Price controls: Kamala Harris is proposing some

Price controls imposed by government must be the prime bogeyman haunting the nightmares of mainstream economists. (I mean, except for maybe the state appropriating the means of production, or something on that scale.)

Corporate monopoly control of prices doesn’t tend to bother them so much.

But some economists and economics journalists actually try to focus on what happens in the real world when evaluating economic policies, and not just on the preferences of oligarchs. Bob Kuttner, for example:

Harris’s general emphasis on price-gouging is a policy area where government can make a huge constructive difference without spending large sums. It is good economics and smart politics on several counts.

First, it vividly connects with the issue of inflation where ordinary people feel it. Grocery store prices have increased only slightly over the past year, but consumers remember exactly what a quart of milk or a dozen eggs cost before the supply shocks of the pandemic. In addition, supermarket profits are notably higher than before the pandemic, which means that prices should have moderated more.

Second, the plan reframes the issue from whether Biden or Trump was better at containing an abstraction known as inflation to how corporate concentration opportunistically drives price hikes. The right remedy for that ill is not slowing the economy generally, as the Federal Reserve has done, but going after the root cause. This is also a useful shot across the Fed’s bow.

Third, the approach recasts the struggle as ordinary people vs. predatory corporations rather than impersonal forces, with Harris in the role of champion of beleaguered consumers.

Is Harris right on the economics? A detailed study by Groundwork Collaborative found that corporate concentration and increased profits accounted for more than half of the inflation felt by consumers in 2022 and 2023. [my emphasis] (1)

Kuttner calls this approach “pocketbook progressivism” in the mode of Elizabeth Warren.

Harris and Walz are so far giving indications that they will continue moving away neoliberal dogma in economic policy toward something more like a left-Keynesian position, a process that Biden began. Biden has seemed remarkably stuck in the past on foreign policy issues, especially on Ukraine and Israel. But on economic policies, he has moved distinctly away from the strict neoliberal orientation of the Clinton and especially Obama Administrations.

Obama spent much of his first Presidential term pushing foe “entitlement reform,” the universal euphemism for “cutting Social Security and Medicare.” Fortunately for American seniors, the Republicans were too arrogant and radicalized even then to take the gift Obama was offering them, even though cutting Social Security and Medicare have been Republican dreams since those programs were enacted. But they were right to see that Obama was validating two of their most radical and antisocial goals with his “entitlement reform” nonsense.

It wasn’t enough to get Mitt Romney elected in 2012. But Obama’s reluctance to embrace progressive economic goals was a big factor in making it possible for a radical loon like Donald Trump to get into the White House. With programs like the Green New Deal, a positive position on labor issues, and stronger antitrust enforcement, Biden did make some real steps in the right direction.

If those approaches were also a holdover from the past when those were more standard Democratic approach, that’s fine. Moving away from more progressive economics was always bad policy and bad politics.

In any case, Trump is calling Harris and everyone else on the spectrum from NeverTrump Republicans to everyone left of them a bunch of Commies. “We pledge to you that we will root out the communists, Marxists, fascists, and the radical left thugs that live like vermin within the confines of our country," he told a crowd of his groupies in New Hampshire late last year. (2)

In the spirit of “if you're gonna do the time, you might as well do the crime,” Kamala should bring on the price controls. She might even want to try expropriating X/Twitter from Elon Musk while she’s at it!

Notes:

(1) Kuttner, Robert (2024): Economics According to Harris. The American Prospect 08/16/2024. <https://prospect.org/blogs-and-newsletters/tap/2024-08-16-economics-according-to-harris/> (Accessed: 2024-17-08).

(2) Kurtzleben, Danielle (2023): Why Trump's authoritarian language about 'vermin' matters. NPR 11/17/2023. <https://www.npr.org/2023/11/17/1213746885/trump-vermin-hitler-immigration-authoritarian-republican-primary> (Accessed: 2024-17-08).