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Our Eye Candy du Jour is a repeat from April 2022, the last time imposing price controls was considered. It's the Newsweek cover from November 1973, the last time price controls were imposed. And it reflects an outcome unsurprising to anyone who knows even a smattering of economics.
But price controls are Kamala's latest brainstorm. Reactions are not hard to find.
Noah Rothman weighs in: Kamala Harris's First Policy Proposal Is Economically Illiterate.
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.
It's a "gifted" link, so peruse the item in its entirety.
Even (Democrat) Noah Smith thinks Harris makes a big mistake by embracing price controls.
Price controls on food are a really terrible idea. The best-case scenario is that the controls are ineffectual but create the legal and administrative machinery for far more harmful controls in the future. The worst-case scenario is that they cause shortages of food and groceries, leading to mass hardship, exacerbating inflation, and setting America up for increased political instability.
If you want to defend Harris here, you pretty much have to assume that this is a populist proposal that she’ll eventually backtrack on once in office, or fail to get passed. After all, in the final days of his campaign, Biden floated a (very bad) proposal for national rent control — an idea he had never embraced in his presidency, and which was probably just a Hail Mary pass. But Harris explicitly said that price controls on groceries are something she’d do in her first 100 days as President, and candidates tend to be serious when they say that.
It’s also a very bad sign that Harris intends to use executive power to implement price controls. She appears to believe that the Federal Trade Commission can impose penalties on companies that “price gouge” — i.e., that raise their prices more than the administration believes is warranted. I am not a lawyer, but the idea that the FTC can go in and simply tell a Kroger’s in Michigan what price to charge for eggs seems like a vast expansion of the agency’s powers.
As pointed out Wednesday, Tim Walz's "Mind your own damn business" slogan doesn't apply … to anything except abortion.
Harvard econ prof Greg Mankiw says: Kamala Harris...sigh.
I plan to vote for Kamala Harris. Why? Simply because she is not Donald Trump. In my judgment, Trump is (1) an authoritarian narcissist whose rhetoric is mean-spirited and untethered from reality and (2) an isolationist with wrong-headed views on trade and immigration and downright scary views on national security issues like NATO, Ukraine, and Taiwan.
But every time Harris says something specific about economic policy, she makes my voting for her more painful. For example: No taxes on tips, stricter rules against price gouging, expanded price controls on pharmaceuticals.
You want to say, between gasps and sputters: "But Greg, 'Not Donald Trump' is a very low bar, and a piss-poor reason to vote for someone."
Nick Catoggio considers that choice as well: The Lesser of Two Weasels (Dispatch paywall).
The vice president’s response to public angst over inflation will reportedly be a proposed federal ban on “corporate price-gouging” of food and groceries. That’s terrible policy, as is usually the case when government starts fiddling with the profit margins of private enterprises. If a business’ costs increase while its revenue is artificially suppressed, guess what happens.
It’s also dishonest. “Corporate price-gouging” isn’t why Americans have struggled for three years with the cost of living. Supply-chain problems caused by pandemic shutdowns combined with trillions of dollars in federal stimulus—some of it approved by the Biden-Harris administration—left too much money chasing too few goods. Demagoguery about corporate greed is Harris’ cynical attempt to shift blame away from herself and onto a familiar scapegoat.
It’s totally unserious, treating American voters like children who believe the government can lower the cost of living through the brute-force magic of imperious price controls with no ill effects. And it’ll probably work. American voters very much are children when it comes to that.
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Also of note:
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Reader, suppose you were an economic idiot. And suppose you were running for president. But I repeat myself. As Mankiw mentioned, it's not only price controls. Eric Boehm looks at a Trump proposal that Kamala has, um, adopted, but: Carving Out a Tax Cut Just for Tips Doesn't Make More Sense When Kamala Harris Does It.
Vice President Kamala Harris has followed in former President Donald Trump's footsteps by promising to eliminate income taxes on tips if she's elected. Trump, meanwhile, is already complaining that she's stolen the idea from him—although isn't it supposed to be a triumph when you convince an opposing campaign to adopt your views?
[…]
Unfortunately, this is a poorly thought-out idea no matter whose campaign is pushing it. As I wrote shortly after Trump floated this plan in June, exempting tips from income taxes would increase the deficit, create some weird economic incentives, and unfairly cut taxes for a small subset of workers while not doing much to help the majority of Americans or grow the economy.
Those things are all still true, even when the silly idea comes out of a Democratic politician's mouth. Don't buy the argument being peddled by people such as Los Angeles Times columnist Michael Hiltzik, who declared Harris' version of this plan "better" simply because she's also calling for a higher national minimum wage.
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Another bad idea embraced by both candidates… is apparently to do nothing about Social Security. At the Manhattan Institute, Chris Pope has a long article, with nice graphics, about The Overextended Retirement State. His "Executive Summary":
The welfare state is supposed to redistribute funds from times of plenty to times of need, as well as from rich to poor. That is why the nation’s most generous publicly financed benefits are reserved for seniors, who have less capacity to earn money and who face higher health-care costs, while taxes are concentrated on working-age households.
But working-age Americans, despite typically earning more income than seniors, also bear substantial child-rearing costs, have rarely paid off their mortgages, and must spend more to live near good jobs and schools. As a result, this group now has lower material standards of living than retirees: they have less living space, are more likely to go without meals or health care, are less able to pay utility bills, are more likely to live in pest-infested houses, and are more likely to live where they feel threatened by crime. This also means that families have less money to invest in their children.
The U.S.’s increasingly costly entitlements for middle-class retirees result in substantial redistribution away from young workers. If this system is not reformed soon, major tax increases on workers at all income levels will be required, which will only exacerbate redistribution away from age groups who are worst off.
You would think those present and future workers might be a little upset about that. Unfortunately, it works to neither party's partisan advantage to point it out, which means the "watchdog" media also finds it uninteresting.
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And, sadly, many liberals are too wimpy to defend themselves. Emily Chamlee-Wright takes a big-picture look at the ideological landscape, concentrating on The Bogus Post-Liberal Indictment of Liberalism. An interesting point:
[…] PLI [Post-liberal intelligentsia] critiques often deploy freeze-frame storytelling. These freeze-frame narratives point to something bad happening in the world, tie that bad thing to liberalism’s fondness for individual liberty, and then propose a top-down fix (if they propose a fix at all). Because liberalism is the supposed cause of the problem, the audience is expected to set aside any liberal squeamishness they may harbor, such as concerns about individual rights, constitutional restraint, or market-based reasoning, as the PLI elect impose their conception of the common good.
Freeze-frame narratives are effective in the sense that they put any honest defender of the liberal project into a position of having to concede that (a) problems exist, and (b) solutions can be elusive. But where we agree that a problem does in fact exist, rather than responding apologetically or defensively, liberals ought to ask, “In which system will we have the best prospects of solving the problem?” Freeze-frame storytelling, intentionally or not, has the effect of foreclosing this line of questioning, and keeps us from understanding liberalism as a system that fosters learning.
The liberal promise is not that bad stuff doesn’t happen. Liberalism doesn’t promise that there won’t be economic or social disruption. What it promises is that with liberal norms and institutions in place, free people tend to find solutions. But when we reject liberal principles, workable solutions are much less likely to be found.
Which is a good excuse to look up this old song:
If you're like me, the only lyrics you remember from that song are "Freeze-frame (freeze-frame) Freeze-frame (freeze-frame) Freeze-frame (freeze-frame) Freeze-frame, now freeze."
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