Americans scored an average of just 48% on a test of their financial literacy, the Global Financial Literacy Excellence Center recently reported. And while that might seem discouraging, there is a silver lining: one can be financially illiterate and still secure the nomination for President of the United States. Kamala Harris proved that very point in her August 16 speech in which she vowed to work for the passage of “the first-ever federal ban on price gouging on food.”
Inflation during the Biden-Harris administration has strained American households’ budgets, with food prices rising more than 20%. So yes, grocery store prices are a real problem. But price gouging by greedy grocery store operators is not the culprit, as Harris claims. Most of the price hikes have come from the higher costs of packaging, processing and transporting food before it reaches grocery shelves. In fact, the average profit margin in the grocery business is a razor-thin 1.6%. If grocers are price gougers, they are not very good at it.
What Harris should have learned in basic economics is that inflation has one cause: It is always and everywhere the result of government policies that increase the supply of money circulating in the economy faster than the productive sectors of the economy can expand their capacity to produce goods and services for purchase.
Despite the economy having shown strong signs of recovery from the pandemic, the Biden-Harris administration muscled the massive $1.9 trillion American Rescue Plan spending package through Congress without a single Republican vote in 2021. And the ironically named Inflation Reduction Act (IRA) passed in 2022 – again without GOP support – was a nearly $1 trillion spending bill laden with pork such as tax credits for electric vehicles and other giveaways.
And it was Harris herself, who as vice president, broke Senate ties in both cases. To be clear, it was her deciding voice that flooded the economy with borrowed money to buy votes, thereby touching off the worst inflation the nation has experienced in decades. The administration’s spending also drove up the federal budget deficit and pushed the national debt past $35 trillion. Today, Harris actually brags about her role in passing the IRA that has visited so much pain upon American families.
Although her price controls would do nothing to tame inflation, they would be very effective at creating shortages. What’s a grocer with a 1.6% profit margin supposed to do if he can’t pass along the inflated prices charged by all of his suppliers? He will cut his inventory, cut jobs, or simply go out of business.
The IRA’s price controls on prescription drugs sold to Medicare offer another case in point. Each new drug costs more than $2 billion, on average, to research, develop, test and take to market. And after years of investment, only 10% of drugs typically make it all the way. With price controls, pharmaceutical firms can’t afford to take such enormous risks, so many are already canceling research on the next generation of life-saving drugs.
Now the vice president says she has the answer to the inflation and economic upheaval she caused: Just vote for her so she can crush the productive sectors of the economy with price controls and other punitive regulations. But this may be a tough sell. According to a poll of voters surveyed on August 15, 46% believe that the economy is in worse shape than when the Biden-Harris team took office, while just 33% who said it has improved.
Price controls have never worked, not in ancient Rome, or the Soviet Union, or Venezuela. The only way to effectively fight inflation is to restrain government spending and roll back needless regulations imposed by the Biden-Harris regime. But working Americans have no hope of that from Kamala, the joyful warrior, the smiley face on financial illiteracy.
J. Kennerly Davis is a former finance executive at a Fortune 500 electric and gas company, and a former Deputy Attorney General for the Commonwealth of Virginia. He is also a member of the Federalist Society’s Regulatory Transparency Project.
Inflation during the Biden-Harris administration has strained American households’ budgets, with food prices rising more than 20%. So yes, grocery store prices are a real problem. But price gouging by greedy grocery store operators is not the culprit, as Harris claims. Most of the price hikes have come from the higher costs of packaging, processing and transporting food before it reaches grocery shelves. In fact, the average profit margin in the grocery business is a razor-thin 1.6%. If grocers are price gougers, they are not very good at it.
What Harris should have learned in basic economics is that inflation has one cause: It is always and everywhere the result of government policies that increase the supply of money circulating in the economy faster than the productive sectors of the economy can expand their capacity to produce goods and services for purchase.
Despite the economy having shown strong signs of recovery from the pandemic, the Biden-Harris administration muscled the massive $1.9 trillion American Rescue Plan spending package through Congress without a single Republican vote in 2021. And the ironically named Inflation Reduction Act (IRA) passed in 2022 – again without GOP support – was a nearly $1 trillion spending bill laden with pork such as tax credits for electric vehicles and other giveaways.
And it was Harris herself, who as vice president, broke Senate ties in both cases. To be clear, it was her deciding voice that flooded the economy with borrowed money to buy votes, thereby touching off the worst inflation the nation has experienced in decades. The administration’s spending also drove up the federal budget deficit and pushed the national debt past $35 trillion. Today, Harris actually brags about her role in passing the IRA that has visited so much pain upon American families.
Although her price controls would do nothing to tame inflation, they would be very effective at creating shortages. What’s a grocer with a 1.6% profit margin supposed to do if he can’t pass along the inflated prices charged by all of his suppliers? He will cut his inventory, cut jobs, or simply go out of business.
The IRA’s price controls on prescription drugs sold to Medicare offer another case in point. Each new drug costs more than $2 billion, on average, to research, develop, test and take to market. And after years of investment, only 10% of drugs typically make it all the way. With price controls, pharmaceutical firms can’t afford to take such enormous risks, so many are already canceling research on the next generation of life-saving drugs.
Now the vice president says she has the answer to the inflation and economic upheaval she caused: Just vote for her so she can crush the productive sectors of the economy with price controls and other punitive regulations. But this may be a tough sell. According to a poll of voters surveyed on August 15, 46% believe that the economy is in worse shape than when the Biden-Harris team took office, while just 33% who said it has improved.
Price controls have never worked, not in ancient Rome, or the Soviet Union, or Venezuela. The only way to effectively fight inflation is to restrain government spending and roll back needless regulations imposed by the Biden-Harris regime. But working Americans have no hope of that from Kamala, the joyful warrior, the smiley face on financial illiteracy.
J. Kennerly Davis is a former finance executive at a Fortune 500 electric and gas company, and a former Deputy Attorney General for the Commonwealth of Virginia. He is also a member of the Federalist Society’s Regulatory Transparency Project.
