Over at Bleeding Heart Libertarians, Jason Brennan summarizes an analysis that he and Peter Jaworski will make in response to Michael Sandel’s argument that (quoting Brennan’s interpretation of Sandel’s claim)
queuing distributes goods equally, while markets distribute according to ability and willingness to pay. Since people have unequal ability to pay, markets distribute goods unequally. They are in that way unfair compared to queuing.
Jason does a nice job exposing some of the many flaws in Sandel’s argument that queuing is more egalitarian than are markets. Here’s yet one additional problem with Sandel’s argument. (Jason and Jaworski might well make this additional argument in their larger work.)
As Jason suggests, queuing that is the result of money prices kept too low obliges people to pay more in the currency of time than they would have had to pay in the currency of time if money prices were closer to market-clearing levels. People spend more in the currency of time and less in the currency of money.
But it’s not the case that for every one-unit decrease in the money cost of acquiring the good that is in short supply there is only a one-unit – an equal-value – increase in the time cost of acquiring that good. The total amount spent, measured in value, in order to secure a chance of actually acquiring a unit of the good that is in short supply is greater than is the total amount spent if the money price were allowed to rise to its market-clearing (“equilibrium”) level.
Readers familiar with standard supply-and-demand analysis can picture an effective price ceiling that causes the quantity supplied not only to be less than the quantity demanded, but less than what the quantity supplied would be at the higher, market-clearing price. That is, the price ceiling makes the good (say, gasoline) less abundant than it would be otherwise. The marginal value of each unit of the now-lower quantity supplied of gasoline is, therefore, higher than it would be were gasoline’s price allowed to rise to its market-clearing height. Because the price-ceiling raises the marginal value of gasoline – yet does so in a way that prevents gasoline suppliers from profiting from this higher value – the value of the bundle of nonmony resources (e.g., time) spent by aspiring buyers to maximize their chances of actually acquiring some units of gasoline will rise until it is equal to the difference between the marginal value of the good and the capped money price. The total amount spent to buy each available unit of the good – the value of the bundle of nonmony resources plus the capped money price – will be higher than would be the total amount spent to buy each available unit of the good in the absence of a price cap.
If (as is plausible) the method used by buyers to compete amongst each other in order to acquire desired amounts of the artificially restricted supplies of gasoline is queuing, then the queues will lengthen until the amount of time spent in queues rises to its market-clearing height. That is, the (money-)price ceiling will cause the marginal value of time spent queuing for gasoline to be equal to the marginal value of gasoline – a value that is necessarily higher than it would be if the quantity supplied of gasoline were greater (that is, as high as it would be if there were no price ceiling in place).
The total (monetary and nonmonetary) per-unit cost of a gallon of gasoline will be higher if the money price of gasoline is capped than if it is not capped. In short, price controls raise – they do not lower – the cost of acquiring goods and services whose prices are controlled.
It might still be the case that people who are especially rich in time will be better able to afford such price-controlled goods and services than they would if the price controls were abolished. (Although, for other reasons, even this possibility isn’t all that high.) But make no mistake: price controls meant to lower the cost that consumers in general pay for goods and services do the opposite: such controls raise the cost.
Not convinced? Ask yourself the following question: What would be the cost of acquiring a gallon or a liter of gasoline if government capped the price of gasoline at, say, $0.01 per gallon (or liter)? Do you think that your cost of acquiring a gallon or a liter of gasoline would be lower than it is without any price ceiling? The same? Or higher?