Mark America

I live in Texas. I spent the weekend hunkering down in the deluge of the Northern-most outer bands of Hurricane Harvey.  Though not nearly as bad off as those under the hurricane and subsequent tropical storm away to our South and Southeast, we will have our share of drenching rains and attendant flash-flooding.  Watching television, I am struck by how Texas elected officials are spending so much time in front of cameras, including even Texas Attorney General Ken Paxton. During several weekend appearances on FoxNews, Paxton reassured the audience that Texas has some of the strongest “anti-gouging” statutes anywhere in the country, with additional or enhanced penalties for those who “take advantage of the elderly.” I’ve seen enough of this in my lifetime to know that these laws are abominable. Not only do they violate the property rights of traders, but they also cause an irrational element to rush into our economics.  Politicians of any party who support these laws do so in opposition to all the laws of the universe, and further degrade our social fabric by institutionalizing vast immorality.  I urge the immediate repeal of such laws, and constitutional amendments at both the state and federal levels that would implement severe punishments on any public official who would attempt to intercede in this fashion dress in the free market. These laws result in the misallocation of resources, the violation of individual liberties on a massive scale, and in some instances, additional death and mayhem.  Perhaps worst of all, it encourages complacency and sloth, rewarding both with unjustifiably low prices, while punishing those who had the foresight and self-discipline to plan ahead.

If you purchase a large stock of some commodity, let’s use bottled water as our example,  well in advance of some localized or regional emergency, with the notion of selling it at some future date for a profit, you’re simply doing business.  If there comes to be some shortage of bottled water, you would be in a good position relative to the market, and would be able to increase your price to whatever level the market would bear.  The equilibrium price for bottled water would shift dramatically upward, and you would make a tidy profit, in a free market.  In Texas, as in many other states and localities, there are laws that prohibit the raising of prices for commodities for various items and commodities when an emergency is declared.  This extends to items like generators, pumps, flashlights, and other items frequently needed in the aftermath of some calamity, natural or otherwise.  The idea is that those who sell such items should not be left in a position to “take advantage of an emergency.”

This is a ridiculous notion.  Every trade in any market under every condition is a situation of either the buyer or seller (and most frequently, both,) believing they are in the more advantageous position in the trade.  What politicians call “price-gouging” is merely the natural result of a free market in the face of scarcity.  What politicians cynically do is to take advantage of the consumers’ sentiments in this situation.  If there are any profiteers in an emergency, people who are abusing their positions to make undue gains on the basis of tragedies, it is the politicians who make political hay off of disasters. These laws, all of them, are immoral and fly in the face of all rational economic theories. Let’s examine the consequences:

The owner of the commodity, in this case the seller/reseller is prohibited from getting the greatest possible value from his/her foresight, investment, and simple commercial activities. Why would anybody go through the trouble of stock-piling any commodity of any description, dealing with transportation and storage, as well as distribution, if merely the act of maximizing one’s profits is an activity to be punished?  This means if you merely prepare, following the model of the ant rather than the grasshopper, you can be seen as profiting from a disaster. Obviously, the net effect of this will be to discourage the stockpiling of commodities in the private market, and that can have yet another unintended consequence: Increased human suffering.

Human suffering will be increased under these laws because it doesn’t matter how cheaply a commodity may be priced if it’s unavailable in the place it’s needed at the time it’s needed, for customers willing and able to pay.  Imagine if this same mindset was applied to other aspects of life. Take for example the “convenience store.” Nobody would buy anything at the prices charged for common items in your average convenience store except for the fact that why you’re paying the premium price is for the convenience of getting the goods when you need them, where you happen to be when that need arises.  Naturally, if you apply the same notions manifest in these immoral “anti-gouging” statutes, then all convenience stores should go out of existence.  In fact, so should all big-box stores. All grocery stores should likewise go out of existence. In fact, anybody between the producer and consumer should be forced out of business if you are to take this idea to its logical conclusion, because what they all do is to profit by providing a convenience and efficiency in distribution.

Naturally, the things these statist villains ignore is their unremitting violence against individual liberty. Some of these people claim to be motivated by justice and freedom, but an examination of their advocacy in this context unmasks the truth: They don’t give a rip about your private property rights, or your life, or anything else.  Instead, they care deeply about maintaining power and the politically-obtained positions they enjoy because people don’t think these things through before making emotionally-based demands of their government(s.) If I own a warehouse full of bottle water, having taken the time, having invested the money and effort to build it, maintain it, stock it, and then protect it, why shouldn’t I be able to sell it for whatever price I can obtain?  What moral principles are in question? Obviously, this is another example of collectivism versus the individual.  More, if I need a bottle of water, who is Ken Paxton or any other politician to insert himself or the force of government if I am willing to pay even one million dollars for a bottle?  Does Attorney General Paxton have the right to stop me from drinking?  Naturally, because he’s a politician, he would argue that he’s merely forbidding somebody from taking advantage of my thirst, but what if the seller simply says: “Never mind, I’m not interested in selling.” Will Mr. Paxton put a gun to his head and force him to sell at a price Mr. Paxton permits?  You bet he will.  You can be assured that Mr. Paxton and all the other statist thugs are more than willing to do precisely that for their own political advantage, or to suit their own broken, irrational, and inconsistent moral exigencies.

The other problem with all of this is that it discourages rational behavior and planning.  Why worry about keeping a relatively small but nevertheless potentially critical household stock of important commodities? I have many things in excess of my immediate consumption needs, all on the basis of the idea that I don’t have perfect knowledge of all circumstances that may suddenly arise.  I have food storage, not a ton, but enough that we could subsist a few weeks, and we have enough water, and in a pinch, we have generators, and if things get really bad, I suppose that horses could come back as a means of transportation. The point is that we all make choices, and some of us make better choices than others. Those who make poor choices or simply act irresponsibly find themselves facing higher costs than those who make better choices and/or choose to prepare.  The anti-gouging law favors the irresponsible and those who make poor choices.

On Saturday, during the news coverage, a number of people were shown walking out along a rock out-cropping among the white-capped waves at the coast, taking selfies, and otherwise acting foolishly in what can easily devolve into a life-threatening situation.  The newscaster remarked that they were not only risking their lives but also the lives of first responders who would be called upon to save them if they happened to get blown or washed into the bay and caught in the strong current.  I am not a first-responder, but were I, I would refuse to risk my life for such people, and the mere fact that we ask first-responders to rescue such irresponsible people is the main reason we have so many irresponsible people.  Start letting such fools pay the full cost of their foolishness without any extraordinary measures to rescue them from their own choices, and suddenly, as if by magic, people will begin to make better choices.

Subsidizing sloth and stupidity never profits any society; neither does punishing ambition or foresight. Law should never demand the irrational, and must never impose the immoral, yet that is precisely what these laws manage to do.  For the sake of full disclosure, let me state that I am not now nor do I expect at any time in the future to be among those who could profit from the repeal of these laws, inasmuch as I don’t possess any substantial stocks of any commodities beyond those for my own uses.  On the other hand, should the day dawn in which I find myself in need of a commodity that has otherwise become scarce, I will be willing to pay such price as may be necessary to obtain it, should I have managed to fail to foresee and prepare.

Scarcity of an item at a particular time and place when combined with the quantity demanded by the market should always be the driver of the equilibrium price. When government intercedes in economics, it always, always has [allegedly]unintended negative results, even though governments and their cohorts in media do their level best to hide this fact from you. A more recent example of this is the debate over the repeal of Obama-care. Government stooges claim that were Obama-care to be repealed, some millions of people would lose their coverage.  What government stooges and their cohorts in media do not track, and desperately do not want you to track, is the number of people who lost coverage or saw the value of their coverage destroyed by the institution of Obama-care.  Government stooges do not want you to see the people who, in order to avoid the government fine, pay for insurance their health and risk levels would not justify.  Nobody tracks the opportunity cost of where all those dollars might have been spent or saved in other ways, that might have made marked improvements in the present or future standards of living of the people in question.  No, such numbers are harder to derive, and it’s much easier to claim some ridiculous numbers on the basis of who is in the government program at present as some measure of the program’s alleged successes.

I am certain that on some future date, Texas Attorney General Ken Paxton will claim that some number of Texans were spared from price-gouging by the immoral law he now so adamantly enforces, but there will never be a day when there will be a count of the people who were deprived of commodities because there was no seller selling it, due to the lack of potential profit.  Paxton, like every other statist thug on the planet, will claim a victory.  It is no different from Venezuela, where their dictators, current and previous, proclaimed victory over the free market by the compulsory lowering of prices, but not one word will be uttered about the extreme shortages of all the basic commodities, even toilet paper.  None but the politically-connected elites can find food or toilet paper, no matter the price.

One of the more frustrating things I encounter daily is the absolutely thorough economic ignorance of most people.  Clearly, our public schools don’t teach economics, or to the degree they do, it is only of the fraudulent Marxist derivatives.  One person I spoke with this morning complained bitterly of the twenty cent jump in the cost of gasoline we’ve seen since Friday, and actually applied the term “price-gouging” to describe it.  This is the prevailing nonsense among most of our people, and it is the reason cynical politicians like Mr. Paxton are able to make so much mileage on such immoral, irrational laws.

The truth is that at the moment, roughly one-fourth of the refining capacity of the United States is shut down in the wake of Harvey, and only some fraction of that will come back on-line soon.  The distribution chain is broken, with all of the flooding and so on, such that fuel tankers that routinely transport truckloads of fuel through the remainder of the state are not able to maintain their normal delivery schedules.  This leads first to spot shortages, as some gas stations run out of the commodity.  Depending upon how long this goes on, it will spread in broader and broader bands of localized shortages.  This drives prices.  Gas stations do not keep a large inventory of fuel.  They get daily deliveries, sometime multiple daily deliveries, and the price is adjusted based on the expected quantity demanded.  In any such environment, prices go up, and they can ratchet up quickly.  Much of it will depend on how quickly the refining and distribution channels are restored.  Still, most Americans do not understand economics, and don’t really care to.  Instead, like the throngs of the economically ignorant in Caracas, Venezuela, they only demand, but do not know anything about how the commodities they take for granted are delivered to them at the time and place they need them, or how that production and distribution chain is at the mercy of all sorts of factors.  No, like the multitude of nitwits who AG Paxton is racing to reassure, they only demand.  They give no thought to supply, or to its scarcity.

This is the direct byproduct of a people now too accustomed to governmental intervention in all facets of the free market.  Rather than a people who understand economics, and who understand the concepts of supply and demand, we have instead a country of people who expect the government to solve all their problems, and they believe that prices higher than they will happily pay are a problem to be addressed by government.  If you consider the absurdity of a people who will happily queue-up for the latest iPhone, shelling out hundreds of dollars for a device that can be made useless at any moment by a strong wind in their vicinity, who will not happily pay one hundred dollars for a case of bottled water in the place they find themselves in a time of scarcity, you begin to recognize the problem.  These are the same people who believe Internet should just “exist,” and bandwidth should just “be there,” without payment, and without cost to them, the consumers.  This economic irrationality is exceeded in scale only by the immorality of those who accept it.

We will become a country like Venezuela.  Some will say that we will have deserved it. Those who say that will not have been wrong.