Tangle - Kamala Harris's price gouging proposal.

I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 13 minutes.

Your feedback, my response.

As expected, Friday's subscribers-only piece drove a huge response, and our inbox has been flooded. I'm headed out to Chicago for the Democratic National Convention this morning, but I’m still sorting through the emails, responding to who I can, and considering all the feedback. It's been a healthy mix: Praise for taking a principled stance, anger at my perspective, and some people just saying thank you for a thought-provoking piece.

Due to the massive response to Friday's piece, we're planning to publish a full reader-feedback edition this week where we will share criticism and praise. Thank you for reading. Stay tuned for more soon. And you can read the piece here (paywall).

Follow along.

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Quick hits.

1. The Democratic National Convention will begin tonight, with President Joe Biden delivering the primetime address. Vice President Kamala Harris is scheduled to speak Thursday. (The convention)
2. House Oversight Committee Chair James Comer (R-KY) announced he will be opening an investigation into Tim Walz's work related to China, including coordinating student trips. (The investigation)
3. The Supreme Court denied the Biden administration’s emergency request to partially reinstate its new Title IX rule, which has been blocked from taking effect in many states. (The ruling)
4. Hamas rejected an updated U.S. proposal for a ceasefire and hostage deal on Sunday, blaming Israeli Prime Minister Benjamin Netanyahu for putting up new obstacles in the talks. (The rejection)
5. Former Rep. George Santos (R-NY) is expected to plead guilty to multiple counts in his federal fraud case when he appears in court this afternoon. (The case)

Today's topic.

Kamala Harris’s price gouging proposal. On Friday, Vice President Kamala Harris announced a set of economic policy plans at a rally in Raleigh, North Carolina. Those proposals included an expanded Child Tax Credit, financial assistance for first-time homebuyers, cutting regulations to boost homebuilding, and a federal ban on price gouging on food. The price gouging plan in particular represents one of Harris’s most notable policy ideas since she became the Democratic nominee for president, and it has attracted scrutiny and interest from across the political spectrum. 

Price gouging broadly refers to the practice of raising prices on goods, services, or commodities to unfairly take advantage of spikes in demand, usually in emergency situations when certain goods or services become essential. The only existing federal law against price gouging outlaws the hoarding of designated scarce items for resale at more than the prevailing market price.

On Friday, Harris said she would “work to pass the first-ever federal ban on price gouging on food and groceries” as part of an effort to lower food costs, which are 21% higher than three years ago, according to the July inflation report. The plan calls for new rules to ensure corporations “can’t unfairly exploit consumers to run up excessive profits on food and groceries,” as well as “new authority” for the Federal Trade Commission and state attorneys general “to investigate and impose strict new penalties on companies that break the rules.” The Harris campaign has not shared additional details about how the plan would be enacted. 

Since the onset of the Covid-19 pandemic, some Democrats have accused corporations — including food producers and grocers — of raising prices to seek greater profits even after pandemic-related supply chain issues had been resolved. In March, President Joe Biden announced a “strike force” to “root out and end illegal corporate behavior that raises prices for Americans through anti-competitive, unfair, deceptive, or fraudulent business practices,” including by food and grocery companies. Earlier this year, Democratic senators also introduced legislation to “enforce a federal ban against grossly excessive price increases.” 

On Friday, former President Donald Trump criticized Harris’s proposal at a rally in Pennsylvania. “She says she’s going to lower the cost of food and housing starting on Day One,” Trump said. “But Day One for Kamala was three and a half years ago, so why didn’t she do it then?” He added that the price gouging ban might “sound good politically” but is “very dangerous” and “communist.”

Today, we’ll share arguments from the left and right about Harris’s proposal on price gouging, followed by my take.

What the left is saying.

• The left is mixed on the plan, with some praising its focus on consumer protections.
• Some criticize the proposal, calling it bad policy and bad politics. 
• Others say focusing on price gouging could play well with voters even if the plan is economically flawed. 

In The American Prospect, Robert Kuttner said Harris’s plan could “make a huge constructive difference.”

The price gouging plan “is good economics and smart politics on several counts. First, it vividly connects with the issue of inflation where ordinary people feel it. Grocery store prices have increased only slightly over the past year, but consumers remember exactly what a quart of milk or a dozen eggs cost before the supply shocks of the pandemic,” Kuttner wrote. “Second, the plan reframes the issue from whether Biden or Trump was better at containing an abstraction known as inflation to how corporate concentration opportunistically drives price hikes. The right remedy for that ill is not slowing the economy generally, as the Federal Reserve has done, but going after the root cause.”

“Third, the approach recasts the struggle as ordinary people vs. predatory corporations rather than impersonal forces, with Harris in the role of champion of beleaguered consumers. Is Harris right on the economics? A detailed study by Groundwork Collaborative found that corporate concentration and increased profits accounted for more than half of the inflation felt by consumers in 2022 and 2023,” Kuttner said. “Supposedly, by moving left, Harris risks alienating swing voters. But swing voters also buy groceries. The only voters whom Harris risks alienating by championing consumers are large corporations and their allies.”

In The Washington Post, Catherine Rampell wrote “when your opponent calls you ‘communist,’ maybe don’t propose price controls?”

“It’s not hard to figure out where this proposal came from. Voters want to blame someone for high grocery bills, and the presidential candidates have apparently decided the choices are either the Biden administration or corporate greed. Harris has chosen the latter,” Rampell said. “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.

“At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat. (There’s a reason narrower ‘price gouging’ laws that exist in some U.S. states are rarely invoked.) At worst, it might accidentally raise prices,” Rampell wrote. “That’s because, among other things, the legislation would ban companies from offering lower prices to a big customer such as Costco than to Joe’s Corner Store, which means quantity discounts are in trouble. Worse, it would require public companies to publish detailed internal data about costs, margins, contracts and their future pricing strategies.”

In The Atlantic, Josh Barro called the plan “economically dumb but politically smart.”

“The campaign is starting to roll out its economic platform, and the substance likely won’t appeal to many people who actually know about economics. But it’s hard for me to argue with the politics. As someone who has often said Democrats need to compromise their ideals to win, I don’t exclude my own ideals from that,” Barro said. “The first example is Harris’s proposal to fight inflation through a new federal law on price gouging. My guess is such a law would be designed in such a way that it would have little effect on the market. But if it did have effects on the market, they would tend to be negative, as with President Richard Nixon’s price and wage controls in the 1970s.”

Price gouging “is kind of an incoherent concept; there’s no fundamental reason of ‘fairness’ that shortages shouldn’t be managed with price hikes. Yes, periods of shortage drive up profit margins. Higher profits are part of what brings new producers into constrained industries. And in a robustly competitive market, those profit margins get forced down as supply expands. Price controls inhibit that process and are a bad idea,” Barro wrote. “All of that said, Harris is trying to win a presidential election, and to win elections, you run on popular ideas. And the voters, in their infinite wisdom, strongly favor laws against ‘price gouging.’”

What the right is saying.

• The right opposes Harris’s proposal, suggesting it would wreak havoc on the economy.
• Some say Harris continues to focus on placating voters instead of putting forward serious policy ideas.
• Others link the plan to progressives’ fixation with equitable outcomes.

In National Review, Noah Rothman called the proposal “economically illiterate.”

“Harris is, in effect, attacking high prices for being high as though they increased in a vacuum. She is not addressing the economic inducements that lead to upward pressure on prices. Her formulation is that of Elizabeth Warren, who has had an outsized influence on the Biden White House’s economic thinking. In the progressive imagination, prices increase because rapacious corporations seek to maximize profits,” Rothman said. “That’s not what inflation is. Simply put, inflation is too much money chasing after too few goods. Rising prices are a market signal that creates incentives for firms to meet specific demands.”

“Distorting the price mechanism may keep prices low, but it also eliminates incentives for companies to meet demand where it exists. The result is a hopelessly dysfunctional economy typified by artificially low prices for goods that are poorly distributed and harder to find,” Rothman wrote. “Still, Harris’s proposal is valuable insofar as it exposes her pivots to the center as fraudulent and opportunistic… Some of the first words from her own lips having anything to do with policy will be devoted to popularizing a zombified left-wing shibboleth with one political value proposition: It just might redirect the anger consumers experience over high prices away from the public sector and toward producers in the private economy.”

In City Journal, Allison Schrager said “the Harris campaign’s price control idea is pandering, not serious policy.”

“This is the wrong solution to a nonexistent problem. Food prices have steadily fallen over time as a share of income. The exception was the pandemic, where the cost of food eaten at home rose 20 percent. This was caused not by grocers’ price gouging but by shortages and elevated demand from excessive fiscal policy. The natural market response to less supply and more demand is to raise prices,” Schrager wrote. “Inflation on food at home now stands near zero. People are frustrated, though, because prices are significantly higher than they used to be; short of mandating wage cuts for everyone involved in the food chain, there is no way to bring prices back to 2019 levels.”

“Targeting big companies, as the Harris plan seems designed to do, is not harmless, either,” Schrager added. “Food prices as a share of income fell as the food industry consolidated and took advantage of economies of scale. Limiting food companies’ ability to set prices in response to market conditions will only curb their growth and willingness to operate in less populated areas—further increasing the prices that many consumers pay. We can expect fewer goods available during the next event that increases demand or reduces supply. Good luck finding food during the next hurricane.”

In The Dispatch, Jonah Goldberg wrote “what is dumb may never die.”

“What Harris is proposing is probably smart politics. Dumb policies are often the bleeding edge of smart politics. For starters, as the New York Times notes, this crap polls well with swing voters, and progressive groups are hot for the idea as well. Tell any politician that a policy idea simultaneously placates the base and appeals to swing voters, and they will perk up like a cat when it hears a can of tuna being opened,” Goldberg said. “Moreover, inflation has been an albatross for the Biden-Harris administration—that’s still a thing, by the way—and it’s a powerful and legitimate issue for the Trump campaign.”

“If the median voter thinks price-fixing is a good idea, then the median voter is ignorant and wrong—about price fixing… A bad idea doesn’t become good just because a large number of people subscribe to it,” Goldberg said. “The appeal of price-fixing should be seen as just one facet of a broader and more consistent—and consistently wrong—vision. The vision of the anointed, to use Thomas Sowell’s phrase, looks at results, outcomes, and consequences aesthetically. What I mean is, if they don’t like the result, they assume the process itself is bad, illegitimate, or unjust.”

My take.

Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.

• The government setting price controls is not a new idea, and it’s never been a good one.
• We still don’t have strong evidence that greed is causing inflation, nor do we have good evidence price fixing would help.
• Harris probably knows this will never become law, which raises the political question of why she is proposing it. 

It’s a little hard to believe that we’re sitting here in 2024, with the benefit of decades of economic progress, talking about price fixing.

Last week, we covered the “no tax on tips” policy that the Harris campaign took from Trump’s platform. In that edition, we gave Trump an A+ for the idea, Harris a B for taking it, and the policy as a whole an optimistic C. On this, Harris gets a D for pulling a bad idea from the history books.

Let’s start with what the Harris campaign actually said. On Friday, Harris gave her first policy-focused speech since she became the Democratic Party’s presumptive nominee. In that speech, she shared her grand vision for what she called an “opportunity economy,” outlining her plan for allocating tax credits, incentivizing home purchasing, bringing healthcare costs down, and more. There’s a lot I could talk about with any of those issues — some, like cutting housing regulations, sounded quite good. 

However, much of the reaction to Harris’s speech was focused on something that her campaign addressed the day before: price gouging. According to a campaign statement, a Harris presidency would introduce “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.”

That might sound like a good idea — who doesn’t want to make it illegal for corporations to rob consumers? But the government getting into the business of defining what prices are acceptable isn’t something that works. Ever. There are things government is good at: Setting monetary policy and taxation come to mind. So does granting subsidies, though people of different political persuasions disagree over how much is healthy, and in which industries. The government is also good at setting regulations; obviously it can go too far, but people tend to agree that some common sense regulation to ensure a free market is a good thing — and setting laws against price collusion is something the government already does! 

But if the government opts instead to define consumer prices when they start getting high, that can lead to unintended consequences: black markets, hoarding, shortages, and even price increases — as Catherine Rampell wrote in The Washington Post (under “What the left is saying”). Any graduate of Econ 101 can tell you that one of the biggest strengths of a free market economy is that it’s really good at setting fair prices. Handing the reins over to the government, even just to set guardrails for those prices, can get problematic fast.

In her scathing piece, Rampell described how the left’s most revered economic policy wonk, Sen. Elizabeth Warren (D-MA), had trouble defining those terms in her own bill on price gouging: “Warren’s bill would ban any ‘grossly excessive price’ during any ‘atypical disruption’ of a market. Alas, no definition was provided for these terms, either; rather, the bill would empower the Federal Trade Commission to enforce bans using any metric it deems appropriate,” Rampell wrote.

That’s to say nothing of what Harris is responding to with this proposal, which is higher costs caused by inflation following the pandemic. Throughout her speech on Friday, she repeatedly railed against a “high cost of living,” careful not to draw a direct line between economic hardships and post-pandemic inflation, which would reflect poorly on the Biden administration’s handling of the issue. When she got into the causes of those high costs, she came up with two: a disrupted global supply chain and corporate greed.

And to be fair, I give Harris a much better grade for that. A disrupted supply chain and general market disruptions did cause global inflation. On the other hand, while I do think that it’s easy to find examples of corporate greed during and following the pandemic, smoking-gun evidence that greed was driving inflation is much harder to come by — economists from the San Francisco Federal Reserve Bank recently went as far as to say that consumer price markups “have not been a main driver of the ups and downs of inflation.” What’s more, Harris notably left out one pretty obvious partial driver of inflation: too much stimulus. As I’ve said before, I don’t think Biden’s stimulus checks solely caused inflation, but I do think adding too much stimulus played a significant role in driving prices up.

Yet, I didn’t hear Harris accept any blame for that — instead, she pointed the finger at some bad corporate actors who weren’t “playing by the rules,” and then offered a weak solution to fix it.

All of this brings up an obvious question: Why is Harris proposing something so many people — herself included — probably understand won’t work? One answer is that this is not a policy proposal she actually intends to act on, but rather one that is designed to whitewash the Biden administration's record on inflation. Another possibility is one that writers on both the left and right suggested: Harris has identified an issue that polls well with voters and is trying to reap the benefits of highlighting the issue without actually putting forward a serious plan to address it. 

But those are just guesses, and I truly don’t know what Harris’s motivation here is. What I do know is that inflation will come up a lot between now and November, and when it does, it looks like “price gouging” is going to be Harris’s scapegoat for what is one of the Biden administration’s stickiest issues. And I don’t think voters are going to buy it.

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Your questions, answered.

Q: Is the US just the pot calling the kettle black when it comes to election interference? We clutch our pearls over supposed "interference" from China, Russia and other bad actors while we simultaneously meddle in foreign elections all the time — Venezuela being this week's example.

— Craig from Solana Beach, CA

Tangle: There’s no question that the U.S. has room to improve its elections. As we saw in 2020, some of our systemic flaws resulted in election results that many people questioned, didn’t trust, or outright denied. Laws that mandated mail-in votes could not be counted until Election Day resulted in confusion and claims of fraud. Ballot-harvesting, a practice that permits non-profit groups to collect mail-in ballots from individuals and return them on their behalf, can be done in ways that are either legal or illegal depending on the state, but even at their best can look suspicious. And even though we did not have election fraud in 2020 or 2022, there were some instances of voter fraud — and voter ID laws can help with that.

We absolutely can improve our elections. We should fund a federal program to provide every American who registers to vote with free photo identification at the federal level, and states should continue to improve their systems. Famously, Florida’s 2000 presidential election featured confusing ballots, late certifications, and a Supreme Court case to decide who would be president. Then Florida improved, and by 2020 they were running incredibly smooth elections. 

And, yes, our country as a whole has meddled in a lot of elections, particularly in Latin America; there’s no disputing that. While it's hard to measure how much damage our past meddling is still doing today, we do appear to be less active than we were historically. Stories continue to pop up of the U.S. using social media or other levers to influence elections, but only once this century have credible allegations risen about our government really thumbing the scales: In 2006, during Gaza’s election of Hamas. And in that case, George W. Bush was accused of not doing enough to prevent Hamas's narrow victory.

I say all that so I can say this: The issues the U.S. has with its elections are nothing at all like the issues in Venezuela, Russia, or China. We need to improve our system; Venezuela’s is entirely corrupted. Russia’s elections are an outright farce where competing against the incumbent is often lethal. China is an authoritarian one-party autocracy. Comparing our issues to theirs is not like the pot calling the kettle black; it’s like a pot with a broken handle calling a kettle that won’t hold water “leaky.”

Want to have a question answered in the newsletter? You can reply to this email (it goes straight to our inbox) or fill out this form.

Under the radar.

The Harris campaign is funding misleading ads that appear to be news organizations supporting her candidacy but are actually edited Google news headlines. Google and the Harris campaign have defended the practice as both legal and common, noting that Democrats and Republicans have used the strategy in the past. The ads look like this:

The headline — “VP Harris's Economic Vision - Lower Costs And Higher Wages” — links to a real story from The Associated Press. But the headline and subhead were actually written by the Harris campaign. Media ethics experts have criticized the practice, and some news outlets are reaching out to ask the campaign to stop. Axios has the story.

Numbers.

• 34. The number of states with some form of an anti-price gouging law.
• 1.6%. Profit margins in the grocery industry in 2023, the lowest level since 2019, according to The Food Industry Association.
• +0.2%. The month-over-month increase in the food index in July, according to the U.S. Labor Department’s consumer price index report. 
• +2.2%. The year-over-year increase in the food index in July.
• 59%. The percentage of registered voters who say corporate greed is a major cause of inflation, according to a February 2024 Navigator Research poll. 
• 59%. The percentage of registered voters who say government spending is a major cause of inflation. 
• 39%. The percentage of registered voters who say the government should prosecute companies for price gouging and price fixing as a means to fight inflation, according to a June 2024 Blueprint poll. 
• 63%. The percentage of registered voters who support starting a congressional committee to hold hearings on and investigate price gouging and overcharging by corporations. 

The extras.

• One year ago today we had just rerun an edition on cancel culture.
• The most clicked link in Thursday’s newsletter was Medicare announcing lower prices on 10 common drugs.
• Nothing to do with politics: More monoliths are popping up in the Nevada desert.
• Yesterday’s survey: 1,873 readers responded to our survey asking who they think is going to win the presidential election with 72% saying Kamala Harris. “I'm heavy for Trump, but you're right, he needs to get away from himself and back to what put him there in 2016. He's his own worst enemy,” one respondent said.

Have a nice day.

Londoner Tim Bushe is known for creative hedge trimming, which began when his wife encouraged him to cut the design of a cat into a bush — although he decided to create a train instead. Bushe’s trimming work expanded to helping a neighbor, then to more homes in the neighborhood. Now that his designs have taken off, he uses his yard works to raise funds for meaningful organizations. One organization hit particularly close to home: "My young sister has got Down syndrome,” Bushe shared, “I raised about £10,000 for her." CBS News has the story.

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