Biden and Harris took office. Some of the surge in prices was due directly to effects from the COVID-19 pandemic, but there is no doubt that their policies and continued high levels of spending fueled the problem.
Inflation has hit many sectors hard, but something we all have felt whenever we’re in the checkout line is the high cost of groceries. So that’s what Harris chose to focus on in proposing a federal ban on “price gouging” from food and grocery industries.
The rate of inflation is already slowing, including for food, because of the Federal Reserve’s decision to set high interest rates, although the effect of higher prices will stick around for a long time.
This is why price controls don’t work
Harris’ price-control plan is light on substance, so it’s helpful to look at legislation crafted in part by Democratic Sens. Bob Casey of Pennsylvania and Elizabeth Warren of Massachusetts for additional info. Harris has endorsed their proposal.
It’s true that between 2019 and 2023, food prices rose 25%, outpacing housing, medical care and other categories. Only transportation rose more.
But did prices increase because of a nefarious plot by corporations to harm their customers? No.
Even the Biden-Harris Department of Agriculture targets blame to factors outside corporations’ control, from COVID-19 market disruptions to the war in Ukraine.
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Harris may want to look like she’s “doing something,” but government interference isn’t the answer. And that is what price controls would do in practice.
“It is going to lead to shortages,” Scott Lincicome, senior fellow with the Cato Institute, told me. “It’s going to decrease investment in that area. It is going to lead to higher prices in the long term.“
“If you can’t get a good return on that investment or simply you’re gonna have to deal with the hassle of bureaucrats telling you how to run your business, you’re going to invest less or not at all in that industry,” Lincicome said. “So over time, that means less supply, that means less competition and that’s worse for consumers. And you know what? We have centuries of evidence of this.”
Biden has also floated a price-capping plan of his own, which Harris supports. Last month, he announced a proposal to limit rent increases by landlords.
Yet, just like price controls, rent caps lead to housing shortages and other problems and are denounced by a wide array of economists. Even a former top economic adviser for President Barack Obama told The Washington Post: “Rent control has been about as disgraced as any economic policy in the tool kit.”
Free market trumps the government every time
Harris’ price-control plan may not be communism-lite. Even so, it’s a bad idea, and it’s concerning that it was one of her first major policy proposals.
“You don’t have to call it communism,” Lincicome said. “I mean, it’s just bad economic policy.”
Policymakers and bureaucrats will never be the best judges of what the right price is. That’s much better left to the free market. If you don’t believe me, look at how great things are going in socialist countries like Venezuela, where the government controls everything and there are constant food shortages.
“It’s the pretense of the kind of central planners who ran the Soviet Union’s economy for decades,” write First Trust economists Brian Wesbury and Robert Stein of Harris’ plan.
Harris is looking for catchy sound bites, but price controls are dangerous. She should have left them in the failed-ideas vault.
Ingrid Jacques is a columnist at USA TODAY. Contact her at ijacques@usatoday.com or on X, formerly Twitter: @Ingrid_Jacques.
