The Stupid Price Gouging Discourse

Conor here: Many on the left seem eager to believe that Kamala would continue the one bright spot from the Biden administration: crackdowns from the DOJ Antitrust Division and the Federal Trade Commission on things like concentration and price fixing.

Yet the Harris campaign has yet to voice any support for Jonathan Kanter (head of DOJ antitrust) or Lina Khan (FTC head). We’re getting a steady diet of stories about Kamala being caught between billionaire donors and progressives.

The plutocrats want Khan gone, and the Harris campaign declines to comment. Is there something, anything in Harris’ record that would lead us to believe she would stand up to the billionaires, or does her history suggest the opposite?

While many took Harris’ big August economic speech as a cause for celebration because she mentioned mergers and price-fixing, maybe I’m too pessimistic, but I think it’s actually cause for more concern. It was reminiscent of Obama who said nice things, but we know the rest of the story. The non-plan plan that emerged from Harris’ speech was evidence of this. I wrote the following when Harris unveiled her price gouging “plan”:

So Harris comes out with a non-plan to tackle price gouging. Her campaign can’t even explain what would constitute excessive profit, what a ban on price gouging would target, or how it would be enforced. Maybe the obfuscation is the point.

It’s really impossible to know what Harris supports since she has so view policy proposals and rarely speaks to the press, but here Matt Bruenig argues the price gouging proposal is either stupid or a bait-and-switch that too many are desperate to buy into.

By Matt Bruenig. Originally published at his website.

Ten days ago, Kamala Harris released her Lowering Costs Agenda (LCA), a five-page list of various policy proposals that all ostensibly relate back to lowering prices.

The LCA contains the following text about grocery costs:

Lowering Grocery Costs

Vice President Harris knows that rising food prices remain a top concern for American families. Many big grocery chains that have seen production costs level off have nevertheless kept prices high and have seen their highest profits in two decades. While some food companies have passed along these savings, others still have not. Price fluctuations are normal in free markets, but Vice President Harris recognizes there is a big difference between fair pricing and the excessive prices unrelated to the costs of doing business that Americans have seen in the food and grocery industry.

That’s why Vice President Harris and Governor Walz will work to enact a plan in their first 100 days to go after bad actors to bring down Americans’ grocery costs and keep inflation in check. They will work with Congress to:

• Advance the first-ever federal ban on price gouging on food and groceries;

• Set clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive profits on food and groceries.

• Secure new authority for the FTC and state attorneys general to investigate and impose strict new penalties on companies that break the rules.

The document provides no further elaboration about what exactly is meant by “price gouging.” But given that the preface to this particular sentence states that grocery price levels are being inflated by big grocery chains who are excessively profiteering and then states that this plan aims to “bring down Americans’ grocery costs,” it would be reasonable to assume that Harris is proposing some kind of regulation that would penalize grocery stores for setting prices too far above their costs.

Explicitly imposing some sort of cost-plus rule on grocery store pricing is fairly controversial and so a number of articles were published either critiquing the idea or reporting on the reaction of various economists and industry spokespeople.

Rather than defend the idea of imposing some kind of pricing regulation to bring down grocery store prices right now, various writers have instead decided to defend the much narrower idea of banning certain price hikes in the immediate aftermath of a natural disaster.

For instance, in The Atlantic, Zephyr Teachout defends the Harris plan by referencing these very narrow state laws:

Price gouging in the popular imagination has a “know it when you see it” quality, but it is actually a well-developed body of law. A typical price-gouging claim has four elements. First, a triggering event, sometimes called an “abnormal market disruption,” such as a natural disaster or power outage, must have occurred. Second, in most states, the claim must concern essential goods and services. (No one cares if you overcharge for Louis Vuitton handbags during a hurricane.) Third, a price increase must be “excessive” or “unconscionable,” which most states define as exceeding a certain percentage, typically 10 to 25 percent. Finally, the elevated price must be in excess of the seller’s increased cost. This is crucial: Even during emergencies, sellers are allowed to maintain their existing profit margins. They just can’t increase those margins excessively.

At Axios, Emily Peck does the same thing, telling us to “think bans on selling $10 bottles of water after a major hurricane” and explaining that this sort of very narrow anti-price-gouging regulation already exists in 38 states.

Insofar as we only have a single sentence in a five-page document to go on, it is pretty pointless to debate what Harris really meant. Indeed, because this section of this campaign document was probably cobbled together by a variety of people in the OMI-AELP-ILSR-MPU-Prospect policy bloc, it may not even have any specific authorial intent that can actually be discovered.

But if we interpret price gouging the way those defending it in the discourse do, then Harris’s proposal to regulate price gouging is not actually going to lower grocery costs right now. At best, it is a promise to keep them from rising too much during natural disasters that occur in the future, something that is already illegal in 38 states anyways.

I don’t mean to play dumb too much here. I understand that the election season is a period of intense dishonesty and bad faith. Campaigns have to balance a variety of conflicting constituencies, various discourse participants get really bought in either because they have been consulted or because they are fearful of an adverse election outcome, and so vagueness and misdirection is an intentional persuasion strategy.

In this case, it seems pretty obvious that, in saying she will bring down grocery prices by fighting price gouging, the Harris campaign and those in its orbit hope that regular people will like the sound of that because they don’t like the current prices and think that fighting “price gouging” means she is going to lower them while also hoping that the elite discourse can be mollified by insisting that “price gouging” actually refers to a much different policy that will do nothing to lower current grocery store prices.

So long as the streams don’t cross, it’s a messaging victory. But if you are someone like me who still does kind of like the policy discourse despite it at all, the whole thing is a very frustrating and depressing spectacle.