Demands and Supply
A storm hits the east coast. Some homes are washed away. Others burn down. Millions lose power. Gasoline supplies are massively disrupted, even as mass transit is unusable for days.
Obviously, post-Hurricane Sandy, emergency measures are called for. It’s crucial, for instance, that the disrupted and reduced supplies of gasoline be gotten into the tanks of vehicles as inefficiently as possible, and by causing motorists to waste as much of their precious time as possible. Who but rational and well-informed persons could disagree?
To achieve this goal, rationing and laws against “price gouging” — in New Jersey, defined as adding more than ten percent to prices under normal conditions of supply and demand — come to the rescue! So Governor Chris Christie assures gas station owners that his government will “impose the strictest penalties on profiteers who . . . seek to capitalize on the misfortune of others in the midst of a crisis. . . .”
After all, what’s the alternative?
Well, it’s this: Let fuel prices rise to the height required to induce motorists who least urgently demand gas to give way to those who most urgently demand it. This would
- shrink or prevent round-the-block gas lines;
- encourage shipment of gas to those areas where prices have risen the highest, i.e., where gasoline is scarcest;
- allow people to get back on their feet as quickly as possible by following their own best judgment in the face of local circumstances best known to themselves.
What do you call this strategy? Getting out of the way. Or laissez faire — but there’s nothing foreign about it. It used to be the American way.
This is Common Sense. I’m Paul Jacob.