Businessicy – Under the administration of Joe Biden and Kamala Harris, food prices have surged by more than 20%. In response, presidential candidate Kamala Harris has proposed a solution, but it has received mixed reactions from economists. According to a CNN report on Sunday, August 18, 2024, Vice President Kamala Harris stated on Friday, August 16, 2024, that she has a plan. Her solution involves banning hoarding across the entire food industry.
“My plan will include new penalties for companies that exploit crises and violate the rules,” Harris said during a campaign event.
However, some economists believe that Harris’s proposal could create more problems than it aims to solve. Gavin Roberts, who studied anti-hoarding laws passed by several states during the COVID-19 pandemic, observed that one of the most significant impacts, particularly in grocery stores, was that such laws motivated people to purchase more goods than they would have if prices had simply risen.
“When prices are high, in most cases, the best policy response is to take no action at all,” said Roberts, the Chair of Weber State University’s Economics Department.
This approach would lead consumers who are reluctant to buy beef, for instance, because of high prices, to opt for other types of meat and protein. This helps keep beef available on grocery store shelves for those who want it and are willing to pay a higher price. Although Harris claims that her proposal will make the food industry more competitive, Roberts argues that it may actually have the opposite effect.
“It is more likely to maintain the status quo,” he said.
Roberts suggests that such a plan would be more likely to prevent new competitors from entering the market to take advantage of larger profit margins, competition that could help lower prices in the long run.
Economist Jason Furman shares a similar view. He believes that anti-price gouging laws could unintentionally harm consumers. “This is not a sensible policy, and I think the best hope is that it will end up being rhetoric without reality. There are no benefits here, and there are risks,” he said.
Instead of implementing anti-price gouging measures, Roberts suggests that Harris investigate whether there are any barriers preventing new players from entering the highly concentrated food industry. On this point, Harris also plans to provide more resources to the federal government to identify and address price fixing and other anti-competitive practices in the food and grocery industries.
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It remains unclear to what extent unchecked price hikes have contributed to inflation over the past few years. Research from the Federal Reserve Bank of San Francisco suggests that corporate price increases have not been the main catalyst for the inflation surge that began in 2021. Meanwhile, progressive-leaning think tanks have published research indicating a more direct connection.
Until the end of last year, companies routinely told investors that customers continued to pay for goods even as businesses raised prices. This was because demand remained high, fueled by larger paychecks and pandemic-related stimulus funds that boosted savings.
Vice President Kamala Harris has already secured enough votes from Democratic delegates to become the party’s nominee for President of the United States. This was announced by Democratic National Committee Chair Jaime Harrison on Friday, August 2, 2024.
The online voting process is still ongoing until Monday, August 5, but the campaign marked the moment when Harris crossed the threshold to secure the majority of delegate votes. Harris is poise to become the first woman of color to lead the Democratic Party’s ticket in a presidential election.
“I am honored to be the Democratic presidential nominee,” Harris said in a phone call with her supporters, as reported by VOA Indonesia on Saturday, August 3, 2024.
“We will rally behind Vice President Kamala Harris and demonstrate the strength of our party during the convention in Chicago later this month,” Harrison said.
The Democratic Party is moving forward with virtual voting to nominate Harris, reaching the peak of a tumultuous process that was shaken by President Joe Biden’s decision not to seek re-election. Delegates to the Democratic National Convention began casting their votes via email on Thursday, August 1, and the voting will remain open until Monday night.
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