Food prices have surged more than 20% under the Biden-Harris administration, prompting Vice President Kamala Harris to propose a federal ban on price gouging in the food industry. However, some economists believe that Harris’ proposal could create more problems than it solves. Anti-price gouging laws implemented during the pandemic led to increased purchasing of goods due to fear of rising prices. In response to high prices, the best course of action is often to take no action, as this allows consumers to make choices that help balance supply and demand, keeping goods available for those willing to pay higher prices.
Harris claims her proposal will help make the food industry more competitive, but economists like Gavin Roberts believe it would do the opposite by maintaining the status quo and preventing new competition from entering the market. Jason Furman, a top economist in the Obama administration, also agrees that anti-price gouging laws could harm consumers. Instead of pursuing anti-price gouging policies, Roberts recommends investigating what is preventing new parties from entering concentrated industries. Harris also plans to make more resources available for the federal government to identify and address price-fixing and other anti-competitive practices in the food and grocery industries.
The impact of price gouging on inflation over the last few years is still debatable. Research from the San Francisco Federal Reserve suggests that corporate price gouging was not the primary cause of the inflation surge in 2021, while other studies suggest a more direct link. Inflation in recent years has been influenced by a variety of factors, including the war in Ukraine, government spending, and pandemic-related supply chain disruptions. Many economists believe that the inflation Americans have faced is the result of a combination of these events and not solely corporate greed.
Although Harris’ proposal had its supporters, such as Lindsay Owens of Groundwork Collaborative, a progressive think tank, who believes it will give government agencies more authority to crack down on bad actors charging higher prices to consumers. Others, like Jason Furman, worry that the proposed ban on price gouging could lead to unintended consequences and harm consumers in the long run. Ultimately, the debate over how to address rising food prices and inflation continues, with economists and policymakers offering differing perspectives on the best way forward.
