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Quotation of the Day…

… is from page 52 of Ronald Coase‘s 1994 collection, Essays on Economics and Economists; specifically, it’s from Coase’s 1974 paper “Economists and Public Policy”; Coase’s quotation of Edwin Cannan is from pages 16-17 of Cannan’s 1927 book, An Economist’s Protest (brackets inserted by Coase; footnote deleted):

Of course, Cannan argues against price controls in the usual way.  But he points to a paradoxical aspect of the situation: “When the price of a thing goes up, [people] abuse, not the buyers nor the persons who might produce it and do not do so, but the persons who are producing and selling it, and thereby keeping down its price.”  So, if there is a “shortage” of wheat or beef or oil, we abuse those who are producing all the wheat, beef, or oil that we have and without whose efforts the “shortage” would have been still greater.

Two thoughts.

First, keep the above piece of wisdom in mind whenever you hear complaints of ‘price gouging’ following natural disasters.

Second, and relatedly, the same piece of wisdom applies to those who support higher legislated minimum wages.  Many newspaper pundits, bloggers, politicians, and  ‘activists’  – and even some (but by no means all) economists – are eager to pontificate on how terrible, in their view, is the fact that low-skilled workers are paid less money per hour than these pundits, bloggers, politicians, and ‘activists’ somehow divine these workers ‘should’ be paid.  And so they point accusing fingers at actual employers of low-skilled workers such as Wal-Mart and McDonald’s.  And yet virtually none of these pundits, bloggers, politicians, and ‘activists’ (or economists) are setting up businesses to hire these workers in competition with these workers’ current exploiters.  These pundits, bloggers, politicians, and ‘activists’ (and economists) content themselves to demand that a third-party – government – heavy-handedly command low-wage workers to remain unemployed if these workers cannot persuade employers to pay them hourly wages at least as high as the mandated ‘minimum.’

And it’s a peculiar fact, really: If large numbers of workers are in fact really today underpaid – and if the these pundits, bloggers, politicians, and ‘activists’ (and economists) really believe that large numbers of workers are in fact today underpaid – these pundits, bloggers, politicians, ‘activists’  (and economists) could profit handsomely by putting their money and their efforts where their mouths are.  But they do not do so – and that fact speaks volumes.