The Kamala Harris Economic Plan
Readers know that I lean conservative in the context of the literal interpretation the Constitution. What’s written there and what isn’t.
Normally I shy away from being overtly obvious in support of any political party or candidate.
But I can not be silent on the “economic plan” outlined by Kamala Harris on August 16, 2024.
Here’s a summary:
- Combating “price gouging” on groceries and food by authorizing the Federal Trade Commission to impose large fines on grocery stores that impose “excessive” price hikes on customers
- Eliminating medical debt for millions of Americans, possibly by using federal funds to buy and forgive outstanding debt from health providers
- Capping the out-of-pocket cost of insulin at $35 per month for all Americans
- Limiting Americans’ annual out-of-pocket spending on prescription drugs to $2,000
- Providing up to $25,000 in down-payment support for more than 1 million first-time home buyers
- Calling for the construction of three million new housing units over the next four years
- Expanding an existing tax incentive for developers who build affordable rental housing
- Removing tax benefits for Wall Street investors who bulk buy single-family rental homes
- Preventing corporate landlords from using algorithmic price-setting tools to increase rents by large margins
- Passing a child tax credit that would provide $6,000 per child to families for the first year of a baby’s life
- Expanding the Earned Income Tax Credit for lower-wage workers by up to $1,500
To an economist, other than the tax credits for children and low incomes, this list is beyond ignorant of the ideal government’s limited role in a free market economy – in one where price is determined by supply and demand and one where competition makes the consumer the price/cost winner.
The ‘plan’ to intervene on food prices – or the price of anything – with the idea of controlling inflation will have the completely opposite effect. Price determines supply under capitalism. Gov’t controlled prices reduce supply and ergo, increases prices. A reduced supply of groceries will also result in long lines to access them, especially the mainstays like milk, eggs, flour, and meat.
We older folks remember the long lines at gas stations in the 70’s as the government tried to control the price of gas after OPEC significantly reduced production to increase prices. It was a misguided, government produced nightmare intended for an opposite result. Younger folks should check the history books.
The same is true for the proposed rent controls. When the gov’t removes the incentive to produce and compete, the supply goes down and the commensurate pressure on price goes up.
The $25,000 down payment ‘gift’ to first time home buyers has similar problems. The obvious one is the incentive to the home seller to increase the price of the home by up to $25,000. Further, it increases government spending even more. And third, it requires taxpayers to foot that downpayment bill for people they don’t know. Who ultimately gets the $25,000? (It’s the same scenario for forgiving student loan debt.)
Ditto on the proposed medical outlays.
In order for any of these controls and handouts to work, and then at best only for the short term, is for the government to nationalize the private companies involved, including the food production system and the health industry, including pharma and hospitals. That means taking them over – owning them.
When you believe only the federal government can solve problems, you believe it all belongs to that government, including you. And if you go there, you believe in socialism. At that point capitalism is the enemy.
Capitalism and socialism are two different economic systems:
Capitalism is based on individual initiative, private ownership of capital goods, and market mechanisms.
Socialism is based on government planning, collective ownership, and limitations on private control of resources.
Whenever a government sets price controls subjectively and arbitrarily, it ignores the cost of delivering the product. How much does it cost to grow a bushel of wheat, develop and manufacture a dose of insulin, to build/maintain a house for sale or rent? You see, the propositions outlined by Harris ignore those costs and “set prices to supposedly help the proletariat” – the working class – when it ultimately hurts them.
I dare say the major cost of food, medicine and housing is energy, followed by personnel, and these days, technology. So, if the Harris approach is to reduce prices, the obvious actions should be to reduce the cost(s) of production. When it comes to energy, the Biden/Harris administration policies have done just the opposite – increased the cost of energy with no end in sight.
Then there’s profit – the bane of socialism. The “price gouging” by grocery stores is a meager profit margin of about 1.5%.
But profit is the incentive to produce – to increase the supply. If the grocery store must sell eggs at some reduced price because of government imposed control of the selling price for eggs, the supplier of eggs to the grocery store has less, or perhaps no, incentive (profit motive) to increase or even continue to produce the current number of eggs. The supply goes down. Supply down, price up. Dah!
In a nutshell, there you have it.
Will ignorance, coupled with production disincentive/anti-capitalistic ideology prevail in 2024 in America?
Is socialism the real Harris plan?
Allah help us if it is.
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Have a great and prosperous week.
Hug somebody.
References:
SPIDER Bytes
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