The bill is unlikely to garner broad support and become law. So-called price gouging is a pet issue of Warren's, one shared by the likes of
the White House, which has claimed, amid the ongoing nationwide baby formula shortage, that it will crack down on price gouging as supplies dwindle.
Prices contain useful information about how hotly demanded a product is. Consider what would happen if firms never charged higher prices for goods or services in high demand: They would run out of the good or no longer be able to offer the service at all, denying consumers the ability to get the good or service they need. Uber's surge pricing is inconvenient when you need to get somewhere, but it also conveys useful information about the scarcity of available drivers, allowing some would-be customers to shift to an alternative, better coordinating the remaining supply so drivers are provided to those who are either least price-sensitive or
most in need, conveyed by their willingness to pay.
Moreover, it's not clear that Warren's bill is narrowly tailored to target "price gouging" as people classically understand it. It looks more like the federal government wading into the sticky territory of setting price controls over the long term, given how broadly the text defines "exceptional market shock." It is important, during prolonged periods of war or pandemic, for companies to be able to adjust their pricing strategies to respond to, say, higher prices and decreased supply of wheat, when
one-quarter of the world's supply is cut off due to Russia's war in Ukraine and will remain cut off for an unknown length of time. (Ditto for
pork,
crabs, and a gazillion other products that have been affected by COVID-related supply chain disruptions over the last two years.) Empowering the FTC to hassle these companies for engaging in the exceedingly normal practice of altering their prices to respond to changing supply and demand is ludicrous, and yet another step on the
road toward Venezuela.