SAN FRANCISCO — The norm of fixed prices for goods and services is ending due to new technology, with generative artificial intelligence expected to exacerbate existing issues, according to Lindsay Owens, CEO of Groundwork Collaborative. Owens, a former economic policy adviser to Sen. Elizabeth Warren, details this shift in her book, "Gouged: The End of a Fair Price and What That Means for Your Wallet."
For 150 years, since John Wanamaker introduced price tags in his Philadelphia department store in the late 19th century, fixed prices were a cultural norm, not a legal mandate. This practice is ending as companies use software to increase profits from consumers.
New technologies have intensified the drive for corporations to overcharge. Owens said big tech has reinvented the practice, enabling companies to extract more capital from consumers in nearly every transaction through sophisticated digital tools.
Loyalty programs represent a critical part of this shift, operating as advanced data harvesting operations. Consumers often exchange personal data for the promise of deals, but Owens contends companies fail to deliver on their end of the bargain.
Duke economist Curtis Taylor predicted this outcome in 2004. He posited that once loyalty programs embraced high-tech capabilities, firms would use shopping records to identify their most eager customers and subsequently charge them higher prices for their perceived loyalty.
Owens experienced this firsthand with McDonald's, receiving a 515-page dossier based on her app interactions. This extensive data estimated a zero percent chance she would ever cease being a customer, illustrating the granular level of consumer profiling achieved through these systems.
The book highlights how these algorithmic pricing models contribute to a constant upward creep in consumer costs, stretching household budgets thin. Generative AI is identified as a technology that could further exacerbate these issues, enabling more dynamic and opaque pricing strategies.
Owens' analysis stems from her background as a corporate watchdog and her previous role advising on economic policy in the Senate.
"Gouged: The End of a Fair Price and What That Means for Your Wallet" is available now, offering a detailed account of how corporations use data, algorithms and digital manipulation to overcharge consumers systematically.
