Are grocery stores engaged in “price gouging?”

Price controls sound good in theory. In practice they lead to shortages.

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It is close to certain Marie Antoinette never said “Let them eat cake.” This was disinformation used against the ancien régime (a deserving target!) in the runup to the 1789 French Revolution. Fake news has been around for centuries.

But there was an actual pastry-related political event in 1775 France, which historians call the Flour War.

Speculators were keeping flour, a staple of the urban working class, off the market to drive up prices. French government created a grain police tasked to identify and punish speculators, while imposing price controls on farmers and the bakeries where ordinary people in cities purchased their sustenance.

The result? Shortage of bread. Amazingly, grain producers and bakers did not wish to sell at a loss. A month of rioting in Paris, Rouen and other cities.

Photo by Joshua Rawson-Harris on Unsplash

Presidential candidate Kamala Harris just proposed price controls on grocery stores.

Supermarket and restaurant prices are a clear area of public concern. Over the last five years food prices have risen 26 percent, well ahead of all other consumer prices, which are up 14 percent.

The cost rise includes the COVID year of 2020, when grocery stores, struggling to stay open, had little choice save to raise prices.

Nevertheless, sticker shock is felt. Anyone who’s tried to buy a home recently has experienced sticker shock. But few Americans are home-buyers in any given year. By contrast people are in grocery stores and the McDonald’s constantly, and recoil against the prices.

This makes consumer food costs a good political issue for Harris. Let’s bear in mind the most likely result of her proposal will be shortages. If you liked the bare shelves of 2020 – they may come back!