After hearing of the North Carolina attorney general’s hunger to enforce price gouging laws, I got right to The Locker Room and encouraged people to thank rather than vilify the retailers. My focus was on economic logic, and Bill Lumaye then had me on to discuss what may be a counterintuitive assertion, including a few challenging questions. (Click below to listen–four minutes.)
[audio:http://bit.ly/nmovlC]
With a little more time to consider the issue, I wrote an expanded commentary for The Future of Freedom Foundation with the same headline, “Give Thanks to ‘Price Gougers.'” This includes a response to a concern raised by Lumaye, essentially, What about the poor?
Sure, as in normal times, those with less may merit charity. However, while price controls may make some goods available at lower prices, without increased returns on offer there will be fewer of those goods available for everyone, rich and poor alike.
In other words, whatever the price may be, some people are not going to be able to afford the item–and a mandated lower price will see fewer people with it, not more.
In my earlier blog post, I also overlooked the constitutional implications, with respect to property rights. Clarified here:
All of these laws also reflect either a misunderstanding of private property or a disrespect for it. If a retailer has bought an item, he has ownership that includes the right to sell at the price he chooses. By forcing retailers to part with their property at terms they do not agree with, many legislators appear to have forgotten the Fourteenth Amendment: “… nor shall any State deprive any person of life, liberty, or property, without due process of law….”
Unfortunately, consumers have also acquired an entitlement mentality with regard to other people’s property. Already, many are bringing law enforcement to bear on retailers.
