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MUST READ: Here’s EXACTLY What Would Happen If Kamala Harris Implements “Price Fixing” At Grocery Stores (It’s Very Bad)
This is truly a “Must Read”.
No, not because I wrote it.
No, it’s not me.
I’m going to show you a brilliant post from a man named Robert Sterling who worked in M&A in the food industry and he provided such a great breakdown of exactly what would happen in the event of Kamala Harris’s Grocery Store Pricing Fixing policy that Elon Musk himself reposted it and said “Accurate conclusion (read the whole post)”:
Accurate conclusion (read the whole post) https://t.co/E0JcF2lxoG
— Elon Musk (@elonmusk) August 17, 2024
So that’s what we’re going to do, let’s read the ENTIRE thing because it is spot on.
People need to stop overreacting about Kamala’s plan to reduce food inflation, as if it would lead to communism, mass starvation, and the end of America.
I worked in M&A in the food industry. Here’s a step-by-step summary of what would actually happen:
1. The government… pic.twitter.com/r6drzTFf1a
— Robert Sterling (@RobertMSterling) August 17, 2024
People need to stop overreacting about Kamala’s plan to reduce food inflation, as if it would lead to communism, mass starvation, and the end of America.
I worked in M&A in the food industry. Here’s a step-by-step summary of what would actually happen:
1. The government announces that grocery retailers aren’t allowed to raise prices.
2. Grocery stores, which operate on 1-2% net margins, can’t survive if their suppliers raise prices. So the government announces that food producers (Kraft Heinz, ConAgra, Tyson, Hormel, et. al.) also aren’t allowed to raise prices.
3. Not all grocery stores are created equal. Stores in lower-income areas make less money than those in higher-income areas, as the former disproportionately sell lower-margin prepackaged foods (“center of the store”) instead of higher-margin fresh products like meat (“perimeter of the store”). Because stores in lower-income areas aren’t able to cover overhead (remember, even if their wholesale costs are fixed, their labor, utilities, insurance, and other operating expenses aren’t fixed… yet), grocery chains start to shut them down. Food deserts in rural areas and in low-income urban areas alike become worse.
4. Meanwhile, margins for food producers are also quickly eroding. Their primary costs (ingredients, energy, and labor) aren’t fixed, and their shrinking gross profits leave less cash flow available to cover overhead, maintain facilities, and reinvest in additional production capacity.
5. Grocery chains, which have finite shelf space, start to repurpose their stores (those they didn’t have to shut down, I should say) to sell more non-price-controlled items—everything from nutrition supplements to kitchenware to apparel—and less price-controlled food products. Your local Kroger or Safeway starts to look and feel more like a Walmart.
6. Food producers stop making products with lower margins. Grocery chain start competing with each other to secure inventory. Since they can’t compete by offering stronger prices (remember, producers aren’t allowed to raise prices here, and, even if they could, grocery chains no longer have the gross profit to bear price increases), they compete on things like payment terms.
7. Small grocery chains start to shut down entirely, or get sold to larger chains like Kroger. In addition to not being able to cover fixed costs, a major reason for this is because they can no longer reliably secure delivery of products, due to producers prioritizing sales to larger customers, which are able to leverage their stronger balance sheets to offer superior payment terms.
8. Smaller food producers—which typically sell via distributors, rather than directly to grocery chains—start to go out of business. Because these producers have an additional step their value chains, and because they have lower volumes over which to spread their fixed costs, their cost structure is inherently disadvantaged compared to major food producers. When grocery stores aren’t able to raise prices, cutting product costs becomes all the more important, and deprioritizing purchases from smaller producers is an easy way to do so.
9. As supply chains break down, lines start to form outside grocery stores every morning. Cities assign police officers to patrol store parking lots, and food producers draft contingency plans to assign armed escorts to delivery trucks.
10. The federal government announces a program to issue block grants for states to purchase and operate shuttered grocery stores. The USDA also seizes closed-down production facilities.
11. The government announces that prices for all key food costs—corn, wheat, cattle, energy, etc.—are also now fixed, to stop “profiteers” from gouging the now-government-operated food industry.
12. Shockingly, the government struggles to operate one of the most complex industries on the planet. The entire food supply chain starts imploding.
13. Communism, mass starvation, and the end of America quickly ensue.
Hey wait a second
Very well said and extremely accurate!
I do not have any history working in the food industry (except as a Grocery Bagger when I was 14, and I was the best bagger we had at that store! Sadly, 40 years later I now have to employ those skills again because the stores have no employees and you have to self-checkout your whole cart), but I wrote a very similar analysis earlier this morning based on even a primitive understanding of Economics and Supply Chains:
JUST IN: Even CNN Turns On Kamala Harris
You know it’s bad when you release a platform SO radical and SO dangerous that even Far-Left CNN turns on you!
That’s what just happened to Kamala Harris after releasing her plan to “stop price gouging” at grocery stores.
Another name for that is “price fixing” and that’s exactly what they do in every single Communist Country and the results are all the same (spoiler alert: it never ends well).
So even Far-Left CNN had to admit this idea will “create more problems than it solves”.
That’s a VERY nice way to say it will send us on a fast-track to living in a Communist Shithole! (sorry Franklin).
Take a look:
Ouch…Harris’ plan to stop price gouging could create more problems than it solveshttps://t.co/rmNdZp3cQy
— Salas (@SMSalas14) August 17, 2024
Here’s a snip from the full CNN article:
Food prices have surged by more than 20% under the Biden-Harris administration, leaving many voters eager to stretch their dollars further at the grocery store.
On Friday, Vice President Kamala Harris said she has a solution: a federal ban on price gouging across the food industry.
“My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” Harris said at a campaign event.
There’s just one issue: Harris’ proposal could create more problems than the one it’s trying to solve, some economists say.
Gavin Roberts studied anti-price gouging laws some states passed during the pandemic. One of the biggest effects he observed, especially at grocery stores, was that these laws motivated people “to go buy goods more than they would if prices had risen.”
When prices are high, in most cases, the best policy action in response is actually taking no action, Roberts, the chair of Weber State University’s economics department, told CNN.
That would cause consumers who are deterred by, say, high prices of beef, to instead purchase another type of meat or protein. That helps keep beef on the grocery store shelves for people who want it enough to pay the higher prices.
And while Harris claims her proposal “will help the food industry become more competitive,” Roberts said it would do just the opposite. “It’s more likely to maintain that status quo,” he said because it would keep new competition from moving in to take advantage of the bigger profit margins — competition that could have helped lower prices in the long run.
Jason Furman, a top economist in the Obama administration, shared Roberts’ view that anti-price gouging laws could inadvertently harm consumers. “This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,” he told the New York Times. “There’s no upside here, and there is some downside.”
Instead of pursuing anti-price gouging policies, Roberts recommended that Harris investigate what, if anything, is stopping new parties from entering concentrated industries.
To his point, a campaign fact sheet said that Harris also plans to make more resources available for “the federal government to identify and take on price-fixing and other anti-competitive practices in the food and grocery industries.”
The Harris Campaign displays a complete lack of a basic understanding of how our economy and a free market work.
Grocery stores are not arbitrarily setting high prices, what a stupid and rudimentary misunderstanding of basic markets.
As long as there is free market competition, grocery stores are in tight competition with the store down the street to keep prices competitive and low, otherwise they will lose all business to the competing store.
If prices are high, it’s not because one store just randomly decided to set them high and “gouge” customers.
It doesn’t work like that.
If prices are high, it’s because the COST OF GOODS to the store are high, so the grocery store sets prices that allows for a profit to the store but still low enough to keep customers.
It’s basic Econ 101.
CNN: “Harris’ plan to stop price gouging could create more problems than it solves”
Could???
It’s absolutely insane. Prices aren’t randomly chosen by grocery store owners. There is no gouging. That’s a left wing talking point. pic.twitter.com/pueZSygKeZ
— Douglas County GOP (@DougCOGOP) August 17, 2024
What happens when you artificially set prices at the government level…..errrrrrr “stop price gouging” as the Harris Campaign is calling it?
What happens is immediate shortages and a quick plunge into empty store shelves as seen throughout history in EVERY SINGLE Communist country that has tried this!
Think about it….
Let’s say eggs cost $3 a dozen for the grocery store to purchase from it’s supplier.
Currently, the grocery store sells them for $4 on the shelf to make enough profit to pay for their employee salaries, rent, overhead, etc.
Now the “Almighty Government” comes in and says you can only charge $3.10 for eggs. Or $2.75.
What do you think the store does next?
They suddenly purchase less eggs, possibly even zero eggs.
Why sell something that causes you to sell it at a loss?
You’re better off not selling any eggs than selling them at a loss.
$0 profit is better than negative $0.25 profit.
And voila….you suddenly have empty store shelves where eggs used to be.
This is not rocket science.
The only question remaining is whether the Kamala Harris campaign is so dumb it doesn’t realize this or whether it’s intentional to increase the crash of this country.
What do you think?
My money is on the latter.
I suppose I should clarify….I think Kamala herself is dumb enough to not have a clue about anything I just wrote, but the people behind her (Team Obama) know EXACTLY how this all works and they have a plan to crash this country.
That’s my take, but let me know what you think….
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