This article first appeared in our weekly Hackwatch newsletter on media accountability. Subscribe here to get it delivered straight to your inbox every week, and check out our Hackwatch website.
Kamala Harris’ campaign rhetoric has been focused on holding corporations accountable, an approach we at the Revolving Door Project think is in line with the view of the vast majority of everyday Americans. To this end, Harris has introduced a number of policies that match the moment, including a proposal to crack down on rent gougers and a proposal to institute the “first-ever federal ban on price gouging on food and groceries.” These efforts are bringing about an onslaught of critics, including Washington Post columnist Catherine Rampell, who has penned multiple op-eds slamming such policies.
Rampell’s latest attack on the price gouging ban rested on two major planks:
- It’s bad politics—“If your opponent claims you’re a ‘communist,’ maybe don’t start with an economic agenda that can (accurately) be described as federal price controls.”
- It’s bad economics—“It’s hard to exaggerate how bad this policy is […] Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would […] 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 […] At worst, it might accidentally raise prices.”
But neither argument is all that convincing.
Let’s address the political dimensions of her opposition first. For starters, hyperbolic criticism from Donald Trump—Harris’ literal rival for office and, as Rampell’s colleagues have demonstrated, a habitual liar—are not (and ought not be) the barometer for sound policy.
As my colleague Jacob Plaza recently explained, American voters—you know, the people actually responsible for electing the next president—are overwhelmingly in favor of efforts to curtail corporate power. Navigator polling data from February of this year noted that 85 percent of Americans blame “corporations being greedy and raising prices to make record profits” for inflation (59 percent of whom say it is a “major cause” of inflation). Likewise, YouGov polling data from 2023 found that 69 percent of Americans irrespective of party affiliation support stronger antitrust legislation.
With all this in mind, Rampell’s assertion that it’s politically dangerous to crack down on corporations (like we’ve long advocated for at RDP) is absurd. We believe that inspiring your opponent to criticize a policy stance that is popular is literally the smartest thing a politician can do, and it is fascinating that Rampell disagrees.
The economic dimensions of Rampell’s opposition are similarly absurd. Harris’ proposal is vague, so allies and opponents alike can really only speculate about the effects of its implementation. But the picture Rampell paints of widespread destitution brought on by “a sweeping set of government-enforced price controls across every industry, not only food” is completely unmoored from the reality of anti-price gouging law in the U.S.
First of all, as Matt Stoller pointed out, “price controls” and “price gouging” are not the same thing:
“Price controls means setting prices centrally through an administrative agency. It’s a form of price fixing, and one that has been pervasive in every society in human history […] Price gouging has two meanings. The first is technical, and means taking advantage of an emergency or supply disruption to raise prices above what they otherwise would have been, like Enron gouging the state of California in power markets in 2001 […] The second meaning of price gouging is how normal people use it, and that term means charging unfair prices because a corporation has the power to do so, aka Ticketmaster. That kind of price gouging can encompass anything from charging a lot during an emergency – the technical definition – to slapping a junk fee on a hotel bill after you’ve checked in, to surveillance pricing where a company charges you more because of what they know about you, to making it hard to cancel a subscription. Basically, being cheated by someone with power is being gouged.”
Nothing about Harris’ announcement suggests that the Federal Trade Commission “would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk,” as Rampell claims. Granting that sort of power to federal agencies isn’t even a feature of similar legislation put forth by Sen. Elizabeth Warren (D-Mass.) that Rampell herself describes as “the most likely template for Harris’s proposal.”
Stoller’s take is not unique—Martin Sandbu in the socialist outlet Jacobin…er, wait, actually the Financial Times, also distinguishes between price controls and pricing regulation in response to market consolidation (rampant in our food systems, sadly, as my colleague Jeff Hauser noted in an earlier newsletter). Sandbu makes clear that traditional understandings of how markets can be captured and distorted are at play in America’s food system, and that prices and profits in the space exceed what can be reasonably defended. Sandbu sums up his analysis by observing:
“Globally, however, food commodity prices are now on average back to 2021 levels. So there is something going on in the US which is slowing down the transmission of lower food prices to consumers. US voters, especially low-income ones, have a genuine grievance, and there are enough signs that markets are not working as they should for a sensible economic policymaker to consider regulatory intervention to free up markets and increase competitive pressures.”
Rampell’s doomsday scenarios look even more ridiculous when placed in the context of anti-price gouging laws which already exist in a majority of states. Axios’ Emily Peck recently published an excellent piece making this context clear; it’s worth a full read but here are a few key takeaways:
- 38 states across the country already have anti-price gouging laws in effect that prohibit companies from raising prices in an emergency.
- The laws are triggered by any event declared an emergency by the state/federal government. “Once triggered, some laws explicitly prohibit price hikes above a certain threshold, anywhere from 10% to 25%. Others are more subjective, banning ‘egregious”’or ‘unconscionable’ price increases.”
- Companies accused of price gouging can still defend themselves by citing increases in costs.
- State’s anti-price gouging laws were all triggered during the COVID-19 pandemic.
That last point is especially important. While we won’t know what a federal ban on price gouging would look like until its implementation, we can use the pandemic emergency period as a case study. And what you find is that the “shortages, black markets and hoarding” Rampell seems so scared of were alleviated—not induced—by anti-price gouging legislation. Peck again:
“In New York, Tyson Foods is still fending off a civil probe looking into pandemic price gouging. Other states, like Tennessee — no commie stronghold — went after sellers who marked up hand sanitizer. The Florida AG’s office issued 70 subpoenas investigating price gouging around PPE.”
Zephyr Teachout—a law professor with political experience working in New York Attorney General Letitia James’ office—also just published an excellent piece placing Harris’ proposal within the context of existing anti-price gouging law. And the most likely effect of a federal ban, Teachout argues, would be an increased capacity for regulators to go after more powerful firms:
“The problem with price-gouging laws is that they exist only at the state level. Few states have the resources to take on the multinational corporations that dominate markets for many essential goods. Even if they did, they would still face jurisdictional challenges. If a company makes baby formula in Wisconsin and then sells to a distributor in Minnesota, which then sells to a supermarket in Oregon, that company might radically hike the price it charges in Minnesota when the next pandemic hits—but then be unreachable by the Oregon attorney general even if Oregonians end up paying the cost.
Most price gouging today happens far beyond the reach of most state attorneys general. A strong federal law would help not only the public but also the small-business owners who lack the ability to do anything but pass on big increases—and who become, unfairly, the face of ugly profiteering for many consumers. If properly designed, such a law would very rarely need to be used. With a federal ban in place, the biggest corporations in the world would keep a price-gouging expert at the ready to wag their finger the next time they’re tempted to exploit a disaster for profit.”
To be clear, Rampell isn’t the only individual criticizing Harris’ proposal. Fellow members of the economics commentariat like Noah Smith (in keeping with the false notion that Harris is advocating for price controls) maligned the proposal as “the dark side of progressive economics.” Representatives of the food industry obviously hate the idea, as do establishment economists like Jason Furman and Ken Rogoff. The Washington Post editorial board went so far as to assert that Harris had “squandered” her opportunity to put forth a clear economic plan on “populist gimmicks.”
But there is nothing gimmicky about holding corporations accountable. Especially when they have been repeatedly found to abuse their power and jack up prices for groceries and other goods and services. That industry representatives feel so threatened is proof that Harris’ proposal is a step in the right direction. The presidential hopeful should continue picking these fights and ignore attacks from corporations themselves and their sympathizers in the media class.
CORRECTION: A previous version of this newsletter misdescribed Zephyr Teachout as an economist. She is a law professor.
IMAGE: Vice President Kamala Harris delivers remarks at the kickoff for the Reproductive Freedoms Tour, Monday, January 22, 2024, at the International Union of Painters and Allied Trades (IUPAT) District Council 7 in Big Bend, Wisconsin. (Official White House Photo by Lawrence Jackson)