Kamala Harris has recently advocated price controls on food to suppress what she calls price-gouging.
This underscores her incompetence, because grocers profit from rapid turnover on low-margin items, as opposed to high markups.
According to Newsweek:
The campaign claims that many large grocery chains have kept prices high despite stable production costs, leading to their highest profits in 20 years. That fails to take into account that grocery stores tend to have razor-thin profit margins, typically between 1-3%, far lower than other retail sectors.
More to the point is that price controls result in shortages, black markets, or both. The rebel Jack Cade, as portrayed by Shakespeare in Henry VI, Part 2, made this clear more than five hundred years ago as he made the call for it. (Cade lived during the fifteenth century, Shakespeare in the sixteenth and seventeeth.)
Shakespeare’s audiences included lower-class Britons known as groundlings, as they had to sit on the ground because they could not afford seats in the Globe Theatre. He accordingly wrote in crude, lower-class humor known as comic relief into his plays to appeal to this demographic, which often could not even read or write. They nonetheless worked for a living and understood that one cannot have something for nothing, as had been promised by Cade.
CADE: Be brave, then, for your captain is brave and vows reformation. There shall be in England seven halfpenny loaves sold for a penny. The three-hooped pot shall have ten hoops, and I will make it felony to drink small beer. All the realm shall be in common, and in Cheapside shall my palfrey go to grass. And when I am king, as king I will be—
ALL God save your Majesty!
CADE I thank you, good people.—There shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers and worship me their lord.
The groundlings, along with everybody else, laughed their heads off at Cade’s outrageous campaign promises. They knew fully well that, if the king decreed that bakers must sell seven half-penny loaves for a penny, bread would become available only on the black market if there was any at all. The same went for the proposition that the three-hooped pot should have ten hoops, i.e., the price for the contents of the former would now buy the latter. They also knew that the king could not abolish money and proclaim that all should eat and drink on his score because somebody had to pay the farmers, millers, and brewers and few if any kings could afford to do that.
Is Kamala Harris Insane?
The source of “The definition of insanity is doing the same thing over and over and expecting different results” is unknown, although it has been attributed to Albert Einstein.
The American Institute for Economic Research, in “4,000 Years of Failed Price Controls” shows that rulers in Mesopotamia, Athens, Rome, and elsewhere attempted to control prices with utterly ruinous results.
The article adds that, in Bengal in 1770, price controls killed ten million people through starvation. It quotes Adam Smith’s The Wealth of Nations as follows:
When the government, in order to remedy the inconveniencies of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or, if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season.
The AIER paper continues, noting that Andrew Dickson White, a co-founder of Cornell University, wrote of price controls in revolutionary France:
The first result of the Maximum [price law] was that every means was taken to evade the fixed price imposed, and the farmers brought in as little produce as they possibly could. This increased the scarcity, and the people of the large cities were put on an allowance [read: rationing].
The same reference adds that President Richard Nixon imposed price controls on gasoline during the 1970s, with the result that stations had little gasoline to sell and people had to wait in long lines to get what little there was.
Investopedia adds:
“Over the long term, price controls can lead to problems such as shortages, rationing, inferior product quality, and illegal markets.”
and cites as a reference the Federal Reserve Bank of St. Louis, which stated:
Prices allocate scarce resources. Price controls distort those signals, leading to the inefficient allocation of goods and services.
Kamala the Kwack
Kamala Harris is, despite the long record of price-control failures, promoting this quack remedy to appeal to consumers who are frustrated by high prices, much as a cancer quack sells a patient an opiate that reduces immediate discomfort but does not cure the disease and will cause harm in the long run.
If she does not know that price controls usually lead to ruinous results, she is incompetent. If she knows and promotes them anyway, she is dishonest.
Consumers actually have some control over prices in a free market system, quite unlike Harris’s proposed command market system. If they don’t like a price hike, they can leave the item on the store shelf until the retailer has to knock the price back down to sell it at all if it can be done. For example, even though groceries are a necessity, consumers can buy the generic store brand which generally costs less than items with fancy labels.
I am not sure how Ben & Jerry’s can get $4.99 a pint for their ice cream, and not let consumers buy economical three-pint quantities, when store brands are about $3.50 for three pints and Wal-Mart sells a gallon for less than seven dollars. Sam’s Club, where I live, sells Member’s Mark ice cream for $7.28 for ten pints. “Organic” is meanwhile often code for “same food, higher price.” The store brands of coffee and tea are usually less expensive than those with fancy labels and packaging. Consumer education is therefore a far better approach than government mandates in reducing some of the pain.
Under price controls, consumers have no control at all over the availability of products, which will disappear from store shelves under price controls, either to be hoarded by others or not produced at all at government-dictated prices.
That’s because the root cause of the high prices is inflation, which is solely a monetary problem, brought on by too much government spending. Too many freshly printed dollars chasing too few goods in an economy results in inflation, including higher input and transport costs for farmers and food processors and distributors. That includes even Ben & Jerry’s. Kamala Harris brought the inflation through her tie-breaking votes on several behemoth spending bills in the Senate during her administration and here we are. She’s actually responsible for the soaring prices at the grocery, but she blames producers and hopes to win votes for it.
Harris also wants to give first-time home buyers $25,000. That will tack $25,000 onto the price of homes as the underlying inflation will not be addressed. Taxpayers will be the ones who pay.
Did anybody give us money toward our first home? If not, why should our tax money be used to help Kamala Harris buy votes from first-time home buyers in November?
Does Kamala the Kwack know we are $34 trillion (when I last checked) in debt? Where is she going to get the money? While this debt is already growing in leaps and bounds, this will turbocharge the debt.
If you think inflation is bad now, just wait until Kamala gets through with us; the subsidy she proposes for housing is likely drive prices higher, and interest rates higher.
The effect of this economic quackery on Argentina is highly instructive.
ABC News of Australia explained it well in the article with this headline:
How Argentina went from one of the world’s richest nations to 100 per cent inflation, with ‘mountains of money worth nothing.
It could happen here if Kamala Harris wins the election, so we must do everything possible to educate swing voters and centrist Democrats before the polls open for mail-in ballots. Use social media, talk radio, and letters to the editor to reach as many undecided voters as possible, and donate to the Republican National Committee to get out the vote. The economy we save might be our own.
Civis Americanus is the pen name of an American Thinker contributor who remembers the lessons of history, and wants to ensure that our country never needs to learn those lessons again the hard way.
Image: Picryl // public domain
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