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CONLEY COMMENTARY (WSAU) – Kamala Harris continues to demonstrate her economic illiteracy. Her proposals simply won’t work.
She calls out price gouging at the grocery store – without any specific examples – for an industry that operates at profit margins of just over one-percent. She claims big grocery chains like Krogers and Albertsons are making a profit. Watch what happens if they begin losing money; they’ll close stores.
Kamala proposes that the government, taxpayers like you and me, should cover the downpayments when some people want to buy a home. That will only cause inflation in the housing market. If I want to sell my home and know that they buyer is getting a $25,000 gift from the government, I’d be a fool not to raise the asking price by $25,000.
Now the Harris campaign says they will target speculation in real estate, which they blame for higher prices and rising rents. Are Harris and her economic advisors so economically obtuse to not realize that all real estate is speculative. Why? Because houses and apartment buildings and office buildings don’t appear magically appear overnight. They take years to build. So if I build a new apartment building I’m guessing – speculating – that the demand for apartments will be higher two years from now when the building is ready for occupancy. If I build an office tower, I’m speculating that the economy will grow that that new companies will move in when the project is finished in 4 to 5 years. If a developer guesses wrong, and demand is less than they anticipated, they’ll default on their loans and lose their investment to the bank. If they guess right, they can rent their space for more than the going rate is today.
We’ve already seen an example of this in Wausau. If you have a good memory, you might remember there were plans for a second Dudley Tower to be built downtown. Why hasn’t ground been broken? Because the best-guess of the developers is that there isn’t enough demand to fill the new office space. So… ground has not been broken and the project is dormant for now.
If Kamala Harris’ administration wants to control the rents that can be charged for new buildings, those buildings won’t get built. What developer wants to know that their market-based profits are capped by the government, but their losses could be unlimited and are theirs to bare alone.
What Kamala Harris can’t wrap her head around is the best way to determine price, from a bottle of soda to an apartment, is supply and demand. Government intervention doesn’t work.
Chris Conley
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