Democratic New York Attorney General Letitia James called on baby formula retailers to “stop overcharging” for the scarce product Friday.
The low supply of baby formula has been worsening for months, leading to multiple hospitalizations among children and elevated prices for parents.
Though basic principles of supply and demand would imply that low availability would increase prices, James pinned the high costs on “price gouging” from retailers.
“It’s unconscionable that some retailers are taking advantage of the national baby formula shortage while parents are struggling to find food for their children,” she said in a press release. “Amid this crisis, families already have enough to worry about and should not have to worry about being price gouged. We are warning all retailers that New York will not tolerate price gouging of baby formula, and I encourage anyone who sees this to continue reporting it to my office.”
The release added that New York’s price gouging laws prohibit the practice for consumers, small businesses, and government agencies — though it clarified that “it is not price gouging for retailers to limit the amount of formula they sell to individual consumers.”
Indeed, the statement’s admission points to the reality that price controls inevitably lead to shortages. If sellers are unable to toggle prices in response to changing demand, they will have no choice but to force competition in other ways — such as waiting in lines or artificially restricting quantities.
Nevertheless, Democrats have frequently pounded the price control drum amid the various economic bottlenecks of the past year.
Ahead of Thanksgiving, Sen. Elizabeth Warren (D-MA) blamed meat and poultry producers of “price fixing,” “excessive consolidation,” and “plain-old corporate greed” as turkey prices rose — and called for the Department of Justice to intervene.
“Lack of competition in the poultry industry is allowing these massive companies to squeeze both American consumers and farmers to fuel record corporate profits and payouts to shareholders,” she argued. “When companies have monopoly power as massive suppliers, they can jack up prices of the goods they sell.”
Warren, however, dismissed the possibility that firms’ price increases are related to “inflationary costs” — even as several reports indicated that the high price of corn feed was causing a modest decline in turkey production.
More recently, House Speaker Nancy Pelosi (D-CA) touted the “Consumer Fuel Price Gouging Prevention Act” — which would allow President Joe Biden to control gas prices under the guise of an “energy emergency.”
“Again and again, we see gas prices rise, sometimes when the cost of oil drops, oil prices drop, and price gouging needs to be stopped,” Pelosi said. “This is a major exploitation of the consumer because this is a product that the consumer must have.”
Democrats have continued to press short-term, demand-side solutions to rising gas prices — such as rebate programs and gas cards. The Biden administration has also called for oil companies to increase supply — even as officials canceled an enormous oil and gas lease sale in Alaska and two sales under consideration in the Gulf of Mexico.
During testimony to the Senate this week, FDA Commissioner Robert Califf said that he expects a “gradual improvement up to probably somewhere around two months” before baby formula fully returns to shelves.