Tangle - Kamala Harris’s Price Gouging Proposal

Starting point is 00:00:00 Working in the trades is intense. It can be stressful and painful. Some guys use drugs and alcohol to cope. But when we ask for help, or we see someone struggling with addiction... Our silence speaks volumes. See how you can help, or get help, at Canada.ca slash ease the burden. A message from the Government of Canada. From Searchlight Pictures comes A Real Pain, one of the most moving and funny films of the year.

Starting point is 00:00:35 Written and directed by Oscar-nominated Jesse Eisenberg and starring Eisenberg and Emmy Award winner Kieran Culkin, A Real Pain is a comedy about mismatched cousins who reunite for a tour through Poland to honor their beloved grandmother. The adventure takes a turn when the pair's old tensions resurface against the backdrop of their family history. A Real Pain was one of the buzziest titles at Sundance Film Festival this year, garnering rave reviews and acclaim from both critics and audiences alike. See A Real Pain only in theaters November 15th. Based on

Starting point is 00:01:04 Charles Yu's award-winning book. Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world

Starting point is 00:01:13 beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like

Starting point is 00:01:22 to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle Podcast, a place where you get news from across the political spectrum, some independent thinking, and a little bit of Isaac's take. I'm your host, John Law, and I am coming to you from Chicago, where I will be meeting Isaac later today.

Starting point is 00:02:06 He and I were supposed to catch flights that landed at the same time, and unfortunately, his flight was delayed by three hours. So he is being a trooper, toughing it out, making his way here. He should be here hopefully shortly. And we apologize for the delay that might have caused today. But we are going to be bringing you the daily podcast throughout the week, as well as coverage from the DNC. So we are looking forward to sharing all of that with you. In the meantime, let's move on to today's quick hits.

Starting point is 00:02:51 hits. First up, the Democratic National Convention will begin tonight with President Joe Biden delivering the primetime address. Vice President Kamala Harris is scheduled to speak on Thursday. Number two, House Oversight Committee Chair James Comer, the Republican from Kentucky, announced he will be opening an investigation into Tim Walz's work related to China, including coordinating student trips. Number three, 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. Number four, 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. And number five, former Representative George Santos, the Republican from New York,

Starting point is 00:03:30 is expected to plead guilty to multiple counts in his federal fraud case when he appears in court this afternoon. vice president kamala harris is set to release her first major economic plan as a presidential candidate later today in north carolina as president i will take on the high costs that matter most to most americans like the cost of food on friday vice president kamalaala 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,

Starting point is 00:04:16 cutting regulations to boost home building, and a federal ban on price gouging on food. The price gouging plan in particular represents one of Harris' 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

Starting point is 00:04:45 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 a 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,

Starting point is 00:05:29 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' 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.

Starting point is 00:06:22 Today, we'll share arguments from the left and the right about Harris's proposal on price gouging and then Isaac's take. We'll be right back after this quick break. Whether renting, renewing a mortgage, or considering buying a home, everybody has housing costs on their minds. For free tools and resources to help you manage your home finances, visit Canada.ca slash ItPaysToKnow. A message from the Government of Canada.

Starting point is 00:06:57 From Searchlight Pictures comes A Real Pain, one of the most moving and funny films of the year. Written and directed by Oscar-nominated Jesse Eisenberg and starring Eisenberg and Emmy Award-winner Kieran Culkin, A Real Pain is a comedy about mismatched cousins who reunite for a tour through Poland to honor their beloved grandmother. The adventure takes a turn when the pair's old tensions resurface against the backdrop of their family history. A Real Pain was one of the buzziest titles at Sundance Film Festival this year, garnering rave reviews and acclaim from both critics and audiences alike. See A Real Pain only in theaters November 15th.

Starting point is 00:07:42 All right, first up, let's start with 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' 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,

Starting point is 00:08:20 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 versus 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

Starting point is 00:08:55 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.

Starting point is 00:09:34 Harris has chosen the latter, Rampel 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.

Starting point is 00:10:02 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 big consumers, 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 Barrow called the plan economically dumb, but politically smart. The campaign is starting to roll out its

Starting point is 00:10:42 economic policy, and the substance likely won't appeal to too many people who actually know about economics. But it's hard for me to argue with the politics. As someone who's often said Democrats need to compromise their own ideals to win, I don't exclude my own ideals from that, Barrow 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 designated 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

Starting point is 00:11:14 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 the process and are a bad idea, Barrow wrote. All 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. All right, that is it for what the left is saying, which brings us to 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.

Starting point is 00:12:18 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's not addressing the economic inducements that led to upward pressure on prices. Her formulation is that of Elizabeth Warren, who has 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.

Starting point is 00:12:53 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 demands where it exists. is low, but it also eliminates incentives for companies to meet demands 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 those first words from her own lips having anything to do with policy will be devoted to popularizing a zombified left-wing shibboleth

Starting point is 00:13:27 with one political value proposition. It might just redirect the anger consumers experience over high prices away from the public sector and towards producers in the private economy. In City Journal, Alison Schrager said, the Harris campaign's price control idea is pandering, not serious policy. This is the wrong solution to a non-existent 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%. This was caused not by

Starting point is 00:13:56 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's 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,

Starting point is 00:14:41 further increasing the prices that many consumers pay. We can expect fewer goods available during 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 pulls 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'll perk up like a cat when it hears a can of tuna being opened, Goldberg

Starting point is 00:15:19 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, 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. All right, let's head over to Isaac for his take.

Starting point is 00:16:20 All right, that is it for what the left and the right are saying, which brings us to Isaac's take. Just a reminder that this is Isaac's opinion, and I'm just reading it in the first person. So 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

Starting point is 00:16:37 that the Harris campaign took from Trump's platform. In that addition, we gave Trump an A plus 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

Starting point is 00:17:05 economy, outlining her plan for allocating tax cuts, incentivizing home purchasing, bringing health care 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 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?

Starting point is 00:17:48 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,

Starting point is 00:18:09 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 over the reins to the government, even just to set guardrails for those prices, can get problematic real fast.

Starting point is 00:18:49 In her scathing piece, Rampell described how the left's most revered economic policy wonk, Senator Elizabeth Warren from Massachusetts, 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

Starting point is 00:19:05 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,

Starting point is 00:19:40 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 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 so far as to say that consumer price markups have not been a main driver

Starting point is 00:20:09 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

Starting point is 00:20:23 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 it's 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 the right suggested. Harris has identified an issue that pulls well with voters

Starting point is 00:21:01 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. 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.

Starting point is 00:21:31 We'll be right back after this quick break. From Searchlight Pictures comes A Real Pain, one of the most moving and funny films of the year. Written and directed by Oscar-nominated Jesse Eisenberg and starring Eisenberg and Emmy Award winner Kieran Culkin, A Real Pain is a comedy about mismatched cousins who reunite for a tour through Poland to honor their beloved grandmother. The adventure takes a turn when the pair's old tensions resurface against the backdrop of their family history. A Real Pain was one of the buzziest titles at Sundance Film Festival this year, garnering rave reviews and acclaim from both critics and audiences alike.

Starting point is 00:22:08 See A Real Pain only in theaters November 15th. Are you sure you parked over here? Do you see it anywhere? I think it's back this way. Come on. Hey, you're going the wrong way. Feeling distracted? You're not alone. Whether renting, considering buying a home, or renewing a mortgage, many Canadians are finding it hard to focus with housing costs on their minds. For free tools and resources to help you manage your home finances and clear your head, visit Canada.ca slash ItPaysToKnow. A message from the Government of Canada.

Starting point is 00:22:41 Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. All right, that is it for Isaac's take, which brings us to your questions answered. This question comes from Craig in Solana Beach, California. Craig asks, is the U.S. 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

Starting point is 00:23:31 while we simultaneously meddle in foreign elections all the time, Venezuela being this week's example. Here's Isaac's response. So 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

Starting point is 00:24:02 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,

Starting point is 00:24:37 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.

Starting point is 00:25:14 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.

Starting point is 00:25:44 It's like a pot with a broken handle calling a kettle that won't hold water leaky. All right, next up is our under-the-radar story. The Harris campaign is funding misleading ads that appear to be news organizations supporting her candidacy, but they 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 this strategy in the past. The headline, VP Harris's economic vision lowers costs and hires wages, links to a real story from the Associated Press. But the headline and subhead were actually written by the Harris campaign.

Starting point is 00:26:22 Media ethics experts have criticized the practice, and some news outlets are reaching out to ask the campaign to stop. Axios has this story and there's a link in today's episode description. All right, next up is our numbers section. The number of states with some form of anti-price gouging laws is 34. Profit margins in the grocery industry in 2023 were 1.6%, the lowest level since 2019, according to the Food Industry Association. The month-over-month increase in the food index in July is 0.2%, according to the U.S. Labor Department's Consumer Price Index report. The year-over-year increase in the food index in July is 2.2 percent. The percentage of registered voters who say corporate greed is a major cause of inflation is 59 percent, according to a February 2024 Navigator research poll. The

Starting point is 00:27:16 percentage of registered voters who say government spending is a major cause of inflation is also 59 percent. The percentage of registered voters who say the government should prosecute companies for price gouging and price fixing as a means to fight inflation is 39%, according to a June 2024 Blueprint poll. And the percentage of registered voters who support starting a congressional committee to hold hearings on and investigate price gouging and overcharging by corporations is 63%. And last but not least, our Have a Nice Day story.

Starting point is 00:27:49 Londoner Tim Bush is known for his 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. Bush'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 younger sister has got Down syndrome, Bush shared.

Starting point is 00:28:16 I raised about £10,000 for her. CBS News has this story, and there's a link in today's episode description. All right, everybody, that is it for today's episode. As always, if you'd like to support our work, please go to retangle.com and sign up for a membership. Isaac and I are here in Chicago, and we're going to be bringing you some coverage from the DNC throughout the week. We'll be right back here tomorrow. For Isaac and the rest of the crew, this is John Law signing off. Have a great day, y'all. Peace. Have a great day, y'all.

Starting point is 00:29:05 Peace. The music for the podcast was produced by Diet 75. And if you're looking for more from Tangle, please go check out our website at readtangle.com.

Tangle - Kamala Harris’s Price Gouging Proposal

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