by Daniel Brouse
August 17, 2024
I began writing this after listening to Harris’ recent speeches — first on drug prices and then on the broader economic policy of her campaign. My concerns arise from a general disappointment with the direction of the campaign’s economic strategy.
Unfortunately, the “deal to cut Medicare prices on popular drugs” is misleading. The claim of a 50% reduction in drug prices is based on the list price, which few people actually pay. Medicare already benefits from discounted rates, and this new legislation won’t have much impact on those prices. In truth, the new rule is unlikely to significantly affect pharmaceutical companies’ profits, which explains why their stock prices have remained stable. This legislation is more about political posturing than genuinely lowering drug costs for consumers.
Regarding the economic policy laid out in Harris’ second speech, blaming inflation on ‘corporate greed’ is a simplistic and misleading narrative that every serious investor and economist recognizes as nonsense. The real drivers of inflation are far more complex, with a significant portion—around 75%-85%—traceable to the Trump administration’s policies. Failing to accurately identify and address the true causes of inflation undermines the administration’s economic credibility. This misstep, coupled with the questionable drug price control regulations announced the day before, paints an increasingly concerning picture for the economy. Markets are already reacting negatively to these policy directions, which doesn’t bode well for the future. If possible, the campaign needs to adjust its messaging—because Trump’s policies would be even worse. After these two days of speeches, I’m seriously reconsidering my vote, and I’m not alone. Many others who prioritize the economy are having second thoughts as well.
When asked if I could ever vote for Trump, I replied: No, I would never vote for Trump. He stole money from our business ethics experiment back in the ’90s. If you read my papers on him, you’ll see that Trump is largely responsible for the current inflation due to his disastrous fiscal and monetary policies. However, I also can’t support Harris if she continues to advocate for policies that contradict basic economic principles. Protectionism, price controls, and tariffs are major red flags for the entire business community. My goal is to convey what the financial markets are signaling. Right now, they seem to prefer Trump’s lack of regulation over Harris’ market interventions. It’s troubling when markets lean towards Trump’s deregulation, despite the significant damage he’s caused.
A friend mentioned that Harris cited two major factors contributing to inflation: Trump’s mishandling of the pandemic and supply chain disruptions, along with ‘corporate greed’ and ‘price gouging.’ While Biden has supposedly addressed the first, Harris claims she’ll tackle the second. From an economist’s perspective, there are several issues with that viewpoint. My goal is to help Democrats win the election with solid economic facts, not alienate independents who were leaning towards supporting her. At the very least, it’s better to stay silent on certain points and ideally avoid catering to the base’s misguided notions. For example, avoid terms like ‘corporate greed,’ ‘price gouging,’ or discussions on ‘supply chain disruptions.’
My friend insisted that these issues are real and not up for debate. However, I replied that none of these things—’corporate greed,’ ‘price gouging,’ or ‘supply chain disruptions’ — are as straightforward as they’re often portrayed. Labeling them that way is misleading and oversimplifies the issues. Such terms are often used to incite the base rather than address the real, complex economic factors at play. I strongly suggest avoiding these simplistic labels as they risk alienating informed voters who recognize the deeper economic realities.
There is certainly a lack of economic understanding among Democrats, which is why I’m trying to provide some clarity. Corporate profit margins have remained relatively stable. The reason corporate profits seem to be at ‘record levels’ is due to inflation. As prices rise with inflation, the absolute dollar amount of profits increases, but the percentage of profits remains the same. As for prices coming down, that would indicate deflation, which is generally a sign of severe economic problems—not something we should hope for. Also, corporations are not capable of being ‘greedy’ by definition; attributing morals or ethics to non-human entities is nonsensical. Promoting these false and misleading ideas is detrimental to politicians, the economy, and only serves to sow division and hate.
Conclusion:
A friend asked me, “Okay, I hear you, but if you’re reconsidering your vote, who would you vote for?”
I replied that, as of now, I’m not planning to vote for either presidential or senatorial candidates. Both Harris and Casey have proposed highly detrimental economic policies, just as Trump and McCormick have. In my view, the Democrats have made a serious mistake in their messaging, turning these races into a battle of the bases.
Most importantly, neither party is addressing the most serious economic threat to humanity—climate change. While both sides sow division with false and misleading economic rhetoric, they are completely ignoring the accelerating impact of anthropogenic global warming. In fact, the policies proposed by both parties seem poised to exacerbate climate change, leading to a permanent decline in the U.S. economy and potentially rendering our planet mostly uninhabitable within a generation.