Kamala Harris’ Price Control Plan Would Cause Widespread Supply Chain Crisis

Since Joe Biden took office in 2021, Democrats have launched a propaganda campaign to hide or deny the effects of inflation. At first, they claimed there was no threat of inflation. Then they claimed inflation was “transitory.” When the CPI hit 40-year highs, they were forced to admit inflation was a problem, but refused to acknowledge its real cause (helicopter money from the Federal Reserve to fund various stimulus programs that the United States cannot afford). Instead, Biden and Harris have argued that business is to blame and that high prices are the product of a “price gouging.”

The official media has been repeating this narrative for years, even though it has been thoroughly debunked. Retail prices have risen in direct correlation with rising production costs. As commodity and manufacturing prices rise, so do the prices on the shelves. And, with too many dollars being spent on too few goods, manufacturing struggles to keep up with the demand for labor. More labor, higher wages, and less supply mean, again, higher prices.

Making producers the scapegoats for economic failure is a tradition that is well-established in the tradition of socialist governments that refuse to take responsibility for their own failures. It is also a way for politicians to pretend that they are solving the problem, by temporarily treating the symptoms, but without ever addressing the source of the evil (because they are the source).

Here’s your story on “price gouging”: The average costs paid by companies have increased as much as the costs charged to consumers. If companies are “greedy,” they’re doing it wrong… pic.twitter.com/ALiw72MXSf

—EJ Antoni, Ph.D. (@RealEJAntoni) August 14, 2024

Rising costs have been one of the biggest challenges for manufacturers in 2023, and this year looks set to be no exception. Inflation has pushed up prices not only for materials, but also for wages and energy, and the problem is expected to persist through 2025. Industry reports also suggest that weaker consumer demand has combined with price inflation, putting a strain on profits and the supply chain.

As demand weakens and costs rise, manufacturers must reduce supply. If supply decreases, shelves empty or prices rise even higher on the black market.

Kamala Harris’ campaign recently unveiled its economic policy plan to solve the current stagflationary crisis, and it’s no surprise that it intends to continue the same strategies that caused the problem in the first place. It intends to print even more money to create even more giveaways to corrupt uninformed voters. Analysts view its plan as an attempt to institute communist economic restrictions and overthrow what’s left of the free market. True, but what are the consequences?

Beyond the death of what remains of the free market in the United States, the biggest threat is the immediate damage that price controls will do to the supply chain. With manufacturers’ profit margins already thin and labor costs rising, there is little room to maneuver. Price controls would limit revenues, and without profit incentives, companies have no incentive to continue producing. They will slow production or shut down entirely until better market conditions return.

Interestingly, the World Bank and even the Federal Reserve have recently warned about the dangers of price controls. These guys are corrupt, but they are not crazy like Kamala. The last time the United States instituted price controls was in the early 1970s, at the beginning of the last stagflation crisis. This was after the dollar was taken off the gold standard under the Nixon era. It was an absolute disaster.

On August 15, 1971, in a nationally televised speech, Nixon announced, “I am today ordering a freeze on all prices and wages throughout the United States.” After a 90-day freeze, increases were to be approved by a “Wage Board” and a “Price Commission” before controls could be lifted. The measure was initially popular and helped win Nixon a second term.

However, by 1973 and the OPEC oil embargo, it had become clear that price controls were not working. As the New York Times noted in June 1973:

“Housewives browsing their supermarket shelves next week will find most of what they want still there. But a widening circle of food processors and retailers are caught in a profit squeeze resulting from the price freeze, and that is starting to reduce production of some foods… That could lead to shortages of many products over the next month.

All levels of the food industry, from farmers to retailers, are critical of the caps imposed on meat in March and on all other products on June 13. Their discontent with the cap has contributed to recent warnings of shortages.

In June 1973, Daniel Yergin and Joseph Stanislaw explained in The Commanding Heights: The Battle for the World Economy:

“Ranchers stopped sending their cattle to market, farmers drowned their chickens and consumers emptied supermarket shelves…”

The government is not in a position to control prices. Controls will only make the damage worse in the long run, and Kamala Harris and her team of Biden advisors are not smart enough to tackle the problem anyway.