I’m glad that I was never on Twitter.
Mr. V__:
Such potty language! Not being on X I missed this charming tweet that you shared – a tweet that incites you to ask “what in God’s name blinds [me] and other market fundamentalists to corporate greed as the cause of price gouging.”
I’ll take more seriously the theory that price increases are caused by corporate greed if and when proponents of that theory acknowledge and promote its implication – namely, the theory that price decreases are caused by corporate altruism. If you insist on explaining prices as resulting chiefly from the intentions of corporate executives, you have to use this ‘theory’ to explain all prices, not just those that you dislike.
As it happens, today’s Wall Street Journal reports that “last year’s warm winter likely means cheap heat this year.” Here we have a weather event followed by changing prices. If in the wake of hurricanes and other destructive weather events observed price increases are best explained by corporate greed, then it must also be true that in the wake of favorable weather events, such as last year’s warm winter, observed price decreases are best explained by corporate altruism. Is this your theory? Will you and the tweeting pundits whose economic analyses you find to be “more realistic than robotic stories of ‘supply & demand’” publicly applaud energy producers and utility companies for their outburst of selflessness?
Consistency isn’t the only requirement of sound thinking, but it’s one of them. Having never encountered from champions of the “corporate greed” theory of rising prices a “corporate altruism” explanation of falling prices I would reject their theory even if I were unaware of the far more compelling account of price changes – of price increases and of price decreases – offered by the emphatically nonrobotic theory of supply and demand.
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
