Friday, September 23, 2005

Economicide

When things get rough for the government, they love to bring up the raw meat issues. Sometimes it's the flag-burning amendment to the Constitution. Other times it's cracking down on criminals and drug dealers. Right now the pseudo-wrath of Congress seems to be directed at the price gouging practiced by a variety of companies and entrepreneurs in the face of hurricane induced shortages.

Now, one man's gouge is another man's fair share. Everybody hates scalpers, but everybody does business with them. The reason can be found in any elementary economics textbook. Market prices constitute a system, a mechanism, that assures the optimal distribution of scarce goods. Why optimal? The goods go to the people who are willing to spend the most money, even in bad weather. Well, you say, that means only rich people can afford them. Well, I say, I hate to be hard-hearted, but there have to be rewards for being rich. Otherwise people wouldn't bother to earn the money, to build the economy, to provide the jobs, to feed the poor. Poor people can, as a hedge, also plan ahead, saving their small money for a rainy-day emergency, or they could anticipate the possible impact of storms on their lives. To be both poor and irresponsible is a risky combination. Having been both, I speak from personal knowledge. Sometimes you find that you don't have the resources to protect yourself, and you find yourself at the mercy of somebody like the Sheriff of the City of Gretna. Sometimes government cannot protect you.

We have to understand that Capitalism is nasty. People have been trying to find a way around it for centuries. The Roman masses were always crying about grain prices. The United States has, however, accepted Capitalism wholeheartedly and been generally rewarded for the choice. It's hypocritical to start complaining about it now. OTOH, we have not given it complete free rein. The limited government controls, in general, have been made toward encouraging truth, public safety and honest competition. And in this light, I say that scalping is honest competition. So is price gouging. If the scalpers guess wrong, they have to eat their tickets. If the price gougers guess right, they get to reap happy profits and provide a necessary service that wasn't there before. Not only that, they will also try real hard to guess right the next time. Laws restricting this laudable activity would be very foolish.

The unfortunate shortages after Katrina were natural, somewhat expected, plannable. What we really need to worry about are the unnatural shortages, induced by monopolies, unfair business practices, excessive concentrations of wealth and power, extortion rackets, market manipulation, price-fixing, predatory pricing, prohibition, corruption, special pleading, cartels, government favoritism and tactical legislation. Why aren't the Congresscritters worried about those things?

9/23/2005 12:01 AM

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