CODIFYING A COLLECTION OF DUMB POLICIES DOESN'T MAKE THEM LESS DUMB.

In "How price gouging bans really work," Axios contributor Emily Peck attempts a defense of the national price gouging policy the Jarrett regency hopes to enact.  She attempts to be funny.  "If banning price gouging is communist, then the U.S. went Marxist long ago. Most of us live in states that already have bans in place."  As she notes, those state bans take effect when a governor declares a state of emergency, and their most recent use was to protect people's right to buy unavailable toilet paper at no more than 10% above the pre-pandemic price rather than have the opportunity to buy toilet paper at some higher price, which might have been more effective at inducing people to leave some for others than limiting daily purchases to one package.  That works a lot better than relying on an allocation czar for toilet paper.

The dirigiste impulse dies hard among some people, including Ms Peck.

One advantage of a national ban is that the federal government would have more power to go after big global corporations that are hard to pursue at the state level.

Under these laws, companies that raise prices can defend themselves by demonstrating that they increased prices because their costs went up, says Zephyr Teachout, a law professor at Fordham.

The flip side of that is a national company has no ability to shift resources in response to changing circumstances.  In the absence of a price-gouging ban in a state affected by a hurricane or riots, a national company such as Weyerhaeuser is able to respond to offers from, say, a home improvement store in Texas or a board-up service in Chicago by shifting shipments of plywood into those regions.  With a national policy, though, a higher price for Weyerhaeuser plywood in Houston triggers a national inquiry.

It's what I've come to expect of the Jarrett regency, though.  The structure-conduct-performance paradigm was out of favor for years, but now it's back, and Robert Kuttner has another turn in the limelight.

Harris’s general emphasis on price-gouging is a policy area where government can make a huge constructive difference without spending large sums. It 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. In addition, supermarket profits are notably higher than before the pandemic, which means that prices should have moderated more.

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. This is also a useful shot across the Fed’s bow.

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.

So much for the unintended consequences of state and local price gouging laws in effect during the corona tyranny.  There's no end of research opportunities disentangling those as the annual reports and government agency data become available.  I hope at least some academic researchers with a sense of scholarly integrity take up the task, otherwise it's going to be dueling position papers from rent seekers policy shops.

Second, there will be no end of research opportunities contrasting varying systems of belief, from inflation being always and everywhere, including during the Trump presidency, a monetary phenomenon, to the various schools of administered pricing (I'm using the term in the sense of Berle and Means from years ago, apparently there are new definitions) and the effect of concentration on prices.

Third, I predict a return of the consumer welfare standard to antitrust enforcement, as the quest to identify, jawbone, or break up supposed price-gouging firms ends up with more beleaguered customers.  It's not hard to predict that.  "Unknown and perhaps unknowable, complex adaptive systems being prone to do what they darn well please."

Mr Kuttner, though, explains what the Democrats' slogan, "finish the job," means.

Far from being notably to the left of Biden, Harris’s economic program looks much like the one that Biden began, which was short-circuited only by the lack of a working majority in Congress and some hostile court decisions. If Harris wins big, she will pick up where Biden left off, and that includes court reform. Her housing plan and her proposed restoration and expansion of the Child Tax Credit build on Biden, and go a little bigger. Likewise her proposed expansion of price controls for drugs. It’s all about constraining corporate excess and helping working people—and connecting the two goals.

The turn to pocketbook progressivism by both Biden and Harris has one great thinker and political strategist in common, and that is Sen. Elizabeth Warren. Early in Biden’s administration, Warren was a source of both ideas and people. Some of Biden’s best and most effective appointees were part of Warren-world. They include Rohit Chopra, who heads the Consumer Financial Protection Bureau, which was Warren’s idea, and FTC Chair Lina Khan, who resurrected antitrust. To the extent that there has already been progress against opportunistic price hikes, the CFPB and the FTC get a lot of the credit.

While the likes of Mr Kuttner and Ms Peck argue that protecting consumers from temporary exercises of corporate power are simply Good Government, the reality is that such policies are intellectually incoherent and empirically empty, and inevitably involve price controls.  Over to you, Brian Albrecht.

Harris’s campaign has been vague on details, but any attempt to ban “price gouging” on groceries would essentially amount to price controls. Some might argue that calling Harris’s proposal “price controls” is unfair or hyperbolic. After all, she’s not directly setting prices, right? But let’s be clear: any policy that gives the government the power to decide what price increases are “fair” or “unfair” is effectively a price control system. It doesn’t matter if you call it “anti-gouging,” “fair pricing,” or “consumer protection” - the effect is the same. When bureaucrats, not markets, determine acceptable prices, we’re dealing with price controls.

Yes, and a national policy that might lead to an investigation of a grocer changing a price has the potential to snarl supply chains by jamming price signals.  "The market must clear in some way, even if prices aren’t doing the work."  In the absence of price signals, we have merchants dependent on the good will of consumers.  You're limited to one pack of toilet paper today.  (Please don't come back until next week is the implicit wish.)  And as I write this, the baby formula is still in a locked case near the large bottles of booze at the supermarket a short walk from here.  There's nothing in codifying price gouging at the federal level that will make a single package of formula more available.