Tag Archives: Chris Christie

Ron Paul praises price gouging

Sure, I called it. But isn’t that special when Ron Paul backs me up on simple free market economics:

Had gas stations been allowed to raise their prices to reflect the increased demand for gasoline, only those most in need of gasoline would have purchased gas, while everyone would have economized on their existing supply. But because prices remained lower than they should have been, no one sought to conserve gas. Low prices signaled that gas was in abundant supply, while reality was exactly the opposite, and only those fortunate enough to be at the front of gas lines were able to purchase gas before it sold out. Not surprisingly, a thriving black market developed, with gas offered for up to $20 per gallon.

With price controls in effect, supply shortages were exacerbated. If prices had been allowed to increase to market levels, the profit opportunity would have brought in new supplies from outside the region. As supplies increased, prices gradually would have decreased as supply and demand returned to equilibrium. But with price controls in effect, what company would want to deal with the hassle of shipping gas to a disaster-stricken area with downed power lines and flooded highways when the same profit could be made elsewhere? So instead of gas shipments flooding into the disaster zones, what little gas supply is left is rapidly sold and consumed.

Governments fail to understand that prices are not just random numbers. Prices perform an important role in providing information, coordinating supply and demand, and enabling economic calculation. When government interferes with the price mechanism, economic calamity ensues. Price controls on gasoline led to the infamous gas lines of the 1970s, yet politicians today repeat those same failed mistakes. Instituting price caps at a below-market price will always lead to shortages. No act of any legislature can reverse the laws of supply and demand.

History shows us that the quickest path to economic recovery is to abolish all price controls. If governments really want to aid recovery, they would abolish their “price-gouging” legislation and allow the free market to function.

It’s a shame that RINO governor Chris Christie won’t listen to free market advocates, but he’ll be listening when citizens hit the voting booth next year and remember his handling of gas shortages by further exacerbating the situation with rationing. Even worse, they might remember him giving the green light to football fans to attend a Giants football game during said rationing and state of emergency. Or, they might remember that Christie was quick to send an army of 45 bureaucrats out to check gas station receipts.

Already polls are showing Governor Christie rather vulnerable against Democrat contenders (who most certainly would have also rationed gas, but go ahead and ask them yourselves). Hurricane Sandy and his mishandling of the aftermath have yet to be factored into these polls.

Gas rationing may have ended in New Jersey today, but the extended gas crisis’ actual costs to the New Jersey economy will no doubt haunt Christie well into next year’s re-election bid.

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Post-Sandy price gouging laws and gas shortages

Yesterday, Matthew Iglesias at Slate warned us that many people living in states suffering from the freak storm Hurricane Sandy will find themselves in dire shortages as the free market gets tangled with price gouging laws:

Even in these polarized times, there are some things politicians of both parties can agree. Price gouging, for example, is wrong. New York Attorney General Eric Scheiderman, a Democrat, wants you to know it. But this isn’t just for soft-hearted liberals. New Jersey’s notoriously tough conservative governor, Chris Christie, also put out a weekend press release warning that “price gouging during a state of emergency is illegal” and that complaints would be investigated by the attorney general. Specifically, Garden State merchants are barred from raising prices more than 10 percent over their normal level during emergency conditions (New York’s anti-gouging law sets a less precise definition, barring “unconscionably extreme” increases).

The bipartisan indignation is heartening, but there’s one problem. These laws are hideously misguided. Stopping price hikes during disasters may sound like a way to help people, but all it does is exacerbate shortages and complicate preparedness.

The basic imperative to allocate goods efficiently doesn’t vanish in a storm or other crisis. If anything, it becomes more important. And price controls in an emergency have the same results as they do any other time: They lead to shortages and overconsumption. Letting merchants raise prices if they think customers will be willing to pay more isn’t a concession to greed. Rather, it creates much-needed incentives for people to think harder about what they really need and appropriately rewards vendors who manage their inventories well.

Today, gasoline is in short demand as retailers who were able to stay open are prohibited from adjusting prices in the face of inflated demand:

Drivers and homeowners scrambled to secure fuel for their cars and generators in the U.S. Northeast on Wednesday as storm-hit gasoline stations started to run dry.

More than half of all gasoline service stations in the New York City area and New Jersey were shut because of depleted fuel supplies and power outages, frustrating attempts to restore normal life, industry officials said.

Reports of long lines, dark stations and empty tanks circulated across the region. Some station owners were unable to pump fuel due to a lack of power, while others quickly ran their tanks dry because of increased demand and logistical problems in delivering fresh supplies.

Being able to adjust prices to reflect market conditions isn’t price gouging, it’s good economic sense.

As economist Art Carden eloquently wrote in 2011, “[I]n post-disaster situations rising prices perform vital economic triage by showing which uses of resources are now high-value and which uses of resources are now low-value.”

“A disaster means a big shock both to what people want and to the resources available to fulfill those wants. Freely-moving prices make sure resources are allocated to their highest-valued uses, and rising prices send people a very important signal: resources have gotten scarcer and need to be conserved. If houses are destroyed by a tornado, rising lumber prices tell someone in an unaffected area to think twice about building a new deck because the lumber is probably more valuable rebuilding houses. Rising gas prices tell people to think twice about burning scarce gas for a Sunday drive in the country. And so on.”

In other words, temporarily higher prices would encourage those not directly involved in cleanup to stay home and out of the way until the economy stabilizes.

But with price gouging laws, your desire to drive around looking at a storm’s destruction is just as valid as the crews who are working to clean it up, and makes the overall economic situation that much more painful, for a longer period.

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Wikipedia locks possible VP pages after Colbert joke

Politico: “The pages of Tim Pawlenty, Rob Portman, Paul Ryan, Marco Rubio, Bobby Jindal, Chris Christie and (following yesterday’s Drudge bump) David Petraeus have been locked after Colbert, citing a Fox News report about the jump in revisions to Sarah Palin’s page in 2008, encouraged viewers to ‘go on Wikipedia, and make as many edits as possible to your favorite VP contender.'”

This comes on the heels of a report earlier this week by Micah Sifry: “None of Wikipedia entries for the current candidates being bandied about by Romney-watchers — Rob Portman, Marco Rubio, Paul Ryan, Bobby Jindal, Chris Christie, Kelly Ayotte or Pawlenty — are currently showing anything like the spike in edits that Cyveillance spotted on Palin and Biden’s pages back in 2008. But most of those came in the 24 hours prior to the official announcement.”

Stephen Colbert of course deserves full credit for throwing the monkey wrench in Wikipedia when he told viewers: “We could be looking at Vice President Season Six of Buffy-the-Vampire Slayer. So, Nation, let your voice be heard in this history decision. Go on Wikipedia, and make as many edits as possible to your favorite VP contender.”

Sifry responds: “Oh well, I guess we all just pushed the needle deeper into the haystack.”

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