This law professor Zephyr Teachout is a whirlwind of economic illiteracy.
Editor, Washington Monthly
Editor:
Zephyr Teachout packs copious confusion into her attempted defense of Kamala Harris’s proposal that the federal government superintended the pricing decisions of grocers (“Stop Calling Kamala Harris’ Anti-Price-Gouging Proposal Price Controls,” Sept. 9).
Central to Teachout’s case is the fact that the anti-price-gouging statutes favored by Harris do not impose specific maximum prices of the sort that were imposed, say, during World War II. But this distinction is one of vocabulary and not of substance. A government that threatens to punish merchants for selling at nominal prices higher than deemed appropriate by government clearly intends to control prices. It’s no surprise, therefore, that economists routinely analyze prohibitions against so-called “price gouging” using exactly the same tools they use to analyze other forms of price controls.
Unfortunately, the fruits of these analyses are lost on Teachout. For example, she ignores the well-known conclusion that merchants who are free, post-natural disaster, to raise prices to high, market-clearing levels will, pre-natural disaster, have stronger incentives to carry as inventories more goods that are likely to be in high demand if a natural disaster strikes. By outlawing post-disaster price hikes, government harms consumers by causing reductions the inventories available when natural disasters strike.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
