How does Trump differ from Harris? Take, for example, how the two respond to the leading complaint (inflation) about the most concerning issue (the economy).
Trump proposes to continue many initiatives he started in his first term as President, removing the artificial constraints government imposes on production. His ideas include lowering taxes, increasing American manufacturing capacity, and halting the government’s devastating monetary policies that cheapen the value of the dollar.
Contrast that with Vice President Kamala Harris’s answer: empower the Federal Trade Commission to determine what prices should be, and to start fining (maybe even locking up) anyone who charges more than the “government-determined” right price.
Harris’ idea is called “price control,” and it is not a new answer to consumer pain. Communist countries around the world use price controls to keep themselves in power, offering “cheap bread” as the reward for giving up personal freedom.
Even the United States flirted with peace-time price control in the early 70s. Richard Nixon asked Congress for price-setting power in the Economic Stabilization Act of 1970, promising he would curb crippling inflation. Nixon appointed 22 members to a national Pay Board and Price Commission with the power to set prices, rents, wages, salaries, interest rates, and dividends.
Economists now cite the experience as a policy failure. In 1973 when Nixon attempted to lift his price controls, both markets and household budgets were rocked by worse than inflation: they now faced dire shortage of basic necessities.
The result was so aweful that even Harris dances around calling her proposal “price controls.” But as International Center for Law and Economics’s chief economist, Brian Albretch, explains:
“Any policy that gives the government the power to decide what price increases are ‘fair’ or ‘unfair’ is effectively a price control system. It doesn’t matter if you call it ‘anti-gouging,’ ‘fair pricing,’ or ‘consumer protection’ — the effect is the same.”
The reason price controls fail is easily understood: prices are what prompt the decision to produce, or not. Prices set too high encourage a glut of production that has no buyer. Prices set too low cause a product to disappear from the store’s shelves with no one interested in making more of it. The inevitable result of government promising “low prices” is a shortage of that item.
But there are downsides to government price control besides just the inevitable economic consequence. Shortage is guaranteed even when an all-knowing government is motivated solely by an honest desire to help the poor.
But newsflash: government often is clueless of conditions that affect prices in specific regions, and not everything government does remains free from influence by corrupt and selfish interests.
Take cold storage of food, for example. Without expensive refrigeration and cooling, a head of lettuce has a fraction of the shelf life in Phoenix that it has in Pocatello. Gas prices in Idaho, however, are routinely higher as pipelines and tankers add cost in a state with no refineries.
Setting national prices without knowing unique “local” conditions will cause gluts and shortages that are “localized” and that give one region an economic advantage over another. In a government controlled by politicians there is no incentive to fix or eliminate this distortion. Rather, politicians will see the opportunity to use these distortions for regional economic advantage.
It is already a cliché that USDA crop reports must be kept secret to avoid commodities traders using the official estimates to game the options and futures markets. Can you imagine the secrecy needed around the actual setting of “right prices?” Every person involved will have the power to make one trader a billionaire and leave everyone else bankrupt.
Even if implemented free from the corruption commonplace in Washington, D.C., Harris will, at most, have created a bandage. The root cause, continual printing of new money making the dollar increasingly worthless, will, under Harris, remain unaddressed.
As Chris Neely, an economist with the St. Louis Federal Reserve, observes, “economists generally oppose most price controls.” Based on her answer to inflation, Harris may “identify” as a lot of different special interests, but one discipline she is not: she is no economist.
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