As coronavirus continues to spread through the United States, The Wall Street Journal has raised a most valid public policy point that might not be on many people’s radar:
“Progressives” among us will attempt to make permanent any temporarily imposed public policies to address the contagion.
It’s a good point.
And as The Journal reminds – and we would remind that the admonition indeed should be applicable to local, county and state government in Pennsylvania as well:
“(G)overnment’s role in the crisis should be to address a genuine short-term hardship, not to permanently expand the size of government and the burden on taxpayers.”
Speaking of the coronavirus, it didn’t take long for those who have no understanding of basic economics to begin shouting “price gouging!” as the cost of a number of items, particularly hand sanitizer and disinfectant wipes, rose, and in some cases markedly.
A number of states, Pennsylvania included, have laws prohibiting “gouging.”
But as this scrivener reminded in 2016 in a column for Tucker Carlson’s Daily Caller:
“(A)s economics scholar Mark Thoma reminded a few years back, one person’s ‘price gouging’ is a far more astute person’s textbook case of, yes, supply and demand but, also, the magic of the markets.
“Economists ‘believe that price increases are the best way to allocate scarce goods and services after a natural disaster and, importantly, to encourage additional supply,’ wrote Thoma, a University of Oregon economics scholar, in the aftermath of the same ‘gouging’ debate following Hurricane Sandy.
“Simply put, shortages result when prices don’t go up to meet demand. Thus, the choice becomes commodities at a higher price or no commodities at all.
“Or as Sandy Ikeda, a professor of economics at Purchase College, State University of New York, put it last March (2015), referring specifically to gasoline:
“’As long as buyers and sellers … are free to adjust prices (i.e. in the absence of price controls), then the quantity demanded and supplied will tend to be equal. Markets will clear, which means no surpluses (unexpected inventory accumulation) and no shortages (no people willing to pay will be turned away).’
“The only thing that will cause a shortage? Price ceilings, he reminds.
“’Bluntly, the solution to high prices is, well, high prices. The higher the price gets, the greater incentive for sellers to provide more of the product that is in short supply.’
“Mark Perry, a University of Michigan economist and a scholar at the American Enterprise Institute, concurred at the time:
“’Rising, market-based prices following a disaster are the most effective method possible for allocating scarce resources, eliminating shortages and attracting essential supplies to the areas that need them most before a disaster — wind and rain don’t change the reality.’”
Nor, dare it be uttered, does the coronavirus outbreak.
“Continued Perry, ‘It’s only in the fantasy world of politics that the “anointed elected officials” think they can get to be the “price deciders” and determine if sellers are guilty of “price gouging.”’
‘“In the real world of the marketplace it’s much different and much more democratic — the impersonal market forces of supply and demand become the “price deciders” and we’re all much better off with those market-determined prices than with artificial prices determined by politicians and bureaucrats,’ he logically concluded.
“But economics logic is the first thing the evades uninformed reporters, a poorly educated public and, of course, pols looking to score points with both.
“To paraphrase Euripides, the Greek tragic dramatist:
“Puff up the people with specious words or phrases — ‘price gouging’ — sway them to their media-indoctrinated bias — eviscerating ‘greedy capitalists’ — and then, when calamity follows — product shortages — escape from justice.”
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
