Category Archives: Economics

Miscellaneous economy stuff

Price Controls and Ways Around Them

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Donald Boudreaux and Richard McKenzie, economics professor at George Mason University and emeritus economics professor at UC Irvine’s Merage Business Schoo, respectively, reflected on Progressive-Democratic Party Presidential nominee Kamala Harris’ price control scheme and some ways around them.

[C]competitive market forces will encourage them to do so, even when illegal.

Competitive forces, especially, are human nature: all of us want our goodies for as little as possible, and where there are at least two suppliers of something, those suppliers will compete with each other on some form of price in order to get our business.

Thus:

  • “shrinkflation”— keep prices the same but shrink the portions of goods
  • nonprice adjustments, such as relabeling/redefining “select” grade steaks as higher-ranking “choice” grades
  • hire fewer workers
  • devote less effort to cleaning produce
  • reduce hours of operation

Another major way, for all that it’s an illegal path—that pesky human nature—is the black market. Price controls are an open door for these to thrive, even where they’re illegal. And yes, that includes here in these United States. Keep in mind, especially vis-à-vis black markets that human nature—wanting stuff for as little as possible—can be made to work strongly against black market: free markets, especially those without price controls, will always and everywhere be able to produce goods and services at less cost and so for lower prices than can any black market. The latter’s production costs always include things that are intrinsically absent in free markets: the cost of evading the lawman along with the risk premium necessarily charged against the likelihood of getting caught.

What’s in Harris’ Econ Plans?

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Here’s an overview.

  • federal limits on price increases for food producers and grocers
  • legislation creating a new series of tax incentives for builders who construct “starter” homes sold to first-time homebuyers
  • $40 billion innovation fund for businesses building affordable rental housing units
  • provide $25,000 in potential down payment assistance to help some renters buy a home
  • accelerate Medicare and other federal programs to “negotiate” with drugmakers to lower the cost of prescription medications
  • work with state entities to cancel $7 billion of medical debt for up to 3 million qualifying Americans
  • make permanent a $3,600 per child tax credit
  • new $6,000 tax credit for those with newborn children
  • cut taxes for some frontline workers by up to $1,500

Each one of these is inflationary in its own right, and each one will drive a need to increase taxes in order to pay for them.

It seems to me—and the press is complicit in this, however unintentionally, with its focus—that Harris’ plan for price controls on those food producers and grocers to combat what she’s pleased to call “price gouging” is nothing but a distraction to draw attention away from her other proposals in order to get many of them enacted unnoticed.

On Harris’ Housing Subsidy Gimmick

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Progressive-Democrat Vice President and Progressive-Democratic Party Presidential candidate Kamala Harris wants to fork over $25,000 to every first-time home buyer looking to buy a house to help them buy. The quick and dirty of that silliness is as follows.

Harris and her team don’t believe in or don’t understand the truism of a simple supply-demand graph that’s taught in any serious high school Intro to Econ class. Throwing money at a supply of something whose supply cannot grow as fast as the increase in money will only run up the price of that something, along with the price of the inputs to that something—and that input price inflation will slow the demand-encouraged increase of the supply of the something.

Those getting the 25 stacks aren’t going to be helped at all beyond the first few. Those getting the Harris Bucks later not only will find it difficult to find a house among that reduced and reducing supply, they’ll be no more able to afford that find than they are now.

Ignored by Harris with her gimmick are those who’ve become empty nesters and those at the other end of their lives, retirees, looking to downsize into smaller, used to be cheaper, housing. These folks will be actively harmed by the same outcomes that will render the gimmick merely useless to those first-time buyers.

Alternatively, and more likely, these Harris Bucks are just a 21st century bread and circus vote-buying scheme and who cares about those first-timers and downsizer wannabes. Richard J Daley is spinning in his grave over not having thought of this.

Hmm….

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The wonders in New York City’s government has spent some $4.88 billion on means of support for illegal aliens “migrants” in the city over the two years ending with the end of FY2024.

Imagine the benefits to the city’s residents and to their city’s economy were those billions of dollars spent on a couple of alternatives:

  • increased policing with more cops on the beat, and/or
  • increased prosecution of criminals rather than releasing them on no bail, and/or
  • recriminalizing misbehaviors like shoplifting, vandalism, assaults

Even [trigger alert] leaving some of that money in the hands of city residents through tax rate reductions.

A Couple of Suitable Civil Sanctions

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General Motors is being sued by Texas’ Attorney General Ken Paxton for allegedly

unlawfully collecting driving data from users and selling it to other companies.

GMC allegedly

used technology that was installed in the majority of 2015 or newer General Motors vehicles that would “collect, record, analyze, and transmit highly detailed driving data about each time a driver used their vehicle[.]”

That’s a long time to be collecting and peddling personal information without the permission of the vehicle’s owner.

After all,

Unbeknownst to customers, however, by enrolling in GM’s products, they were “agreeing” to General Motors’ collection and sale of their data. Despite lengthy and convoluted disclosures, General Motors never informed its customers of its actual conduct—the systematic collection and sale of their highly detailed driving data.

I see two suitable civil sanctions here, assuming conviction. One is to force GMC to disclose the amount of money it received over those two years from its sale of those data. It must then be required to pay that money to each person who bought a GMC vehicle from those two model years, whether the vehicle was bought new or used. Yes, yes, identifying all the used vehicle buyers will be difficult. Cry me a river. GMC should have thought about that beforehand.

The other isn’t really a sanction, per se. GMC should be required to disclose each of the buyers of those data, and then each of those buyers should be required to certify that it has purged all of the data of this type that GMC sold to it.

It would be suitable, also, to go after criminal sanctions against the GMC executives who authorized the illegal collection of the data, who authorized the sale of those illegally collected data, and who carried out the collections, and who carried out the sales.

It’s time to get draconian in sanctioning these data thefts. Bad enough we have to deal with hackers; we shouldn’t have to be subject to such thefts from allegedly mainstream companies.