Vice President Kamala Harris‘ presidential campaign has adopted a populist economic message, blaming corporate greed for high food prices. But her proposal to ban price gouging has drawn criticism from economists, including a key figure in the Obama administration.
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Jason Furman, who chaired the Council of Economic Advisers under President Obama, rejected Harris’ plan outright. “It’s not sensible policy,” Furman told the New York Times. “The best hope is that it ends up being a lot of rhetoric and no reality.”
Harris’ campaign announced last week that she would call for a federal ban on corporate price gouging in the food sector in an upcoming economic policy speech. The move appears designed to appeal to swing voters frustrated by persistent inflation, especially on everyday goods like groceries.
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However, economists across the political spectrum argue that corporate behavior has played a minor role in recent price increases compared to factors such as supply chain disruptions, changes in consumer demand and expansionary fiscal and monetary policies during the pandemic.
“When prices rise on average over time and profit margins widen, it may look like price gouging, but it actually indicates an overall increase in demand,” Joshua Hendrickson, an economist at the University of Mississippi, told the Times.
Furman warned that measures to curb price increases could hinder economic adjustment. “If prices do not rise in response to strong demand, new firms may not be as inclined to enter the market to boost supply.”
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The debate highlights the tension between politically popular proposals and economic orthodoxy. Kevin O’Leary, the investor on “Shark Tank,” expressed surprise that Harris did not lean toward a more “centrist” policy. “Her advisers have given her some bad advice,” O’Leary said in a recent interview with Fox News, predicting that the implementation of the programs would face increased scrutiny.
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Some economists, however, believe it makes sense to combat corporate pricing power. Isabella Weber of the University of Massachusetts Amherst argues that allowing companies to make excessive profits during supply shocks could set a troubling precedent for future crises.
“When the worst times for ordinary people turn out to be the best times for corporations, the fundamental social contract breaks down,” the report says.
Although inflation is easing, it remains a major concern for many Americans, and the debate over price gouging and corporate profits will likely remain at the center of economic policy discussions in the coming months.
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This article “This is not sensible policy”: Obama’s chief economist rejects Kamala Harris’ crackdown on price gouging originally appeared on Benzinga.com
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