Senator Warren’s New Price Gouging Prevention Act Cracks Down on Corporations’ Pricing Power
Washington, D.C. — The American Economic Liberties Project released the following statement in response to the introduction of the Price Gouging Prevention Act by Senator Elizabeth Warren.
“Many Americans find the prices for necessary goods and services going up faster than their paychecks as large corporations pad their bottom lines,” said Erik Peinert, Research Manager and Editor at the American Economic Liberties Project. “As we recover from the fallout of a once-in-a-lifetime pandemic, Americans should not be put through another round of unnecessary economic hardship. Senator Warren’s price-gouging legislation provides a critical lifeline for families and small businesses, prohibiting opportunistic price increases now and during future crises.”
The Price Gouging Prevention Act prohibits raising the price of consumer goods and services by more than 10% and directs the Federal Trade Commission (FTC) to enforce a ban on any excessive or opportunistic price increases. FTC Chair Lina Khan has raised concerns that extreme market power is contributing to inflation, recently discussing the now well-documented phenomenon of CEOs sharing their pricing strategies on earnings calls at the University of Chicago’s Stigler Center last month.
What You Need To Know About Inflation
Pandemic Profiteering is Widespread
A macroanalysis by Economic Liberties’ Matt Stoller found that corporate profits are driving roughly 60% of price-hikes, costing everyday Americans an additional $2,126. Stoller’s findings were recently validated by new research from the Economic Policy Institute.
American Families are Struggling
A Gallup survey found that 45% of responding households reported being hurt by price increases, with 1 in 10 saying they were severe enough to impact their standing of living.
Corporate Concentration is at the Root of Inflation
As President Biden has acknowledged, large corporations are using real economic challenges as cover to massively boost their profits, while forcing families to pay more.
CEOs of firms like Procter & Gamble, Blackstone Mortgage Trust, Disney, GSK, PepsiCo, and Unilever are boasting about their incredible pricing power, noting that it is “driving [their] bullishness” and that there exists little “in the way of elasticity.” Similar celebrations of consumer price-gouging have occurred regularly for months. Meanwhile, these corporations are reporting some of the biggest profits margins in 70 years.
Learn more about Economic Liberties here.
The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.