WaPo Opinion By Catherine Rampell
When your opponent calls you ‘communist,’ maybe don’t propose price controls?
It’s hard to exaggerate how bad Kamala Harris’s price-gouging proposal is.
“Price gouging” is the focus of Vice President Kamala Harris’s economic agenda, her presidential campaign says. She’ll crack down on “excessive prices” and “excessive corporate profits,” particularly for groceries.
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So what level counts as “excessive,” you might ask? TBD, but Harris will ban it.
That’s the thing about price gouging: As has been said of hardcore pornography, you know it when you see it.
It’s not hard to figure out where this proposal came from. Voters want to blame someone for high grocery bills, and the presidential candidates have apparently decided the choices are either the Biden administration or corporate greed. Harris has chosen the latter.
In a news release Wednesday, her campaign said the first 100 days of her presidency would include the “first-ever federal ban on price gouging on food and groceries — setting clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries.”
What are these “clear rules of the road” or the thresholds that determine when a price or profit level becomes “excessive”? The memo doesn’t say, and the campaign did not answer questions I sent seeking clarification.
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The most likely template for Harris’s proposal is a recent bill from Sen. Elizabeth Warren (D-Mass.). (Harris co-sponsored similar legislation with Warren in 2020, when Harris was a senator.) Warren’s bill would ban any “grossly excessive price” during any “atypical disruption” of a market. Alas, no definition was provided for these terms, either; rather, the bill would empower the Federal Trade Commission to enforce bans using any metric it deems appropriate.
It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.
At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat. (There’s a reason narrower “price gouging” laws that exist in some U.S. states are rarely invoked.) At worst, it might accidentally raise prices.
That’s because, among other things, the legislation would ban companies from offering lower prices to a big customer such as Costco than to Joe’s Corner Store, which means quantity discounts are in trouble. Worse, it would require public companies to publish detailed internal data about costs, margins, contracts and their future pricing strategies. Posting cost and pricing plans publicly is a fantastic way for companies to collude to keep prices higher — all facilitated by the government. …
https://www.washingtonpost.com/opinions/2024/08/15/kamala-harris-price-gouging-groceries/