So, there was this guy, see, who thought he could make a fortune out of the coronavirus. Buy up hand sanitizer from rural stores and sell in the Big City. Or, perhaps, online. And then Amazon said he couldn’t charge a permium. And e-Bay wouldn’t allow him to sell at all.
The reason? Because of the anti-price gouging laws in many US states. Huzzah therefore, the people have been saved from the evil capitalist.
Except that’s not what is the end result:
So by denying the Colvins the profits of their price gouging, the government is wrecking economic incentives. The next time something’s in short supply in one place and available in another, no one will bother to move it. No one will bother to get people what they need and demand — at least, not in the proper quantity. A shortage will only be worsened by the same laws meant to address its damages.
Killing the incentive to move things from low-valued uses and places to those with higher values will not end well. Unless, that is, we’re just tired of this whole “living in a rich and bountiful society” thing.
We might think it trivial, stopping some profiteer in an emergency. We might even think it righteous. We’d be wrong on both counts. The very reason we’re in a rich place and time is that people do add value. And those bottles sitting in rural pharmacies had no value: People weren’t buying them, right? Yet they had, before the law stopped it, great value at their destination: People were buying them off Amazon and the like en masse.
So why do we stop people from doing this? Sadly, such is the political misunderstanding of economics that we are actively using the law to make society poorer.
Well done peeps, very well done indeed.