Food prices have jumped over 20% under the Biden-Harris administration, and voters are feeling the pinch at the grocery store.
On Friday, Vice President Kamala Harris announced a bold solution: a federal ban on price gouging in the food industry.
“My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” Harris said at a campaign event.
But while the proposal sounds like a lifeline, some economists warn it could do more harm than good.
Gavin Roberts, who studied anti-price gouging laws enacted during the pandemic, observed that these regulations often backfire.
They motivated people to buy more than they would if prices had risen, Roberts explained.
This behavior could lead to stockpiling and shortages, as consumers rush to grab items like beef before prices increase, leaving fewer options on the shelves for others.
This could create additional challenges for businesses trying to manage supply and demand effectively.
Harris argues her plan will make the food industry more competitive, but Roberts disagrees.
It’s more likely to maintain the status quo, he said.
By stifling profit margins, these laws could deter new competitors from entering the market—competition that might have driven prices down in the long run.
Jason Furman, a former top economist in the Obama administration, echoed these concerns, calling the proposal “not sensible policy.”
Furman told the New York Times, “There’s no upside here, and there is some downside,” suggesting that the plan might end up as mere rhetoric rather than effective regulation.
Instead of focusing on price-gouging bans, Roberts suggests Harris should investigate barriers preventing new competitors from entering concentrated industries.
Interestingly, Harris’ campaign fact sheet does hint at broader measures, including ramping up resources for the federal government to tackle price-fixing and anti-competitive practices in the food and grocery sectors.
Critics aside, some supporters cheer Harris’ aggressive stance.
Lindsay Owens, executive director of the progressive Groundwork Collaborative, dismissed fears of shortages due to the price-gouging statute.
She sees it as a tool to empower agencies like the Federal Trade Commission to “crackdown on bad actors” who charge consumers exorbitant prices.
“It’s good to see this aggressive approach,” Owens said.
Yet, the root causes of rising food prices remain complex.
The San Francisco Federal Reserve suggests that corporate price gouging wasn’t the main driver of the inflation surge that began in 2021.
Instead, the rise in prices can be traced to a tangled web of factors, including the war in Ukraine, government spending, and pandemic-induced disruptions.
The unprecedented strain on supply chains during the pandemic’s peak also played a significant role in pushing prices up.
Harris’ plan may address symptoms, but it could miss the underlying disease.
As voters seek relief from rising costs, the question remains: Will this proposal ease the burden, or is it a cure that’s worse than the disease?
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