Kamalanomics skips Econ 101 and doesn’t come to close to reality

Vice President Kamala Harris has enjoyed a strong first month as the presumptive Democratic Party nominee for the 2024 presidential race. The advantage of not having to campaign through a primary and compete against other members of her party around policies, issues and ideas is that there is less to criticize. The media has not asked her a lot about her stances, vision and philosophy, and candidate Harris has been less forthcoming thus far than in her 2019-2020 campaign in which explicit advocacy for a single-payer health care system, the Green New Deal, and the banning of fracking proved to be tough positions to defend with the public. 

There are more than just political reasons for wanting to know the policy vision of a given candidate. Various ideas and proposals may be popular with some in the public, or they may be problematic and give the Trump campaign fodder, but those political risks and opportunities are less important than just understanding what a candidate stands for.  

And while there is some obfuscation involved when a candidate who previously led the charge in high-profile issues now claims through spokespeople to have reversed course, there is no obfuscation on new and fresh policies presented. We finally received the beginning of a policy vision last week with a couple distinct policy ideas candidate Harris announced. 

VP DEBATE MODERATOR PREVIEWS WHY TRUMP IS ‘WRONG’ ON KAMALA’S PRICE CONTROL ATTACKS

It does need to be pointed out what was not yet presented: Any vision for tax policy, government spending, deficit reduction or entitlement reform. Defenders of candidate Harris could easily point out that candidate former President Donald Trump has also declined to offer any specifics around these categories, but for those who believe that the most significant economic issues facing the nation involve the national debt, entitlement reform and the need for greater economic growth, it is surprising that neither candidate has addressed any of these issues even superficially, let alone substantively.  

Here is what was presented in the vice president’s North Carolina address last week: 

• A ban on “price gouging” for groceries and food.
• A $25,000 subsidy for first-time homebuyers.
• A $6,000 child tax credit for the first year of a baby’s life.
• A governmentally imposed cap on prescription drug costs.

It is that top proposal that garnered the most attention, and actually generated stern rebukes from even far-left media outlets like the Washington Post and CNN. And for good reason, as a blank-check authorization to the Federal Trade Commission to impose large fines on grocery stores when they arbitrarily deem prices to be “excessive” represents an expansion of the regulatory state that would be considered incomprehensible in American history and tradition.  

Price controls have been tried before, and the results have been consistent, clear and counterproductive. Rather than help facilitate sustainably low and competitive prices, price controls disincentivize the production that is needed to reset prices, to clear the market, and to match supply and demand at the competitive crux where prices are always set.  

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The idea of unelected bureaucrats telling grocery stores where to set prices, and even more Orwellian, punishing them for where they do set prices, is outrageous in terms of the basic freedoms and protections generally taken for granted in the American economy. But from an Economics 101 perspective, it mistakenly operates from the viewpoint that prices can be imposed to begin with, as opposed to discovered.  

A fair question can be asked if one believes a federal commission setting prices for food and groceries is even modestly acceptable, let alone optimal: Why in the world would this optimal process be limited to just food and groceries? If some form of justice, as well as economic equilibrium, can be found inside the walls of the Federal Trade Commission, why not extend this power and giftedness to all consumer products, and while we’re at it, all wholesale products?  

Price controls have been tried before, and the results have been consistent, clear and counterproductive. Rather than help facilitate sustainably low and competitive prices, price controls disincentivize the production that is needed to reset prices, to clear the market, and to match supply and demand at the competitive crux where prices are always set.  

This is not merely an argument, though, for some limiting principle: The rhetorical question is to undermine the argument for the first claim. No one believes the government can or should set prices on all products because no one believes the government can or should set prices on any products.  

Prices are set by the matching of buyers and sellers who freely exchange. The axes of supply and demand are met, human preferences are measured, time and place circumstances are weighed, and price discovery is borne. It is the fundamental miracle of the free market.  

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Prices convey the information necessary to producers to do economic calculations, to adjust accordingly, and yes, to compete. “Excessive” prices are never sustainable for the very reason that self-interest works so well – there is too much money to be made in not charging excessive prices! Capturing market share, expanding the customer base, and all sorts of profit-making opportunity awaits the greedy capitalist who charges less than his or her competitor.  

This is Economics 101. And it is the course clearly lacking in what we have seen so far from Kamalanomics.