Not surprisingly, the economy takes center-stage this election year. Most of that focus, especially by the political party out-of-power, centers on the price of food and groceries. Based on Cato Institute report from earlier this, food prices increased 18% during the 11 years from 2010 to 2021. During the three plus years of the Biden administration, these same food prices have increased over 21%. Of course, we are all aware that the pandemic was the root cause of much of this inflation. The government began an aggressive monetary policy that put excess money in the bank accounts of many families. Many businesses shut down due to the pandemic reducing the supply of goods to all-time lows. When the economy finally re-opened, there was too much money chasing limited supplies. As we all know that prices rise when demand far exceeds supply.
Democrats are aware that prices are too high and Republicans are blaming the Democrats for these high prices. Some Democrats are suggesting that the next Congress pass legislation that punishes corporations for price gouging. This plan will be impossible to enforce and really has no chance of passing Congress. How do we look at price gouging? Does price gouging just apply to grocery stores or do we also look at the profits of the entire food supply chain including the producers of feedstock, the companies that produce the food for the grocery stores, the trucking industry that transports food to these stores, the companies that provided electricity to these stores, etc.? Are going to pass legislation to punish all these industries for price gouging?
There is a simple solution to attack this runup in food prices. Bring back competition. The federal government should create a web page that publishes the average price of foods in certain areas. The average price of ground beef in the Northeast is $5.50/lb while extra lean ground beef is $7.20/lb. The average price of a dozen eggs in Pennsylvania is $4.50 while the price of a dozen eggs in New York is $5.35. This web page can have a wide range of grocery pricing, from fruit and vegetable to all the various sources of protein that we consume, and can be updated regularly. This information will make us all smart shoppers and avoid over-spending at the grocery stores. As stores feel the pressures of high prices, they will begin to pressure on their suppliers to reduce costs and this pressure will continue down the food chain. This is a very simple solution to the high costs of food prices. Once this is established for the food industry, the same concept can be applied to many consumer goods and services.
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