WASHINGTON (TN) — Vice President Kamala Harris’ recent proposal to impose a federal ban on price gouging, specifically targeting the grocery and food retail industries, has made headlines and raised concerns among economists. At a recent rally, Harris spoke about persistently high food prices, but instead of blaming the prices on inflation, she blamed food and food retail companies for price gouging.
Harris would cap the prices of certain goods and services at a certain level by enacting a federal ban on price gouging. States across the country already have bans on price gouging that take effect during states of emergency or natural disasters.
Harris’s broader economic plan has not yet been fully presented, but the ban on price gouging has come under criticism from both economists and political opponents.
Economists question the effectiveness of price gouging bans
According to Gavin Roberts, an economist at Weber State University who has researched anti-price gouging laws during the COVID-19 pandemic, a ban on price gouging might not actually lower prices. Roberts noted that nationwide bans on price gouging could potentially stifle competition and inadvertently keep prices high.
A long history of price controls
Economists said price controls are nothing new. According to economist Brian Albrecht, any policy that gives the government the power to determine what a “fair” or “unfair” price is is actually a price control, regardless of how it is labeled. “When bureaucrats, not markets, determine acceptable prices, we are dealing with price controls,” he said.
Price controls date back to ancient Egypt, Greece and Rome. During the American Revolution, colonial governments even set maximum prices on essential goods for George Washington’s army. More recently, the US has implemented price controls during major crises such as World War II and the energy crisis of the 1970s. However, these measures often led to long-term market disruptions and shortages.
The debate continues
While Harris sees her proposal as a way to ease the financial burden on American families, economists and critics alike warn of the potential negative side effects such regulations could have on the market.
