If we have demand for something rising then we’d like to have some method of achieving two related things. Firstly, we’d like to sort through that risen demand in some manner and work out who should get those things there aren’t enough of. We’d also like to increase supply of those things so that the demand can be met.
We have a method of doing that – the price system:
The imposition of anti-price gouging legislation makes no economic sense and would have the opposite of the desired effect
Have you tried buying hand sanitiser this week? By all accounts, store shelves have been emptied of the stuff, in the wake of public health warnings about the coronavirus.
Social media is full of images of unfilled racks at supermarkets or chemists, with laments about how panic buyers are hoarding products away from those with compromised immune systems “who really need it”. As a result of the backlash, Boots is now even rationing purchases to two per customer.
Or, as someone more extreme even than Cato in this free market stuff points out:
Markey goes on to ask, “At what level is an item considered unfairly priced?” There is only one possible answer to that: the price which no one will pay. If someone will pay the price, then it’s fairly priced to them. If they didn’t think it was worth it, they wouldn’t buy it. The end.
The value of something is individually determined and cannot always be easily ascertained by observers in Washington, such as Markey. I, for example, place a negative value upon the “music” of Justin Bieber. Millions upon millions disagree with me and are willing to pay for his “music.”
The fair value of a product is what we, consumers, are willing to pay.
If boxes of face masks are $10, sure, I’ll have one. But if they’re $400, I’ll pass — only people in true need will pay that much. The result? I end up not using a face mask to feed my cat while a doctor does get one to treat sick patients.
This is the miracle of the price system. Or, as Markey would call it, “price gouging.” I say, all hail price gouging! And fie to the fools who would stop us using the only efficient allocation method we’ve got.
Then again, sadly it’s possible to get fired for telling people these obvious truths.