Jonathan Chait has been using his column in New York Mag’s Intelligencer to criticize the Biden administration’s populist modifications of Obamaism and warn Vice President Harris against continuing Biden’s domestic economic agenda.
In Chait’s piece Kamala Harris’s Economic Plan: Good Politics, Meh Policy, he joined the chorus of pundits lambasting Harris’ policies to take on corporate power.
In fairness to Chait, he starts by expressing his support for Harris’ plans to increase the child tax credit, extend health insurance subsidies, expand powers to negotiate lower prescription drug costs, and increase the supply of housing. But then Chait gets into the policies that are “pretty bad” in his mind, all of which involve addressing the influence of corporate power on the economy:
The other circle of ideas is targeted more directly at prices. The trouble is that these ideas are pretty bad. Harris would raise taxes on major investors who acquire large numbers of single-family rental homes. This is the product of a weird populist fixation with Wall Street buying up homes and renting them out. Creating a larger rental market for single-family homes does not drive up the cost of housing.
Harris’ plan to take on corporate landlords is twofold: removing tax incentives for Wall Street to gobble up single family homes by passing the Stop Predatory Investing Act, and tackling algorithmic rent-fixing by passing the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act. Chait conveniently does not touch on that second part, likely because it undermines the claim that high housing costs are largely the result of zoning regulations. To be clear, housing supply certainly plays a role, but so does algorithmic price fixing—hence the new DOJ lawsuit against software company RealPage for facilitating collusion between corporate landlords to artificially inflate rents.
As for the issue of Wall Street investors, this is a real problem rather than a “weird populist fixation,” as Chait asserts without supporting evidence. It is true that corporations have bought up tens of thousands of houses—Progress Residential, the largest single-family home rental company, owns over 85,000 homes—driving up rents and local housing prices while locking out lower income families from the market. It’s extremely profitable for Wall Street—research from Accountable.US shows the two largest single family rental companies made nearly a billion dollars in profit in 2023, which is why they spent $130,000 lobbying against the Stop Predatory Investing Act. And it’s obvious that it is easier for landlords to collude on prices when landlords are corporate in scale, rather than Mom & Pop. That ease of collusion would impact prices is hardly revolutionary leftwing economics–it is straight out of any introductory textbook for Industrial Organization or Antitrust Law & Economics.
Chait also takes issue with Harris’ plan to continue Biden’s antitrust agenda and crack down on price gouging:
Harris would also “crack down on unfair mergers and acquisitions that give big food corporations the power to jack up food and grocery prices.” It may be true that some grocery stories collude to illegally raise prices, but price-fixing is not a major cause of food prices. The grocery industry had a 1.18 percent net-profit margin last year — which is to say, that even if Harris’s plan could somehow eliminate all profits in the industry, consumers would barely notice.
Glad to see Chait acknowledges that collusion may be a problem! Unfortunately, Chait then conflates price gouging and price-fixing—they are not the same thing—and wrongly claims corporations are not responsible for high prices. Net-profit margins do not tell the whole story, as we have documented cases of both price gouging and fixing in concentrated markets like the eggs and meat industries. Price gouging is not the only cause, but it certainly is a cause, especially in concentrated industries, as research from the Groundwork Collaborative shows. (For more info, see our Hack Watch newsletter where Julian Scoffield dispelled similar criticisms put forth by Washington Post’s Catherine Rampell.)
Chait skips right over the “mergers and acquisitions” aspect of Harris’ plan, but consolidation throughout the supply chain has been a major factor in increasing costs of groceries. According to the USDA, consolidation of the food supply leaves markets more vulnerable to disruptions from disease or disasters, while allowing conglomerates to “use their dominance to charge consumers more, produce fewer or lower quality products, and innovate less.”
Evil corporations are not actually to blame for the high cost of housing (which is about locally induced building restrictions) or food (which was caused by global factors that have since receded). But it’s easier to convince people of a simplistic solution than an unpopular truth.
Whether specific corporations are “evil” or not is besides the point, but Chait employs this rhetorical trick to make his opponents seem naive or deluded. As I described above, corporations do hold some responsibility for the high costs of housing and food. Of course supply chain disruptions played a part in high food prices, but as Isabella Weber’s theory of Sellers’ Inflation explained, corporations with outsized market power can take advantage of supply shocks to maintain high prices even when disruptions have been resolved. That’s an unpopular truth among Chait’s cohort, but it is a truth nonetheless.
Oddly enough, Chait wraps up the piece by admitting that Harris’ plan is good at its stated goals:
A positive aspect of this dynamic is that persuading Harris to endorse conceptually shaky but popular ideas is a big improvement from the left’s previous method of persuading her to endorse conceptually shaky ideas that are politically toxic. Some news reports have described Harris’s plan as a way to “fight inflation.” Judged by that measure, it’s a bad plan. Harris’s campaign describes the proposals as a way to “Lower Costs for American Families.” Judged by that standard, it’s mostly good.
The straw man about “the left’s” methods aside, we’re glad that Chait agrees with us that pursuing a corporate crackdown is a political winner! Perhaps he can convince his friend Matt Yglesias that Harris does not need to acquiesce to business interests and become the embodiment of a moderate candidate in order to win in November.
Chait had another piece earlier this August titled Yes, She Can: Bidenism brought Kamala Harris and the Democrats to the brink of catastrophe. Obamaism can save them. Chait and Yglesias have been on a tirade against left-wing critics of the Obama administration (though the latter wrote in 2016 that Obama left the Democratic Party as a “smoking pile of rubble” that needed to admit their political strategy “failed quite badly;” we think that version of Yglesias was on to a better way to balance Obama’s personal appeal and failure as a party leader.) We don’t need to debate the pros and cons of the Obama era (our friends at The American Prospect have a thorough rebuttal to Chait’s assessment) but we’d like to touch on a few points regarding Chait’s criticisms of Biden’s policies and advice for Harris.
A key gripe for Chait was Biden’s “unity task force” with Elizabeth Warren and Bernie Sanders that resulted in some Warrenite appointees to the executive branch:
But, flush with victory over his more progressive rivals, Biden made a peculiar decision. Rather than pivot to the center, as nominees traditionally do, he instead pivoted away from it. Biden agreed to a “unity task force” to adjust his platform in the direction of Warren and Sanders. The new Biden platform endorsed the “recognition that race-neutral policies are not a sufficient response to race-based disparities,” a rollback of immigration enforcement, jobs programs like those effectively used during the New Deal, and other elements that borrowed from his vanquished rivals. He proceeded to staff his administration with officials loyal to Warren and Sanders.
It’s not really a “peculiar” decision for those of us who remember the 2020 primary wherein Bernie Sanders was winning until the rest of the candidates dropped out and endorsed Biden. Regardless, it’s telling that Chait does not mention which appointees he has an issue with—the Warren/Sanders wing appointees are leaders of the Federal Trade Commission, Consumer Financial Protection Board, Department of Labor, National Labor Relations Board, and the DOJ Antitrust Division—all of whom have been very successful regulators.
But apparently Chait doesn’t count executive branch achievements among policy wins:
Biden can certainly boast of meaningful policy accomplishments. But the idea that they rank alongside those of Roosevelt or Johnson or even Obama is, upon examination, ludicrous. Biden’s policy legacy can be summarized quickly. His most prominent is the Inflation Reduction Act, which is anchored in large-scale green-energy investments. He also gained Republican support to increase spending on infrastructure, along with passing another bill to invest in strategic domestic battery and microchip industries and more scientific research.
It’s simply untrue that Biden’s policy accomplishments only consist of legislation. Of course, massive pieces of legislation are hallmarks of an administration, but I would argue that executive branch rulemaking to expand labor and consumer protections, along with antitrust lawsuits to restore competitive markets, also represent policy victories. (As my colleague Hannah Story Brown just argued in The American Prospect, Harris would be wise to seek a more populist turn in enforcing laws against pollution and white collar crime at the DOJ than Merrick Garland and Lisa Monaco, along the lines of her legacy as California’s Attorney General.)
Chait ultimately ends his piece with a warning for Harris to distance herself from Biden’s legacy and present a more moderate image:
It’s good that Harris is pushing back against the groups whose incessant demands reduced her last campaign to a miserable, politically toxic husk. […] We should not underestimate the challenge facing Harris. She is digging out of two deep holes: the record of left-wing position-taking from her first campaign and the unpopular record of the administration she served with. Republicans will do their mightiest to paint her as an out-of-touch liberal. Fortunately for Democrats, the response to such an attack has been sitting right in front of them all along.
Chait’s insistence that Harris’ 2020 campaign is politically “toxic” because of left wing ideas seems like a stretch. She certainly did not perform well in the primaries, but it was a very crowded field that included two candidates with much higher name recognition (Biden and Sanders) than everyone else. There were not one but TWO media friendly Rhodes Scholars turned mayors of small to medium sized cities (Pete & Booker). Another prominent prosecutor turned Senator, Amy Klobuchar. Elizabeth Warren. Two billionaires, Steyer and Bloomberg. Did you remember Deval Patrick ran? Jay Inslee? Michael Bennet? We could go on and on. It’s hard to make a definitive assessment one way or the other.
While Biden’s personal popularity is not high, there are many factors affecting those numbers–most notably the elephant in the room throughout his presidency, Biden’s age and resultingly low energy presentation. (which, alas, Chait thought was a brilliant approach when Democrats lost the House of Representatives in 2022)
So, no, we don’t agree that Harris needs to run from the Biden agenda in order to be popular. In fact, Harris’ popularity has only increased as she’s been more visible on the campaign trail, all while touting the Biden administration’s successes. Well before anyone thought Biden needed to drop out, we at RDP called for Harris to be more visible in promoting the Biden agenda. We had publicly called last September for Harris to frontline a corporate crackdown precisely because the actions Biden has been taking are popular with the American people, as evidenced by polling that shows widespread support for economic populism. The Harris campaign shouldn’t shy away from this record, but ensure that every voter knows about the administration’s wins in taking on corporate interests.
Ironically, in his piece on Harris’ economic plan, Chait seems to agree that these policies are good politics! Even if Chait is still not on board with the agenda, we’re glad that he has come around to the reality that economic populism makes for a strong campaign message.
Image Credit: Wikipedia Commons, “Jonathan Chait” is licensed under CC BY-SA 3.0.