Vice President Kamala Harris‘ presidential campaign has embraced a populist economic message, blaming corporate greed for high grocery prices. However, her proposal to ban price gouging is drawing criticism from economists, including a key figure from the Obama administration.
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Jason Furman, who served as Chairman of the Council of Economic Advisers under President Obama, dismissed Harris’s plan in plain terms. “This is not sensible policy,” Furman told The New York Times. “The biggest hope is that it ends up being a lot of rhetoric and no reality.”
Harris's campaign announced last week that she would call for a federal ban on corporate price gouging for groceries in an upcoming economic policy speech. The move appears designed to appeal to swing voters frustrated by persistent inflation, particularly in everyday essentials like food.
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However, economists across the political spectrum argue that corporate behavior played a minor role in recent price increases compared to factors like supply chain disruptions, shifts in consumer demand, and expansionary fiscal and monetary policies during the pandemic.
“If prices are rising on average over time and profit margins expand, that might look like price gouging, but it’s actually indicative of a broad increase in demand,” Joshua Hendrickson, an economist at the University of Mississippi, explained to the Times.
Furman warned that policies aimed at curbing price increases could hinder economic adjustment. “If prices do not rise in response to strong demand, new companies may not have as much inclination to jump into the market to ramp up supply.”
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The debate points to the tension between politically popular proposals and economic orthodoxy. Kevin O’Leary, the "Shark Tank" investor, expressed surprise that Harris didn’t move toward more "centrist" policies. “Her advisors have given her some bad advice,” O’Leary said in a recent Fox News interview, predicting increased scrutiny of how the programs would be implemented.
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Some economists, however, see merit in efforts to address corporate pricing power. Isabella Weber of the University of Massachusetts Amherst argues that allowing companies to reap outsized profits during supply shocks could set a worrying precedent for future crises.
"If the worst of times for ordinary people ends up being the best of times for corporations, some sort of basic social contract is kind of crumpling," she said in the report.
With inflation cooling but still a top concern for many Americans, the debate over price gouging and corporate profits will likely remain at the front of economic policy discussions in the months ahead.
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This article 'This Is Not Sensible Policy': Obama's Chief Economist Dismisses Kamala Harris' Price Gouging Crackdown originally appeared on Benzinga.com
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