Economists have expressed differing opinions on Vice President Kamala Harris's highly-anticipated economic agenda, which includes a federal ban on price gouging for food and groceries. The proposal, set to be unveiled on Friday, aims to address elevated inflation and ensure fair pricing practices in the grocery sector.

The Harris campaign believes that a ban on price gouging would prevent food and grocery companies from excessively hiking prices over a set period of time. However, economists have engaged in a debate over the effectiveness of such a measure in controlling food prices and whether it is a desirable outcome.

Inflation remains a top concern for voters and a potential vulnerability for Harris, as prices have increased by approximately 20% since President Biden took office. The Harris campaign acknowledged these concerns, stating that certain big grocery chains have maintained high prices despite leveling production costs, resulting in their highest profits in two decades. While some food companies have reduced prices, others have yet to pass on these savings to consumers, according to the campaign's statement.

The specifics of the proposed price gouging ban remain limited, but economists have suggested that it may resemble similar bans already existent in 37 states. These state bans prohibit companies from exploiting sudden imbalances between supply and demand by significantly raising prices. Niko Lusiani, director of the corporate power program at progressive advocacy group Roosevelt Forward, likens the typical example to a water company selling water at exorbitant prices in the aftermath of a natural disaster.

State bans on price gouging vary in their definitions, with some establishing subjective criteria such as a sudden and significant spike in prices, while others outline specific numerical amounts to determine violations. Luis Cabral, an economics professor at New York University, cautions that determining price gouging is not an easy task, as qualitative definitions can be overly vague while quantitative ones struggle to set clear boundaries.

One key distinction in the proposed federal ban is the absence of a stipulation requiring an emergency scenario to trigger its application. During the pandemic, price hikes could be traced back to disruptions caused by COVID-19. Lusiani acknowledges the shift in context but suggests that current price increases may still be viewed as a result of the previous disruption.

Enforcement of the ban is deemed crucial by experts, with violations expected to be met with financial penalties. State-level price gouging bans typically impose civil penalties enforced by the state attorney general, although some measures even involve criminal penalties.

The effectiveness of a federal price gouging ban in curbing price increases and its potential benefits for the economy have sparked sharp disagreements among economists. Those who attribute price increases to corporate profiteering argue that market concentration allows dominant companies, particularly in the food and grocery sector, to raise prices without facing competition from lower-priced alternatives. A recent study by the Federal Trade Commission revealed that grocery retailer profit margins saw significant increases even after prices started to stabilize.

On the other hand, some economists view the acceleration of price increases in recent years as a result of imbalances between supply and demand caused by the pandemic. Global supply chains were disrupted, leading to shortages of goods and workers, while government stimulus measures fueled consumer demand.

While opinions on a federal price gouging ban differ, there is support for moderate measures that could deter price hikes, such as enhanced government oversight of corporate practices. Joe Brusuelas, chief economist for RSM US, opposes an outright ban but suggests the implementation of milder initiatives.

As Vice President Harris prepares to present her economic agenda, the divisive views on a federal price gouging ban highlight the complexities surrounding inflation control and the role of government intervention in addressing the issue. Only time will tell how these proposals will play out and their impact on consumers' wallets.