Government price controls and populist spending plans: The Democrat is presenting an economic program that is likely to exacerbate the problems she claims to be solving.
The honeymoon period is coming to an end. In recent weeks, Kamala Harris has been riding a wave of growing popularity without it being clear what the new Democratic candidate for the presidency actually stood for. Her constantly cheerful charisma and the refreshing contrast to the constantly grumpy Donald Trump were reason enough to cheer for the vice president. But at some point in every election campaign, there comes a time when, in addition to atmosphere, a minimum amount of substance is also needed.
In the footsteps of Nixon
That time is now. Harris has therefore indicated for the first time how she thinks about economic policy and what measures she intends to take as president to transform the world’s largest economy. The focus of her programmatic speech in North Carolina was the problem that most concerns American households with middle and low incomes: the sharp rise in the cost of living. Whether it is buying food or housing, life in the USA has become significantly more expensive.
As correct as Harris is in recognizing the voters’ most pressing problem, her prescriptions are just as wrong. The candidate is relying on state dirigism, on eliminating the market, and on populist accusations that big companies are fundamentally evil and only small corner shops embody the good. Nowhere is this more evident than in Harris’ announcement of a “nationwide ban on price gouging on food.” If Harris has her way, companies that charge too much for food should be punished by the state.
That may be applauded, but the consequences would be disastrous. State price limits always increase scarcity and thus inflation. Venezuela and Cuba have proven this. And it was also evident in the USA in the 1970s, where Richard Nixon wanted to combat inflation with price controls – and failed miserably. Inflation cannot be banned by decree. Nor can it be objectively determined whether a price is too high. In a market, that is decided by competition – not by a team of bureaucrats.
The state finances home buyers
Harris’ proposal to give $25,000 in grants to all first-time home buyers is also not very well thought out. Such generosity will not ensure that more families can afford a mortgage. It will result in housing prices rising even more, especially as demand increases accordingly. One may find such market logic unpleasant, but ignoring it means that public money is used to exacerbate the problems it promises to solve.
No one denies that life has become harder for many American families and that they feel they are stuck financially. But the inconvenient truth for Harris is that President Biden’s far too expansive spending policy has contributed to the already high global inflation pressure in the USA increasing even more. Harris shares political responsibility for this. Nevertheless, she seems willing to repeat Biden’s mistake. She is making plans that, if implemented, would primarily have a price-driving effect.
The Democrats emphasize that the presidential election is about two visions: Harris represents the future, Trump represents the past. Socially, that may be true. Economically, however, both candidates represent outdated ideas that have often proven their ineffectiveness in the fight against high prices. Trump relies on isolation and tariffs, which make imports and consumption more expensive; Harris advocates a planned economy pricing policy, which leads to pent-up inflation. It is difficult to say which is worse. One thing is clear: neither vision represents a successful future.