Search Falling Awake
Just Darts Since 2009
The latest (but not last, I’m sure) in a long line of fiascoes caused by ignoring basic economics:
Zimbabwe authorities ordered businesses on Thursday to stop selling basic goods in bulk to avert shortages after an official price freeze triggered a frenzied buying spree that has emptied most shop shelves.
Over the past week shoppers have been buying sugar, cooking oil, flour, salt and maize-meal in bulk, leaving shelves empty while manufacturers have stopped producing. They say the price freeze is not viable given the price of other goods and raw materials continue to skyrocket.
So to counteract runaway inflation, Mugabe institutes price controls. As a direct result, food becomes impossible to find, because people understandably want to buy food in bulk at below-market prices. To counteract that Mugabe bans buying in bulk.
Now, imagine that Zimbabwe is run by a responsible government. Minimal corruption, the rule of law, the whole shebang. Now–for whatever reason–prices skyrocket for basic staples. What happens? High prices for goods draw more goods to Zimbabwe. Prices then fall because of increased supply. No one needs to order anyone to do anything, because it’s in everyone’s self-interest to get food where it’s needed.
It’s the invisible hand at work. And guess who else is ignoring the invisible hand of market economies? The US federal government.
…and outlawing “price-gouging:”
[The bill would make it] unlawful to charge an “unconscionably excessive” price for oil products including gasoline and give the federal government new authority to investigate oil industry market manipulation.
Who decides what is “unconscionably excessive?” Central authority. Not the consumer, who could decide to conserve more energy and pay less that way. The government wants to decide how much you’re going to pay for a gallon of gas. And the lower the price is, the more likely the next step will be long lines and rationing.
And don’t try the objection that high gas prices mean that the rich can afford more gas than the rest of us. That’s life. The rich can afford more of everything than the rest of us. They can afford to hire someone to wait in line to gas up the car, too.
And by the way, while our representatives in Congress fume about oil industry profits, check out this chart from the Department of Energy website:
I couldn’t find more recent figures on the site, but these are from one year ago. They show that the oil companies’ profits plus refinery costs equal the taxes our state and federal governments exact. Who’s doing the gouging here?
The problem with not trusting the invisible hand is that it’s got to be replaced with a visible one. The hand of government, backed up by the threat of fines or jail for those who don’t obey.
Now, imagine the United States is run by a responsible government…