Both presidential campaigns are making outlandish promises in the waning hours before election day. Kamala Harris claims she will stop corporate price gouging with government force. The legislative mechanics of how she would do this are unknown. Prices distribute goods. A high price is a signal that more of that particular good should be produced. Increases in the level of all prices is caused by inflation of the money supply. Price inflation indicates a drop in the purchasing power of money. Murray Rothbard explains what will result with Harris price controls:
Economic theory tells us the myriad evils that stem from any attempt at price controls of goods and services. Maximum price controls lead to artificially created shortages of the product; mini- mum controls lead to artificial unsold surpluses. There is a ready cure for these economic ills; they are caused not by processes deep within the free market economy, but by arbitrary government intervention into the market. Remove the controls, let market processes have full sway, and shortages and surpluses will disappear.
With the Federal Reserve continuing to expand the supply of money with no end in sight, prices will continue to increase, reminding us of Rothbard’s quip, “Pumping in more money while imposing direct price controls and hoping there by to stem inflation is very much like trying to cure a fever by holding down the mercury column in the thermometer.”
Donald Trump says he has enlisted Elon Musk to cut the federal government by one-third. However, most of the budget cannot be touched. The fastest growing government expenditure is interest on its debt. Interest expense has surpassed the defense budget and Medicare to now be second only to social security in federal government expenditures.
Medicare and Medicaid total $1.7 trillion, Social Security $1.5 trillion, and interest $1.2 trillion. These items total $4.4 trillion. Defense and everything else totals $2.5 trillion. It’s unlikely that crony capitalist Musk can do the impossible. After all, he’s made his fortune from big government. He doesn’t want to shrink the space program, or stop EV tax credits. As Lee Enochs wrote on mises.org, “The billionaire tech magnate continues to get richer and richer on the American taxpayer’s dime, highlighting the need to do as Murray Rothbard advised of reassessing the ‘partnership’ of government and business.”
Ever the optimist, Rothbard wrote,
Where O where can the budget ever be cut? Anywhere and everywhere, with meat axes, hacksaws, anything to hand. … Of course, if I had my druthers, and could push a magic button, the federal budget would be cut back to a nice fat zero. So don’t start wailing about “where can we cut the budget?” All we need is the will.
Alas, the will is gone.
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