[Kamala] Harris takes page from communist Cuba’s playbook with war on prices [price controls].
The Washington Times, Aug. 16, 2024
When your opponent calls you ‘communist,’ maybe don’t propose price controls?
It’s hard to exaggerate how bad Kamala Harris’s price-gouging proposal is.
The Washington Post, Aug. 15, 2024
The [Soviet] system of price controls had deleterious effects both for Soviet consumers and the [whole] economy …. Shortages of most foods led to lower quality diets, and many consumer products routinely available in the West, telephones, cars, and modern washing machines, were amazingly rare in the Soviet Union. Less housing space per person, no central heating, no air conditioning, often no sewer connections or hot water. … Yet even this draconian option fails to prevent hyperinflation in the end.
The Mises Institute, 1/3/2022
[Democrat’s] … think they are God and know better for everyone else than we know for ourselves.
Former Democrat Party rising star, presidential candidate Tulsi Gabbard (HI, 2nd district) Mar. 29, 2024
Since the Biden-Harris administration drove inflation up to 40-year highs and does not want to take responsibility for it, comrade Harris, taking a page from communist playbooks, says she will “solve” the problem, which she blames on “price gouging,” by introducing “price controls” over basic goods such as groceries. That is, Harris claims the higher prices under the Biden-Harris administration are caused, not by the Biden-Harris economic policies, but by “price gouging”. One is not supposed to ask the obvious question why the “price gouging” flourished under the Biden-Harris, not the Trump, administration.
One also notices that comrade Harris, as is standard for Democrat Party economic pronouncements, gives no support whatsoever for her claim that grocery stores are “price gouging.” In fact, grocery stores operate on an extremely thin profit margin. According to the Food Industry Association (FMI), “In 2023, profit margins in the grocery industry hit 1.6%, the lowest level since it was 1% in 2019, as total expenses increased.” One wonders how grocery stores manage to stay in business because:
“Running a profitable grocery store is no easy feat. With those notoriously low profit margins industry-wide, your success depends on smart management, efficiency, and leveraging technology. In short, maximizing returns on every square foot of retail space and dollar of inventory …“
That is, to make a profit in a grocery store one actually has to know something – a foreign concept in our political class. One cannot just sit in one’s plush office in D.C. or Moscow and decide, godlike, what the price of a dozen eggs should be.
Comrade Harris does not grasp that in a market-based economy, the price of a commodity reflects important information about the cost of producing that commodity and getting it to market. The effect of price controls, therefore, is to destroy that essential source of information, leading to shortages and other crises. To take one instructive example, Nobel Prize winning economist Milton Friedman explains how the price controls imposed by the US government in 1973 in response to the high price of OPEC oil “prevented information about the OPEC Cartel from being transmitted accurately to petroleum users,” which ended up by strengthening OPEC because the artificially controlled lower prices did not motivate consumers to economize the use of oil (and also required an expensive government bureaucracy to allocate the scarce supply of oil). When one stomps down the crease in a rug, it just pops up somewhere else. The price controls, designed to “stick it” to the OPEC cartel, ended up hurting American consumers and helping OPEC. What a surprise!
Since comrade Kamala’s call for price controls on groceries is not based on any data whatsoever, how does she “know” there is grocery price gouging?
Karl Marx taught that human history is the history of class struggles, where the two essentially antagonistic classes, capitalists and workers, are defined in purely economic terms. That is, Marx begins with the assumption that there is, so to speak, a “good guy” and a “bad guy”, where the “bad guy” is the evil capitalist exploiting the oppressed workers. Once one has imbibed this basic Marxist picture, whether one is a card-carrying Marxist or not, everything becomes very simple. One does not need to do any empirical research to determine whether the grocery stores are “price gouging”. For one hears it everywhere in the virtue-signaling culture that it is the evil capitalist grocers who are exploiting the poor workers.
As University of Chicago economist Thomas Sowell puts it:
Marx … produced such a comprehensive, dramatic, and fascinating vision that it could withstand innumerable empirical contradictions, logical refutations, and moral revulsions at its effects. The Marxian vision took the overwhelming complexity of the real world and made the parts [seem to] fall into place in a way that was intellectually exhilarating and conferred such a sense of moral superiority that opponents [of Marxism] could be … dismissed as moral lepers or blind reactionaries.
After Marx, therefore, one doesn’t actually have to know anything about grocery stores and their profit margins to become a (pretend) “moral hero” and stick it to the “moral lepers” (the grocers) by imposing price controls on them. One already knows, without evidence, that the grocers who provide the food your children eat, are the bad guys. The high prices at the grocery store cannot be the supply line problems that emerged under the Biden-Harris administration Transportation Secretary Pete Buttigieg because he was picked for “identity politics” (he is gay), not because he knew anything about the US transportation system. They cannot be caused by the Biden-Harris administration’s profligate inflationary spending. They cannot be caused by the Biden administration’s attack on fossil fuels that makes energy, and therefore everything else, much more expensive. Of course not! The high price of groceries must be caused by the evil capitalist grocers, not by government incompetence. How very convenient for the Biden-Harris administration.
The truth is much the reverse. Whereas the simplistic Marxist message is that the capitalist is inherently exploitative, the capitalist is, in fact, the person who finds a way to provide the car you drive, the house you live in, the food you eat, the schools your children attend, the medicine you take when sick, etc. Marx himself, unlike his rather less inspired American progeny, well understood the unparalleled productive power of capitalism.
A politician who is a lawyer may know something about lawyering but generally does not know anything about how to run an economy, or international relations, or health care, and so on. Knowing literally nothing about these problems, politicians find it very easy to dream up simplistic schemes for solving them. Ignorance is so simplifying.
It may be true that when God says “Let there be light!”, then there is light, but it is, unfortunately, not true that when some demagogic politician says, “Let there be low grocery prices,” then there are low grocery prices. Quite the contrary, interference in the market by politicians who know nothing about how markets work often leads to quite the reverse, market chaos, high prices and shortages. The Soviet people learned that the hard way, which is why the Soviet Union doesn’t exist anymore. Whoever would have thought, 40 years ago, that a US presidential candidate would promote this discredited destructive nonsense!
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