Given all the discussion of price controls that has erupted since Kamala Harris made a pitch for such a policy to deal with the inflated costs of food and housing which she attributes to price gouging. This pitch is an obvious play to obfuscate the serious inflation issue that the Biden Harris administration has dumped on the American economy by the egregious level of their agenda driven spending. This policy statement has been roundly criticized by many politicians and virtually all economists. Her total lack of economic knowledge is now on display because soaring prices, in a functioning free market environment, are the result of inflation and not the cause of inflation. Also, at almost every point in time since 2021, as inflation increased to painful levels, the producer price index (PPI) moved in unison with the consumer price index (CPI), which means that producers were only passing on their increased cost. The connection of price controls and Marxism that has been painted on Kamala Harris does have validity given her long history of policy statements and actions that disclose her far left persona. The disastrous effects of price controls are true in almost all circumstances for a reason whose roots are imbedded in microeconomics and logically aggregated to the macro analysis of any economy. The link between price controls and Marxism is attributable to the fact that this misguided mechanism has been adopted by so many socialist countries with consistently horrible outcomes – commonly referenced countries include Cuba, Venezuela, Argentina, and the Soviet Union. Central decision making, without the benefit of a free market to efficiently allocate scarce resources, will always lead to imbalances between supply and demand. When inflation occurs, and it will, the typical socialist reaction is price controls. It should be noted, however, that Richard Nixon and Jimmy Carter also dabbled with price controls with the same negative outcomes.
Kamala Harris’ concentration on food and real estate and her presentation of cures for the radically increased cost of these subsistence goods and services is, in effect, an admission that the Biden Harris Administration ushered in a crippling inflation that buried the middle- and lower-income wage earner. In order to duck the obvious connection between her history as vice president and the recent debilitating inflation, she is now perfecting her adaptation of the dance move known as the “Texas Side Step” (humorized in the movie “The Best Little Whore House in Texas”) by implying that nasty price gougers (or as she said price gaging) have been the culprits behind those painfully high prices.
Note that in the following minimally technical microeconomic analysis of price controls, it is recognized that the profit margin associated with grocery stores and the food industry in general is below 2% in comparison to Nvidia’s profit margin of over 57%. Real estate issues are directly tied to supply and demand for properties in as many different markets as there are cities, towns, and rural areas across the country. Since price controls make no sense in addressing the high cost of homes, her fix for unaffordable housing is to offer $25,000 for first time home owners to apply to their down payment.
There is an intuitive microeconomic concept that a rational supplier of any good or service will only offer for sale the quantity of that good or service where the cost of producing the last unit sold does not exceed the revenue generated by the sale of that unit. Keep in mind that the amount of capital investment establishes the physical production capacity of the seller, and that the marginal cost of selling each consecutive unit decreases at first as economies of scale prevail, which continues until the level of production, given the capital facility limitations, reaches a point where their production efficiency decreases instead of increases. After that level of output, when output increases to the point where total production capacity is reached and average cost equals average revenue (i.e. price), no more units can be sold at a profit (money will be lost with each additional unit sold). In the case of food production, which operates with a razor thin profit margin, any drop in the price below the normal market price will force the seller to decrease production to the level where the last unit sold is not sold at a loss. That is why price controls have consistently led to long lines and empty shelves. Congratulations Kamala, you just supplied plenty of cover for Donald Trump to call you comrade Kamala, because only the communist countries have imposed price controls repeatedly with the same horrible results. More importantly, the imposition of price controls by communist countries has always followed periods of severe inflation caused by poor central decision making. That does sound familiar.
To clearly confirm her lack of economic knowledge Kamala has, as mentioned above, proposed giving each first-time home buyer $25,000 to apply to the down payment. She does not have the insight and analytical capability to realize that her plan would irrationally amplify subprime mortgages in a manner that is reminiscent of misguided policies that led to the 2007-2008 subprime mortgage crisis, which was one of the primary causes of 2007-2008 global financial crisis. In an article posted in georgeeconmics.com, “It’s a Political Year – The Far Left’s Communication Skills Shine Again”,I recognize and highly praise the ability of the Democrat party to camouflage their economically disastrous agenda driven policies and how they have run Kamala Harris through their reimaging room for a complete make over to make her far left persona look and sound more like a moderate. Undoubtedly, she will revisit the reimaging room to cover up these two new “faux pas” which have disclosed her real self, aided by the lock step cooperation of the network media arm of the Democrat party. I would not be surprised if the new deception will be that the actual words that she used were intended to mean something different than they clearly mean or some other form of meaningless nonsense that will be repeated over and over again by the politically biased network media for a week or two – after which the network media will totally ignore the issue.
We need to ask; should we join the left leaning network media in salivating over all of the nonsense coming out of the Harris campaign that sounds good to those voters not attuned to the basic concept of what economic policies actually work, as they propose counterproductive fixes to the economic pain their agenda driven policies have inflicted on middle- and low-income workers over the last three plus years? I have faith that the Democrat spin masters in their makeover room will flesh out Kamala’s far left policy statements in a manner that paints a different picture than the actual wording of her policy statements. This clearly means, a little “shake and bake,” coupled with some air brush activity, and “voila,” Kamala has the solutions to the problems she was instrumental in creating. It may not be obvious, with all of the recent smoke and mirrors narrative that clouds reality, but virtually all of the inflationary problems that have plagued our country in the past few years, coupled with a proposal of price controls, are attributable to misguided central decision making – a tell-tale sign of Marxist failure.