Democrats OK platform full of economic nonsense

Delegates adopted the 2024 Democratic platform at their national convention, and hoo boy, is it a doozy.

It is a 92-page manifesto that features many of the usual Democratic platitudes: Guns are bad, abortions are a right, the rich don’t pay their fair share and so forth.

However, there are some hidden threads within it that show just how far removed from reality some of the party’s faithful are.

“As companies’ costs went up, they raised prices, too,” the platform groused. “President Biden worked across industries to ease supply bottlenecks and get goods and energy flowing again. He delivered, and inflation has since dropped two-thirds from its peak.

“But some companies haven’t passed those new savings on to consumers. Their costs have come down, but they’ve kept prices high anyway, boosting profits.”

This is either grossly misleading and just plain ignorant because that isn’t how inflation works. The rate that inflation has been increasing has slowed—a phenomenon called disinflation. In fact, the year-over-year inflation rate peaked at 9.1 percent under Biden, and is now at about 2.9 percent.

To be clear, goods and business costs have not gone down across the board because there hasn’t been deflation, which is when the overall price of goods drops. Rather, prices have increased by 20 percent since 2021, and they will keep going up so long as new inflation rates are positive numbers because inflation is cumulative. So what savings are left to pass on to consumers when business costs keep rising?

Never mind the tenets of elementary economics. According to the Democratic platform, corporate greed is to blame for high prices, and the answers to make goods more affordable are largely to subsidize Americans, forgive their debt or fix prices. As you can imagine, these are problematic ideas, but they aren’t new. Biden has long supported student loan and medical debt forgiveness, providing down payment assistance for prospective homeowners and price-fixing.

Whether we are talking about medical costs, groceries or otherwise, interfering in the free market to set prices is bad policy. “Price fixing destroys the signals on which this ever-changing balance depends. It always does harm […] Not only is price fixing never a cure for inflation, but in the long run it prolongs and increases inflation,” wrote renowned economist Henry Hazlitt.

If drafters of the platform truly want to reduce prices, they should listen to what else Hazlett wrote: “Of course; it’s competition that holds down prices—not government ukase. And it’s competition that we should continue to depend on.” As such, Democrats ought to promote more competition and fewer regulations to foster a healthy, thriving economy.

Subsidizing and providing various forms of debt forgiveness are likewise misguided policies. To begin with, they create moral hazards—encouraging people to assume unsustainable, risky debt believing that they will never have to repay it. What’s more, nothing the government does is free. Someone pays for subsidies and debt cancellation—almost always by taxpayers. Yet The United States government has been running deficits since the very early 2000s, and has accumulated an extraordinarily large national debt.

It sits at an astounding $35 trillion, which is difficult to fathom, but Marketplace attempted to put it into perspective. If we lined up the dollar bills needed to pay off our debt, they “would breeze past Mars, which is 140 million miles away,” the outlet reported. “Neptune is just under 30 trillion dollar bills away. We’ve reached the last official planet in our solar system, and we still have about $6 trillion in debt to go.”

Given our galactically large debt, politicians probably shouldn’t be endorsing more handouts, but they are. If they come to fruition, their costs will be tacked onto our already burdensome national debt, paid for by our children or grandchildren and may ignite a further inflationary response. Sadly, it is not surprising that the platform—much like the GOP platform that I wrote about in July—fails to mention balancing the federal budget, which is desperately needed.

I will hand it to the Democrats: Their platform is far more thorough than the recently adopted Republican platform, and it was even edited better—save for one major oversight. Much of the long-form policy document talks of what President Joe Biden will accomplish in his second term. It references his “second term” explicitly 19 times. Yet delegates approved the Democratic platform long after Biden announced plans to retire after his solitary term. That’s an embarrassing oversight and certainly an annoyance to the actual nominee Vice President Kamala Harris.

All of this aside, the Democrats have some laudable planks in their platform, including promoting criminal justice reform, combating the opioid epidemic, strengthening American leadership abroad, etc. But when it comes to economics, much of this document is built on shaky foundations.