Long-time readers know I cringe when I hear the term "price-gougers" or something similar. When I hear that term, I see visions of populist demagogues dancing in my head. A Las Vegas Review Journal editorialist explains:
Even though she admits the "problem" has not arisen in Nevada in recent memory, state Sen. Dina Titus, D-Las Vegas, now offers Senate Bill 82, which seeks to ban "price gouging" by classifying as an illegal "deceptive trade practice" the sale of a consumer good or service "for an unconscionable price before or during a state of emergency."
What's "unconscionable"? Selling at a price 25 percent higher than the average price of said good or service over the past 30 days "unless approved by an appropriate government or governmental entity." Or so the bill says.
Though, reading further down, there's an exception if the price hike is justified by "an increase in the costs incurred" by the seller.
I wonder if the "costs incurred" include opportunity costs. Some say price gouging is unfair. What's unfair about people engaging in voluntary exchange at the prices they face?
Then there's the unintended consequences:
"Consider -- if a gas station owner has gas, someone has to decide who gets it. If the price remains at pre-hurricane levels, many will fill their tanks, because they can afford to do so, against the chance (and even likelihood) that gas will later become completely unavailable (a self-fulfilling prophecy if the price is not allowed to rise).
"Many will do so even if they have no immediate need for it. But after the first few people do this, the gas will be gone, and none will be available for those who come after, because it's now tied up in the gas tanks of those who didn't really need it.
And what about anti-price gouging laws?
The best -- in the long run, the only -- way to sustain price-gouging is to give the activity the imprimatur of a government guaranteed monopoly -- which Sen. Titus and her cohorts do, all the time.
If you don't believe this, just try to offer some lower-priced competition to Nevada's taxicab operators, or barbers, or any of a hundred other "regulated" professions, without first seeking a government license or permit -- a permitting process that often requires you to demonstrate to a regulatory board made up of the very people with whom you hope to compete, that you won't hurt the people with whom you want to compete by stealing away any of their customers or undercutting their prices!
So here come the biggest "price-gougers" of all, offering to make it illegal for some small-time entrepreneur to load his pickup with bottled water and baby food, race the stuff to the scene of a disaster days before bumbling government bureaucrats can get there, and compensate himself for the risks thus sustained by selling these life-saving supplies to those who need them most for whatever the traffic will bear.
All to "protect Nevadans" by making sure that instead of being charged more for vital supplies at times of emergency -- there won't be any to buy at all.
Who's going to protect people from the bureaucrats and politicians?
HT to Craig Newmark