Aug
19
2024

A Reading Suggestion for Kamala

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Happy surprise: Thomas Sowell's 2014 book, linked at your right, is the #1 best seller in Amazon's "Political Economy" genre. Might be a lot of people buying it for their favorite presidential candidates? Who knows?

Anyway, Harvard econ prof Greg Mankiw has a hiring suggestion for one candidate. (I assume he's realistic about asking her to … y'know … read a book.): Maybe Ms. Harris needs some economists.

The response to the rollout of Kamala Harris's economic plan, especially the price gouging regulation, has not been good.

When you lose the ever-reasonable Catherine Rampell, you should doubt whether you are positioning yourself to attract swing voters. Rampbell writes, "It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Some far-off Washington bureaucrats would....At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat."

Mankiw (who has admitted planning on voting for Kamala, because "she is not Donald Trump") has two hypotheses:

[Amazon Link]
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One is that the Harris campaign believes that the remaining persuadable swing voters are economically ignorant, so the campaign is offering them economically ignorant economic policies. Bryan Caplan's wonderful book The Myth of the Rational Voter documents a lot of mistaken beliefs among the general public, including an anti-market bias. Ms. Harris's political advisers may be steering her to pander to these mistaken beliefs,

A second hypothesis involves campaign personnel. The people I see mentioned as Harris economic advisers are Brian Deese, Gene Sperling, Mike Pyle, Deanne Millison, and Brian Nelson. All smart people, no doubt. But as far as I know, none of these people is trained as a PhD economist. They all seem to be lawyers. Maybe lawyers are more inclined to see a problem and think, "I know what new law will fix that." True economists are more respectful of the invisible hand and more worried about the unintended consequences of heavy-handed regulation.

Great minds think alike. It's only been a few days since I recommended Bryan Caplan's book, and I shall do so again.

But let's allow Kamala to speak for herself. Jeff Maurer has graciously allowed her to write a guest article for his substack, and it is worth your attention: In This Crucial Moment, America Needs a President Who Will Fiddle With the Price of Eggs a Bit.

The 21st century presents unprecedented challenges. Technology is reshaping our world at a rapid pace. Rogue countries threaten global stability. Climate change remains a test of humanity’s ingenuity and resolve. Plus: Eggs have gotten hella expensive. Have you noticed that? You can easily pay $4 for a dozen now — more if you want “free range” or “organic” or whatever. As president, I will address these challenges head-on, especially the eggs. In fact, I’m going to start with the eggs. My short term focus is on eggs — eggs are at the front of the queue. And once egg prices are under control, I’ll move on to the other stuff.

In a speech outlining my economic vision on Friday, I announced a plan to take on price gouging by food suppliers and grocery stores. Economists say that “price gouging” is a term with no definition, and they point out that grocery prices are the same relative to wages as they were before the pandemic, and that grocery store profits are actually lower than profits in other industries. But I say four dollars for eggs is utter bullshit. I mean, come on…four dollars?! At least buy a girl dinner first, Safeway! And it’s not just eggs: Bush’s baked beans are $3.49 (for the small can!), and Oreos are nearly $5.00. That is Ass Reaming City, USA. If I’m elected to the most powerful office in the world, I will get those prices down to $3 and $4, respectively, because the most solemn responsibility of a president is to relentlessly bird-dog the price of cookies and beans.

Well, you get the idea. Checking prices at Hannaford… whoa, she's right! Oreos "Family Size" packs are $4.99. Even for "Thins", which is kind of a ripoff.

But she's also wrong. Bush's baked beans aren't that bad: Hannaford charges $2.15 for a 16 oz. can. And their store-brand can is only $1.19.

Anyway, click through for the remainder of Kamala's deep thoughts.

But for a sober analysis, there's J.D. Tuccille at Reason: Kamala Harris' Dishonest and Stupid Price Control Proposal. Tell it like it is, J.D.:

Especially when it comes to groceries, it's difficult to make a case for "price gouging." A New York University Stern School of Business annual survey shows a net profit margin of 1.18 percent for retail grocery stores last year. That's down a bit from when the Biden administration took office (you can check annual data here). Kroger, the industry giant that is frequently portrayed as a greedy bogeyman, recently enjoyed a slightly higher net profit margin of 1.43 percent; over the last 15 years, its profits briefly reached as high as 3.02 percent in 2018. (The Cato Institute's Scott Lincicome does a good dive into food-industry economics on X.)

So much for Harris's deflection. But then there's her scheme for price controls to address the higher prices brought by government policy. Such controls have such a well-documented track record that they heap stupidity onto Harris's dishonesty.

"I have a stupid idea that will fail to fix the problems caused by Biden's fiscal insanity." Doesn't quite have the message you want to see in a successful political campaign.

Also of note:

  • Let's be charitable for a change. We previously noted that (Democrat) economist Noah Smith thinks Kamala's price control proposal is a "big mistake." But, in the other hand, he thinks Harris has the right idea on housing.

    Hm, really? Despite my skepticism, Smith makes a pretty good, if obvious, point here:

    Housing policy is incredibly tough in America — and in most other rich countries — because housing has to serve two functions at once. It’s both a consumption good and an investment asset. A house is a place to live, but it’s also something that’s supposed to make you wealthier over time, when its price goes up. These two objectives directly conflict — if owner-occupied housing becomes more affordable, that makes most Americans poorer.

    When I say “most Americans”, I’m not exaggerating. The homeownership rate is about two thirds, with only small fluctuations. And for middle-class Americans, most of their wealth is the value of their home:

    This fact sets up a direct and inevitable conflict between two large classes of American society: homebuyers versus homeowners. If you’re buying a house for the first time or looking to significantly upgrade, you want house prices to be as low as possible. But if you already own a home that you’re happy with, you want the price of that home to be as high as possible, so that you can make the homebuyers pay you a lot of money when you’re finally ready to sell. It’s basically a zero-sum game.

    Note: I speak as a homeowner myself.

    My default "solution" to perceived economic problems is: let the free market and property rights work.

    But, on the ground, land use regulations are one of the biggest impediments to market mechanisms. Your "property rights" extend only as far as the local zoners say they do. And (of course) they have the powers "democratically" assigned them by homeowners. Who vote, and are incredibly hostile to any construction they perceive might decrease their home values (or raise property taxes, a slightly different story).

    Smith thinks that the "right" combination of federal mandates, subsidies, incentives, regulation, taxes, etc. could be designed to break this logjam. I'm doubtful of this "fatal conceit", but at least he's honest about the problem.

  • On the LFOD watch. The Valley News editorializes about New Hampshire, where the Second Amendment trumps rights to safety and security. No surprise, it's about guns!

    Among the most remarkable displays of legislative audacity performed this year in Concord was the enactment of House Bill 1336, signed into law last month by Gov. Chris Sununu. It requires that as of Jan. 1, 2025, any private or public employer that receives federal or state money must permit employees to keep firearms in their vehicles while on their employer’s premises, so long as the vehicle is locked and the firearms are out of sight. Nor may the employer require an employee to disclose whether she has a gun in her car.

    Remarkable, how? Let us count the ways, because there’s a lot to unpack here.

    New Hampshire boasts of being the business-friendly “Live Free or Die” state, to which enterprises allegedly flock to reap the benefits of “the New Hampshire (low-tax) advantage.” It’s pretty hard to square that reputation as a bastion of corporate freedom with the actions of a nanny-state government that desires to dictate to employers how they may regulate what takes place on their own property. (The only salve for bruised employers is that the bill exempts them from civil liability for any mayhem committed with firearms stolen from employees’ vehicles.)

    I gotta admire the chutzpah it takes to assert that the F in LFOD means "freedom for employers to forbid their employees from having certain items in their cars." Whatever happened to sticking up for the little guy against his robber-baron employer?

    I will point out that my former employer concentrated their fire on a truly despised minority: people that use one form or another of nicotine; their "Tobacco-, Smoke-, and Nicotine-Free Policy" (TSN) prohibits products

    including but not limited to: cigarettes (clove cigarettes, bidis, kreteks), electronic nicotine delivery systems (ENDS, vaping), cigars and cigarillos, hookah-smoked products or any lighted or heated tobacco and nicotine products, and non-combustible tobacco and nicotine products (dip, chew, oral nicotine pouches, tobacco substitutes)

    indoors or outdoors, specifically:

    including, but not limited to, parking lots, paths, fields, sports/recreational areas, and stadiums, as well as in all personal vehicles while on campus.

    And not just employees, but also students, and "other persons on campus, regardless of the purpose for their visit."

  • Just a heads up. James Lileks has a substack, where he will provide a humorous column. It's $5/month or $50/year to subscribe, and I've done that to help keep his dog in Alpo.