In a campaign speech earlier this month, Democratic presidential nominee Kamala Harris laid out several new planks of her economic agenda. Among them were expansions to the child tax credit, subsidies for homebuyers, and caps on prescription drug costs. But the policy that seems to have the most people talking is Harris’s proposal for the “first-ever federal ban” on price gouging for food and groceries.

According to Forbes, grocery prices have increased 27 percent since July 2019. And while inflation has cooled back to roughly pre-pandemic levels, American families are still feeling the pinch, spending the greatest percentage of their household budgets on food in three decades, according to the Department of Agriculture. If you shop for groceries, you’ve surely seen it: A carton of grade-A eggs that cost $1.40 five years ago now costs more than $3 on average. A gallon of milk that cost just under $3 now costs nearly $4. And a pound of beef that cost less than $4 now costs around $5.50.

Polls show that inflation is still the number-one issue voters are worried about, and Harris is attempting to address that concern. While the major spikes in inflation that took place over the first two years of the Biden administration were multifaceted, with supply-chain hiccups, the war in Ukraine, and increased demand from a strong labor market all playing a role, Harris is making the case that price gouging by large corporations was also to blame. “Many big grocery chains that have seen production costs level off have nevertheless kept prices high,” says a fact sheet from her campaign. To deal with this problem, Harris says she plans to “set 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” and “secure new authority for the [Federal Trade Commission] and state attorneys general to investigate and impose strict new penalties on companies that break the rules.” 

Harris’s rollout of this policy has been widely panned in the press. The libertarian magazine Reason called it “dishonest and stupid,” which is unsurprising coming from them, but even more mainstream publications haven’t been much kinder, with the Atlantic’s Josh Barro calling Harris’s plan “economically dumb” and saying her “promises make no sense to people acquainted with supply and demand.” Positive write-ups, like Nick Hanauer’s in the New Republic, have been the exception rather than the rule. The skepticism is not entirely unwarranted. For the moment, Harris’s policy is frustratingly vague. Nowhere has she defined the term “price-gouging,” nor has she given any parameters for what constitutes “excessive profits,” which makes it hard to give her particular ideas for tackling the problem a critical evaluation. Additionally, 37 U.S. states already have some form of price gouging law on the books. Harris needs to clarify what exactly her proposal would do that these laws have failed to do. 

But a lot of commentators have taken issue not with the policy’s lack of detail, but with its very premise. As you’d expect, conservatives including Donald Trump are running with the line that proposing price controls proves Harris is a “communist.” (A line that only makes sense, Newsweek points out, if you are also willing to call Richard Nixon a communist.) Allison Schrager of the right-wing Manhattan Institute has stated that Harris was reviving the “price-gouging myth” and that her policy was “the wrong solution to a nonexistent problem.”

Even liberal publications have taken a similarly derisive tone. In an August 15 editorial, the Washington Post’s Catherine Rampell suggested that conservatives had a point when calling Harris’s plan “communist,” and said that the Vice President was “exploiting [inflation] for demagogic gain because push-polling suggests people are mad about ‘greed.’” In USA Today, Nicole Russell wrote that “No one with a half-way functioning brain thinks that inflation, which caused high prices, at the local grocer is due to price gouging by corporations.” CNN’s news article on the policy, which carries the rather opinionated headline that “Harris’ plan to stop price gouging could create more problems than it solves” is a touch more charitable, saying that “many economists contend corporate profits were juiced by that thing you learned in Econ 101: supply and demand—not corporate greed (alone, anyway).”

It would be one thing if these articles simply argued that Harris’s proposed method to combat price gouging was faulty or ill-considered. I don’t think the contours of the policy are clear enough yet to make that judgment, but these writers are certainly free to give their predictions. But the writers don’t just argue that Harris is wrong about how to fight price gouging. They seem to think that the mere idea of price gouging is laughable, something that nobody with even a basic degree of economic literacy could believe is a real problem.

Except that’s obviously not true. We know that companies have dramatically increased their profits on the backs of consumers in the last few years. Pointing to an increase in corporate profits from 9.7 percent of America’s total GDP in 2020 to 11.2 percent in 2023, Hanauer estimates that companies “have gouged their way to an almost unbelievable $1.5 trillion in excess profits since 2020—that’s in addition to their pre-pandemic profit rates.” This means that price gouging has cost American families $12,000 on average in that time frame.

Food manufacturers have attempted to justify increasing prices by pointing to the increased costs of labor and materials, as well as supply chain hiccups that created shortages. If companies were only raising their prices to accommodate rising input costs, this would make sense. But grocery stores and manufacturers have both been bringing in considerably bigger profits than they did before the pandemic. 

Some of the price increases have come from profits at the retail level. According to a report from the Federal Trade Commission, food and beverage retailers increased their revenues from 5.6 percent above their total cost in 2015 to more than 6 percent in 2021 and 7 percent in 2023. And according to Forbes, “The top 10 retailers increased their combined profits by over $10 billion [in 2021 and 2022] and issued over $15 billion in shareholder buybacks.” And on Tuesday, a Kroger pricing executive, Andy Groff, even admitted during questioning at an FTC hearing that the company's objective was to "pass through our inflation to consumers" and that "on milk and eggs, retail inflation has been significantly higher than cost inflation."

Meanwhile, a lot of gouging happened at the manufacturer level too. Reporting from April 2023 by Nik Popli, in Time magazine, provides several examples of major companies that saw historic windfalls in the pandemic’s aftermath: 

At Kraft-Heinz, the multinational food company that makes Oscar Mayer, Jell-O, and Kool Aid, profits for the quarter ending at the end of 2022 were up nearly 450%, compared to the prior year, at $887 million. Tyson Foods, the largest meat company in the U.S., more than doubled its profits between the first quarters of 2021 and 2022. And General Mills, which owns Kix, Trix, and Chex among other recognizable cereal labels, saw its fourth quarter profits last year rise 97% compared to the previous quarter. 

Even four years after the initial shock of the pandemic, many companies that raised their prices have not brought them back down. For example, even as input costs dropped in 2023, PepsiCo announced that they would not bring their prices back down to accommodate it. In fact, they did the opposite, increasing prices by double digits in 2023 and 2024. The Groundwork Collaborative, a group of progressive economists, has found this to be true across the economy as a whole. “Corporate profit margins,” they wrote in a study published in January, “have remained high and even grown—as labor costs have stabilized, nonlabor input costs have come down, and supply chain snarls have eased.” Looking at inflation from April to September 2023, they found that corporate profits accounted for 53 percent of the increase in consumer prices, compared with just 11 percent forty years before the pandemic. 

Another study, from the U.K.-based think tanks Common Wealth and the Institute for Public Policy Research, looked at the financial statements of companies from the U.S., U.K., European Union, Brazil, and South Africa. It determined that across the period from 2019 to 2022, the U.S. experienced 9 percent inflation while the Eurozone experienced 11 percent. But at the same time, corporate profits increased by anywhere from 32 to 44 percent depending on the country. Fortune magazine described this pattern as evidence that companies were “lying to you about inflation.”

It’s not just lefty think tanks reaching these conclusions. The International Monetary Fund (not exactly a cabal of hardened communists) looked at inflation across the Eurozone in 2022 and found that 45 percent of it could be attributed to “domestic profits.” The Federal Reserve Bank of Kansas City reached a similar conclusion about inflation in the U.S., stating that “markup growth,” that is, the increase in the ratio of how much a firm charges vs. production costs, “was a major contributor to inflation in 2021.” This and other economic analyses demonstrating such astonishing profiteering even surprised some in the belly of the beast. Albert Edwards, a strategist at one of Europe’s oldest investment banks, Société Générale, said the following in April 2023:

After working in finance for over 40 years I had felt there wasn’t much that could surprise me. Yet I find the unprecedented levels of corporate Greedflation in this economic cycle astonishing. The latest release of US whole economy profits data delivered another shock to my weakening confidence that the capitalist system is working as it should.

Another criticism of Harris’s crusade against “price gouging” is the idea that grocery prices are no longer a problem because the rate of inflation has settled back to normal levels. While this is true that inflation has cooled, it’s not actually helpful in terms of high food prices. Inflation is the rate of increase, so when grocery costs rise dramatically for years and then stop, it might technically be true that “inflation has gone down”—but we’re still stuck with the price increases from the past years, and Americans are still paying a greater percentage of their incomes for groceries than they were five years ago. And this doesn’t even begin to address the fact that the costs of other major expenses like housing, energy, medical care, and transportation have also grown considerably. An Urban Institute study from 2023 found that in order to pay for groceries, families were increasingly going into credit card debt, relying on apps like Buy Now, Pay Later, or even taking out predatory payday loans.

To be clear, groceries are just one of many areas where the government should intervene to make life more affordable, and addressing price gouging on food should not come at the expense of addressing it in other areas of life. (To her credit, Harris has proposed policies of varying quality and specificity to address childcare, housing, and prescription drug costs too. In Jacobin, Matt Bruenig has a useful article breaking each of them down.)

It’s clear, however, that food manufacturers and retailers got away with screwing us badly over the past few years. The New York Times reported earlier this year that a lot of companies have been “testing the limits” of how much they could charge consumers, and found there were fewer than they once thought: 

Big companies that had previously pushed through one standard price increase per year are now raising prices more frequently. Retailers increasingly use digital price displays, which they can change with the touch of a button. Across the economy, executives trying to maximize profits are effectively running tests to see what prices consumers will bear before they stop buying.

Huge disruptions to supply chains pushed up corporate costs during the pandemic and forced many companies to think more creatively about their pricing strategies, [Alexander MacKay, coleads the Pricing Lab at Harvard Business] said. That supercharged a trend toward more rigorous pricing, and showed many companies that they could more boldly play with prices without chasing shoppers away. The experimentation continues even as costs ease.

Stores like Walmart and Kroger, meanwhile, are increasingly exploring the possibilities of so-called “dynamic pricing,” a practice similar to the “surge pricing” that makes Uber and Lyft rides cost more at peak hours. As a letter from Senators Elizabeth Warren and Bob Casey warns, digital price labels may soon be used to “rais[e] prices suddenly and at times when certain products are in highest demand,” such as “the price of turkeys in the days leading up to Thanksgiving, or the price of ice cream on a hot day.”

Inflation may have come back to normal—more or less—but it’s only a matter of time before the next economic crisis comes around. We need to have guardrails in place to make sure that companies can’t take advantage. So what can be done?

After getting flogged in the press, the Harris campaign has attempted to reject any notion that they are proposing sweeping, industry-wide “price controls.” The campaign has suggested, in characteristically vague terms, that Harris’s policy would more closely mirror already existing state laws that prevent jacking up the prices of certain goods in cases of emergency—“the sort of laws that prevent stores from quadrupling the price of snow shovels right after a blizzard hits,” as the New York Times says.

It’s hard to know whether Harris and her team are backtracking, or if the campaign left the policy intentionally vague to test the response. But regardless, it’s a shame to see them so responsive to media backlash and obvious bad-faith attacks from Republicans, who will call them communists no matter what they propose. 

It’s also a shame that Democrats are so quick to summarily dismiss the idea of broader price controls. This is a needless concession to the orthodoxy of “Economics 101,” which is usually more conventional wisdom than actual fact. Indeed, many of the arguments I have seen thrashing Harris at the mere suggestion that she may impose “price controls” rely heavily on their theoretical shortcomings in a utopian market dreamscape rather than how they’ve actually played out in reality. Let’s take Rampell’s argument in the Washington Post. She suggests that Harris would likely model a piece of price gouging legislation off a bill introduced by Elizabeth Warren in 2020 (a fair assumption at the time, since Harris had not yet backed off the idea of wide-reaching price controls). Rampell writes: 

It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.

There are a few obvious red flags here. For one thing, there’s the simplistic dichotomy of good, natural, virtuous “supply and demand” being subverted by the big, scary “far-off Washington bureaucrats” who seek to “control prices.” Really, all prices are the result of choices from someone. The only question is who. A Kroger pricing manager’s only incentive is to maximize the company’s profits by charging as much as they believe they can get away with. At least a “far-off Washington bureaucrat” would face some mechanism of democratic accountability.

Rampell also brings up the dangers of shortages, which is another common argument against price controls. The theory goes that by limiting the price a producer can charge, you limit their incentive to produce. We’ve seen instances of this before: Rampell links to a story from Argentina in 2007, where retailers could not find cattle farmers who were willing to sell beef to them at government prices. If you go back further, to World War II, you can find stories of meat producers packing sausages with “soybeans, potatoes, or cracker meal” and selling muskrat steaks to save money due to the government suppression of meat prices.

For the era of greedflation, a possible alternative solution to capping prices would be to instead cap profits. As historian Uwe Fuhrmann writes, this is something that West Germany did to curb inflation after World War II: “the authorities established legally binding ‘maximum prices for end consumers’ and capped profit margins at 20 percent. Only after this combination of price controls and revenue caps did prices finally go down…”

But there are also plenty of modern examples of price controls being used successfully in the United States. Rent controls are some of the best examples, as catalogued by Mark Paul last year in the American Prospect:

One study of rent control in New Jersey—a state with a rich history of embracing rent control—found that, over three decades, rent control increased housing supply (though this was largely attributed to landlords slicing up larger units into smaller ones). Other studies have repeatedly confirmed that rent control doesn’t affect the overall supply of housing, though landlords may take advantage of poorly written rent control laws that allow them to convert existing rentals into condos to better capture price increases and skirt the intentions of rent control laws—loopholes that could easily be shut […]

 

There are further benefits that the conventional wisdom misses. One, rent control works; as study after study has shown, rent regulation keeps housing more affordable. In Massachusetts, researchers have found that tenants in controlled units pay just half as much in rent as those in non-controlled units of similar size and quality. On the opposite coast, L.A. renters in regulated units pay one-quarter to one-third less in rent than those in nonregulated units—meaning hundreds of dollars a month in savings for households often living paycheck to paycheck.

You’ve also probably heard that Medicare recently “negotiated” the price of expensive prescription drugs. This is effectively an example of the government using its outsized influence as a buyer of these drugs to control prices. Separately, as part of the Inflation Reduction Act, the Biden administration also imposed more direct “inflation penalties”—price controls, in other words—on 64 drugs whose prices increased faster than the rate of inflation. And it introduced a $35/month cap on insulin for Medicare patients, which has been so popular that Donald Trump is trying to take credit for it.

So when it comes to capping the price of groceries, we shouldn’t be so quick to dismiss price controls out of hand. But that doesn’t mean they are the only solution to inflation either. 

Breaking up food monopolies is another way a prospective Harris administration could attempt to fight price gouging. In the U.S., just four grocery chains control 70 percent of the market and most food items are produced by just a handful of manufacturers, making it easy for them to artificially keep prices high without illegally colluding. Former Labor Secretary Robert Reich points to meat prices as a prime example:

At the end of 2023, Americans were paying at least 30% more for beef, pork, and poultry products than they were in 2020.

 

Why? Near-monopoly power! Just four companies now control processing of 80 percent of beef, nearly 70 percent of pork, and almost 60 percent of poultry. So of course, it’s easy for them to coordinate price increases.

 

And this goes well beyond the grocery store. In 75 percent of U.S. industries, fewer companies now control more of their markets than they did twenty years ago.

The Biden administration has already given Harris a head start on reducing the power of monopolies.It has attempted to block the merger of Kroger and Albertsons, has sued the company Agri Stats for giving meat processors an easy means of colluding, and has provided subsidies to regional chicken producers in an attempt to fight “Big Meat” and increase competition within the poultry industry.

But we should also look for solutions that are not limited by the constraints of the market. Bruenig, for instance, suggests that rather than simply capping Kroger’s prices, “[a] better idea would be for the federal government to spend about $45 billion to purchase Kroger. This would allow it to directly set the prices for the second-largest grocery store chain in the country.” 

Additionally, a lot of the problems inherent to price controls seem to come from attempting to impose them while leaving every other facet of the market intact. Yes, if you limit prices, that may incentivize businesses to produce less. But the government also has tools that it has used in the past to remedy that problem in critical situations. 

Most notably, there’s the Defense Production Act, which was used during the COVID-19 pandemic to ensure that enough ventilators and N-95 respirators were available to the public. Joe Biden showed how it could be used to address shortages. In 2022, he invoked the DPA to order companies to speed up production amid a national baby formula shortage caused by contamination and supply chain bottlenecks. This power could theoretically be extended to correct any shortage, with the government simply declaring low supply or high costs an emergency.

Regardless of what tools are used, I think it’s important that legislators feel at ease to think outside the typical “Econ 101” paradigm. Many of the arguments I’ve seen criticizing policies against price gouging seem to treat the vagaries of the free market as iron laws that cannot be questioned. Two years ago, the economist and YouTuber Cahal Moran wrote for this magazine that “doctrinaire and one-eyed statements about how an imagined ‘basic economics’ implies we can’t have nice things are the height of ideology. Most policies have both positive and negative effects, and the degree to which one outweighs the other will depend on careful case-by-case consideration.” I think that sentiment applies here, too. 

Remember, the “basic economics” framework assumes that there is no such thing as price gouging at all. It not only assumes that prices are just natural outcomes of supply and demand, but that it’s a good thing companies have incentives to increase their prices as much as possible. (If you don’t believe me, the libertarian think tank Learn Liberty published a video last week arguing that “Price Gouging is a Good Thing, Actually.”  I considered responding to this video myself, but my colleague Nathan J. Robinson responded to a similar version of this dreadful argument back in 2016 and I’d probably be repeating much of what he’s already said.) But I think the last few years, in which more families have come to struggle to meet their basic needs as a result of price gouging, have shown pretty unequivocally that it is deeply harmful. 

We need to be willing to look outside the narrow parameters of what economic orthodoxy allows us to do. We should not ignore history either—we need to be aware of how past efforts to regulate the economy have failed and what can be improved upon. But in a fight to improve people’s lives, we should not take any tools off the table.