Harris’ great idea: price controls
Trump recently made a taunting joke about Kamala Harris:
? Trump TAUNTS Harris Campaign on Her Plan:
"She's waiting for me to announce [my plan] so she can copy it"pic.twitter.com/AktYW2tqU8
— Resist the Mainstream (@ResisttheMS) August 14, 2024
I chuckled yesterday when I read that. It’s a reference to the fact that Harris copied Trump’s “no tax on tips” proposal.
But you know what? Harris didn’t suggest that at all. Instead, she came up with price controls:
In a statement released last night, Harris’ campaign said it would enact the “the first-ever federal ban on price gouging on food and groceries—setting clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries,” with enforcement power given to the Federal Trade Commission. You heard that right: price controls.
It’s not clear how an “excessive” profit would be defined, nor why policing that would be in the purview of the federal government, nor why food prices in particular ought to qualify. It’s not clear what types of behavior that are currently legal would be outlawed.
Price controls have been disastrous whenever they’ve been implemented. Prices are signals, ways of communicating how much of a good is needed by consumers and how much ought to be produced.
To me it seems odd that Harris would choose this particular method, when she’s been engaged in trying to pretend she’s not a leftist. Then again, the leftists who control the Democrat Party these days have only a few arrows in their quiver, and this sort of “blame evil big business and fix the problem with more federal government control” approach is most definitely one of them. It appeals to envy and ignorance, two commodities that certainly aren’t in short supply.
Of course, the press lapped it up, with several journalists on social media treating it like Harris had just stepped down from upon high to present the Ten Commandments. Nothing matters on that front. If the Harris campaign says it, it’s going to be spun as “joy” and “optimism” wrapped in abject brilliance.
For normal Americans, though, these policies have consequences, and price controls would be an economic disaster. One only needs to look at the history of the Soviet Union to understand that, or if you’d like a modern day analogue, Venezuela. When government is used to cap the prices, from groceries to rent, it inevitabily leads to stagnation or even regression in the market.
I’m further informed by commenter “sdferr” that Harris’ father was a Marxist economist who proposed just that sort of thing for Jamaica in the 1970s. Interesting. Even Snopes – not a voice on the right – agrees that Harris’ dad was indeed a Marxist economist:
Taking a closer look at Harris’ work and the economics school of thought he professed, we were able to confirm that he inscribed himself in Marx’s intellectual tradition. …
… Donald J. Harris, a professor of economics at Stanford University, also did his research from a post-Keynesian perspective. Fowé was noting his line of inquiry admiringly. Keynesians stipulate that markets alone cannot ensure full employment and instead advocate for government intervention. Post-Keynesians agree, but argue that in intervening, the government should focus on equality and redistribution of wealth. …
Harris was also preoccupied with exploitation and other concepts that came directly from Karl Marx’s theory of capital. For example, The Economist recounts that he once argued that the inequality that beset Black people in the U.S. did not come from a form of “colonial rule” where white people dominate. Instead, he argued that the problem was capitalism. In this sense, Harris was indeed marxist in his thinking.
Of course, children don’t necessarily ascribe to the parents’ ideologies. But in this case, Harris’ behavior is very much in line with leftist economic theories and behavior. My guess is that she’s relying on the supposed ignorance of the electorate on such things, and pandering to the desire of many to blame “corporations” – or maybe it’s her own ignorance being demonstrated here. Or perhaps both.
Wage and price controls are the #1 reason I wasn’t a big fan of Nixon, unlike some other conservatives who were. His popularity on the right seems to have grown.
Still, my first vote ever was cast for him. Amazingly, as I still lived in NY, we carried the state.
It’ll be morbidly fascinating to see how the mainstream media will attempt to spin Kamala’s “price controls” proposal.
One possibilty is that they’ll claim that what Kamala Harris is proposing isn’t really “price controls”… after all I noticed that the campaign didn’t use the exact phrase “price control”. They’ll reframe it as something else with some clever sophistry.
I’m not confident that most people know why price controls are a bad idea. Even many of those who will say “price controls are bad” will also say that they are in favor of “fair” prices and against “gouging” and “predatory” pricing, so it is very easy to slip price controls in under another name.
There are 20 states with “unfair price” laws and an additional 4 with such laws only applying to gasoline.
This has been done before, even before Nixon, with Roosevelt’s National Recovery Administration, as I pointed out on the open thread when this came up. It was quite popular, but the Supreme Court eventually shut it down. The NRA was a voluntary program and many businesses supported it, mostly because it was popular but some through fear.
Whatever the plan really is, it’s just a simple-sounding plan meant to sound good to the rubes but never be implemented–“You don’t like the high prices on food we caused? Well, firstly, we didn’t cause them. And secondly, we’ve got a simple fix.”
It’s just another way of expressing that the continuing increase in prices that curiously started in January of 2021 is because of “evil corporations” and not the current administration.
Her proposal is downright scary. And with a D controlled Congress we might as well declare the country the new Union of Socialist States. If she wants CW2, this is another good step along that path. God help us in November if our fellow citizens vote these people in. We may be able to survive a Harris prez, but if they control the Congress……
Wasn’t Obama’s father (BHO Sr) also a Marxist economist? Definitely an avowed Marxist. It’s scary that their progeny have made it to the very top here.
@physicsguy:If she wants CW2, this is another good step along that path.
There will be no consequences for shafting the American middle class. We have too much to lose. We’re mostly wage slaves with mortgages and kids.
CW2 will be the Left against the center-left.
“U.S. Vice President and 2024 presidential candidate Kamala Harris once explained cloud storage thus: “It’s on your laptop, and it’s then therefore up here in this cloud, that exists above us, right? It’s no longer in a physical place.”
She really said that. The US Senator from California didn’t know what the cloud is.
She’s intensely stupid. Too dumb to be President.
And margins on groceries are the smallest of any commodity. Just one more example of how unbelievably stupid these people are.
…enforcement power given to the Federal Trade Commission.
Another unelected body of drooling Commissars.
Unfortunately, economic ignorance is widespread, so most folks don’t understand why this is such a disastrous and stupid plan.
One potential way to explain it to people is just point out that price controls ALWAYS lead to shortages. Every single time. There’s so much literature on this topic, only a red diaper commie baby would offer it as a serious proposal.
Freedom’s just another word for nothing left to lose
Some song writer
They want food and energy shortages so they can ration them.
You have been a good little commie so you may have a cheeseburger on your birthday. You have been a bad little commie so cabbage soup for you.
My emergency food supply…
https://www.youtube.com/watch?v=il-ltfB0Fm0
Price controls! Back to the 70’s!
I’m not confident that most people know why price controls are a bad idea. Even many of those who will say “price controls are bad” will also say that they are in favor of “fair” prices and against “gouging” and “predatory” pricing, so it is very easy to slip price controls in under another name.
I agree with you and, besides, the effect on supply will be after the election.
I eagerly await Commissar Harris’s first 5-Year Plan.
Price controls, huh? Well, we’re about to have a 3rd world import forced on us to be “the president,” so why not go full third world? You know, wage controls, rationing, black markets for in-demand goods, crime and all the rest. You know, like Venezuela.
Not that we have enough to make any difference, but we’re sending some more money to Trump, and to the R senatorial and congressional election efforts for advertising buys.
Prices are signals, ways of communicating how much of a good is needed by consumers and how much ought to be produced.
Ahmen.
A few months ago, some of my new friends were ranting on Facebook about food inflation being caused by corporate price gouging. One of their favorite propagandists had posted an item that stated that Kroger’s food stores corporation had logged a 150% profit increase in the last 3 years. See? That proves it!
Being something of an investor, I looked it up. There had indeed been an approx. 150% profit increase in the stated time period, however… The starting or base number was a year near the end of covid and the Kroger profit margin was rather close to zero. Much lower than normal. The current profits were perhaps only slightly above average, but much higher than that one low year.
And what is the current profit margin? 1.4% Ooooo. How terrible! So if one were to zero out Kroger’s profit right now, it would maybe save you $1.40 on a $100 bag of groceries.
Michael Towns (4:35 pm) said:
“One potential way to explain it to people is just point out that price controls ALWAYS lead to shortages.”
People don’t want / like stuff pointed out to them, especially when the stuff being pointed out is not what makes them feel warm ‘n’ fuzzy.
“Every single time.”
Go pound sand [SARCASTIC, but that might easily be a reaction among LIVs*.]
* = Low Information Voters, whose understanding of Economics 101 can be quite low.
“There’s so much literature on this topic, . . . .”
We don’ wanna read no steenking literature. [“Literature”. *UGGH*.]
” . . . only a red diaper commie baby would offer it as a serious proposal.”
Whassa “red diaper baby”?? [*I* know, most of us here at neo’s place know, but would the receiver of this information know? Would the receiver of this information *care*?]
Want to know why food prices are so high? Have you bought any fertilizer recently? A 25-pound bag of fertilizer that was maybe $30 a few years back. I just saw some in Costco the other day for ……wait for it…. $79 a bag.
Then, of course, there’s the diesel fuel cost to power the farmers’ tractors. In 2020 Diesel was $2.43/gal. Today it’s $3.81/gal. That’s a 57% increase from 2020, But diesel is down from $4.04 just three months ago. (I understand Biden is releasing more oil from the strategic reserve to lower prices going into the election.)
They say grocery prices are up 25.8% since 2020. Considering fertilizer and diesel costs alone, they could be much higher.
Price controls?? Nope! Drill, baby, drill.
I’m pretty sure a majority of dems would support eliminating ALL corporate profits, not just Krogers’, if you offered that as a policy proposal. They don’t understand that, without profit, there would be no grocery stores or any other businesses.
It’d be nice if some never-Trumpers actually spoke up and pointed out the lunacy of kamala’s price controls idea. But all of these elites are so invested in the dems winning the next election they don’t care how many foolish lies get told in support of that claim.
Having lived for almost 30 years in a variety of Third World countries, I’ve seen this all before. Do we really want the USA to become a Third World country? We’re certainly headed that way under Harris and the Democrats.
But hey, I have an idea! If price controls are a good way to make things fair, let’s propose price controls for the Fourth Estate. Try telling the WashPost, NYTimes, and other news outlets that they have to reduce the newsstand price of their papers because — price gouging! And trying to make news available to everyone! Yeah, I’ll bet that will go over well.
This is like the Biden mantra: pay your fair share (in taxes). While his son does not. Fair taxes, fair prices — they all seem to touch someone other than the Democrats’ main constituencies: teachers, union leaders, media elite, Silicon Valley billionaires.
And most insulting: she’s number two in the government, with a number one who is non compos mentis. If she really things it’s time to institute price controls, walk down the hall and talk to Joe. Convince him to do it NOW!
We’re dealing with cultural Marxists and economic fascists.
Upon what basis then might we assume that the left intends for “the first-ever federal ban on price gouging on food and groceries” to be either temporary or limited only to food?
Fundamental transformation requires far more control… over everything.
In fairness, price controls are hardly Marxist, predating Marx by possibly thousands of years. Diocletian’s Edict on Maximum Prices was not the first, and was issued in AD 301, with the following result:
Price controls are good for the connected and the powerful though. Larger producers and retailers are better equipped to weather artificially low prices than small ones. Powerful people, rich people, and corrupt people don’t do without.
It’s just chumps who work, follow rules, and pay taxes that suffer.
Instead of price controls, how about something novel, like competition between stores? It’s easy, one store charges less for eggs than the “price gouger across town. Then another store charges even less than that in order to get more customers.
As a Californicator, an idea for my state, stop allowing people to steal grocery carts full of food without fear of consequence. That might help lower the cost.
And here is a real killer idea to help with cost of living, cap credit card interest at 8%. Unlike we commenters who use our credit card for convenience and pay in full every month, lower income people use it to survive and make minimum payments and are paying 20%. Even the suggestion would make politicians cry
@fullmoon:Instead of price controls, how about something novel…cap credit card interest at 8%.
This is what I’m talking about. People say they’re against “price controls” and then they say they’re okay with price controls. A cap on credit card interest is a cap on the price of credit.
Like any other price ceiling, you will make credit cards more affordable for poor people by making them unavailable to poor people….
Grocery stores have a profit margin of 2.2% Price gouging? In a pig’s eye.
The more Kamala talks, the more she exhibits her ineptitude for any position but talking head.
Where and when have price controls worked? Recall Allende’s Chile, with 200-400% inflation coupled with price controls resulting in widely differing prices for the same item. Getting ride of price controls does work. Recall that in early 1981, President Reagan eliminated price controls on oil- the “new oil” versus “old oil” nonsense etc. In late 1981, the price of oil began to fall.
https://thegrocerystoreguy.com/what-is-the-profit-margin-for-grocery-stores/
The Democratic Party of Crime is insisting we relive the 1970s in every excrutiating detail.
@Art Deco:insisting we relive the 1970s in every excrutiating detail.
Aw not the clothes, and the fake wood paneling…
Let’s outlaw the KKK: Keynesian economic policies, Kenyan USA presidents, and Karl Marx’s policies!
But not Kris Kristopherson!
https://www.wideopencountry.com/me-and-bobby-mcgee-story-behind-the-song/
IMO this nails their actual agenda:
https://notthebee.com/article/kamala-calls-for-ban-on-price-gouging-or-put-another-way-communist-price-controls
“They tried this in the thirties, and it did nothing but prolong the Great Depression and put the little guys out of business.
And if there’s one thing we know about the modern corporate-state alliance, it’s that they love nothing more than to crush mom and pop.”
That was also one of the major economic effects of the Covid War waged by Democrats against the sane citizens of the country, which may well turn out to be a precursor of CW2.0; read the post by Jim Melcher’s daughter linked in the open thread.
Forcing food suppliers out of business to pursue some elusive “fair price” is about par for all of the Democrats’ policies.
The minimum wage is always zero, and so is the minimum profit.
https://notthebee.com/article/subway-is-on-the-way-out-come-see-the-fascinating-economic-discussion-in-the-comments-about-why-its-happening
@ Niketas > “CW2 will be the Left against the center-left.”
I understand why you might think that, and it’s already happening in some ways, but I believe that it is not the CW2 we generally refer to here and elsewhere in the blogosphere.
Once the Democrats settle which faction is going to keep control, they will come after the rest of us.
https://notthebee.com/article/anti-israel-protesters-crash-democratic-afterparty-following-kamala-harris-event
Too bad they can’t both lose.
@ Michael Towns > “There’s so much literature on this topic, only a red diaper commie baby would offer it as a serious proposal.”
There are libraries full of literature showing that their policies don’t work, and often can’t work, on EVERY topic proposed by the Democrats .
That hasn’t stopped them yet.
@ Mike+K > “the effect on supply will be after the election.”
And when Trump wins, the Democrats will blame him for it.
It’s how they always operate: they take credit for anything good that happens in their tenure, even if it’s the result of good policies by the preceding Republicans; anything bad that happens is the fault of the preceding Republicans, even if there is no connection or it’s the result of policies they changed; anything bad that happens after they totally screw things up is never their fault.
@ TommyJay > “There had indeed been an approx. 150% profit increase in the stated time period, however… The starting or base number was a year near the end of covid and the Kroger profit margin was rather close to zero.”
I have begun to look behind wild percentages as you have, since the time I discovered that a hysterical doom-mongering headline about the doubling of cases of some horrid disease was an increase from 1 case to 2.
How to lie with statistics, indeed.
PS those kinds of stories are an actual case of the “malinformation” (truth presented in a misleading fashion) that I would like to eradicate from “news” stories; it’s not the kind of information the Democrats want to stamp out on the Right.
@ J. J. > “Price controls?? Nope! Drill, baby, drill.”
You’ve been reading Mr. Trump’s tweets again!
https://notthebee.com/article/trump-says-hell-slash-energy-and-electricity-prices-by-half-at-least
As you note, cutting energy prices will reduce food prices as well.
And most other prices too.
@ f > “If she really things [thinks] it’s time to institute price controls, walk down the hall and talk to Joe. Convince him to do it NOW!”
If their handlers wanted to institute price controls now, they would already have done so; Kamala convincing Joe is not part of the process.
As someone else noted about Kamala’s promises to “fix the border” if elected, she and the Democrats could do that NOW, but they only want campaign slogans that might persuade the fence-sitters and pacify moderate Dems.
They can’t enact them now and run on their “success” instead of promises, because their leftist voters and handlers would be furious.
They have no intention of actually implementing the policies once elected.
@ Niketas > “Larger producers and retailers are better equipped to weather artificially low prices than small ones. Powerful people, rich people, and corrupt people don’t do without.”
Indeed.
See my comment at 1:08am.
“Like any other price ceiling, you will make credit cards more affordable for poor people by making them unavailable to poor people”
As with the minimum wage, the minimum cap is zero.
“Powerful people, rich people, and corrupt people don’t do without.”
Riffing on Neo’s other post today:
La majestueuse égalité des lois, qui interdit au riche comme au pauvre de coucher sous les ponts, de mendier dans les rues et de voler du pain.
In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread.
Le Lys Rouge [The Red Lily] (1894), ch. 7; Anatole France
https://en.wikiquote.org/wiki/Anatole_France#Quotes_about_France
I think that Harris may be responding to things like this:
https://notthebee.com/article/watch-philadelphia-woman-is-brought-to-tears-when-asked-how-much-inflation-has-hurt-her-the-last-few-years
“I blame the federal government … If a working class mom who works as a paralegal cannot by a $2 bell pepper because it’s now $5, imagine a mother living with food stamps. Imagine a mother working minimum wage trying to feed children.”
Not The Bee expounded: “My two cents? This is where voting for the “compassionate” Democrats lands you. They’re going to run a campaign of joy, free stuff, hope, and all it gets you is misery.”
But the Democrats, as others have noted above, intends to blame everyone and everything EXCEPT the federal government (which at the moment is THEM).
And a lot of voters will believe the gaslighting, not the facts.
(Also commented thusly on The Selling of Kamala Part 1).
}}} big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries,”
What the hell kind of idiot thinks that food prices are going up as high as they are because of some corporate gimcrackery, and not the actual legitimate causative factors that the current Admin (whoever it is) has implemented?
In the back to the 70’s vein “We are the World”.
As the self-designated party pooper around here – I have two thoughts:
Price controls are a terrible idea, but they may be good politics. Kamala has hinted that she will impose price controls by executive order. My prediction – she will announce price controls the same way that Biden announced student loan “forgiveness.” There will be a big Rose Garden ceremony to announce “price relief for the American people.” She will sign a clearly unconstitutional EO purporting to impose price controls. Larry Tribe will write an op-ed in the NY Times explaining how the EO is actually the most constitutional action by any president ever. That EO will be enjoined by the courts about a week later. The litigation will take about a year and a half until it reaches the Supremes, with the matter being in the news regularly during that time. The Supremes will uphold the injunction. Sotomayor will pen a typically acid (and typically embarrassing) dissent excoriating the Republican-appointed justices for “substituting their authority for that of the economic experts in the Harris administration.” So Harris will dodge the ill effects of price controls, dodge responsibility for further inflation by blaming it on mean Republican judges, and receive new ammunition for the left’s push to pack the Supreme Court. For Harris, it will be win-win-win.
Second point – when it comes to economically illiterate proposals, Trump is better than Harris, but only because Harris so bad. Trump’s ideas about tariffs and ending the taxation of Social Security benefits are nearly as daft as Kamala’s price controls. There’s a good chance that we’re going to get a heaping dose of dumb economic policy regardless of who wins in November. (Example scenario – Trump wins and gets to implement his dumb economic ideas. The economy does poorly. Democrats ride the poor economy to a big win in 2028 and then implement their even dumber economic ideas.)
Yes, I’m just a basket of sunshine this morning.
CC™, as ever, finds The Great Orange Whale no matter what the subject; The Great Orange Whale is always out there! Beware, you dolts!
Harris and her proposals are a catastrophy awaiting, but …. The Great Orange Whale!
A chicken in every pot political ploy to spin Kamala’s everyman credentials and attract votes.
As the self-designated party pooper around here
Judging from the rest of the comments, you’re hardly the most cynical or pesimistic person. You’re not even in the top 3.
Nonapod – I’ll take that as a compliment. Thank you.
Bauxite’s scenario of a Harris “price control” effort is spot on. No such authority exists. Even a Democrat law would be unconstitutional, as long as we have a Court. Down-ticket races matter as well as the top.
As to Trump’s (and Harris’s) no-tax proposals, the negative effect of this on the federal budget would be greatly mitigated by the Trump reversal of toxic Biden-Harris energy restrictions and business regulations.
Trump’s “dumb economic policies” worked pretty well as I recall.
Aw not the clothes, and the fake wood paneling…
The music, movies and TV were all better in the 1970’s, at least…
@Bauxite, Kate: Kamala has hinted that she will impose price controls by executive order…No such authority exists. Even a Democrat law would be unconstitutional, as long as we have a Court.
The big corporations will do as their compliance departments recommend, and they are going to recommend following an executive order until such time as the courts get around to declaring it invalid. Regulatory bodies can fine and punish and require corrective action based on that executive order until it’s actually invalidated or stayed.
I’ve spent much of my career working for organizations whose largest customer is a government. Government says “frog” they hop. They don’t wait for the courts to work it out, and the government doesn’t have to wait either. Lawsuits are a last resort anyway. Big companies like being in bed with the government. Price controls will not bother them a bit, they can afford compliance.
Michael Townes
You miss the second “win”
First comes the compassionate win when the morons support price controls to benefit the poor.
Then, when shortages occur, the win of accusing “big corporations” of being “greedy”.
@Kate:Trump reversal of toxic Biden-Harris energy restrictions and business regulations.
And we’ll be stuck with them anyway because a Hawaiian judge will rule he can’t undo them, just like they did in his first term. We’re not living in a nation of laws. We’re living in a country where people who aren’t elected have enormous power and do more or less what they want, and using the full force of law on their enemies.
Kate – Before the 1930’s, you would be right about price controls being unconstitutional. Since the SC wrote the word “interstate” out of the commerce clause in the 30’s however, Congress clearly has the power to impose price controls if it wants to do so.
Even with the current Supreme Court, I think that Wickard v. Filburn would stand. Too much of the edifice of the federal government would fall with it. I think it would be 8-1 with Thomas in dissent.
Niketas Choniates – I think you’re right, but the question then becomes how smart the lefties are. Forcing price controls by the back door denies the government a lot of the opportunity to take credit for the action, and also actually implements the price controls, which most smart lefties know are a disaster. Lose-lose
Michael K – Trump didn’t implement across-the-board tariffs or pure demand-side tax cuts on transfer payments in his first term.
“Trump’s ideas about tariffs and ending the taxation of Social Security benefits are nearly as daft as Kamala’s price controls.”– Bauxite
So you’re saying Robert Lighthizer and Larry Kudlow are dumb? They worked for Reagan and then Trump in his first term. Reagan was more of a quota man while Trump acknowledges he’s a tariff man.
We’ve now had 30 years of the WTO and NAFTA and I think it’s time reassess the pros and cons of “free” trade. “Free” trade isn’t free, it just passes the costs on to a different segment of the population.
I think Trump’s move toward reciprocal trade is sound. Our balance of trade deficit is approaching $1 trillion a year (nearly 4% of GDP). Trump has floated the idea of replacing other taxes with tariffs, which isn’t as “daft” as you say.
Actually Reagan used tariffs (though he relied more on quotas).
From a National Review article:
https://www.nationalreview.com/2020/10/i-am-a-tariff-man-comparing-presidents-reagan-and-trump/
It is a complex subject, but reflexive mantra ‘free trade good–everything else bad’ misses the point.
We are desperately trying to move semiconductor production out of Taiwan, spending $60 billion dollars of taxpayer money to do it. We just realized if China does physically reclaim Taiwan we could be held hostage to China’s whims.
There are many sectors that we need for national security to maintain robust production here.
And let’s not get bogged down in the argument about what jobs can’t come back to the US, or technology is replacing workers now. We need skilled and semi-skilled jobs for a healthy economy.
I think Trump’s idea of bilateral trade agreements where the trade balance between import-export quotas/tariffs are reciprocal is the best way to maintain a robust US economy.
The latest supreme court decision suggests the price controld would be unconstitutional of course if they pack the Court with ignoramuses like jackson and sotomayor katie bar the door
Its a terrible decision in every which way i didnt expect we would face power shortages and famine but thats what comes accepting a steal as in 2020
@Bauxite:Forcing price controls by the back door
Not sure where you’re getting “back door” from in the scenario I outlined.
The day that executive order comes out the front door, with media fanfare and hallelujahs, every big corporation will begin complying, because their compliance teams will tell them that otherwise they’ll be liable for fines and corrective action.
Somebody may sue, but until the executive order is stayed or declared invalid it will be complied with. It will be right out in the open, not by the back door.
Like the bear tax in the simpsons its a solution to the wrong problem which is the inflation of thr money supply
Right now the most pernicious effects of the rampant “inflation” coming out of the COVID year have already been felt. The “price gouging” has already occurred– which is really a phenomenon of trying to get ahead of inflation.
There was no doubt opportunism to take advantage of rising prices– but the uncertainty inflation brings may be the worst condition an economy faces (except a depression).
The problem is how does a retailer or distributor or manufacturer price in the uncertainty of what the next shipment of product/raw material might be. You’re forced to take an extra markup– since the next round of price increases might wipe out any profit. It almost bakes in an additional level of inflation. You might absorb losses for a certain amount of time, but certainly not sustainable– especially for smaller companies. Large companies do have a greater capacity to absorb losses and no doubt would be at the government trough as there will probably end up being some subsidy to maintain “price controls”.
This is just a sop to her base that she is going to “do something– anything and we don’t care if it works”, because the correct answer to the inflation we’re facing is reduce government spending. And the Dem/leftists have no intention of cutting government spending.
Trump is smart enough to realize that is a losing argument in this election and is choosing to focus on the other measure which will lower prices– increase the supply of the commodity that affects everything (energy) which, is also something the Dem/leftists won’t do.
So the Dem/leftist solution is something that we all know won’t just not work, but can’t work for all the reasons previously mentioned in the comments.
https://x.com/TrumpWarRoom/status/1824521830616457372
Brian E – I was just pointing out that Trump did not implement significant tariffs during his first term. The tariffs that he did implement were minor. Therefore, pointing out that the economy was good during his first term does not imply that his economic ideas make sense now. The economic policies he’s promising now are different than what he did during his first term.
On tariffs in general – I think it’s a cost benefit issue. Generally, I think that there is an economic cost to tariffs. Things get more expensive when you artificially increase the cost of cheaper foreign goods. The consumer pays more. Prices go up without a corresponding increase in value or quality. On the other hand, it may be that there are non-economic benefits for tariffs that outweigh the negative economic costs. (I.e., domestic jobs, having manufacturing capacity and know-how on-shore.) The problem is that neither choice is cost free. There’s a downside to tariffs, there’s a downside to unfettered free trade. I’m not sure which path is correct, but which ever path you choose, you had better explain the costs or risk getting gobsmacked by a public caught unaware when the cost arrives. As a politician, sooner or later you have to pay the piper. Pretending that tariffs will be great for the economy is not going to be effective.
On the other hand, exempting SS benefits from income tax is just dumb. I don’t see any benefit to that other than pure vote buying, much like “forgiving” college loans. There’s no supply side effect at all. It’s just goosing consumption by a segment of the population that already has high consumption.
Bauxite, let’s start at the beginning.
Trump is not a dumb guy. Do we agree on that much?
The fact you either disagree or don’t understand the rationale for his policies don’t make them dumb either.
This is from an article 5 years ago, but it does represent the kind of trade barriers Trump was facing at the time:
As to ending the income tax on SS benefits, according to AARP, in 2022 taxes from SS benefits amounted to $48 billion. According to a CBS News report in 2023 “The U.S. has pumped nearly $25 billion of non-military aid into Ukraine’s economy since the invasion began.” This is before the recent $62 billion package.
It’s not going to bankrupt the country if we don’t tax any SS benefits– and I think there is a larger strategy in the Trump-Vance administration about how we fund the government.
I think someone in the Trump camp floated the idea of developing ANWAR and using dedicating the profits from that to begin reducing the national debt.
Trump is not locked into the DC way of doing business.
Rather than rejecting his ideas as daft, you might find out the rationale or see any idea he might have be fleshed out to a working policy. Much of his campaign sets an agenda and the actual machinations will fit the needs and the ability to get Congress to go along.
All-in Podcast dissects the Kamala price gouging policy beginning at 59:30 to about 1:20:00. Ouch!!!
Break up Google, Starbucks CEO out, Kamala’s price controls, Boeing disaster, Kursk offensive
https://www.youtube.com/watch?v=xA5B6quoahY&t=27s
Great comments on trade, Brian. As you suggest “free trade” is great in principle, it’s just that the other countries don’t practice it. My observation from many decades of working in the electronics industry is that every other country tries to foster its own economy and industries, including “good guy” allies like the Europeans, Asian tigers and Israel.
Trump is nothing if not a negotiator and I’m confident he has never intended to erect insuperable barriers to trade but just wants to make sure US industries and workers get a fair shake. Not to mention the need for certain critical products to be manufactured domestically for reasons of national security regardless of the economic rationale.
@FOAF:“free trade” is great in principle, it’s just that the other countries don’t practice it.
Other countries are taking poison, so we should take it ourselves.
These “unfair” trade practices amount to other countries robbing their own taxpayers in order to give us a discount and put some extra money in the pockets of their connected industries. Seems pretty silly to “counter” by the doing the same thing to our own taxpayers.
Seems smarter to accept the discount and focus on the things we do better than other countries, but there’s always connected industries making the argument that all of us should be taxed for their benefit. But we can’t all get protected, any more than we can all get rich by picking each other’s pockets.
Niketas, a rather simplified version of international trade.
Manipulating currency to make imports more expensive and exports cheaper is another way trade is manipulated. And in so doing jobs are lost.
I may have read your comment incorrectly, but it seemed you’re implying we should just ignore when other countries put up barriers to our products. But that silly barrier produces more economic activity internally in that country– from which more people are employed to buy things and fuel their own economy.
Meanwhile, our own industries lose business.
Who do you think benefits the most?
@Brian E:But that silly barrier produces more economic activity internally in that country– from which more people are employed to buy things and fuel their own economy.
That’s not more economic activity. It’s extra economic activity by the industries you are focusing on, paid for by the destruction of the industries you are not protecting. Their demand is suppressed because the consumers are paying higher prices to the favored industries that they otherwise would have spent on the industries you are ignoring.
Meanwhile, our own industries lose business.
Who do you think benefits the most?
Apply your argument to individual US states. Clearly in the US we should build trade barriers between each US state, that way each US state can employ more people to buy things and fuel their own economies and get richer, if your analysis is right.
New York should set up barriers to Midwestern farmers and encourage their own agriculture and get rich, right? Their farmers are losing business otherwise, right? Every state should set up barriers to Washington apples and Idaho potatoes and encourage their own farmers to grow those things and get rich, right?
But if the people in New York are paying $1.10 for produce that used to cost them $1.00, it’s easy to see how the farmers benefited, but every other producer in New York lost out on that $0.10 that used to go to other things, and that is what you are neglecting from your analysis.
And your logic goes further, saying that if New York should raise barriers to outside farmers, thereby sucking money out of the pockets of all New Yorkers not farmers and putting it in the pockets of New York farmers, then the other states should retaliate against New York’s farm products, and start sucking money from the pockets of their own non-farmers and putting them in the pockets of their farmers, to show New York what’s what.
It’s easy to see how the farmers would do well out of this. (I’m not picking on farmers, it’s the same for any protected industry.) But we can’t all get this deal. We can’t get rich by picking each others pockets. We get rich by doing for people what would cost more to do for themselves.
There are can be sound reasons for tariffs but they can’t logically make us richer. They can only make a few of us richer by making the rest poorer to make up for it. They can be judiciously used to induce other countries to lower their own tariffs, but while the tariff is in effect we are poorer for it and it’s better for both countries if neither had a tariff. Something small across the board to pay for port infrastructure would make a lot of sense, but that’s basically a tax, and like all taxes (including tariffs) is paid by consumers.
Your example fails for several reasons. While there are advantages among states– higher/lower wages, higher/lower cost of living, etc., the basic structure that determines the cost of doing business is similar. Similar tax structure, similar environmental costs, etc. If a company moves through tax advantages from the way our ports districts are structured, their employees have the ability to re-locate, something that is impossible when their job is moved to another country.
The problem with “free” trade is countries with poor standard of living, poor environmental rules, poor labor rules artificially make their cost of goods lower than developed countries.
Which is why Trump is proposing reciprocal trade where one country doesn’t have an advantage that significantly makes a difference in cost of production.
Tariffs are a tax paid to the government, which could reduce taxes in other areas.
In addition to currency manipulation to maintain and trade advantage over another county are subsidies and dumping.
Years ago I bought some apples for .59/ a pound. I think they were Fujis– which were and still sell at a premium (I think). They were from New Zealand. I’m standing in a store in an area that is literally surrounded by orchards and I’m buying apples grown in New Zealand. How could New Zealand farmers grow apples and ship them half way around the world cheaper than the same apples grown a few miles away? (OK, I’d have to drive 25 miles to find an orchard growing apples, but you get the point).
No one is saying every product needs to be made in the US. That’s really just a red herring. And I think I could come up with a list of products that need to be produced here for national security reasons.
I worked for the last 15 years or so in a manufacturing plant that produced construction machinery. Before the Trump era, the company tried to do a corporate inversion to Finland because of the corporate taxes. The move was blocked by the Obama administration– but for years we had a trade imbalance because of our corporate tax structure.
The company built a plant in China (to service the Far East market). They did keep plants here as well. The first thing the company noticed within a couple of years of the plant starting production was proprietary copyrighted control systems were showing up on Chinese clones.
Being from Yakima, you might know of the barriers for our ag products in some of the Asian countries.
I think President Trump is correct to negotiate bi-lateral trade agreements on a reciprocal basis.
See Jagdish Baghwati on this point. ‘Free trade agreements’ are complex compendia of carve-outs no one actually understands. The people who lobbied for a particular carve-out do understand that much, of course. You don’t have the kind of tariff barriers you once did and production for export is more prominent in countries’ national accounts. You do not have ‘free trade’. Note, Glitch McConnell has assented to a system where they’re ratified without being read, which is what you’d expect of a corporate bagman.
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There’s nothing ‘daft’ about declining to subject Social Security benefits to the income tax. All tax regimes are decisions about the distribution of burdens. What actually is daft (but unsurprising in a legislature run by corporate bagmen) is the dense thicket of sectoral preferences incorporated into the income tax code and the corporation tax code.
Except in circumstances where you have natural monopolies (and no ready substitutes), price controls are simply not advisable. We have state and local commissions which regulate natural monopolies.
The business of agencies like the Federal Trade Commission should be to promote transparency in interstate and international transactions and to inhibit collusion among producers (including putting the kibosh on mergers which generate market-dominant firms).
Even with the current Supreme Court, I think that Wickard v. Filburn would stand. Too much of the edifice of the federal government would fall with it.
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The decision was mendacious and absurd. What scrapping it would do would be to extend to local firms a franchise to tell federal regulators to pound sand when a transaction involves parties operating within the boundaries of one state. And, no, the convenience of employees of federal regulatory agencies is not a satisfactory reason to maintain mendacious and absurd decisions.
Art Deco – I agree that Wickard was an absurd decision. I agree we would be better off now if it had never been decided. Overruling it now after nearly a century would be a political disaster, though, and not just because it would inconvenience federal employees. Think Dobbes on steroids, except this time the issues would affect people’s jobs, what they buy, and what they are able to buy.
Brian E and Niketas Choniates – Another distillation on free trade. I think the whole thing depends on frames of reference. In theory, if you have perfect free markets, the entire system (I.e., the entire globe) operates more efficiently and all consumers benefit. Even with the imperfect free trade we have now, it’s hard to argue that there aren’t economic benefits (i.e., goods are being produced for less and prices are lower). On the other hand, if you look at it from the perspective of individual pieces of the system, there are losers. The US has lost manufacturing jobs. The US has lost know-how. The problem, in my view, is that the whole thing is a trade-off. If you want to use tariffs to shield more expensive production in the US, for jobs, know-how, and the like, consumers are going to pay a price (literally) in terms of higher prices and slower economic growth.
So Trump selling tariffs as good economic policy is going to be a flop if he ever gets to do it at scale. Prices will go up. Economic growth will go down. Maybe the benefits in other areas make that a worthwhile trade-off, but he’s not selling it as a trade-off.
Overruling it now after nearly a century would be a political disaster, though, and not just because it would inconvenience federal employees. Think Dobbes on steroids, except this time the issues would affect people’s jobs, what they buy, and what they are able to buy.
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Thanks for the bonus tell.
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I’m sure restaurant employees at your local mall will suffer nervous breakdowns at the thought that only county and state inspectors will be prowling through the place rather than pests from OSHA.
Art Deco – Snark all you want. If you really think that “abolish OSHA” is a winning political message, the joke is on you.
And that would be just one of about two dozen similar lines of attack if Wickard went down.
Example – do you really think that the right will enjoy political success with the Democrats running to “restore” child labor laws? Are you really counting on GOP candidates to educate the public about the difference between state and federal child labor laws. (“No, I’m not against all child labor laws, only federal child labor laws.”)
Look, you’re right on principle, but I think you grossly misjudge the politics.
Concerned Conservative – wrong on principles, wrong on effects, and right on convenience. Because overturning judicial and societal abominations (Roe V Wade, slavery, etc.) is hard work and takes generations.
Concerned Conservative – go with the flow!
Example – do you really think that the right will enjoy political success with the Democrats running to “restore” child labor laws?
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Do you really think any of us cannot see through cheesy sales pitches?
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For anyone who might be momentarily distracted by the chaff Bauxite is tossing around, the point of Wickard was to declare the distinction between inter-state and intra-state commerce to be factitious and to allow federal intervention into any and all transactions. Which in turn prevents local actors from setting their own standards in re what is and is not apposite.
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They’ll enjoy just as much electoral success as they do with this year’s federal gun control bill.
If even commenters here won’t defend basic economic principles, then I can see why Harris’s price controls are going to be really popular. Nixon’s were at first.
It’s the same thinking behind protection as behind price controls: there’s a fixed pie, the prices are “unfair”, somebody’s cheating us somehow getting more than their fair share, and there oughta be a law, and the government’s going to pick who’s worthy of this kind of help.
Prices are a signal. If foreigners do something cheaper than you do, let them and focus on something different. If they can do it by poisoning their environment and paying their own people less and taxing their people to subsidize that industry, they’re punishing themselves already. They’re not punishing us, because the money we save on buying that we’ll spend on other things we want, the pie is not fixed. We can’t punish them more without damaging our own people, because our own consumers pay 100% of the cost of every tariff.
There are always winners and losers in the economy for all kinds of reasons. No one has a right to expect their business to be kept prosperous for all time. If you can’t match a price, that’s valuable information telling you not to be in that business. There are any number of other businesses you can be in.
If you’ve got a moral objection, slave labor or something like that, consumers might cheerfully pay that extra cost. But pretending that we somehow economically do better by making everyone pay more for a few favored industries is a deception that is very convenient to the connected and the powerful.
@BrianE:Being from Yakima
The Palms Springs of Washington? No, I’m not from there, but I used the tallest building in Yakima as a metaphor–the first cities I thought of actually had some decently tall buildings…. There’s not a word like “bicoastal” for people at home in both halves of Washington State, unfortunately. I do visit Yakima at least once a year.
If even commenters here won’t defend basic economic principles, then I can see why Harris’s price controls are going to be really popular. Nixon’s were at first. -Niketas
Your premise is faulty, IMO. It’s not an issue of “defending basic economic principles”. Ricardo was revolutionary at the time, but his model fails to account for the market distortions dissimilar governments can artificially impose. I think a more modern version is “free and fair” trade.
I think that’s the model the Trump administration took and will continue in a second term.
“That’s not more economic activity. It’s extra economic activity by the industries you are focusing on, paid for by the destruction of the industries you are not protecting. Their demand is suppressed because the consumers are paying higher prices to the favored industries that they otherwise would have spent on the industries you are ignoring.” – Niketas
You are assuming there is no disposable income. The other industries aren’t being “destroyed” since they are able to compete with foreign competition because of a natural/technological/intellectual advantage. What the tariff is doing is protecting a vital industry from foreign predatory market manipulation through subsidization/currency manipulation/and other protectionist policies of their own.
We have no problem recognizing predatory/anti-trust actions by domestic industries while allowing these same practices by foreign governments acting on behalf of their industries.
We abandoned laissez-faire and caveat emptor long ago. I would suggest that “the pursuit of happiness” as one of the mandates our government should be seeking is good economic conditions for it’s citizens. Given the enormous transfer of wealth that’s occurred during the last 30 years which, by the way coincides with mega “free” trade agreements and the inclusion of an authoritarian regime in the “free” trade club is attributable in part to this globalization. Some have benefitted at the expense of many.
I’m not sure this is an analogy to international trade, but our local Public Utility District (electric production) owns (operates) two of the dams on the Columbia and the benefit to the local area is relatively cheap power– and an excess that is sold by contract to other parts of the country– but we retained the right to more than we used.
With the inception of data centers, several of the large tech companies have built server centers here. They consume large amounts of power– but employ relatively few people. The county benefits because of the total value of the centers.
As I said, I worked for a construction equipment manufacturer that also used a lot of power, but also employed 800-1200 people (cyclical business). They didn’t pay the same amount of taxes to the county as the server farms but obviously employ a lot more people.
Which is better for our local economy? Which one produces more prosperity?
@BrianE:You are assuming there is no disposable income.
No, I’m not. That extra $0.10 in my scenario was income being disposed of on other products. I think you’re saying that everybody was just hiding that $0.10 under their mattress and the tariff will force them to dig it out? Even if that were true, shouldn’t they get to decide if they want to spend it or not?
I’m not sure this is an analogy to international trade, but our local Public Utility District (electric production) owns (operates) two of the dams on the Columbia and the benefit to the local area is relatively cheap power– and an excess that is sold by contract to other parts of the country– but we retained the right to more than we used.
Lol, those dams are literally socialism. It is government ownership of the means of production. And the grid you put that power on is owned and operated by the Federal Government. More literal socialism.
This is what I’m talking about when I say people say they’re against something and later say they are for it. You just made an argument for price controls and government ownership of the means of production and don’t seem to realize you have done so.
You see the big shiny dams (I know those dams well, and am being gently ironic), and you like the cheap power, and you see the big connected people moving in to take advantage of artificially low prices propped up by the taxpayers in states you don’t live in, and the opportunities for your neighbors to labor for them and help them make more money. You’re seeing the winners the government picked and admiring them. What you don’t see is what else people could be doing if the government hadn’t put its fat thumb on the scale. Understandable you feel that way, but your ideas are not based on principles but on feels. We can’t all get ahead through government favor.
Be a socialist if you want, just don’t pretend you’re not one. It’s not like the dams don’t work or the grid doesn’t deliver power, and every socialist thinks everything can be run as well as that if only the Top Men at the government ran things “rationally”. They’re sure it can be done with health care, for example. Medicare for all, make all the hospitals public utilities, the government will set fair prices and make sure that everyone gets their fair share… oh how many times do we hear it, and yet it somehow always seems shiny and new.
This is what I’m talking about when I say people say they’re against something and later say they are for it. You just made an argument for price controls and government ownership of the means of production and don’t seem to realize you have done so.
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He’s referring to utilities, not ordinary commercial or industrial enterprises.
Niketas, the Grant County PUD financed and built Wanapum and Priest Rapids dams. Nothing to do with socialism.
https://www.grantpud.org/generation
The Bonneville Power Administration (BPA) is a federal agency that owns and operates the transmission lines connecting the various energy sources in the PNW and sells the power at wholesale prices to utilities.
But that’s a whole other issue.
Niketas, I don’t fault you for not knowing that there are a few dams on the Columbia and Snake that weren’t built by the federal government and operated for the benefit of the PNW, and parts of California, Wyoming, Nevada and Utah.
I think I understand your argument. If the government is going to subsidize and finance infrastructure, they are picking favored areas of the country or economic sectors at the expense of other areas– similar to the government supporting/protecting industries with tariffs at the expense of others.
This is no more persuasive than the other arguments, IMO, because the government supports/subsidizes sectors/industries internally and has for decades/centuries(?). Why is protecting essential industries from foreign predators/competition any less a proper use of government?
We have stable food prices and a plentiful supply because of government support. As a society that benefits all of us– as there is nothing more fundamental than food (maybe water).
The fact that our third largest trading partner is China with whom we also have the worst trade deficit, and is an adversary and has been for decades should make it even more obvious that “free” trade has been anything but.
President Trump’s goal for MAGA is based on refueling the American industrial engine. His administration reached 3% GDP growth only one time in his first term, though he was creating the environment to make that once again the norm. Trump’s policies are an attempt to grow the economy out of our debt crisis. I should add part of the equation is deregulation where it has crippled the economy. The alternative will be to inflate us out– and that will wreak unimaginable chaos.
But back to your socialism charge. We probably need to make a distinction between government payments for consumption and government infrastructure investments. Otherwise we’ve been going down the socialism path since the Louisiana Purchase. We’re all socialists now.
But that’s the topic for another debate.
Nik’ talks a good game but doesn’t appear to know details or specifics as shown by the Grant County PUD low head hydropower dams versus the much much bigger Federal hydropower dams upstream and downstream on the Columbia River relative to those owned and operated by Grant County. Counties are a thing.
And the usual superiority complex from Nik regarding “the commenters here” and them being socialists.
We are not worthy.
@BrianE, ArtDeco: I do know who owns which dams (and the grid). But county governments are still governments. Utilities are still government ownership of the means of production. Government ownership of the means of production is still socialism. That is where socialism started in the nineteenth century and has been working to ever since. It may be socialism you’re comfortable with and used to and it even works well enough in that we almost always have electricity and we don’t complain too much about the rates, but it is still socialism.
It seems you guys object to the word “socialism” and not the thing itself; you’re happy to call it a “utility” or say “owned by the county”. If you don’t have an objection in principle to governments running industries for us, then there’s no point in objecting to Harris’s grocery price proposal as “socialism”.
Government ownership of the means of production is still socialism.
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Call it ‘stickball’ if it will help you feel better. It is a natural monopoly and thus a market failure. None of the three models for provision of monopoly services are altogether satisfactory.
Niketas, now this is a novel twist.
I don’t think anyone commenting here is objecting to Harris’s proposal for price controls because it is socialism, though it will increase the government control of the economy. I object to it, as others have, because it won’t achieve it’s desired aim. The conditions that would require some form of price controls doesn’t exist at this point.
Like I said, ever since the Louisiana Purchase we apparently have been socialists, unless we distinguish that part of governments purpose is to help in creating the conditions where capitalism can flourish.
https://x.com/guang_lie/status/1824837259000213615
Niketas, this blog post is four years old, but things haven’t improved during the Biden term. Our trade deficit with China in 2023 was $353 billion.
This is an example of a country that we should trade with?
What is going on with China right now ?
https://chicagoboyz.net/archives/62922.html