Aug 19, 2024 11 min read

(Why) Kamala’s Economic Proposals Are Brilliant

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It took nanoseconds. Kamala announced her economic policies. Wham! The press pounced. All in unison. Without taking even a second to think. Bad! Terrible! Awful! The Washington Post went so far as to legitimize Trump calling her a communist.

Welcome to the crackpot level of American media, and nowhere is it worse than its commentary on economics.

My friends, I’m here to tell you something. Kamala’s economic policies are brilliant. Absolutely stellar. They are the economic state of the art, reflecting not just the latest thinking, but also aimed directly at solving America’s biggest problems. Price gouging. Housing. Having a family. This is stuff that should be celebrated. America is becoming a leader again through such policies.

I know that for a fact. I’ve been the chief economist of one of the world’s largest corporations. I keep up with the literature. I’ve written peer-reviewed books about the economy. This is why so many of you follow me. I know precisely what I’m talking about.

They don’t. Journalism’s criticism of Kamala’s econ policies isn’t criticism at all. It’s a disgrace. They are just making it all up. I’m going to explain that to you, as well, because I feel that our econ journalists are an embarrassment. They lash out at Kamala—and yet they appear not to know the current state of the field at all. They’re regurgitating tired, obsolete far-right talking points from decades ago. Which have all been discredited in the real world. I’m going to explain that to you, in this dense essay, and it’s dense because I want to do justice to Kamala’s policies, and rebut some of the sheer nonsense coming from these crackpots by teaching you a thing or two about econ.

If you feel like something’s off here, it is. They’re trying to get Kamala. Just like they got Biden. This sort of thing is the equivalent of character assassination, and our media should be doing better. What do I mean?

How to Raise a Society’s (Falling) Standard of Living

The Washington Post minced no words. Instantaneously, their editorial board called Kamala’s trio of policies “gimmicks,” while their columnists savaged them, too. Fair? Spectacularly foolish.

Kamala’s first policy is to offer families a $6K tax break for having a first child. A gimmick? Give me a break. America’s median family income is about $70K. Before taxes. That’s about 10% of median income. Would you like a 10% raise? That’s what you’ll get. I think at this juncture, most Americans would be grateful for 10% more income. Half of families—that’s what “median” means—make less than that, of course. So up to half of American families could get a lift more than 10% of their incomes.

In this day and age? We’re savaged by a “cost of living crisis.” I put that in quotes to emphasize that I don’t make it up: even the world’s most pre-eminent, and most conservative, financial institutions, like the IMF, call it that. During an historic cost of living crisis, giving people more than a 10% lift in incomes? That’s a Very Big Deal.

Sound like a “gimmick” to you? The media didn’t even bother doing this basic math. It takes five seconds. But they appear not to even know these fundamental facts about the economy—median incomes, cost of living crisis, etcetera. Like I said: this isn’t criticism. They’re just making stuff up. The IMF itself—one of the world’s, again, most conservative institutions—has recommended governments find ways to help people address the cost of living crisis. Ways just like this.

It’s shocking to me that the editorial board of the Washington Post and their columnists wouldn’t know this. But maybe it shouldn’t be. They seem more focused on gotcha journalism these days than facts. And facts are what I’m trying to teach you. Facts enlighten us, and now you know why Kamala’s first policy is brilliant.

Many readers pointed out to me that the Post is now run by a former Murdoch editor? Does that play a role here?

Let’s come to the second policy, which is building three million new homes. Targeted directly at the middle and working class, not to be sold to investors, aka private equity funds. Is that a…gimmick?

Three million homes. They will house three million families. That’s twelve million people. Twelve million people is 4% of America’s population. In other words, Kamala’s proposing enough housing for a sizable share of the population. If you’re one of those twelve million, is that a gimmick? Having a new, affordable home to live in? A “gimmick,” if we’re fair, is something that doesn’t really count—maybe it affects .001% of the population. But 4%? That’s very real. Far from a gimmick—that’s a policy with real, and tremendous impact. If it’s repeated in a second term, we’re talking housing for 10% of a society’s population, roughly. A gimmick? You must be kidding.

Let’s think harder about it. To build each of those homes, perhaps 10 people will be employed. Probably more, but let’s stick with ten. That’s 30 million jobs. What do 30 million new jobs do? They raise demand in the economy. What are we currently struggling with? A situation of slow demand, which the IMF—let me say it yet again, the world’s most authoritative financial institution—has called weak and sluggish and a threat to financial stability. Creating 30 million jobs right about now is an incredibly smart move, because it restores health, demand, and growth, the good kind, to the economy, when things are risky and uncertain and difficult.

Again, how hard is this to understand? I’ve explained it to you simply, and yet, media didn’t want to think any of this through for even the few seconds it took me to explain it to you. That’s disgraceful. If a media can’t do that, what purpose does it serve?

Let’s keep going. What do those 30 million jobs do, in turn? They create growth, because now, of course, more demand is flowing through the economy, more money is in people’s pockets, and they can go out and spend and invest it. As they do that, new businesses can roar, and more than that, the magical thing called certainty and confidence return. That in turn sparks a virtuous cycle of investment, which is the key to raising living standards.

And that’s really what all this is about. Raising living standards. That’s the point of an economy, after all. And yet our media, pundits, journalists, editorial boards—they seem deliberately unwilling to engage with that point and fact, instead, just regurgitating discredited talking points. All the above is “communism!” My God. Can you even imagine? If any time we talk about raising living standards, it’s “communism,” then of course, we’re not having a sane conversation anymore. We’re just trying to reason with crackpots, which is what America’s media has become, sadly.

Why American Living Standards Have Fallen

I’ll come back to that. First, let’s tackle the third proposal from Kamala, which is the one that really set the media’s hair on fire.

Price gouging. They went nuts. Price gouging?! Where? Where’s the evidence? The Post’s economics columnist went so far as to equate taking on price gouging to “price controls,” and say that was communist. So there’s the Post, calling Kamala a communist.

Let’s pause there. The Post’s columnist literally made this up. Kamala’s proposal pointedly doesn’t mention price controls. And in fact, there are already price controls in the economy. Here’s one Big One. The…minimum wage. Does it make America a “communist” society because it has a minimum wage? You see how ridiculous this is. And you also see how illiterate economics commentators are not to understand this elementary level of stuff.

Why do we want to stop price gouging, anyways? Far from being “communism,”, because that’s how we restore capitalism to good health. Price gouging is already illegal in most states, and every other developed country besides America. Why? Because it’s usually evidence of, and propelled by, “anti-competitive behaviour.” Anti-competitive behaviour means basically building monopolies. America’s economy is the most highly concentrated on earth—just a handful of gigantic companies control nearly every industry. What we want, if we’re interested in the health of capitalism, is competition.

Competition between market players, which ends up in price competition. Why do we want price competition? Because prices are “signals” in economics. The integrity of the “price signal” is paramount in economics, because it allows economies to allocate resources efficiently. But if prices are out of whack, if they’re bad signals, then an economy can’t do that. And that is why we want no price gouging—not for moral reasons, or because we’re “communists,” but because we want capitalism to be healthy, and for prices to be reliable, meaningful signals.

Again, it’s utterly shocking to me that media wouldn’t know this, or worse, not be able to tell you this. The Washington Post literally legitimized Trump calling Kamala a communist, and people went into an uproar, rightly so. But on an even deeper level, it’s worse than it seems, because, no, it’s not “communism," we’re actually trying to defend capitalism, by making prices work the way they should.

Whew, it makes my head sort of explode, but let me return to the issue.

How do we know if there’s price gouging or not? The wrong way to do it is the way pundits tried to—revealing, again, that they don’t know what they’re doing. They looked at "longitudinal” data, aka, prices over time, in a narrow way. The correct way to do it is to look at comparative data.

Let me explain, and here’s a brief tutorial in social science, by the way.

Think about any major category of expenditure in America. Let’s take for example healthcare. Healthcare costs in America have exploded by thousands of percent over the last few decades. So has, for example, sending a kid to college. That’s also true for food, and of course housing.

Now. In most of these categories, the same hasn’t been true in many other countries. In France, my favorite example is that the Sorbonne is free, while sending a kid to Harvard will cost $100K a year or whatnot. Healthcare’s affordable, even if it’s private, in most of the rest of the rich world. Why is that? And what does it tell us?

It tells us that something went badly wrong in America. Americans pay astronomical prices for most basic categories of goods and services compared to most if not many of their peer countries. And that’s clear evidence of price gouging.

And Americans know that by now. We all know that when you get some kind of bill, for example, from an HMO, it’s literally mostly made up. And if you call up and make a fuss, you can get them to drop some of the “charges,” because they’re fictional to begin with.

One thing that strikes most Americans who’ve lived overseas is how much cheaper food is. It comes as a shock. Fruit, dairy, meat, even snacks—half the price or less. That, too, isn’t just evidence of price problems in America, it’s because Europe’s laws on food have been carefully designed to keep it relatively affordable for people.

Is there price gouging in America? Media and pundits have gone hysterical asking this question, and then tried to answer it in naive and unsophisticated ways. They end up missing the forest for the trees. There’s a much simpler, and yet more sophisticated way, to think about the question. If there’s not price gouging in America, how come life in peer countries is so much more affordable?

This is all why America’s standard of living has been falling. According to the most authoritative index on the subject.

That’s a fact. Another one that those writing about economics should know. If there’s not price gouging happening, then why are living standards falling? America’s hardly out of money, housing, or jobs, after all. The reason must be that people are having a harder and harder affording the standard of living their parents and grandparents once enjoyed.

How (Not) to Think About Economics

You see my point, perhaps. Let me make it really, really clear though. There’s a lot of crackpot “research” that comes from “think tanks” in America, which is just right wing propaganda, basically. But the last really good paper on all this? By an eminent and internationally respected economist? Here’s what it found:

I review the causes and consequences of rising concentration of market shares that is occurring in most U.S. industries. While concentration is not necessarily harmful to the economy, my assessment of the available evidence leads me to conclude that Increased barriers to entry have resulted in lower investment, higher prices, and lower productivity growth. I estimate that the associated decline in competition has likely decreased aggregate labor income in the United States by more than $1 trillion between 2000 and 2019.

Now connect that to the evidence on falling living standards.

And there are literally tons of papers like that, because this is what the field has found. Its a consensus now in mainstream economics that, yes, this is a problem, monopolies, raising prices, leading to lower investment and growth. But—again—the editorial boards and journalists we’re dealing with don’t appear to actually read, know, or grasp modern economics at all, and so they don’t know this. But then what business do they have teaching you rank disinformation?

All of that’s abysmal and shocking to me. Let me sum up where we are.

Kamala’s policies aren’t gimmicks. They’re brilliant. Because they hold to transform the American economy, by raising living standards again.

Kamala’s policies aren’t “communism.” They’re designed to keep capitalism healthy. Those are polar opposites, and that journalists and editorial boards have fallen for the former tell us what level their thinking is at—nonfunctional.

Kamala’s policies aren’t some kind of radical leftism. In fact, they are precisely the directions that the cutting edge of the field of economics, the best economists, already suggest. But because journalists and editorial boards don’t read that stuff, they don’t know that, and that’s actually disgraceful, because they’re just making stuff up, and miseducating you. The truth is that 99% of the world’s better economists would nod their heads at Kamala’s plans, and approve whole-heartedly. (And if crackpots from American thinktanks disagree, so much the better.)

We should celebrate policies this smart, innovative, and ferocious. To reflect the cutting edge of economics, to transform living standards, to lay a foundation for growth—these are brave and wise and good things. For media and journalists to paint them as the opposite is, like I’ve said, disgraceful. It betrays that they literally appear to have no idea about the very issues they’re pretending to be authorities opining on, that they hope you listen to. You shouldn’t. Their ignorance is one thing, but when ignorance joins hands with itself, it’s called folly, and nobody should make that mistake.

America Deserves Better

America deserves better than the charade media is playing out with policy. If you don’t understand the first thing about economics, as I’ve proven here, then…keep your mouth shut and go read and learn instead. It’s shocking and alarming that a major American paper, as we discussed above, would call keeping capitalism healthy “communism,” and play right into Trump’s hands, repeating his smear. Just crazy—but irresponsible, too, and egregiously outside the boundaries of good journalism. This is some of the lowest quality writing and thinking I believe I’ve ever seen—I’d flunk it out of a college class—and America deserves better.

Tomorrow, I’ll write some more about this—this is too long already. Take some time with it. This was dense, and I packed a lot of lessons and example into this essay. Let me end on this note.

I’m here to tell it to you like it is. If Kamala’s policies sucked, I’d tell you. If they were pie-in-the-sky, I’d say it. If they were fantastical or brain-dead, you’d hear it from me. The fact is that they are brilliant. Remarkable. Smart. I don’t say that lightly. Don’t let those who don’t know the first thing about economics, don’t read papers or books, and still think the wealth is going to trickle down, or right-wing thinktanks are credible—don’t let them convince you otherwise. Don’t join them in their folly. This moment is too crucial for that.

How to Raise a Society’s (Falling) Standard of Living

Why American Living Standards Have Fallen

How (Not) to Think About Economics

America Deserves Better

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