So one of the latest big ideas coming from the mind of presidential candidate Kamala Harris is to impose price controls on groceries. Let’s take a closer look:
A typical profit margin for a supermarket operator is on the order of 1% to 2% (let’s assume 2% to be extra gouge-y). If a grocer were to completely forgo his profit and sell a $3 item at cost, the final price would come to … $2.94. Who exactly is this benefiting? Answer: Primarily the politicians who manage to convince people that price controls are a good idea, for the purpose of winning votes. Even though history shows that such controls tend to result in shortages and, yes, higher prices.
Now, let’s consider the state/federal government’s “profit margin” per gallon of gasoline, which is $0.184 federal tax plus $0.587 Pennsylvania state tax (the second- highest in the country, behind California). This comes to $0.771, which at the current price of $3.35/gallon, is a “profit margin” of 23%.
Now who’s gouging?
Jeff Novotny
Mesa, Ariz.