Here’s a letter to the Washington Post:
Heavy skepticism is always appropriate – if rarely exercised – whenever Congress is moved by emergencies to hastily enact legislation. Consider, for example, the attempt by members of the House to include, in a COVID-19 relief bill, anti-price-gouging measures (“Add to list Congressional leaders, administration push swift action on third coronavirus relief bill with major economic stimulus,” March 17).
Such measures are perfect examples of what government ought not do. High prices in the midst of emergencies reflect the unhappy reality that supplies have fallen relative to demands. This reality is not made happier by legislation that hides its clearest reflection from public view. Indeed, such legislation only makes reality worse. By keeping prices artificially low, such legislation encourages those consumers who are lucky enough to find available supplies to purchase more than they would have purchased at higher prices. Other consumers thus face an increased prospect of finding no supplies at all.
Worse, prices kept artificially low discourage suppliers from exerting the extra effort necessary to rush additional inventories to locations stricken by tragedy.
Every politician and pundit greedily grabbing for votes and public applause by objecting to so-called “price gouging” is someone who – unlike the suppliers at whom they point their accusing fingers – does absolutely nothing to actually increase the flow of supplies of much-needed goods and services to suffering people. Quite the opposite.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
My son, Thomas, called me this morning from his home in New Hampshire to happily report that he just bought 24 rolls of toilet paper for a total of $60. “I paid that high price voluntarily, Dad,” Thomas said. “The economics that you taught me allows me to understand that it’s better to have the option of actually getting 24 rolls for $60 than to be stuck with being able to get only zero rolls for zero dollars.”
That’s my boy!