Get thee to an economics class

By Jim Thompson
HCP columnist

Now Kamala Harris has come out with price controls, allegedly to stop inflation. They didn’t work for Nixon; in fact, they caused inflation. They haven’t worked for New York City (rent controls), going back to just after World War II.

It is not surprising she (or her handlers) came up with these. After all, not that many columns ago I remarked that governments are the only legal monopolies. Price controls are like monopolies; hence, what government employees understand.

The beauty of capitalism is that purchasers can buy where and what they like, and sellers can set prices where they want. Together, these two certainties produce a supply-demand curve with an equilibrium point – that point where supply equals demand. This happens with every product in a free-market economy.  

Mess with this economics law and you end up with empty shelves in the store, empty pill bottles in the pharmacy, no cars in the car lot, no houses to buy.

It makes no sense for manufacturers to produce products that won’t make a profit. When that happens, they stop. Or they cut wages or cut quality until they can make a profit. Either one hurts the worker.

So, what causes inflation?  

The government spending more money than it takes in. The federal debt crossed the $1 trillion mark in 1982, President Regan’s first term. It crossed the $6 trillion mark in 2002. Now it stands at $35 trillion – and counting. This is due to deficit spending each year. This is inflation – too many dollars chasing too few goods. 

Look in the mirror, Kamala, if you want to see the cause of inflation. You and your cronies are it.

The other matter repeated on the campaign trail this week is that corporations are evil. Let me ask you this. Could you and a few of your neighbors produce a tube of toothpaste? Any idea where to start? And let’s assume you can, what is it going to cost? Will it compete with the leading brands?

Corporations supply us with an abundance of goods and services of high quality at low prices. We don’t even think about it. 

A good example of this is in farming. Many of you buy fruits and vegetables at many of the local farm stands in Highland County. These are at prices you find attractive, and you find the quality of the goods to be excellent. You may buy a loaf or two of homemade bread there, but you don’t buy pasta; they can’t compete with the big pasta companies. The products at the farm stands have a lot of hand labor in them and you, the purchaser, along with the local farmers, and Mennonite and Amish farmers, have found prices you can both live with. That is equilibrium. Everyone is happy.

Pasta is made in large volumes and sold at grocery stores. The wheat for making pasta is grown and harvested by people like my farmer friend in central Kansas. He raises 1,300 acres per year. He harvests it with two CaseIH combines that each cut 25 acres per hour. When I was out there in June for the harvest, I could easily count $5 million worth of equipment in the field with the combines, the tractor/trailer that chases the combines, the semi-trucks and so forth. All for a crop that produces about $200 per acre, IF IT RAINS. No wonder farmers are Godly people.

Swap my wheat farmer friend with my Sugartree Ridge Mennonite friends, and they would be equally lost in the others' work boots. And the quality of the food you buy would go down while the prices go up. They are each very good, excellent at what they do.

I am describing Agri-industry here, but it is the same in all industries. The devil is in the details when it comes to providing you with high quality products at the lowest prices.

One more lie from politicians. They want to punish these mean corporations by raising their taxes. Well, who pays their taxes? You, the consumer do. Raise the taxes on the tomatoes, they will be passed along to you in higher prices. Raise the taxes on the farmer, they will be passed on to you in higher prices.  

We should unleash corporations with the lowest tax rates possible, for this will take away the hidden taxes built into everything you buy.

Jim Thompson, formerly of Marshall, is a graduate of Hillsboro High School and the University of Cincinnati. He resides in Duluth, Ga. and is a columnist for The Highland County Press. He may be reached at jthompson@taii.com.