Posted on 11/03/2012 1:55:01 PM PDT by sickoflibs
In New Jersey there is a shortage of open gasoline stations not because of the supply of gas but due to lack electricity at gas stations. This has caused long lines due to form miles long and lots of frustration. The media is reported thousands standing in line waiting to buy gasoline.
So NJ Gov Chris Christie has just announced a form of gasoline rationing of odd and even buying days. At the same time he is prosecuting merchants for raising prices in response to the shortages; and I am sure this is very popular there: ' Procecute those greedy capitalists because price gouging is unfair' I can imagine them saying.
But suppose gas stations and stores selling generators were allowed to raise their prices legally. Wouldn’t that not only reduce demand some but more importantly wouldn't it bring in a greater supply of generators from other parts of the country to NJ? I mean would you stop your life to buy up generators and drive them to ravaged NJ just to risk prosecution?
Would you rather buy more expensive gasoline, or have NO gasoline being sold to you if you are out of it?
The first time I read Thomas Sowell was about 1991 in the NY Post and he made this exact argument. I have tried it a few times a few times with real people and it always provokes anger. The rule seems to be that ‘fairness trumps effectiveness’.
Yet not one of those who got mad (generally libs or RINOs) ever suspended their own lives to buy supplies and bring them to hurricane ravaged areas. They just sit home comfortably and bask in their warm smugness of being for 'fairness'. Rationing+price controls=fairness
Three linked sources below :
According to AAA, 60 percent of the gas stations in New Jersey and 70 percent on New York's Long Island are closed. That isn't a result of gas shortages, but rather because electricity in the area is spotty and gas pumps require power to operate.
In New Jersey, about 100 consumers have called the attorney general’s office to complain. There are reports of gas stations raising prices by as much as 30 percent in a day and hardware stores charging twice as much for electric generators as they did before Sandy.
That would put merchants in violation of the state's anti-gouging law, which bars price hikes of more than 10 percent in an emergency. New Jersey's law is unusual in that sets a specific price increase threshold in defining gouging. Of the 30 states that have such laws, only seven set a specific level of increase — either 10 percent or 25 percent — that constitutes gouging.
After Sandy, allegations of price gouging (CBS News MoneyWatch November 2, 2012)
TRENTON, N.J. — Motorists in 12 northern New Jersey counties will be allowed to buy gasoline just every other day under an order by Gov. Chris Christie .
Gas lines were long at some gas stations Saturday morning with motorists trying to make purchases before the noon switch to a gas rationing system.
Drivers with license plates ending in an even number will be allowed to buy gas on even-numbered days, and those with plates ending in an odd number can make gas purchases on odd-numbered days.
Christie hopes the rationing will ease long wait times at gas stations and prevent a fuel shortage in the state hard-hit by Superstorm Sandy
Chris Christie Orders Gas Rationing In Some Counties (11/03/12 AOL News@Huff Post)
The New Jersey Attorney General’s Office has brought charges against 65 businesses accused of price gouging in the aftermath of Sandy, the office announced Friday.
Gas stations, convenience stores, restaurants, hotels and stores selling emergency supplies such as generators were among the businesses charged. The businesses are located across the state, but the charges were concentrated in Bergen, Essex, Middlesex, Monmouth, Ocean, and Passaic Counties.
“Fuel, electricity, food, and a place to sleep are not luxuries, certainly not for individuals who have been displaced from their homes and in many cases have limited resources at their disposal,” Gov. Christie said in a statement.
N.J. cracks down on price gouging, ( Philly.com NOVEMBER 2, 2012)
Sure, put a surcharge on the gas to pay the extra expense of using a generator and having an electrician wire it up. Put the generator out where everyone can see it and hear it running. Put a sign on it too explaining the surcharge is paying for the thing.
There is a more practical reason for not interfering with the natural market price mechanism posted here #26 than that.
A'sC picked up on it.
Not bad. That would deter some of the hard feelings.
Like I said, the first time I was introduced to Thomas Sowell was when his editorial appeared in the NY Post around 1991 making the case that gouging should have been allowed in FL after a hurricane because it would result in better consequences than rationing.
I had never heard anyone nuke the conventional popular wisdom with logic before that.
I don’t agree with giving away gas. That a Marxist ploy by britches boy in the White Hut.
I addressed the advocacy of price gouging during a disaster.
You are not “forced” to sell anything
You are though, forced to sell at the governments chosen “fair price” if you sell at all .
You are stuck on Obamas’ fairness BS
And, given your beliefs about the free market, I suspect you’ll be voting for Obama?
No they don't. They prosecute those for selling gas at the price that buyers are willing to pay because stupid voters are seduced by the imaginary concept of fairness, and they don't understand basic economic principles.
In this case allowing raising the price of gasoline to what buyers would pay for it would bring the buyers more gasoline. With these price control laws the voter is saying they would rather have people in their state with no gasoline at all and wait on lines a mile long then let them pay a higher price for actual gas in their tank.
RE Just so you know, price gouging is raising your profit margins on items beyond what is your profit margins were prior to the disaster. So if the widgets cost you more than before the disaster, you can charge more. ”
No that is wrong. Price gouging is raising the price of your product to what the buyers are willing to pay for it. If they can get a better deal else-where they will. Maybe they can drive to PA and buy some cheaper.
BTW : I appreciate your contrary arguments. It makes the thread more interesting and fun.
You are though, forced to sell at the governments chosen “fair price” if you sell at all .
In Christie’s rinoland, you are dealing with rationing. Prices are not fixed. Profits are fixed to prevent lowly scum from benefiting off the suffering of others during a disaster. Really, it can be seen as a fire prevention insurance plan.
When we talk of prices we're talking about rationing by price instead of some other method.
As to desirable consequences the question is desirable to whom? And why?
If the goal is to alleviate the need of the largest number of people to the degree possible during an emergency, that is one goal. If the goal is keeping a supply/demand market going on with supply being able to charge until the demand can't meet the price and lessens that is something else.
If the goal is to restrict supply to those “who really, really need it”, raising prices is not an efficient way to do it.
This is where Sowell is at his best. He describes prices in a market system as a thermometer that tells you your body temperature.
The thermometer reads too high and you better do something about it.
But price controls is like saying the thermometer cant go up too fast regardless of your real temperature because that is unfair.
So NJ drivers get little or no gas at fair prices, and they don't understand why. But it is fair. Or is it?
I’ve read a lot of Sowell’s books. Never read him covering price gouging during a disaster.
Shortages are being caused by electric outages and disabled transportation. This is a special case of a natural disaster causing a temporary small supply. Actually, demand is down too given people are not free to move about and do business as usual so that show how unnatural the supply is when you run shortages in a low demad period.
Then let me be the light that leads you out of darkness.
'Price gouging' in Florida (Townhall Columnists Thomas Sowell 9/14/2004)
That appears to be my job.
He stated the subject had not been discussed much by economists and then went on to a mistaken assumption:
“Charges of “price gouging” usually arise when prices are significantly higher than what people have been used to. Florida’s laws in fact make it illegal to charge much more during an emergency than the average price over some previous 30-day period.”
Price gouging is determined by the profit margin increasing before and after the storm and it has to be done in a court. It’s exact. Either you are taking advantage of people in a disaster or you are not.
That is not the situation in NJ. The shortage is electrical power not gasoline and fuel in the ground may as well be on the moon.
What is needed is either more electricity to the stations or gas from some other outlet or preferably both.
Right now the stations with power are unwilling cartel among stations without power. What sort of market is that?
Right now the market, such as it is, is just about non-functioning. First because of state controls and then because competition is nearly impossible. It's like that thermometer but one with no markings.
If a station raised its prices and I didn't want to pay it, where would I go? No station needs to lower prices to attract customers and no station would lose customers by charging a few cents more per gallon.
It appears to me that no one really knows exactly what their goal is and so it's marathon or not, NG a little bit maybe, union control of work for certain..unless, deliver the goods quickly or let out bids to vendors....on and on...no one seems to know why they're doing what they're doing. They know how but not the why.
You pinged me stating that you never heard Sowell lecture about the benefits of gouging as if his opinion meant something to you(claiming you read his books) . But apparently it was just a bluff by you and you don't care and don't understand what he is saying; based on that response to his editorial on the subject.
Sowell completely destroys the argument for anti-gouging laws. Its not about fairness, we let sellers make money because that works the best for buyers in the long run.
NOW Read it and then explain why Sowell is wrong when he says these laws are bad for us, if you really disagree.
And if you had to pay what others were willing to pay for gas then it would be profitable for other closed stations to buy gas powered electric generators to get their stations pumping gas. Then you would have some gas rather than none.
You (NJ voters) are just causing them to do nothing and sit home and watch you all on TV in 3 mile lines wondering why life is so unfair when you support such fairness laws that NJ passed.
Prices are not just arbitrary numbers plucked out of the air. Nor are the price levels that you happen to be used to any more special or “fair” than other prices that are higher or lower.
What do prices do? They not only allow sellers to recover their costs, they force buyers to restrict how much they demand. More generally, prices cause goods and the resources that produce goods to flow in one direction through the economy rather than in a different direction.
'Price gouging' in Florida (Townhall Columnists Thomas Sowell 9/14/2004)
Sowell wrote: “What if prices were frozen where they were before all this happened?
Those who got to the hotel first would fill up the rooms and those who got there later would be out of luck — and perhaps out of doors or out of the community. At higher prices, a family that might have rented one room for the parents and another for the children will now double up in just one room because of the “exorbitant” prices. That leaves another room for someone else”
Maybe. But I ask why the fastest runner to the hotel should not have the room instead of the person with the bigger wallet? If rooms are four times the normal price the person with money can also rent two rooms, one for the kids and one for mom and dad. Maybe one for the pets too.
How is that any better than the poorer bloke renting two rooms? Or the fastest runner?
The higher price in an emergency certainly would benefit the hotel owner..the higher price might cause some to double up in one room if local laws allow it.
But what of the couple without children? It's just as cold outside for them as for the single guy with more money than them.
So “gouging” would benefit some and hurt others. It's just a matter of who we want to favor and why. That's why I say prices are a form of rationing and raising or lowering prices by any means always benefits some and harms others.
Well if its six to one, half a dozen to the other, why let the government be the arbitrator?
In my experience, its better to let the "invisible hand" rule.
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