The calls for “anti-gouging” measures continue to grow as coronavirus continues its spread through Pennsylvania and the nation. But, and for the second time in a week, it must be pointed out how misguided such laws are.
As Don Boudreaux, a professor of economics at George Mason University, recently pointed out:
“Such measures are perfect examples of what government ought not do. High prices in the midst of emergencies reflect the unhappy reality that supplies have fallen relative to demands.
“This reality is not made happier by legislation that hides its reflection from public view. Indeed, such legislation only makes reality worse.”
Or by state attorneys general, in Pennsylvania and elsewhere, it must be noted.
Back to Professor Boudreaux:
“By keeping prices artificially low, such legislation encourages those consumers who are lucky enough to find available supplies to purchase more than they would have purchased at higher prices. Other consumers thus face an increased prospect of finding no supplies at all.
“Worse, prices kept artificially low discourage suppliers from exerting the extra effort necessary to rush additional inventories to locations stricken by tragedy.
“Every politician and pundit greedily grabbing for votes and public applause by objecting to so-called ‘price gouging’ is someone who – unlike the suppliers at whom they point their accusing fingers – does absolutely nothing to actually increase the flow of supplies of much-needed goods and services to suffering people. Quite the opposite.”
Just as legislators and others are clamoring for “anti-gouging” laws – or beefed-up enforcement of existing laws, so, too, are they exploiting the situation to push for something akin to universal paid sick leave.
But advocates might be careful for what they wish.
To wit, a 2011 study of San Francisco’s mandatory paid sick leave law, effective in 2007, concluded that “nearly 30 percent of the lowest-wage earners reported layoffs or reduced hours, with employers unable to offset the costs through price hikes alone,” say Aaron Yelowitz and Michael Saltsman in a Wall Street Journal commentary.
A 2016 study of a similar Connecticut law found a “sizeable decrease in labor demand” – that is, fewer jobs.
Now, as to the claim that paid sick leave for all would help prevent the spread of coronavirus, Mssrs. Yelowitz and Saltsman point to California and Washington State, where such sick-leave mandates are in effect.
Yet, infection rates are quite high in these states.
As noted not long ago, it remains incumbent upon Congress, in its zeal to help mitigate financial challenges caused by efforts to halt the spread of coronavirus, to make sure such relief efforts are targeted, temporary and, oh, yes, that they work.
Throwing darts at a cash-laden dartboard will help no one – except brace-snapping pols claiming that they’ve done something vital to recovery – a recovery that, perversely, so many of their actions retard.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
