Saturday, August 26, 2017

Paxton cracks down on Supply and Demand....

"Fear not, for I am with you;
Be not dismayed, for I am your God.
I will strengthen you,
Yes, I will help you,
I will uphold you with My righteous right hand."
Isaiah 41:10

This is...disappointing:

From the write up:
Price gouging by Texas merchants in the path of Hurricane Harvey has drawn the attention of Texas Attorney General Ken Paxton, who said Saturday that his office is looking into such cases.

“We’ve already found one big retailer that was charging $42 for a case of water,” Paxton told Fox & Friends. “Another, a gas station $99 for a case of water.”

"We’ll be dealing with those people as we find them,” he said.

Paxton didn't identify the culprits.

Paxton issued a warning about price gouging Friday as the hurricane approached the Texas coast.

Texas law prohibits businesses from charging exorbitant prices for gasoline, food, water, clothing and lodging during declared disasters.


“Anytime catastrophic storms hit Texas, we witness the courage of our first responders and the generosity of neighbors coming together to help their fellow Texans," Paxton said in warning against price gouging. "Unfortunately, in the wake of the damage from storms and flooding, we also see bad actors taking advantage of victims and their circumstances."
This is a dangerous proposal, and it needs to be immediately put to rest.

We get it: There was a big storm last night, and people are stressed.  But to panic and "crack down" on so-called "price gouging" (Translation: Price Controls) will only add politically driven shortages of basic necessities to the mix.  Calm down, take a deep breath, and ask yourself this question: Can anything good come from adding politically driven shortages to the mix?!?

In case you forgot: Price is a function of where supply intersects demand.  When demand spikes, and supply is held relatively constant, prices naturally spike as well.  That's what's happening in the hurricane zone.

Those prices spikes then act as a signal to marginal suppliers.  When prices spike, marginal suppliers respond by entering the market.  As the demand spike subsides and the new supply comes online, prices naturally recede.

But, for price signals to work, they need to be allowed to operate unfettered from political interference.  If anything, price flexibility is more important during a crisis.  Nothing good can come from politically directed price controls driven by panic.

Just so we're clear: There are few elected officials out there with stronger pro-free enterprise records than Ken Paxton.  In 2006, when he was in the legislature, Ken Paxton fought the dadgum margins tax.  But that's also why Ken Paxton, of all people, should know better.

Bottom Line: So called "price gougers" are unsung heroes.  Any panic driven attempt to "crack down" on them via politically directed price controls can only produce shortages when we can least afford them.  This is a recipe for turning a 3 or 4 days crisis into a 3 or 4 week catastrophe.

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