by Matt Stoller at BIG by Matt Stoller
Today’s monopoly round-up for paid subscribers has a ton of great stuff, from a new judge blocking a sports streaming monopoly to a coming formal government request to break-up Google. But the biggest story, and one I’ll spend some time on, is the first slug of Vice President Kamala Harris’s economic plan, the goal of which is to bring down the cost of living, especially with regards to purchasing a home, paying rent, and buying food.
The big news here is that Harris blamed big business monopolists for inflation, and proposed antitrust policies – price fixing and price gouging rules – to bring it down. The media coverage of Harris’s plans was kind of insane, with economists upset and editorial boards dutifully agreeing with their betters. So what exactly did Harris propose? And why were economists so hostile? That’s what I’m going to answer.
Let’s start with the three basic concepts put forward over the past week. These are (1) price fixing, (2) price gouging, and (3) price controls. What are they and how do they differ?
Price fixing means an agreement or conspiracy among competitors to set price, output, wages, or terms of trade for goods or services, or as Adam Smith put it, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Price fixing is often illegal, a violation of antitrust laws. But it’s not always illegal. Bargaining together for wages is a form of price fixing known as a union. Similarly, there are legal exceptions to antitrust laws for certain farmers to collectively bargain when negotiating with powerful processors.
Price controls means setting prices centrally…
Continue Reading