Kamala Harris’ ‘Price Gouging’ Ban: A New Idea That Has Failed for Thousands of Years
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
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