Tag: price gouging

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free trade & free markets political economy

Unconscionable Greed!

Bernie Sanders, Elizabeth Warren, price gouging, inflation

It’s easy to blame others for greed. And when prices rise, I suppose I can imagine being so upset that . . . well, if not my mind, Bernie Sanders’ mind . . . would become unhinged:

“Greed. Greed. Greed. While Americans are struggling at the pump,” the senator tweeted on Friday the 13th, “in the first three months of this year, oil and gas companies made over $41 billion in profits, more than double their profits from last year. The problem is not inflation. The problem is corporate greed.”

That’s Bernie Sanders for you. It’s not government profligacy or Federal Reserve monetary policy or the Biden Administration’s anti-fossil fuels agenda . . . or supply-line problems, persisting COVID-lockdown effects, or anything else.

Just greed.

But is greed somehow cyclical? Why were greedy corporations providing cheap gas a year ago and then able to raise it only under Democrats’ rule?

Alas, Bernie isn’t the only low-brow demagogue in the Senate. There’s Senator Elizabeth Warren pushing a new “price gouging” bill.

So, just as Bernie never answers “why is greed so successful at gouging now?,” how does Liz answer the burning question “how can we objectively define ‘price-gouging’?”

As journalist Catherine Rampell observes on Twitter, the senator’s definition in the bill is less than enlightening: “price-gouging” is “just pricing that is ‘unconscionably excessive.’”

Now that, Senator Warren, is unconscionably vague.

And incidentally, aren’t both senators on the record as demanding higher gas prices to usher in “green energy” to “save the planet”? This all seems unconscionably . . . deceptive.

This is Common Sense. I’m Paul Jacob.

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Photo credits: Warren/Bernie/money

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free trade & free markets ideological culture

Gouging vs. Kicking

price gouging, price freeze, scalping,

New crisis, old reactions.

The market has failed, we are told, to handle the coronavirus pandemic . . . even though it has just begun.

We hear demands for vast public takings (California Gov. Gavin Newsom commandeering hotels to add quarantine stations and hospital beds), huge transfer programs (including gargantuan Federal Reserve quantitative easing), and even war socialism (an old staple courtesy of John Dewey in 1918 — oops, John Cassidy, 2020, in The New Yorker).

But most galling?

Complaints of medical supply shortages while cracking down on “price gouging.”

The most astounding case is of the man who scoured the countryside to hoard a truckload of hand sanitizer to sell later at higher prices — moving goods from a period of low, normal value to a time of higher value — only to discover that he was not allowed to sell them, by Amazon and eBay, not government.* The big Internet trading platforms object to normal entrepreneurial action, buying low and selling high, in times of crisis.

But how scandalous is it? In buying up a supply he sent a signal quicker to producers to ramp up production. And he took goods away — very temporarily — from early panicky buyers (who seized the same opportunity in a near-future scarcity but to hoard for personal use) to offer to truly needy people who would value the product enough to buy at higher prices.

Foolish enough to prohibit crisis pricing — or, here, kum-bah-yah prohibitions in solidarity. But then to castigate markets for being inefficient!

Banning “price gouging” and blaming the market is like taunting your victim on the ground as you kick him.

You’re the bully, not a noble savior.

And all that hand sanitizer goes unused.

This is Common Sense. I’m Paul Jacob.

* There are numerous anti-gouging laws around the country, too. The online market companies are merely mimicking very old political tropes.

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price gouging, price freeze, scalping,

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free trade & free markets too much government

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.