Kamala Harris is pushing Bidenomics, but with feelings – and it might just work

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John Rapley is an author and academic who divides his time among London, Johannesburg and Ottawa. His books include Why Empires Fall (Yale University Press, 2023) and Twilight of the Money Gods (Simon and Schuster, 2017).

As fate would have it, I have worked with Kamala Harris’s father. I was then living in Jamaica and working in development economics. He flew back regularly from his then-post at Stanford, advising governments and appearing with me on a morning radio show.

A modest, thoughtful and deeply intelligent man, he was ahead of his time in advocating industrial policy – which involves a bigger governmental hand in the economy – in an era when we were all meant to be small-government free marketers.

While her mother was the bigger influence on Ms. Harris’s upbringing, that she would now run for president having served in the administration that revived industrial policy seems a fitting coda to Don Harris’s public service.

In her speech on Friday, the Vice-President outlined an economic vision that, like that of her President, eschewed the neoliberal orthodoxy that once dominated her Democratic Party and looked instead for ideas among a new generation of progressive economists. Republicans quickly pounced to say that Ms. Harris would take the country even further to the left than Joe Biden has. That’s a misreading.

Instead, Ms. Harris has arguably presented herself as a continuity candidate, one who will build upon Mr. Biden’s legacy and distill his grand vision into practical, relatable measures that touch ordinary voters – expanding drug access; enlarging child tax credits; lowering prices; increasing the supply of affordable homes. Call it Bidenomics, but with feeling. And it just might work.

Her house-building proposals are winning plaudits for targeting both supply and demand-side measures to boost home building – indeed, they merit consideration here in Canada – and some of her ideas, such as permitting reform of the child tax credit, enjoy bipartisan support.

What really riled Ms. Harris’s critics was her plan to lower inflation by going after price-gougers. At once, a chorus erupted that even first-year economics courses show price controls don’t work. Venezuela, here we come. Yet Ms. Harris didn’t mention price controls.

Instead, she proposed using what amount to antitrust measures to target oligopolistic behaviour in price-setting, a long-established American practice that Mr. Biden has revived.

While it’s not clear that such profit inflation is widespread in American grocery retail, the sector Ms. Harris has singled out for special attention, there is nonetheless a lively debate among academic economists whether “greedflation” has inflated profit margins at the expense of wages. So those who have called her economically illiterate reveal less about her than about themselves, if by literacy one means familiarity with the current literature in the journals.

In any event, this proposal may not see the light of day simply because time renders it redundant. If current trends continue, in the next year or so rising real wages combined with lower inflation will make the pandemic price shocks seem increasingly distant. But as a signal of a Harris administration’s general orientation, on the side of ordinary people, it sends a message to voters.

In that respect, a key test of her beliefs will come with her decision on whether to keep Mr. Biden’s key trust-busters, Lina Khan and Gary Gensler. Some of her big donors have expressed their deep distaste for the two regulators – Ms. Khan, chair of the Federal Trade Commission, and Mr. Gensler, chair of the Securities and Exchange Commission. If she ignores the donors’ call to sack them, that will suggest she will continue Mr. Biden’s program of reining in the plutocrats who have become so powerful in American life.

The truth is, the most significant thing Ms. Harris will do for the economy is win the election and thereby ensure that Mr. Biden’s ambitious industrial policy, which still has years to run, can finish what he started. Doing that requires her to position herself on the side of the political divide that finds more support.

To judge from polls, she may have done that shrewdly. While her Republican opponents are predictably calling her economics “Kamunism” to scare off voters, they may be using a dated playbook. In most of the United States, only folks over the age of 50 have much memory of communism, and those still appalled by it already vote Republican.

Instead, Ms. Harris is channelling the moment’s zeitgeist, which is populist and anti-oligarchic. Her vision of the ideal economy seems to follow Mr. Biden’s, one of competitive capitalism in which the government uses its power to give small firms and households a fighting chance against the predatory big fish. And while her program remains thin on detail, she will be aided by the fact that Donald Trump’s at present borders on incomprehensible.

The day before she gave her speech, Mr. Trump presented what was meant to be his own economic agenda. Unfortunately, instead of outlining his blueprint, Mr. Trump, as often happens these days, went off script – spouting grievances, criticizing Mr. Biden, insulting Ms. Harris. What he didn’t do much of was discuss the economy.

With enemies like him, Ms. Harris won’t even need many friends.