Can Kamala Harris Fix the Economy?

While it’s still unclear what Kamala Harris’s policies will be and the specifics of the few policy proposals she has made, we can look at a fascinating theory she has come up with and her proposed solution for that theory. On August 16, 2024, Kamala Harris laid out a few of her highly anticipated policy proposals. These policies have earned her praise from her supporters; however, many economists and historians have deep concerns about these proposals. Let’s take a deep dive and understand why that is.

Most Americans have felt the harsh realities of inflation over the past few years, even those with more than average means. Our dollars are simply not going as far as they used to. Let’s start with a simple question: what causes inflation? The simplest explanation is that inflation happens when the demand for goods and services outpaces the ability to supply those goods and services. Well, what can cause the demand to increase faster than the supply? One factor is a supply shock. Supply shock happens when there is a significant disruption to important economic input. Another factor is the money supply. This means that an increase in people’s money leads to them wanting to purchase more goods, while the supply cannot keep up with the increased demand. This is often referred to as demand-pull inflation.

Now that we know what the main causes of inflation are, it’s important to understand that the economy is designed to handle low levels of supply shock and a gradual increase in wages. The biggest hit to inflation is when these things happen at high rates unexpectedly. If you’re reading this, you should remember the very unexpected event of COVID-19. What happened during the pandemic? Many businesses were shut down (supply shock), and people were given a bunch of free money (money supply) to help them sustain themselves. Now we’re getting to the meat and potatoes, so I’m writing this think piece.

Let me first say that the pandemic was a time of uncertainty. Most people under 50 have never seen or experienced anything like it, so there is a level of grace that I choose to show everyone as far as their response to it. With that being said, who were the biggest advocates of shutting everything down and keeping everyone inside? Who were the main people pushing for stimulus checks for the citizens? That would be the Democratic Party. Even when we were coming out of the pandemic, they were still pushing for lockdowns and allowing people to abuse unemployment and eviction bans. They spent $800 billion on PPP loans in an attempt to keep businesses that were impacted afloat.

Trump was hesitant to approve this massive spending. However, he eventually agreed due to pressure from Congress and his advisors. Why Trump chose the advisors he chose and why he is choosing differently this time around is another topic for another day, but he decided to listen to his advisors and the people in Congress. Even with the 2020 pandemic, the economy was still relatively stable. In fact, when Trump left office, inflation was only at 1.4%, according to CNN. The highest inflation rate under Trump was 2.3%, a far jump from the 9.1% peak in 2022 under Biden. So, if inflation had been relatively under control when Trump left, then what would have happened?

Remember when we discussed supply shock being a main factor of inflation? Well, that also happened at the beginning of 2022 when Russia decided to invade Ukraine. The response from the US to discourage Russia from continuing its pursuit was to place restrictions and prohibitions on Russia’s ability to trade energy resources to the US. Energy is a vital part of America's economy, so inflation is likely to spike when there is an unexpected drop in supply. It should be noted that these restrictions were put in place through executive order by Joe Biden. This unexpected drop in energy supply is what led to the extremely high rate of inflation that peaked in June of 2022 at 9.1%. Why Russia felt comfortable enough to invade Ukraine in the first place is, again, another topic for another day. It’s almost as if it was beneficial to the US for us to have a working relationship with Putin where there was a level of mutual respect. That sounds like something a businessman would understand, but I could be wrong.

Now that we have an understanding of where inflation comes from and why it got as high as it did, where on Earth did Kamala Harris come up with the idea that inflation is primarily due to price gouging? What evidence has she presented to show that companies have been price gouging, and that’s why everything is more expensive? Is this real, or is she just trying to deflect blame from her administration in order to get people to vote for her? There is not a single company we can point to and say with any level of certainty that they are guilty of “price gouging.” Businesses feel the impact of inflation just like everyone else does. When there are major disruptions in the supply chain, businesses still need to operate and end up paying higher prices for the various supplies needed to operate. With prices going up, employees also need more money to maintain their lifestyles. There are also certain cities (typically liberal cities) that require significant wage increases.

These increases in costs have to come from somewhere; otherwise, the business will suffer losses and will no longer be able to operate. Instead of taking losses, businesses will gradually increase prices over time to compensate for the increase in expenses. The reason why prices seemed to go up so quickly is that inflation quickly went up, and while every business wants to try to squeeze pennies anywhere they can, to say they are to blame for the hike in prices is blatantly dishonest and an attempt to manipulate the American people from placing blame where it belongs; on the Biden administration. Kamala Harris and Joe Biden have completely deflected any accountability on how their leadership and policies have led to the current economic burdens on the American people. It is wrong, and if the mainstream media weren’t working hand in hand with the Biden administration, they would be calling them out on it.

Kamala Harris has fully fabricated the reason why our dollars don’t go as far as they used to, so what is her solution to this major issue? Federal regulations on grocery store prices, aka price control. Have we tried price controls before, and are they an effective policy? We have tried them before, and they are not an effective policy. In every case that not only the US, but other countries have tried price controls it leads to shortages and rises in the black market. This is because price controls prevent the price system from rationing the available supply on its own. When the government decides to fix a price lower than what is the current market value, it leads to a steep increase in demand. The supply chain is unable to keep up with the increase in demand, leading to empty shelves and causing more people to go without the goods altogether. Controls also lead to lower quality of goods because there is no incentive for companies to compete, so the quality of the goods no longer matters. We also see an increase in black markets for the goods that become unavailable, which can charge consumers higher prices than before the controls were in place. I don’t think I need to go into detail about the dangers of the black market since it follows no regulations at all.

Let’s talk about two examples of the realities of price controls' effects on the average American. In the 70s, the US set a maximum price on gasoline. This made gas much more affordable, but as always, it led to shortages in available gas. This caused gas stations to start selling gas on a first-come-first-serve basis, which made consumers wait in extremely long lines, not even to be sure they could fill up their tanks. By the time you factored in the long wait in line and the time being wasted potentially missing work hours, consumers would end up paying more for the gas than had the market set the price. The US has also tried to place controls on rent, and like with controls on gasoline or groceries, most economists are against these types of controls. History has shown us that rent controls lead to less quantity and lower quality of housing. With rent controls in place, investors are less likely to put their money into that industry because they are limited in the profits they can make, which leads to a lower quantity of housing. It also disincentives property owners from adequately maintaining their units because controls reduce competitiveness in the market, thus leading to lower-quality homes. Hopefully, you will start to see that while price controls may sound beneficial when they are initially introduced, the results will inevitably cause more harm than good. This is something the person who wants to lead this country should already know and understand, so it is concerning that this is being pitched to the American people in 2024.

Price controls are also a staple of communism. Every price is controlled in a communist country, not just groceries or gasoline. We have seen how disastrous they can be when implemented in one sector of business; imagine what those results would look like on a grand scale. Well, you would have the Soviet Union. It was normal in the Soviet Union for families to not have heat for their homes in the harsh winter because central heating was unavailable. It was normal for wives and mothers to wait for two hours in line at the grocery stores because the food was in short supply and was first-come-first-serve. The “solution” that Kamala Harris wants you to believe will help the working class has been proven time and time again to hurt the very people it aims to help. Is that the type of America she wants to see? Does she want to see working families fighting with other working families to have the goods and essentials we need? That is what you can expect if Kamala is elected and is allowed to implement her economic plan.

It is so important that we understand who we are voting for and what their plan for the country is. We have seen what has happened to our country under a Biden/Harris administration. Kamala is proud of the destruction their policies have caused, and she wants to cause more destruction by ignoring the real causes of the high inflation and pointing the finger at an imaginary boogie man. She will not be the solution because she refuses to acknowledge the true cause of a major issue impacting Americans. We cannot trust her with another four years to experiment with policies we already know will cause more harm than good. We cannot trust her to be honest with us about her actual plans for this country. We cannot play identity politics with our future. These are dire times, and we need a serious leader. Kamala Harris is not that leader.