Former Obama administration economist Jason Furman on Friday slammed Democratic presidential nominee Kamala Harris’s price control scheme as having "no upside."
"This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality," Furman, a Harvard economist, told the New York Times. "There’s no upside here, and there is some downside."
The vice president’s newly presented ban on price gouging would establish restrictions that ensure "big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries" and direct the Federal Trade Commission and other agencies to penalize any corporations that violate the rules, according to a Harris campaign press release Wednesday. But Furman warned that the plan would prevent the economy from adjusting and keep competition artificially regulated. If prices are not allowed to increase in response to demand, new companies will be hesitant to enter the market to increase supply.
Harris’s price control scheme attempts to blame major corporations for American’s soaring grocery prices under the Biden-Harris administration, but Furman said the laws of supply and demand likely had the most significant impact on grocery bills.
"Egg prices went up last year—it’s because there weren’t as many eggs, and it caused more egg production," Furman said.
Other economists agree, telling the Times that although rising food prices may look like corporate price gouging, the spike is natural due to increased consumer demand following the pandemic and the result of expansionary fiscal policy, such as the stimulus checks that came out in 2021.
"If prices are rising on average over time and profit margins expand, that might look like price gouging, but it’s actually indicative of a broad increase in demand," said Joshua Hendrickson, an economist at the University of Mississippi. "Such broad increases tend to be the result of expansionary monetary or fiscal policy—or both."
Harris is set to lay out her economic platform at a North Carolina rally on Friday. Her policies also include expanding subsidies for the Affordable Care Act, eliminating taxing tips for service workers—an idea first presented by her opponent Donald Trump—and funneling millions into "local solutions" to the housing crisis.
Although her Friday speech will be voters’ first glimpse into what policy in a Harris administration may look like, her campaign said her remarks will be "relatively light" on the details.