Former Obama administration economist Jason Furman sharply criticized Democratic presidential candidate Kamala Harris’ price control program on Friday for offering “no benefits.”
“This is not sensible policy and I think the biggest hope is that it ends up being just a lot of rhetoric and no reality,” said Furman, a Harvard economist who New York Times. “There are no advantages here, but some disadvantages.”
The vice president’s newly unveiled ban on price gouging would create restrictions to ensure that “large companies cannot unfairly exploit consumers to generate excessive corporate profits on food and groceries” and direct the Federal Trade Commission and other agencies to punish any companies that violate the rules, according to a press release from Harris’ campaign on Wednesday. But Furman warned that the plan would prevent the economy from adjusting and keep competition artificially regulated. If prices are not allowed to rise in response to demand, new companies will be reluctant to enter the market to increase supply.
Harris’ price control plan seeks to blame big corporations for the skyrocketing food prices in America under the Biden-Harris administration. But Furman said the laws of supply and demand would likely have the biggest impact on grocery bills.
“Egg prices went up last year – that’s because there weren’t as many eggs and therefore egg production increased,” Furman said.
Other economists agree and say: Just that while rising food prices may look like corporate price gouging, the increase is natural due to increased consumer demand as a result of the pandemic and expansionary fiscal policies, such as those envisaged in the 2021 stimulus checks.
“When prices rise on average over time and profit margins widen, it may look like price gouging, but it actually indicates a general increase in demand,” says Joshua Hendrickson, an economist at the University of Mississippi. “Such general increases are usually the result of expansionary monetary or fiscal policy – or both.”
Harris will outline her economic program at a rally in North Carolina on Friday. Her policy goals also include expanding subsidies for the health care reform law, eliminating taxation on tips for service workers – an idea first put forward by her opponent Donald Trump – and allocating millions to “local solutions” to combat the housing crisis.
Although her speech on Friday will give voters a first glimpse of the possible policies of a Harris administration, her campaign team said her remarks would be “relatively light” on details.
