Tag: price gouging

Shades of Nixon

Reason magazine has a characteristically excellent video about the gas shortages in New York and New Jersey. Which is to say, the video is really about the insane responses of officials in those states to the scarcity of gas. Reason’s Jim Epstein writes: “Govs. Chris Christie and Andrew Cuomo…threatened to prosecute any station owners caught raising prices, thus removing any incentive to truck more gas in from other parts of the country.” Here’s the video:

The Washington Post reports Christie responded with an age-old government-rationing scheme:

New Jersey Gov. Chris Christie ordered…drivers with even-numbered license plates being allowed to fill up on even-numbered dates and odd-numbered cars on the other days. But several motorists said they hadn’t heard the news because they had no power at home, and gas station managers said they didn’t bother to look at the plates.

“I don’t have any time to check plates,” David Singh said as he pumped gas into a car at the Delta station he manages on McCarter Highway in Newark.

So not everyone heard about the government’s rationing scheme, and even fewer people cared. You know what conveys information a lot better than tired government edicts? Market prices.

Fortunately, market prices are still breaking through:

Shauron Sears, 37, a waitress, said she spent 12 hours vainly waiting for gas on Friday and another hour waiting Saturday at a Sunoco station on McCarter Highway. Just as she got to the front of the line, a manager started waving his arms and shouting, “No more gas!”

Sears said…since her house flooded she and her family have been camping at her sister’s house in Orange, N.J. Nine people are in the house, including a baby, and Sears is eager to return to her own home. But her first priority is to get gas.

“There are people who are buying gas and selling it for $8 a gallon,” she said. “Maybe I can buy some from them.”

The entrepreneurs selling gas at illegal mark-ups might affect Sears in a manner the government’s price controls won’t. By helping her.

Friday Links

  • What are Republicans doing to stop ObamaCare? Not much.
  • Conflating the Taliban with al Qaeda isn’t helping our foreign policy dialogue.
  • “Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down.”
  • The new issue of Regulation looks at price gouging, soda taxes, the Durbin Amendment, and more.
  • Who should decide when we tap into strategic oil reserves: The president? Or market forces

In Defense of Gouging

Kevin Drum writes,

There are lots of things to hate about our current medical system, and all of us have our own favorite things to hate. This is mine: the fact that the system massively overcharges you if you’re uninsured, and they do it just because they can. If you’re uninsured, you’ve got no leverage, no alternatives, no nothing. So you get screwed. It’s like the shopkeepers who charge twenty bucks for a pair of flashlight batteries after hurricanes. Maybe it’s the free market at work, but if so, that’s all the worse for the free market. In the healthcare biz, it just doesn’t work.

I see it’s time to roll up the sleeves.

First, let’s look at price gouging after a hurricane. I admit it — in a free market, that’s precisely what happens. People get charged much higher prices. And I actually don’t mind calling it gouging.

But do you know what happens when a disaster strikes in an unfree market? Forced appropriation by the politically well-connected. Instead of higher prices for everyone, you get free stuff for a privileged few — and nothing, or very little, for everyone else.

Let’s use the proper term here as well: theft. In a free market, you see gouging. In an unfree one, you see theft.

How this is an improvement is beyond me. Gouging, remember, is the first step toward its own remedy. Gouging is temporary. Gouging encourages everyone to return to the status quo ante, and it does so in the most direct way possible, by paying people until the goods are cheap again. The worse the gouging, the faster the return.

By contrast, theft actually discourages a return to normalcy. Few will bother producing under harsh conditions when, if times get tough, the state just appropriates and rations everything anyway. Life’s going to be miserable in a disaster. It’s the nature of the beast. But we do have a choice in how miserable it’s going to be, and for how long.

I’d suggest that the many, many regulations on U.S. health care actually make the unfree market the better analogy here. The government is already the dominant player in the health care industry, and it already sets prices to a degree unappreciated by the general public. Indeed, it’s difficult for consumers with low-deductible, employer-provided insurance (the “good” kind) even to consider the price of their health care, let alone to comparison-shop. The situation is still worse for those with government-funded health care. These are the beneficiaries of our mostly unfree market.

Should we be surprised, then, when the full price — that is, the price paid by the uninsured — keeps rising with no end in sight? There’s certainly a problem here, but it’s not a market problem.