Thursday, September 22, 2005

Listening to NPR coming in this morning, they had a report that our idiot, greedhead state senate here in Pennsylvania passed an anti-gouging measure that fines gas station owners if they rapidly increase prices, 20% over the previous high or something like that. I can't give you details because it doesn't seem to be available anywhere online, yet. But here's the bill I think they're talking about.

Here's the key section:
by an amount equal to or in excess of 20% of the average price at which the same or similar consumer goods or services were obtainable in the affected area during the last seven days immediately prior to the declared state of emergency.

Hey, why not repeal the laws of gravity and momentum while you're at it, you collective geniuses of the commonwealth? That way, I can count on the effects of your wisdom and beneficence to protect me from the skull-crushing effects of my own stupidity the next time I decide to jump off a 10-story building! Or my car can escape damage the next time some half-wit rear-ends me on the Benner Pike, due to your hypothetical legislative negation of the power of collision!

This is why they ought to teach basic goddamn economics in elementary school - so that our candle-witted legislators can get certain basic concepts drummed through their thick skulls before they drop out or just stop listening.

Look: prices are signals. They tell us certain vital things about the items for sale - namely, supplies, and the extent of demand. Without those accurate, undistorted price-signals, we as consumers have no good, reliable way of knowing what the rational response in a market *is*.

People with no real immediate need hoard, against fant'sied future want. Merchants sell all their product, and find that they cannot afford to re-stock because someone up the line is cognizant of the laws of supply and demand, or else some other merchant just cornered the local market because *she* decided to hoard against the possibility of a descent of the next set of price-blind hoarders at *her* station. The other gas station guy down the street, who has ties you'd best not look too closely into, always has gas - even though his sign always says "sold out". You just have to have the green, and not talk too much like a cop sniffing around. Supply shocks turn into droughts, and then recessions, and worst of all, stagflation. Suddenly, it's Jimmy Carter time all over again!

Furthermore, screwing with the price of vital product provides a perverse disincentive to *correct* supply problems. When you refuse to let the middlemen take large short-term profits, they have no capital to finance the long-term profits of their suppliers and the eventual producers. If there's no financial incentive for the suppliers to quickly re-instate supply networks, then the work gets done on the maƱana principle, and the supply shock stretches out for weeks instead of days, months instead of weeks. If there's no financial incentive for the producers to bring new resources online to satisfy demand gone wanting, then no new resources appear. Did you see what happened when it became clear that crude prices were going north of $60 and staying there? Suddenly we had more than a half-dozen oil companies looking into oil shale production. If this bill becomes law, the states of emergency will stretch out, one after the other, until they merge together into one continuous, inescapable, miserable, perpetual "state of emergency".

Rapid price fluctuation isn't a crime. It's a clarion call, a tocsin - it's a fire alarm. Collecting and destroying all of the fire-alarms in your house won't save it from burning, it'll just make sure that none of your neighbors wake before your flaming roof-top sparks their own roofs ablaze!


Looks like our own, nepotistically inept state senator, Jake Corman, is one of the many, many sponsors of this bill. It passed unanimously in the senate. There is a movement in Pennsylvania to clear out every single legislator, both houses, due to the recent legislative salary-grab. They're called Clean Sweep. I strongly suggest y'all take a look at 'em, and give it some consideration. We couldn't do worse than this.

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