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Kamala Harris backs price controls that would lead to food shortages rather than fixing the inflation she helped cause

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August 15, 2024

Kamala Harris backs price controls that would lead to food shortages rather than fixing the inflation she helped cause

by Hans Bader
LibertyUnyielding.com




In the 1970s, Kamala Harris’s father, a Marxist economist, advised Jamaica’s government to adopt price controls for food. The result was food shortages and people waiting in long lines for scarce food.

Kamala Harris is now backing price caps for food and groceries in the U.S., which could have the same harmful effect. She’s doing it as a way of deflecting blame for rising inflation under President Biden, which drove up grocery prices. As journalist Guy Benson notes, Harris “cast tie-breaking votes for the inflationary Biden-Harris agenda — and advocated for trillions in *additional* spending. She owns all of it, and then some.”

Grocery prices went up due to inflation under Joe Biden, not greedy grocery stores. Grocery stores’ profit is so small that even if they made no profit at all, grocery prices would fall by only a little over 1%. As economist Scott Lincicome explains, “the American grocery industry….had a 1.18% net profit margin last year.” But the Biden-Harris administration views grocery price increases as the product of greed. As NBC notes, Biden has “spent more than a year … blaming corporate greed for consumer prices driven higher by inflation.” On Friday, Harris will “propose the first-ever federal ban on ‘corporate price-gouging in the food and grocery industries.'”

Given grocery stores’ tiny profit margin, they aren’t engaged in “price-gouging”, except in the misleading way Democrats define the term, which can mean just raising prices to keep up with inflation (an “anti-rent gouging” bill proposed by Virginia Democrats, 2024 HB 721, would limit rent increases to the inflation rate or a lesser rate prescribed by officials if inflation exceeded 7 percent). Grocery prices rose 0.7% less than the general inflation rate over the past year.

Preventing grocery stores from raising prices along with inflation could result in them losing money on every sale, encouraging them to leave shelves bare, as happened in Venezuela due to price controls on food. Food might end up on the black market, where it would be even more expensive. For such reasons, 73.9% of economists say that price controls are not a “useful policy option in the control of inflation.”

As AG notes, “instead of dealing with the actual sources of inflation, the Harris plan is going to be to continue to pretend price increases are a result of price gouging in an industry with razor thin margins.” Given the razor think profit margins, banning “price gouging” won’t do much to reduce prices (and to the extent it does cut prices at all, it will make grocery stores lose money, which will lead to them stocking less food because they lose money on it, which will lead to empty shelves and maybe long lines for what little food they do stock).

“Do you like store shelves that look like Venezuela’s [empty shelves]? Because this is how you get store shelves that look like Venezuela’s,” notes journalist Franklin Harris.

Progressives on TV who are ignorant of economics praised Harris’s “bold” proposal. But it’s as foolish as it is bold. “Putting grocery stores out of business and creating food deserts is certainly a bold campaign promise,” points out Chris McGowne.

Harris’s father was similarly given to bold proposals that backfired. The Economist describes Kamala Harris’s father, Donald Harris as a “combative Marxist economist.” But when Jamaica’s left-wing government took his advice, it sent Jamaica’s economy into a tail-spin. Jamaica’s per capita income fell sharply in the late 1970s, and its GDP fell from $3.25 billion in 1977 to $2.43 billion in 1979. Jamaican per capita income was lower in 1980 than in 1976, even as incomes rose in other Caribbean countries and Puerto Rico.

The inflation that has increased grocery prices is the fault of the big-spending Biden-Harris administration, not greedy grocery stores. President Biden’s policies caused inflation, according to even Democratic economists like Harvard’s Larry Summers — who was Treasury Secretary under President Clinton — and Obama economic advisor Steven Rattner. As Rattner noted in the New York Times, Biden has spent “an unprecedented amount” of taxpayer money, which resulted in “too much money chasing too few goods.”

Harris would be an even bigger spender than Joe Biden. As a senator, Harris proposed handing out $21 trillion in welfare payments during the pandemic, as the American Enterprise Institute notes. That would have bankrupted America. That $21 trillion spending increase would have more than doubled the federal budget, and would have given America a national debt far bigger compared to its economy than other countries that borrowed so much they became unable to pay their debts and had to be bailed out (like Greece. Of course, the U.S. is too big for the international community to bail out, so the U.S. would eventually default if its debt reached the extreme level resulting from Harris’s proposal, since interest rates would inevitably increase, making such a massive national debt unserviceable. That default would trigger a massive financial crisis)

Harris also supports price caps on housing, known as rent control. In July, Harris denounced “corporate landlords” and called for a “cap” on “rent increases.” 93% of economists think that rent control is a bad idea that reduces the quantity and quality of housing available. Rent control stops the construction of some rental housing– when Montgomery County imposed rent control, developers stopped work on some housing projects. Rent control turns some buildings into slums by leaving the landlord with too little money for maintenance. Even Democratic economists mostly think rent control is dumb. Reason Magazine reports that “Obama economic advisor Jason Furman has, in line with a strong majority of economists, acknowledged that ‘Rent control has been about as disgraced as any economic policy in the tool kit.’”

Life under socialism in Venezuela: Empty shelves in grocery stores, basic food stuffs unavailable



http://libertyunyielding.com/2024/08/15/kamala-harris-proposes-price-controls-that-would-lead-to-grocery-shortages-rather-than-fixing-the-inflation-she-helped-cause/

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