A Quick Note on Populist Policies
A Quick Note on Populist Policies
Things that are popular and bad do not fade away easily.
Hey everyone. I had a quick thought as we all I watch the Democratic National Convention this week. Specifically, I wanted to jot down my thoughts on Kamala’s big economic rollout that happened last week.
So, last week Kamala released her economic plan (the first major rollout of her Campaign) and there was major chatter about how it leaned into “populism.” Before I get into that, I will open with a caveat: Yes, Donald Trump’s economic proposals - to the extent that they exist - are nonsensical and bad. His proposals will rapidly accelerate inflation and his own brand of populism cuts against Harris’s good ideas (more on that below). So, please do not send me angry emails. Orange Man Bad™. I get it.
But Kamala’s proposals have gotten their fair share of criticism, some of it coming from the Left. Here is Catherine Rampell in the Washington Post:
“Price gouging” is the focus of Vice President Kamala Harris’s economic agenda, her presidential campaign says. She’ll crack down on “excessive prices” and “excessive corporate profits,” particularly for groceries. […] It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.
Yes, price gouging is bad, but putting in place “price controls” to address inflation is an economically illiterate solution. And here’s a little insider tip about this: Everyone knows it, including Harris herself. So, why did she put it in there? Rampell nails that one too:
It’s not hard to figure out where this proposal came from. Voters want to blame someone for high grocery bills, and the presidential candidates have apparently decided the choices are either the Biden administration or corporate greed. Harris has chosen the latter.
I have appreciated the openness with which political media have acknowledged reality, conceding that Harris knows her policy proposals are bad but is going through with them anyway. However, I think the policy wonks have given Kamala an unusual amount of grace on this subject. Josh Barro basically says that’s because voters do not care about intricate policy details, and it is fair to listen to them if you want to win elections:
So obviously, as a substantive policy matter, I’m not super keen on Kamala Harris’s new proposal to fight inflation through a new federal law on price gouging. My guess is such a law will be designed in such a way that it has little effect on the market, but it does have effects on the market, they will tend to be negative, as with President Nixon’s price and wage controls in the 1970s. All that said, Harris is trying to win a presidential election, and to win elections, you run on popular ideas. […] I spend a lot of time lecturing the left about the need to make compromises instead of demanding that campaigns be run on their loser policy ideas. Well, that lecture applies to me, too: The public demands action against “price gouging,” my objections to such laws are a political loser, and I should make peace with the fact that I won’t get my way on this issue. That is how democracy works.
There is also a detailed conversation about this between Tim Miller and Brian Beutler over at the Bulwark, and they both basically came to the same conclusion: Kamala will talk about these things to win the election, but she will not do them because she knows they do not work. Cool! Beutler himself cited to Barack Obama’s promise to never enact an individual mandate during the 2008 Campaign…only to do that very thing once he became President.
I am glad everyone is on the same page! Price controls are bad, and actually doing them would be terrible policy. But I couldn’t help but read/listen to these points and wonder if anyone had paid attention to Donald Trump over the past eight years.
Populism is bad because it promises simple solutions to voters that cannot be delivered, and that delivery always fails because the world is not a simple place. But the promises - even the broken ones - do not go away. The people who thought those promises were real do not forget them and if they care about them enough, they continually ask for them to be fulfilled. People are voting for Donald Trump so he can complete the border wall, deport 11 million illegal immigrants, and - yes - “punish” other countries for “cheating” us on trade.
So, Kamala is going to make promises to “stop price gouging” and people are just going to…forget? The alternative is also sometimes really bad. Going back to the Obama example: After Obamacare was passed, Democrats suffered historic losses in the 2010 and 2014 midterms, which are still having their effect today. Maybe some of those voters felt duped after having an individual mandate placed on them.
So, I am just writing this as a warning. No economic policy is officially “off the wall” if a candidate proposes it. Once it is out there in the universe it officially becomes firmly affixed to the wall.
Also, Populism sucks and it has sucked for 100 years. It sucks when Democrats do it and it sucks when Republicans do it. A truly effective politician is able to articulate why price controls are bad and provide (plentiful!) historical examples to convince voters why an emotional reaction to inflation isn’t always a good one. I think that is a better tactic than “leaning” into populism.
I’ll also add this: Some of Kamala’s proposals are excellent. Building millions of homes is great! We need more housing in America and NIMBYism is a disease. But it is super popular in some circles and, funnily enough, Trump has embraced it. So, his economic proposals are just as illiterate as Kamala’s.1
That is unsurprising to me, because Trump understands less about policy than he does about grammar, basic human logic, and the lives of his grandchildren. But Kamala knows more than Trump! I, naturally, want her to do better. So, I’ll end with this: She did convince me on the wisdom of one of her proposals, the 25K to people who want to buy their first home.
She is extremely good here and should do more of these interviews. When I first heard her proposal to give people 25K for buying a house, I had a pretty normal reaction: “That will just increase the price of houses by 25K each.” But when she made her point that when people buy more homes it means more property taxes (which will produce more funding for schools), she converted me! There is a return on investment there that is hard to calculate.
Ultimately, my favored proposal is to build like crazy and to make “more housing available than ever before in history,” you know, like Republicans used to support. But now that policy is being pushed by liberal cities, and the GOP nominee is embracing NIMBYism.
What a stupid time to be alive.
I’m still in the August break, but I'm sure we’ll chat soon. Enjoy your brat summer.
Also worth noting: Trump’s plan to fix inflation is to appoint people to…fight inflation. Seriously. Again, he does not have real policy proposals.