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Everyone wants lower prices. Voters say they want lower prices in exit polls. Political candidates run entire campaigns on lowering prices. Any internet discussion can be derailed in an instant by complaining about how much things cost. In 2024, Donald Trump and Republicans surged to power on a wave of anger and resentment at high prices.
Then he immediately jacked the effective tariff rate from 2% to 10% and caused a global energy crisis by starting another war in the Middle East. Now Texas is run by Democrats.
Why? I think the answer is public choice theory. Despite inflation being the number 1 political issue of the last two US general elections, nobody gets into politics to lower consumer prices. Strong consumer sentiment is not a terminal value of ~any of our politicians. It is good with solely instrumental value in that it allows politicians to spend political capital on the things they actually care about, like open borders, ethnic squabbles, corporate profits, or wars.
There is a Matt Yglesias take that even though Republican economic policy is on paper better than Democrat economic policy, Republican presidents end up with worse economic performance because they always start pointless foreign wars, causing both global supply shocks and a rundown of the treasury to pay for military expenditures. It’s hard to argue with this. I’m sort of left going, “real Republican governance has never been tried.”
I think the government has no real levers to pull on prices. The city doesn’t decide what rotisserie chickens cost, the grocery store does. And really, I don’t think most of the people in this country really get that. They expect that the government can lower prices or give them a better job, a fictional power that the government doesn’t have. And most people are really honestly too dumb to understand how things work in government, and are thus prey to near constant propaganda that tells them that the government exists as a personal butler to go and fix their job and the prices and make sure bad stuff doesn’t happen while also not doing anything mean to prevent that.
It’s stuff like this that convinced me that democracy is a terrible idea that mostly destroys everything in the name of government giving people what they say they want when the message is contradictory and incoherent nonsense. People want low taxes, tons of services, welfare, bullet trains, education for everyone that thusly guarantees their kids a high wage job. It’s not possible, and when the government ties itself in knots trying to do it, you get either gridlock or insanity. I’d much rather have a leader who knows how things work to put the state on the right track and keep it there. The public doesn’t know what it wants.
Except we have examples of the US government doing massive mobilization efforts when it decides to. The Civil War. The New Deal. WW2.
Does state control over the economy cause problems? Yes. Can it successfully help large masses of people? Also yes. The existence of many negative second-order effects don't mean that there are no first-order effects that help people. The USSR did actually successfully uplift millions of people from being peasant farmers. Would it have been better to uplift them in a more capitalist way? Probably. In a less bloody way? Definitely. But a lot of uplift did happen even doing it the bloody communist way.
The reality is that if the US government fully unleashed its monstrous powers, spurred by a strong enough motive, it could actually lower prices and give many people better jobs. There would be second-order effects, but a lot of uplift would actually happen. It's quite possible that the negative effects would be worse than the positive effects. And for some people, that would be completely fine. "Who cares if the economy as a whole deteriorates and we let the government be totally authoritarian, if I personally rise" is a self-centered but perfectly coherent approach. "Who cares if we let the government be totally authoritarian and the economy as a whole deteriorates ten years from now? I'm broke now, I need to pay bills now." is also a self-centered but perfectly coherent approach.
And that's before we even get into the possibility that at some point AI might actually make fully automated luxury communism possible for the first time in history.
Yes the regulatory system can add to the supply side costs, but it’s really not the only input, nor is it the biggest. The supply of chickens and the cost of labor and the cost of shipping are huge in determining the cost of the chicken at the store. Inspections and labor laws are part of that, sure, but if the chickens cost more, there aren’t a lot of levers to pull. They cannot unilaterally set the price of chickens. And I don’t think anyone here wants to live in a world where the government could unilaterally impose prices on anything because it would require the government to control most of the economy. It would burn the economy to the ground.
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