Yesterday in North Carolina, a state I cannot figure out, Kamala Harris gave a campaign speech. Two days ago, I blogged about questions the press should ask her if given the chance. I also said don’t worry if she doesn’t speak but, maybe we should be concerned when she does speak. This is especially true if she decides to opine and advocate for policies she did yesterday.
The problem for Harris is groceries. I was at our store in Grand Marais, MN (Republican Pete Stauber’s district) a few days ago and a woman looked at me in the checkout line. She said, “I can’t believe how fast you can spend $100 at the grocery store.” The checkout clerk rolled her eyes knowing it was true. I nodded my head and said, “There are people who can fix that, but it seems the administration doesn’t want to listen.” Both of them laughed.
Since Biden took office, the US has seen the worst food inflation in half a century.
I remember the ‘70s. In my house, we used powdered milk to make regular milk go further. We cut corners everywhere putting water in virtually empty soap and shampoo containers to make them go further.
What’s Harris's solution?
Kamala Harris proposed the first ever “federal ban on corporate price gouging” in the food and grocery industries at her North Carolina campaign stop.
Harris plans to direct the Federal Trade Commission and other agencies to investigate and penalize “big corporations” that violate the rules, and to find other ways of tackling price fixing and other anti-competitive practices in the food and grocery industries.
The woman and the people around her don’t have a clue about how prices work. They are so off base about how they work in the food industry, what she is proposing will make them go even higher.
What’s a fair price for onions? No one can answer that question. It’s what the market bears. Hint: Onion prices are highly volatile because there is no futures market in onions.
Her policies will also cause food shortages. Guess where food will be short? The wealthiest areas of the country will have plenty of food. Does Harris want to starve middle-class and poor America?
Some corporate jockeys inside one of the major food businesses aren’t in their offices trying to figure out how to gouge consumers. Nope, their entire focus is trying how to figure out the cost of production so that they can lower prices to a point where profitability stays high at the margin.
In addition, grocery/food might be one of the most competitive business sectors in the entire worldwide economy. There are lots of substitutes if the price of one good goes too high. Potatoes jump in price, so maybe you eat more rice or noodles.
The way to decrease food prices is to deregulate so there is more competition. The other policy decision they should make is to deregulate industries that work adjacent to the food industry to decrease their costs which will bleed into the food industry.
In the meat business, there are chokepoints in the supply chain. This is especially true when it comes to slaughter and meatpacking. Figuring out the right regulatory regime rather than the anti-competitive and anachronistic one we have today would allow for more competition, and the effect would be lower prices.
One example of an adjacent is energy. It’s more expensive to produce food from the farmer’s field to stick it in a grocery store because fuel expenses for every single actor involved have jumped threefold under the Biden/Harris economic plan.
Criminals robbing stores cause store owners’ costs to increase, which increases prices.
The entire price support and subsidy operation the USDA operates is not rooted in classical economics but was put in place by FDR to buy farmers’ votes in the 1930s. It is centralized power over citizens and usurps freedom. It doesn’t make the food supply any better or safer.
Getting the FTC involved in food pricing is one of the more horrific ideas any politician has ever come up with. But, if she is elected she will do it and it will take years of court cases to stop it. When the court cases end and her unconstitutional action is unwound, her administration will ignore it anyway just like Biden does with forgiving student debt and other court rulings against him.
Back to North Carolina. How can they be electing a Democratic governor there when there is a perfectly good Republican candidate running? Shakes head at that state (and wonders about Tennessee and Kentucky)
This is what happens when a candidate has spent no time working in the private sector.
The speech you are reacting to is tomorrow and hasn't been given yet. The Harris campaign has been leaking bits of it to focus group the nation's reaction and the MSM.
There is a very simple explanation of more than half (maybe two thirds) of grocery inflation -- the cost of energy to get the foodstuffs to the damn store.
Neither Whole Foods nor Kroger has a dairy farm or a fish pond or a vegetable patch in their parking lot, so everything has to come by truck. Many trucks are refrigerated. These trucks get poorer mileage and you have to power the refrigeration.
Most grocery stores cycle through fresh food 2.5 times per week. It is a constant churn. We recently had a weather disturbance in Savannah and trucks were delayed for 3 days. You could see the shelves becoming barren in front of your eyes and then a day later they were full again.
When the Biden admin began its Day One War on Energy, the cost of transport went up. Just look at gas prices -- Biden spurred the highest gas prices in US history and diesel was even worse.
At the same time, both the Feds and certain states (talking to you, California and Gov Newsom) imposed a plethora of new regulations that had the result of deleting a large portion of the oldest and most cost effective trucks from the marketplace.
If a new POTUS were to immediately get rid of these regulations and spur energy exploration and production -- including nuclear as a replacement for fossil fuel electricity -- the transport component would dampen with the price of gasoline.
Groceries are a very low margin business and it is tied to both import (vegetables and fruits from Mexico as an example); and, it is very competitive.
It is also based on crop timing. I was in Kansas a couple of weeks ago and bought fresh corn -- shucked and packaged -- for $0.25/ear in packages of 4. Why so cheap? Farmers were already harvesting corn locally.
Inflation will not go to zero, but it can go back to 1.4% as it was the last month of Trump's admin. It will take some time, but it definitely can be done.
And, no, the solution does not invove Soviet style price controls on anything. Just discussing that wildly disavowed notion lowers the IQ of the entire discussion.
JLM
www.themusingsofthebigredcar.com