This past week, the east coast of the US was hit by devastation and destruction… and it got hit by a hurricane too. The real damage was caused by the government response (big surprise,) the lack of preparedness of the people living there (even bigger surprise,) and the prohibition of those willing to help from actually providing that help (I am Jack’s complete lack of surprise.)
In typical socialist fashion, the government has flexed its muscles to enforce the price gouging laws. What the economic illiterates do not understand is that “price fixing” makes the shortages worse than what they would have been without the intervention. Because of the natural disaster, many items become scarce. The pricing mechanism is the signal to move resources from one area to another. In order to get these resources moved to where they need to be, the price must increase. A full explanation is given here.
Price gouging does provide a positive social function. It limits the ability of the early shoppers to purchase all of the necessary supplies before others can get there. This would be a good example of rationing. This actually serves to prevent shortages! But the socialists in government believe it is better that people go completely without or with less, rather than somebody put forth extra work and turn an unusually large profit. Work and profit are not meant to go together. To those that defied the rules and brought supplies in… thank you for your service.
Because of the price controls, many items are now in short supply. The government, in its egalitarian wisdom, has now declared that items MUST be rationed. No matter what, you can only get a certain amount. To prove how economically illiterate these politicians are, all they would need to do is look back in history to the wage and price controls under Nixon or during World War II. They could also look to the entire history of the Soviet Union.
Of course, many of these problems could have been prevented had people been better prepared. At my local WalMart, bottled water is under $1 per gallon. Canned goods and instant soups/meals are relatively inexpensive. One of the major problems faced in this crisis is that without electricity, people were not able to use their credit cards and EBT (food stamp) cards. The fuel problem could be easily solved by purchasing a few gas cans, filling them up and putting them in a storage area. In 6 months, pour that gasoline into the car and refill the cans if you are worried about the gas going bad. If anything has been learned from the responses of different levels of government and their agencies, you MUST be able to depend upon yourself.
During a time of price controls, a woman walked into a butcher shop. She was dismayed
to see the butcher was selling steak for $10 per pound. She asked the butcher if the price
was correct and he said it was. She said, “The government has fixed the price of steak at
$6 per pound and you are charging too much. The guy across the street is selling steak at
$6 per pound.” The butcher replied, “Go buy your steak from the guy across the street
then.” The lady informed him that the guy across the street was sold out of steak. The
butcher replied, “When I am sold out, I charge $6 per pound also.”
Much of this pain could have been avoided had the politicians allowed the market to operate on its own. Let the pricing mechanism work. Don’t try to rewrite the laws of economics. And most important, don’t arrest/kidnap people for helping out those in need. It’s probably not a good idea to turn away people that have come to help, just because they don’t have the proper gang affiliation. here and here.