Gouging out the truth
In a speech on Friday, Vice President Kamala Harris fleshed out some of the economic policies she would pursue if she won the presidency in November. Harris spoke briefly about her plans to crack down on price gouging in the grocery industry.
I will work to pass the first-ever federal ban on price gouging on food. My plan will include new penalties for opportunistic companies that exploit crises and break the rules, and we will support smaller food businesses that are trying to play by the rules and get ahead. We will help the food industry become more competitive, because I believe competition is the lifeblood of our economy. More competition means lower prices for you and your families.
A press release provided a few more details about Harris' proposal. According to the release, Harris will "[s]et clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive profits on food and groceries." She acknowledged that "[p]rice fluctuations are normal in free markets" but distinguished those price changes with "excessive prices unrelated to the costs of doing business that Americans have seen in the food and grocery industry." Since 2019, grocery prices have increased by about 20%.
Former President Trump seized on Harris' proposal and claimed that she was planning to "implement SOVIET Style Price Controls." In a speech on Saturday, Trump claimed that Harris' proposal to address price gouging amounted to going "full communist," calling her "Comrade Kamala."
The right-wing media got the memo, with Rupert Murdoch's New York Post claiming Harris was proposing "Kamunism," running a cover photo of her in front of a podium with the Soviet hammer and sickle.
While the coverage from the New York Post and other right-wing outlets was to be expected, there was similar coverage in mainstream outlets. In the Washington Post, columnist Catherine Rampell published a column with the headline, "When your opponent calls you ‘communist,’ maybe don’t propose price controls?" Rampell said that under Harris' plan, there would be "a sweeping set of government-enforced price controls across every industry." Rampell said, "[s]upply and demand would no longer determine prices or profit levels." Instead, [f]ar-off Washington bureaucrats" would make those calls.
It's unclear how Rampell arrived at this interpretation of Harris' proposal, which she indicated was limited to companies that "exploit crises" or market power. This is also how existing price gouging laws work in 37 states. Such laws have not turned Ohio, which has a broad anti-gouging statute, into a communist enclave with prices set by the government.
A similar piece by the Washington Post Editorial Board excoriated Harris for "blaming big business" for inflation. But several prominent economists believe big business played a major role in inflation following the onset of the pandemic. For example, two economists at the University of Massachusetts published a journal article arguing that "US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices." Other research found that, in 2020 and 2021, "corporate profits accounted for more than 50% of food price increases, whereas they accounted for only 11% of increases in the four decades prior."
The Washington Post Editorial Board further compared Harris' proposal to Nixon's ineffective 1971 executive order that froze prices for 90 days in an effort to combat inflation. (Harris did not propose freezing prices.) CNN, Newsweek, and The Atlantic also published highly critical coverage of Harris' proposal. Unmentioned in any of the coverage: Trump's own efforts to combat price gouging during his presidency.
When combating price-gouging was not communism
Both Harris' proposal for a federal law combating price-gouging and existing state laws are geared toward preventing large companies from exploiting a crisis or market disruption. Notably, during his presidency, Trump was confronted with a severe crisis, the onset of the COVID-19 pandemic in March 2020. He responded by announcing he would crack down on price-gouging.
In a March 23, 2020 press conference, Trump announced that he was implementing new policies "to prevent price gouging." Trump said that he would "not allow anyone to exploit the suffering of American citizens for their own profit." His plan was to make it a "crime" to sell certain products at "excessive prices."
This was not just rhetoric. That day, Trump signed Executive Order 13910, which the American Bar Association described as the "primary federal anti-price-gouging initiative." The Executive Order allowed the Secretary of Health and Human Services (HHS) to develop a list of products that would protected from hoarding and price-gouging. The list included surgical masks, surgical gloves, hand sanitizer, and disinfecting devices.
During the press conference, Attorney General Bill Barr explained that it was now a crime to sell the items on the list "in excess of prevailing market prices." Barr also announced he was convening a task force to prevent price-gouging and "designating in each of our 93 United States Attorney’s Offices a lead prosecutor who will be responsible in that district for pursuing these cases."
When Republican members of Congress targeted price-gouging
Price-gouging in the food industry has been the subject of bipartisan concern. HuffPost reported that, in February 2023, Senators Mike Rounds (R-SD), Jon Tester (D-MT), and Chuck Grassley (R-IA) introduced the Meat Packing Special Investigator Act. The legislation sought to combat "[a]nticompetitive behavior in the meat packing industry" and address the widening gap "between the price paid to cattle producers for their high-quality American products and the price of beef at the grocery store." The Senators noted at the time that as consumers struggled with rising meat prices, "the four largest beef packers, who control 85 percent of our beef processing capacity, have enjoyed record profits."
Harris made a similar criticism of the meat industry in her speech on Friday, noting that ground beef prices are up 50%. " We will help the food industry become more competitive, because I believe competition is the lifeblood of our economy," Harris said. "More competition means lower prices for you and your families."
While some price-gouging is the result of exploiting a crisis or market disruption, market consolidation and anti-competitive behavior are a more systemic problem.
The meat industry is a prime example. In September 2023, the Justice Department "filed a civil antitrust lawsuit against Agri Stats Inc. …for organizing and managing anticompetitive information exchanges among broiler chicken, pork and turkey processors." Meat producers used this shared information to fix and artificially inflate prices, harming consumers, the Justice Department alleges. The meat processors participating in the scheme "accounted for more than 90% of broiler chicken sales, 80% of pork sales and 90% of turkey sales in the United States."
Anti-competitive behavior extends beyond the beef and poultry industry. In December 2023, a jury found that egg producers were guilty of participating in a price-gouging scheme, resulting in a $53 million verdict. Just last week, StarKist agreed to pay $200 million — including $130 million that will returned to consumers — to settle a class-action lawsuit alleging that it fixed tuna prices.
Truth no longer underpins journalism. WaPo and NYT are two egregious examples. My journalist (ret.) heart bleeds. 😞
It didn't take long for all those in favor of "capitalist" profiteering to protect unnecessary price inflation. There's a "Bandwagon" many are jumping on. Of course Laryy Kudlow would make this argument, but why WaPo?
Judd, I remember that during the past 2 years that you reported on the corporate heads of food products distribution that CEO's when asked why they increased prices beyond enormous profits and stock buybacks from their profits, they answered, "simply because we can." These men who led oil companies and grocery chains were quoted saying these words. Maybe their words were found when I clicked on an underlined source in your reports. Who can find these bald accusations that sort of proved intentional and shameless price gouging?