There has been a great deal of confusion around Vice President Harris’s plans to combat “price gouging.” Last month, her campaign announced that, if elected, the vice president would push for “the first-ever federal ban on price gouging on food and groceries — setting clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries.”
This vague language — along with mixed messages from her advisers and surrogates — led many analysts and commentators to conclude that Harris would use a recent bill from Elizabeth Warren as a template for her policy. Senator Warren’s bill is extremely broad and would give enormous power to the Federal Trade Commission to regulate prices.
If enacted, Warren’s bill would, of course, be a disaster for the economy. If federal bureaucrats took charge of grocery prices, shortages would occur. You would walk into your supermarket with the goal of buying apples, but there would be no apples to buy. People would hoard groceries like they did in the early days of the pandemic. A black market for peanut butter would form.
Does Harris support Warren-style price controls? For weeks, we’ve been left to speculate.
Yesterday, the vice president released a policy book that answers this question: She does not support Warren-style price controls.
From Harris’s book:
Vice President Harris and Governor Walz’s proposal—like many of the laws already on the books in 37 states—will go after nefarious price gouging on essential goods during emergencies or times of crisis. When an emergency strikes, the American people deserve to know the government can take on bad actors that take advantage of a crisis to excessively jack up prices.
The book makes two things clear: Harris would model her plan on existing state laws, not on Warren’s bill. And her regulation would kick in only during emergencies.
She cites a few examples. Take Texas, again from her policy book:
Under the Texas Deceptive Trade Practices-Consumer Protection Act, it is unlawful to take advantage of a disaster declared by the Governor of Texas in order to: “[Sell] or leas[e] fuel, food, medicine, lodging, building materials, construction tools, or another necessity at an exorbitant or excessive price; or [Demand] an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, lodging, building materials, construction tools, or another necessity.”
The Law in Action: During Hurricane Harvey in 2017, the Texas Attorney General’s office received more than 500 complaints regarding price increases, including reports of up to $99 for a case of water, hotels quadrupling their prices, and fuel being sold for $4-$10 per gallon. Ultimately, the state filed lawsuits against three businesses—Robstown Enterprises (a hotel that charged three times its normal rate during Harvey), Bains Brothers (an owner of gas stations that charged $7 per gallon), and Encinal Fuel Stop (a gas station that charged $9-$10 per gallon)—and settled several of the lawsuits when the companies agreed to refund customers.
To be clear, I don’t think a federal price-gouging law is a good idea. Such laws at the state level are more defensible, but still questionable. Yes, cases of water became much more expensive in Texas following Hurricane Harvey. But if you were, say, a Colorado-based business that sold water, those higher prices for water in Texas meant that you wanted to stop selling water to folks in Colorado and to start selling it to folks in Texas. That $99-per-case price sent a signal to water sellers all across America that they should be sending more water to Texans than they normally do. The result: More water went to Texans, which was exactly what was needed following the hurricane.
But even though a federal price-gouging law isn’t a good idea, it’s not a terrible idea. It will likely have no real impact on consumers, producers, or economic activity.
Unlike the Warren bill, what Vice President Harris is proposing is nothing to lose sleep over.