Washington.- Vice President Kamala Harris’ economic agenda for her presidential campaign includes an argument that blames corporate price gouging for the high cost of groceries.
That message has fared well in polls among undecided voters. It has been embraced by progressive groups who regularly point to price gouging as responsible for rapid inflation, or at least something that contributes to rapidly rising prices.
Those groups hailed Harris’ announcement Wednesday evening calling for a federal ban on corporate price gouging on groceries during an economic policy speech she delivered Friday.
However, the economic argument on the issue is complicated.
Economists have cited a number of forces that have driven up prices during the recovery from the pandemic recession, including supply chain problems, an unexpected shift in consumer buying patterns and increased customer demand fueled by government stimulus and low interest rates from the Federal Reserve.
Most economists agree that these forces have had a much greater impact on price increases over that period than corporate behavior.
Biden administration economists have found that corporate behavior has played a role in driving up grocery costs in recent years — but that other factors have done much more.
Harris’s campaign announcement Wednesday cited meatpacking consolidation as the cause of excessive grocery store prices, though officials did not respond Thursday to questions about what evidence Harris might cite or how her proposal would work.
There are examples of companies that have told investors in recent years that they have had to raise prices to increase profits.
Although the term “price gouging” means different things to different people.
For some, it means companies are using shortages as an opportunity to rapidly raise prices, taking advantage of an imbalance between supply and demand to make huge profits.
Such behavior is common — and even expected — in economics, and tends to increase when products are scarce.
For others, “price gouging” suggests that companies are choosing to produce less — maintaining a smaller supply of the product — so they can charge more.
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