In her first economic policy speech as the 2024 Democratic presidential nominee, Kamala Harris rightly criticized Donald Trump for favoring steep tariffs, saying her Republican opponent "wants to impose what is, in effect, a national sales tax on everyday products and basic necessities that we import from other countries." But in the same speech, Harris pitched a half-baked idea that is just as economically dubious, promising to crack down on "price gouging" by the grocery industry.

That proposal is so misguided that it provoked undisguised skepticism from mainstream news outlets such as CNN, the Associated Press, The New York Times, and The Washington Post, along with criticism by Democratic economists. It showed that Harris joins Trump in pushing populist prescriptions that would hurt consumers in the name of sticking it to supposed economic villains.

"If your opponent claims you're a 'communist,'" Post columnist Catherine Rampell suggested, "maybe don't start with an economic agenda that can (accurately) be labeled as federal price controls." Harvard economist Jason Furman, who chaired President Barack Obama's Council of Economic Advisers, was equally scathing.

"This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality," Furman told the Times. "There's no upside here, and there is some downside."

That downside stems from any attempt to override market signals by dictating prices. High prices allocate goods to consumers who derive the greatest value from them, encourage producers to expand supply, and spur competition that helps bring prices down.

Without those signals, you get hoarding and shortages. This is not some airy-fairy theory; it reflects bitter experience since ancient times with interventions like the one Harris proposes.

Consider what happened when President Richard Nixon imposed wage and price controls in the 1970s. "Ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets," Daniel Yergin and Joseph Stanislaw note in their 1998 book on the rise of free markets.

Or consider what happened more recently with eggs. Thanks to avian flu, Furman noted, "egg prices went up last year" because "there weren't as many eggs," but the high prices encouraged "more egg production." If federal regulators had tried to suppress egg prices, they would have short-circuited that market response.

Harris, of course, says she would target only unjustified price increases, the kind that amount to "illegal price gouging" by "opportunistic companies." But as she emphasizes, there currently is no such thing under federal law, and any attempt to define it would be plagued by subjectivity and a lack of relevant knowledge.

The fact that Harris pins the sharp grocery price inflation of recent years on corporate greed suggests that her judgment about such matters cannot be trusted. Economists generally rate other factors—including the war in Ukraine as well as pandemic-related supply disruptions, shifts in consumer demand, and stimulus spending—as much more important.

High profits, in any event, are another important signal that encourages investment and competition. By forbidding "excessive profits," Harris' proposed price policing would undermine the motivation they provide.

According to the most recent numbers, the annual inflation rate dropped below 3 percent as of July. With inflation cooling, this might seem like a strange time for Harris to resuscitate an idea that was already proving disastrous thousands of years ago. But as the Times notes, her message "polls well with swing voters."

The broad tariffs that Trump favors, which Harris condemns as "a national sales tax" that would "devastate Americans," also poll well in the abstract. But they are popular only until voters consider the consequences.

In a recent Cato Institute survey, for example, 62 percent of respondents favored a tariff on "imported blue jeans," but that number plummeted when they were asked to imagine the resulting price increases. Harris likewise is counting on voters who like what she says but do not contemplate what it would mean in practice.

© Copyright 2024 by Creators Syndicate Inc.

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Jakarta, Indonesia—The central business district of Indonesia's 11 million-person capital has the social contrast found in many other developing world megacities. Modern skyscrapers accommodate Indonesia's elite, while shabby informal villages spread from the base of such buildings. I wanted to experience this latter, more common, style so one morning my translator Julya and I walked a few minutes from my upscale French hotel chain across a dirty canal and into a village.

The standardized First World planning aesthetic of square buildings and engineered roadways quickly yielded to clustered huts organized along a twisty network of alleys. This village style is common in the Third World, a bastion of organic, market-oriented development that often withstands the modernization plans of city officials, even in central areas. It bears a striking resemblance to a popular concept in the Western urban planning world: the "superblock."

In superblocks, wide roads and streets are spaced far apart rather than allocated frequently on a grid pattern. The area in between, too condensed to accommodate cars, is reserved for pedestrians, motorbikes, buildings, and courtyards, with alleyways connecting it all.

Such blocks were the historical default before cities were planned for automobiles and before machines made clearing rights of way much easier. Paths would extend along routes that were topographically easy and would be cleared just wide enough for needed pass-throughs.

European villages with their hilly outdoor staircases fit the superblock stereotype, but the style has even deeper roots in Asia, with the oldest known example in China. In their contribution to the book Governing Cities: Asia's Urban Transformation, scholars Daixin Dai and George R. Frantz describe the ones planned in 1036 B.C. for the ancient city of Chengzhou. The pattern persisted through the millennia; 1400s Beijing, according to urbanNext, consisted of "blocks of houses on 150-meter hutong nested in 1,000-meter superblocks," themselves found in larger structures called "megablocks."

Superblocks were common in the colonial and industrial-era U.S., with Philadelphia, for example, growing into a maze of tight alleyways for horse carriages. Savannah, Georgia, was planned for superblocks—still partially intact today—and there are still scattered examples throughout the Northeast and Midwest.

Modern planners increasingly recognize the benefits of superblocks and want to bring them back. Cutting off large residential segments of the city to cars reduces traffic deaths, air pollution, and other negative externalities. The idea has been proposed in Los Angeles, where the City Council hopes to implement a pilot superblock in the city center, and in Seattle, where one is proposed for the Capitol Hill neighborhood.

Urban planners tend to be progressives, and superblock promoters think their idea will be achieved through government planning. The most successful First World superblock retrofit was pushed through that way, in Barcelona. There, the government prohibited automobile traffic through several thoroughfares in the 2010s, allowing pedestrians to move through freely; the authorities hope to create 500 such blocks. Beyond just alleys, a number of blocks have shops, courtyards, and parks.

The effort caused car storage in one Barcelona neighborhood to fall 82 percent. The change has plenty of fans: The World Health Organization reports that in one converted district, residents experienced "a perceived gain in well-being, tranquility and quality of sleep." And it was clearly a government project. As David Roberts wrote in Vox almost five years ago, Barcelona "has always been an intentional city, closely conceived and constructed by central planners." Unsurprisingly, it was planners, in turn, who undid the city's grid and instilled superblocks.

But across the developing world, the opposite is true. In Africa, Asia, and Latin America, superblocks remain the de facto market-driven development pattern, for much the same reasons they were in the ancient world. Most of the population doesn't own cars and is not in an economic position to afford more space. So they maximize the space they have, causing superblock shantytowns to pop up on hillsides, farmland, or even infill urban areas that are being illegally "invaded." The poorer the area, the more devoid it will be of setback requirements, parking minimums, and similar regulations—and the likelier it will be to yield the superblock vernacular.

***

We got a sense of the economic reasons why when walking through the Jakarta village, called Kebon Jahe. This is one of central Jakarta's many urban villages—a neighborhood format known to locals as perkampungan. Kebon Jahe literally is a superblock, in that the entire boundary is one big block of a dozen or so square acres, flanked by big arterial roads but with no significant through roads.

We entered the village wanting to learn how it got planned (or unplanned) to look this way. Julya, a native to the Jakarta area, knew we must first talk to the neighborhood chief.

After veering down one alley and asking around, we were taken down an even smaller alley and introduced to Budi Aprianto. A middle-aged man, he is one of 15 village chiefs, all democratically elected by the block's roughly 1,500 residents.

Kebon Jahe, he explained, was colonized in the 1700s by the Dutch, who built a cemetery there. When Indonesians got back control of the land during the 1940s revolution, the area was converted into farmland and a livestock market. The buildings that exist now began rising in the 1970s, to accompany population demands in central Jakarta. The village has not grown through the efforts of a master developer. A collection of families, many of them in the area for generations, had erected their own homes.

How, I asked, did a sophisticated alley network get built in such a decentralized growth system? After I paid a small bribe, he agreed to show me around.

The network, he explained, is as coordinated as it looks, forming a U shape that lets residents access the whole village. But there are three right-of-way categories.

The first consists of the relatively wide roads that form the entry of Kebon Jahe before hitting up against alleys. These were built by the government, allow cars to park (haphazardly), and have formal retail, such as the popular Alfamart chain.

The second, and primary, form of right of way is the alleys. They're 6 feet to 12 feet wide, meaning they can only handle pedestrians and motorbikes, and they accommodate most of the retail, with merchants setting up stores along or even into the alley. The government paves them and manages them for safety and clearance, but they follow a market logic. They began as private clearances for farmers who were seeking the easiest transport path. Development grew along them, and only later did the government take over. This is why they zigzag along land curves rather than fitting the straight lines common in a grid.

Third are the extremely narrow alleys that veer off these main ones. These are still private. Any given acre in Kebon Jahe has hundreds of small houses so scrunched together it's hard to tell them apart. Most homes don't front the street but, in a pattern atypical in even America's densest cities, go deep into the lot—meaning almost every last square foot of land is covered.

The only parts not covered are the alleys, which allow inside-outside access for these further-back houses. The alleys are also places for hanging birdcages, drying laundry, and running small commercial stands. They're created through negotiation between homeowners, all of whom benefit from the access. But they're extremely narrow—I had to turn sideways while walking through some—and that just boils down to economics.

"Jakarta is a very crowded city," Aprianto explained through my translator. "People use every bit of space they can for themselves."

Some of the extremely narrow alleys actually began as the wider formal public ones. But when adjacent homeowners want to expand their dwellings, they build additions into the alley, unintentionally similar to the invasive favela-style growth seen in Brazil. These households leave just enough alley space that they themselves can get out.

While building onto public alleys is illegal, enforcement is loose, given that Kebon Jahe is a mostly self-governing slum. (Aprianto is an elected leader, but he is not a government official.) In the rare cases when city inspectors appear, residents just pay them off.

***

Before visiting Kebon Jahe, Julya and I explored some superblocks in Tangerang, the working-class Jakarta suburb where she grew up. Many more exist there—unsurprisingly, given that it's an industrial city where factory workers need places to live. Tangerang superblocks are often centered around small mosques (Indonesia is the country with the world's largest Islamic population) or around dirty canals that nonetheless meet certain economic needs.

The same order can be found across the Global South: Large factories are built on city outskirts and quickly get surrounded by informal slums, virtually all of which adopt some variation of the superblock layout. Again, this is not because people there share the ideals of Western planners. Nor do these superblocks have the bells and whistles of the Spanish ones. It's simply the most logical layout in societies defined by economic and spatial scarcity.

Superblocks are more vulnerable in central areas, thanks to pressure to wipe them out and build to higher-end uses. That is not usually a market process. As our Kebon Jahe tour was ending, we passed the more formal area at the village exit, which had a wider alley and larger buildings.

"By next year, all of Kebon Jahe might look like this," Aprianto said.

The city has already started harassing the village's street merchants, and it's planning a program to raze Kebon Jahe homes and replace them with towers. Residents will receive payments from the government that, while large to them, won't be enough to buy replacement units in central Jakarta. Instead, they must find comparably priced units further out, meaning they're effectively being displaced through eminent domain. Such slum clearance is common across the Global South, as it once was in the United States.

It might surprise America's professional planners to hear it, but governments don't usually create superblocks—they destroy them.

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