Harris proposes federal price gouging ban: Will it curb inflation or create new challenges? Plan sparks debate – Times of India

Food prices have surged by over 20% under the Biden-Harris administration, pushing many Americans to stretch their budgets further at the grocery store. In response, Vice President Kamala Harris announced a federal ban on price gouging across the food industry at a campaign event on Friday.
“My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” Harris said.

However, some economists warn that Harris’ proposal could create new challenges. Gavin Roberts, chair of Weber State University’s economics department, studied anti-price gouging laws enacted during the pandemic and observed that such measures often prompted consumers to buy more than they typically would, exacerbating shortages.
“When prices are high, the best policy action is often no action at all,” Roberts said reported CNN, explaining that consumers deterred by high prices of items like beef might switch to other proteins, helping maintain stock levels for those willing to pay more.
Harris claims her proposal will foster competition within the food industry, but Roberts argues it may instead maintain the status quo by deterring new competition that could lower prices in the long run. Jason Furman, a former top economist in the Obama administration, echoed this concern, labeling the proposal as “not sensible policy” with potential downsides for consumers.

Despite the critiques, Harris’ campaign fact sheet indicates that the plan also includes increased resources for federal agencies to combat price-fixing and anti-competitive practices in the food industry. Campaign staff declined to comment on the criticisms, referring instead to Harris’ speech and the fact sheet.
The debate over the causes of inflation in recent years remains unresolved. While the San Francisco Federal Reserve found no strong link between price gouging and inflation, progressive think tanks argue there may be a direct connection.
Lindsay Owens, executive director of the progressive Groundwork Collaborative, supports Harris’ proposal, stating that it would empower agencies like the Federal Trade Commission to “crack down on bad actors” and ensure fair pricing for consumers. “It’s good to see this aggressive approach,” Owens told CNN.
As the discussion around Harris’ proposal continues, the question remains: will this new policy curb rising food prices or create more economic hurdles?