Each issue of Commentary magazine features a joke under the heading “Enter Laughing.” The latest one touches on a key economic principle that tends to be ignored during times of disaster.
Mrs. Klein goes to the butcher. “I would like please a flank steak,” she says.
The butcher says, “That’s $2.29 a pound.”
“Get out of here with your $2.29,” Mrs. Klein says. “Down the block by Oppenheimer’s it’s $1.69 a pound.”
The butcher says, “So go by Oppenheimer.”
She says, “He hasn’t got any.”
The butcher says, “Lady, if I hadn’t got, I’d sell it to you for a buck and a half.”
The joke reminds this reader of economist James Doti’s discussion of his experience with the great Chicago snowstorm of 1967.
After a good deal of shoveling and trekking through the snow, I finally reached the store. But what I found looked like “The Twilight Zone.” Shelves were emptied and all that remained were several tins of anchovies and cans of artichoke hearts. Panic was beginning to set in and a cold sweat that defied the elements broke out over my face. There was only one other grocery store in the area, but I held out little hope that the scene would be much different. You can well imagine my surprise, therefore, when I entered the store to find an adequate, albeit depleted, supply of groceries on the shelves.
It was like a scene from a Keystone Cops movie as I sped around the aisles stocking up on Cokes, Twinkies, Snickers and other necessities of life. But, again, my brief moment of joy was dashed as I entered the checkout line and saw a sign that read: “Prices for all groceries are temporarily doubled.” My joy gave way to outrage as I stormed out the door empty-handed.
Several feet from the door, however, as I gazed upon miles of snow and drew several breathfuls of icy air, principles and ideals gave way to reason and survival. It should not be surprising, therefore, when I tell you that I returned to selectively purchase my needed provisions. The only “idealism” that remained within me was my ability to muster up some grumbling as I trekked back home through the snow.
A footnote to this story is that the store stayed open and was somehow able to sell groceries during the entire week that normal deliveries were cut off. It was only later that I found out that the grocery store owner had paid children to take their sleds to the closest vegetable and meat warehouse to stock up on whatever the children could buy and fit on their sleds.
The Wealth of Nations is replete with examples like my snowstorm experience. But, perhaps because of the eighteenth-century setting, Adam Smith’s examples never affected me as much as my first-hand experience with the workings of a capitalistic system. What greater support could I have for the theory that private vice leads to public virtue? Here we have one store owner who in the interest of fair play does not change his prices but quickly sells all his merchandise and closes shop for the rest of the week. I am sure he experienced a great feeling of self-satisfaction because he had done the decent and proper thing by not exploiting his customers during a time of urgent need.
In sharp contrast to this example of high-minded idealism, we have the case of a capitalist who would seize upon any opportunity to maximize profits. Yet, in doing so, he forced people to limit their purchases to what they really needed. In addition, the higher prices allowed the greedy grocery owner to pay children to put their sleds to a new use, thereby increasing the supply of food available for sale. As Adam Smith stated, … “By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.”
It’s an anecdote the price-gouging crowd ought to consider before the next emergency in North Carolina.
