Food industry hits back at Kamala Harris over grocery price gouging plan
Food industry executives rejected Vice President Kamala Harris’s accusation that the industry was engaging in “price gouging” by raising food prices and making food more expensive for Americans.
Harris, the Democratic Party’s presidential candidate, blamed corporate greed for rising supermarket prices and said it was necessary to impose price controls to bring down food prices across the country, which have risen sharply since President Biden took office.
Food companies responded that labor and raw material costs have skyrocketed due to high inflation, necessitating price increases. They also said they need to maintain healthy profit margins to continue developing new products.
“We understand why this price shock is happening and why it’s annoying,” Andy Harig, vice president of FMI, a trade group that represents grocery retailers and suppliers, told the Wall Street Journal.
“But to automatically say that there must be something evil going on is, in my opinion, too simplistic a statement.”
Some economists argue that attempts to curb price gouging may be merely a means of controlling prices, which may have unintended consequences.
“It can be very difficult to create price controls that are not manipulable,” Michael Sinkinson, an economist at Northwestern University’s Kellogg School of Management who also served on President Biden’s economic advisory council, told The Journal.
Code Red
Kamala Harris’ plan for American-style communism is a $1.7 trillion gift, even though our budget deficit this year is $1.9 trillion and our national debt is already $35 trillion. We rate some of the proposals on a scale of 1 to 5 hammers and sickles:
Price controls
Pitch: A “first” federal ban on “price gouging.”
What is wrong with this: What is usury? What is excessive? That is not said, and price controls inevitably have negative consequences as demand for limited goods increases.
Cost: Black markets, panic buying, less competition … and higher inflation
Reviews:
CHILD RELEASE
Pitch: Restore the COVID-era child tax credit of $3,600, but increase it even further to $6,000 for the first year of a child’s life.
What is wrong with this: All of this comes at a huge cost, which is why the credit was not extended after the pandemic. The credit also discouraged work and fueled inflation as parents spent more on child care.
Cost: $1.2 trillion
Evaluation:
APARTMENT RAFFLE
Thesis: Up to $25,000 down payment for first-time home buyers.
Criticism: Will likely fuel inflation even further. If the government contributes money to the purchase of a home, home prices will rise.
Cost: $100 billion
Reviews
Tax relief for construction companies
Thesis: A $40 billion “innovation fund” to encourage cities to build more housing.
Criticism: Harris again does not trust the market to function as it has done up to now – the demand for housing will lead to more construction activity. Instead, she wants to give companies tax breaks, but this will probably not lead to affordable housing.
Cost: $100 billion
Evaluation:
“How do you set price controls? What is the right benchmark?”
Under the Biden-Harris administration, food prices have risen 21 percent, part of a surge in inflation that has raised overall costs by about 19 percent and soured sentiment toward the economy among many Americans even as unemployment has fallen to historic lows.
Food prices were 27 percent higher in July than in the same month in 2019 – a year before the coronavirus pandemic disrupted supply chains and wreaked havoc on the market.
Harris said if elected president, her administration would ban price gouging by food suppliers and grocery stores.
She said her administration would give the Federal Trade Commission and state attorneys general the power to impose new penalties on companies that exploit consumers to make profits from food and groceries.
Her opponent, former President Donald Trump, sharply criticized the proposal, calling it a “Soviet-style” policy that would lead to even higher inflation.
“The proposal to ban price gouging in the grocery industry is a solution in search of a problem,” the National Grocers Association told the Journal.
Food company executives said profit margins were modest compared to other industries.
The Washington Post, whose editorial page is sympathetic to the Democrats, also sharply criticized Harris’ proposal and called the ban on “price gouging” a “populist ploy.”
“Inflation jumped in 2021 largely because the pandemic disrupted supply chains and … Federal Reserve policies supported by the Biden-Harris administration aimed at slowing it,” the newspaper wrote.
Instead of “being honest with voters,” the vice president chose a less direct approach: “He blamed big business,” wrote the newspaper owned by Jeff Bezos.
With post wires
