Vice President Kamala Harris is anti- capitalist . She does not understand basic economics . Her words and actions tell us that. She supports price controls, and she accuses businesses of corporate greed and price gouging.
Price controls don’t work. Business is a price taker, not a price setter. The free market sets prices where supply and demand for a good or service intersect. That is a basic principle of Economics 101. Price controls have been tried throughout history. Ultimately, they always fail. Price controls lead to shortages. Price controls create black markets. Price controls create false price signals. Capital is destroyed.
Under President Richard Nixon, price controls were imposed for gasoline prices. Long lines and fights followed. Today, President Joe Biden, with the full throated support of Vice President Harris, is celebrating price controls on prescription drugs. But economists tell us that pharmaceutical price controls will lead to reduced research and development spending on new, lifesaving drugs.
Vice President Harris also supports price controls on rents. Evidence from New York City and other municipalities that impose rent controls demonstrates that rent controls lead to housing shortages, higher prices for existing units, lower investment in new rental housing, and decreased expenditures on housing maintenance.
The evidence is abundant that price controls don’t work. So why do Biden and Harris push for price controls?
Simple. Because they want to buy the votes of people who do not understand or do not care about basic economics. Biden and Harris pander to the ignorant and selfish and not to the national interest. Harris also accuses the supermarket and food industry more generally of corporate greed, of price gouging in plain words.
But food prices at supermarkets are higher than pre-COVID-19 levels not because of greed or gouging. Prices are higher because of investment in supply chain resilience and wage inflation caused in large part by the policies of the Biden-Harris administration. The administration pushed hard for higher wages for lower-wage workers. The administration dropped money on the economy during the pandemic.
Wage inflation was the consequence. Supermarkets raised prices to account for higher wage costs. Wages and prices will converge. Supermarkets in the United States do not earn extraordinarily high economic returns. The average return on invested capital in the supermarket sector is under 11% , well below average across the economy.
The supermarket sector is intensely competitive. Walmart drives prices lower across the industry.
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Its intense focus on costs and prices ensures low prices for everyone who chooses to shop at Walmart.
Harris is a far-leftist who does not believe in capitalism. She believes in an all-powerful big government. The people know about big government from the real-life lessons of Cuba and Venezuela. Harris is the socialist wolf knocking on doors.
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