The Harris-Walz campaign has said they want to create a federal ban on corporate price gouging (usually mentioned when folks talk about price hikes in grocery stores). I see economists complaining about variations of this policy being bad, e.g. leading to food desserts. But as far as I can tell there hasn’t been anything specific proposed. Could someone explain our best guess at what they are proposing, and if it’s been serious analyzed/tested elsewhere?
They cite existing legislation in the states; maybe explaining what that legislation does/how it works would be helpful?
In an ideal world it looks like monopoly busting but so much of America is only served by Walmart after decades of terrible antitrust that I don’t have a clue how we’d make it happen. Price controls are a fucking terrible idea but I haven’t heard her talk about it outside extreme medication circumstances so I’m more worried that her plan will be ineffectual rather than openly destructive.
The most valuable bureaucrat in terms of antitrust is currently Lina Khan and Harris has been extremely wishy washy about whether she’ll keep her on. By comparison Trump would clearly fire Khan on day one so Harris is still the obvious better choice - but I wish we could get her to commit to keeping Khan.
Price controls are the only viable solution if monopolies aren’t broken up and if collusion is rampant effectively removing competition.
While I know of no direct evidenceWhile I do not know of any direct evidence of collusion between grocers, the effects seem quite clear to me when nearly every grocer seems to be taking in record profits while many groceries are still 2-5 times higher than just five years ago.Also, if this issue is the litmus test for some people on whether they would vote for Trump over Harris, those people should have their head examined. While Harris lacks some specifics here, Trump has nothing — plus he’s a lying, misogynistic, sociopathic convicted felon — so yes, I agree, Harris is the obvious choice.
Edit> Word change to more accurately represent my intent.
Kroger and Albertsons don’t actually compete in any markets in the US, that takes collusion.
How do you define “compete”?
Here they are on opposite corners of the same intersection.
Sure, that’s only one example, but I’m not sure how well I can Google “Kroger near an [Albertsons|Randalls|Safeway]” to find a list.
There are about 600 stores they want to divest where there was actual competition between them. The two control about 5000 stores between them.
I’ll note that grocers record profits are orders of magnitude less than the price increases. Maybe somebody is getting rich off of the price increases, but I’m pretty sure Walmart is not.
My cynical view is that this is a campaign promise that even if passed, won’t lead to anything of benefit for the average citizen. My solidly blue state has price gouging laws and yet businesses were permitted to price gouge water, charging as much as $60 for a 12 pack of bottles, when we had a toxic algae bloom in our water supply and couldn’t drink it a few years ago. Hundreds of complaints were filed and the governor went on the news said they couldn’t substantiate any of it, even with photo evidence, and none of the companies were punished or at most were sent a letter to “knock it off” even though residents were still having to pay these insane prices if they weren’t able to drive hours away to find normally priced bottled water.
I think if we had an actual left-wing party, I’d have a different view, but instead, we have right-wing and diet-right-wing
As President, she will direct her Administration to crack down on anti-competitive practices that let big corporations jack up prices and undermine the competition that allows all businesses to thrive while keeping prices low for consumers. And she will go after bad actors who exploit an emergency to rip off consumers by calling for the first-ever federal ban on corporate price gouging on food and groceries, which will build on the anti-price gouging statutes already in place in 37 states.
Based off this I would see a federal law that penalizes corporation for doing this kind of stuff. Whether or not she does and if the punishments would actually deter these corporations is another matter entirely. The other problem is that it always happens after the fact. To give an example, in Canada there was a big scandal where a huge Canadian retailer, Loblaws, was caught in a bread price-fixing scheme with some other food retailers and it’s parent company George Weston. After 14 years of reaping the benefits these companies whose revenue streams are in the tens of billions were fined only 500 million. It’s more or less a slap on the wrist and just the cost of doing business to these people.
create a federal ban on corporate price gouging
It is already a crime under state and federal law… Pigs and prosecutors are not doing their jobs
What do the laws on the book look like?
Price fixing occurs when competitors reach an agreement (written, oral, or inferred from conduct) with the purpose and effect of raising, lowering, or stabilizing prices for services or products. Under the free market principles underlying the economy, competitors should freely compete in the marketplace and individually fix their prices based on the market forces (supply and demand). However, when competitors form a price fixing agreement, it can prevent the proper functioning of market based pricing leading to higher costs for consumers and less competition. Most types of price fixing agreements are illegal under antitrust laws, particularly Section 1 of the Sherman Act, but some limited price fixing may be allowed for entities like joint ventures. Price fixing can lead to both felony charges and civil liability for damages resulting from the wrongful manipulation of prices or supply.
The Sherman Act § 1 condemns any contracts, combinations, and conspiracies in restraint of trade, which includes vertical and horizontal price-fixing schemes. Horizontal price fixing agreements are the stereotypical example of price fixing which involves competitors that agree to raise, lower or stabilize prices, creating a cartel agreement. For example, when two competing fast-food chains that sell hamburgers agree on the retail price of cheeseburgers, that horizontal agreement is illegal under the Sherman Act because it would undermine market pricing. Price fixing does not require an explicitly set price but can be achieved by agreeing on an algorithm or other method for controlling prices. Vertical price fixing involves members of the supply chain that agree to raise, lower or stabilize prices. For example, when manufacturers of a product force the retailers to sell the product at a predetermined retail price or require their retailers to follow “suggested” retail price policies that do not allow discounts to customers. These types of agreements are also illegal under antitrust laws.
The boundaries of what constitutes illegal price fixing can be unclear, and sometimes proving price fixing can be challenging. Illegal price fixing can occur where the parties have not directly communicated with one another. The Sherman Act § 1 covers “contracts,” “combinations,” or “conspiracies” formed in order to restrain trade which can occur without formal communication. For example in Interstate Circuit v. United States, the Supreme Court found a conspiracy to exist among the distributors of films in Texas, even though no evidence existed of communication among themselves, because each changed their prices after receiving the same demands from two primary movie theater companies in the state. Often, problems arise with determining whether businesses in an industry are mirroring prices overtime as a function of the market versus a coordinated effort by businesses to control prices.
The Federal Trade Commision (FTC) also has authority under 15 U.S.C. § 45 to prevent “unfair competition” including actions beyond price fixing potentially without the proof requirements required in § 1 of The Sherman Act. However, the Second Circuit has indicated that the Commission still must show “(1) evidence of anticompetitive intent or purpose on the part of the producer charged, or (2) the absence of an independent legitimate business reason for its conduct” in order to act on price fixing under § 45 (See E.I. Du pont. v. FTC, 729 F.2d 128 (2d Cir. 1984)).
Almost all agreements among competitors to control prices or volume of product is per se illegal, but price fixing is allowed in some limited circumstances. There are limited times where negotiations on prices in business like joint ventures actually allows for better pricing in the market or more competition. Also, entities covered by trade agreements may be exempted from traditional price fixing rules such as government operated business like OPEC.
For more information on price fixing and similar antitrust regulations, see this FTC overview and this DOJ guide.
I’d say stuff like stock buybacks and other ways corporations funnel profits away, should be taxed at exorbitant rates. Then start taxing assets like stock portfolios and tax dodging vehicles followed by using assets as collateral as realizing their gains.
“Buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation. But in 1982, the Securities and Exchange Commission passed rule 10b-18, which created a legal process for buybacks and opened the floodgates for companies to start repurchasing their stock en masse.”
Same as banks regulated by glass steagall started fucking with the economy the moment is was repealed. The fairness doctrine for media might also be needed again.
I see economists complaining about variations of this policy being bad, e.g. leading to food desserts.
Sounds delicious. Let us eat cake.
It looks like the opposite of what Kroger has been doing for 4 years
I’ll note that grocers seem to have made very little profit per American in the last few years; Walmart made ~$70 off each of us last year, which seems incompatible with the price increases I’ve been seeing…
I would think there would need to be some kind of trigger for when retail prices for classes of products “necessary for survival” - think food, clothing, shelter, energy kind of things - increases faster than inflation by some threshold over some period of time. Tripping that flag would result in some kind of more detailed human investigation, because maybe there are extenuating circumstances that would reasonably justify a price increase of that kind. There could also be percentage limits to price increases in certain situations. Different from fixed price controls, which are definitely a bad idea (see: The French Revolution), rather a kind of mandated slowing down of such increases to allow the economy a chance to adjust without having inflation go crazy.
To be clear, I have only just poured this all out of my own head. None of it comes from political or economic sources, and my ideas could very well have unintended consequences, because I am neither a politician nor an economist.
It’d probably involve a healthy bit of statistical analysis, basically measuring price increases against measured inflation rates and prosecuting anyone statistically outside the standard without a justifying factor like a different formulation for the product or significantly better quality to justify being more expensive.
As for what the punishment would be, I’d say either fining them twice the value of the excess profit, or forcing them to cut prices on all products to twice the margin they went over by until they’ve lost twice the value they effectively stole.
Price cap increases perhaps. No more than 5% increase from the price the product was on January 01 that year.
That one seems kinda scary - if inflation was 6% and something wasn’t sold at any profit, all stores would stop selling it. (This is true for most food.)
If they stop selling it, they stop buying it from suppliers and then the suppliers need to find a way to decrease their costs to make it so stores buy their products again. Otherwise they go out of business, so they will find a way.
I think the scary thing is if it takes the suppliers more than 3 days to figure that out. Companies oftentimes can last 3 days without food (and rarely fix things very quickly at any scale).
