Democrats didn’t even bother to wait for their 2024 National Convention in Chicago to appoint their replacement presidential candidate, Kamala Harris, and to tout the new economic planks to be added to the party’s platform. In her August 16th speech on the economy, she pledged her loyalty to the party’s current interventionist agenda, professing that the Biden regime’s policies have supposedly been good for the middle class and that she will continue to support Democrat principles of state-guaranteed economic security for them ( “...your salary should be enough to provide you and your family with a good quality of life”; “No child should have to grow up in poverty”; and “After years of hard work, you should be able to retire with dignity.”). However, Harris acknowledged that the cost of living had soared during Biden’s tenure, so she proclaimed that Democrats would now commit themselves to inflicting a whole new set of interventions on the productive sector to supposedly make certain essentials—food, healthcare, and housing—more affordable.
Curiously, Harris correctly argued that Republican protectionism would make foreign-made goods more expensive, and thus drive the cost of living up further, while conspicuously failing to apply the same irrefutable economic logic to her own proposed assaults on domestic productivity or to the assaults already inflicted on domestic producers by the Biden regime. One must infer from this that Harris is very likely not ignorant of the economic problems caused by interventionism (notwithstanding Donald Trump’s characterization of her as being a “stupid” copycat), rather she and other “progressive” activists know that the multiplication of problems caused by interventionism offers a golden political opportunity to advance their agenda.
The goal served by piling intervention upon intervention is to institute a corporatist form of socialist central planning, as Austrian economists F. A. Hayek (The Road to Serfdom) and Ludwig von Mises (Middle-of-the-Road Policy Leads to Socialism), demonstrated more than a decade before Harris was born. From a “progressive” point of view, however, the prospect of instituting socialism as a consequence of ever-multiplying interventions is a feature, not a bug, of their proposals. The political calculation is that if Democrats can convince enough voters—who are largely ignorant of the problems caused by interventionism—that they are the party solving economic problems, even as their interventionist “solutions” are making such problems worse. Following this, Democrats will be able to win enough support to achieve socialism via gradualist, democratic methods without having to take the revolutionary step of formally seizing ownership of the means of production.
Regarding food affordability, Harris espoused the conspiracy theory that food companies (presumably she meant food processors and wholesale distributors) and large retail chains of grocery stores are “bad actors” who took advantage of COVID supply chain disruptions to hike prices, but then used their market power to keep prices high after supply chains were restored. Her proposed ban on “price gouging” is aimed at the presumed “monopoly gains” of these allegedly wicked middlemen, while failing to explain why these middlemen weren’t able to squeeze consumers prior to the pandemic or how they were able to cause price increases in non-food goods. She also failed to acknowledge that post-pandemic supply chain disruptions of grains and fertilizers were caused by Western sanctions against Russia and by egregious “net zero” carbon policies being directed against farmers and that a huge increase in the money stock during the pandemic and an accelerating post-pandemic loss of confidence in the fiat dollar can account for the magnitude of price increases of necessities during the Biden years, quite apart from any issues unique to food supply.
Harris also proposed government subsidies to increase competition from smaller food distributors, which is a tacit admission that whatever market concentration is enjoyed by larger food distributors is, in fact, in the interest of minimizing costs to consumers. As Murray Rothbard explained in Man, Economy, and State, the only coherent definition of monopoly necessarily involves the government creating artificial barriers to entry or artificial economies of scale to the gain of the private monopolist allied with the state. None of Harris’s proposals seek to eliminate any existing taxes, regulations, or subsidies that are responsible for private gains via artificially-generated market concentration.
On the healthcare affordability front, Harris once again proposed piling price controls on top of existing interventions and, once again, blamed allegedly wicked “middlemen” for driving up prices. She neglected to mention that healthcare is already one of the most heavily-subsidized, patent-restricted, licensing-restricted, and regulation-restricted sectors of the economy, and that getting rid of existing subsidies and restrictions on competition would significantly reduce prices. Harris also proposed spending $200 billion to purchase and cancel medical debts owed by millions of Americans, thus expanding the ranks of beneficiaries who receive “free” stuff from the state and presumably swell the ranks of grateful Democrat voters, much like the Biden regime’s repeated attempts to cancel federal student loan debts.
With respect to housing affordability, Harris didn’t have the logical consistency to propose price controls—which would lose her millions of votes from existing homeowners—like she did with food and healthcare, but she did come up with another whopper: the government should give a subsidy of $25,000 to first-time home buyers and tax reductions to home builders who cater to them. Evidently, an existing homeowner is not supposed to notice that the prices of maintaining a home or of moving to another home will be made less affordable by Harris’s preference for stimulating demand by first-time buyers. It also seems that memories have faded of the previous occasion when home buyers could easily take out mortgages without having any skin of their own in the game, namely, the infamous subprime mortgage bubble that burst in 2008.
Harris also condemned the role of large corporations that invest in rental housing and promised stricter regulations for them. However, she failed to recognize that the same Wall Street-Federal Reserve financial system that funds the federal government also uses its privilege of creating dollars and dollar-substitutes out of thin air to fund the systematic acquisition of capital assets, including rental housing stock, by itself and by the corporate cronies it funds. This also has the effect of crowding out thrift-financed investors by driving interest rates down. Again, Harris expressed no desire to repeal the privileges enjoyed by crony corporatists.
Overall, Harris’s speech indicates that Democrats want to accelerate the long-term trend towards increasing the share of GDP devoted to assuring economic security at the expense of capital accumulation. This began when Medicare was enacted in 1965, continued when the dollar was put on a fiat basis in 1971, and then proceeded with annual Social Security benefit increases were put on auto-pilot in 1975. The long-standing “progressive” principle of collectivizing responsibility for guaranteeing economic security and minimum incomes, however, stands in stark opposition to the crucial discoveries of Austrian economists regarding the essential role of time in productivity (cf. Eugen von Böhm-Bawerk, 1889) and the impossibility of economic calculation under central planning of production (Ludwig von Mises, 1920; independently co-discovered in the same year by the Russian economist Boris Brutzkus and German sociologist Max Weber).
Responsibility for providing for future needs cannot be collectivized for any substantial span of time simply because the future productivity required to redeem such promises can only be achieved through private decisions to restrain present consumption (save). These are essential to making labor and natural resource inputs physically available for investment in the present production of capital goods. The argument that we can have investment without thrift via fiat money creation is a cruel hoax, one that ignores the necessity of thrift for making inputs available. Credit expansions, fed by money creation, merely bid up capital goods prices without making more capital goods available in the long run (though in the short run it causes capital-wasting boom-bust cycles). The argument that we should legislate lower prices or liberate debtors from the costs of their consumption is perhaps too ridiculous to even be considered a hoax. Nevertheless, Democrats now want to embrace such increasingly crude measures for plundering the economy for the benefit of particular constituencies, with little regard to how such a racket or confidence in the sinking fiat dollar can be sustained.
The grim realities of decades-long stagnation of personal savings rates, of rapidly falling real median household incomes since 2019, of increasing frequency and intensity of supply chain disruptions over the past decade, and increases in the relative costs of capital-intensive goods and services, are evidence that America needs a drastic turn away from welfare statism towards the virtues of thrift and private investing if it is to reverse its crisis of capital consumption and deindustrialization—precisely the opposite of what the Democrats intend to do.
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