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Economics is not one of NJ Governor Chris Christie's strong suits (see: The Revel Casino and Xanadu). Then again, understanding economics is not a prerequisite for any Governor.
The NJ Blowhard, however, has an opportunity to showcase his economic ignorance with the arrival of Hurricane Sandy. And he doesn't let the opportunity pass.
Murray Sabrin emails in an article from The Courier Post that states:
“During emergencies, New Jerseyans should look out for each other — not seek to take advantage of each other,” the governor said. “The State Division of Consumer Affairs will look closely at any and all complaints about alleged price gouging. Anyone found to have violated the law will face significant penalties.”Translation: If you live in NJ, you can forget about the market price and voluntary transactions. The pre-crisis prices must be kept. They are not allowed to adjust to the new market conditions.
Christie would much rather see empty shelves, like the one that Bob posted earlier today, than a supply that's at least available, but at a higher price.
Christie should just round out his ignorance after the hurricane passes, and proclaim that the disaster is actually a great blessing for NJ, because it has sparked economic activity.
Stay tuned.
For a lot of people the rationale for govt being needed and being the benevolent one comes from exactly here. A typical argument would be - oh so you think that in the time of calamity those that are rich and can pay for the bread should only survive and others should die of starvation? It is more kind to die of starvation if you did not reach the store in time than to die because you cant pay for it.
ReplyDeleteFrankly i do not know how to respond to such a criticism. Keep in mind this is the case of unexpected circumstance, sudden tragedy. Presumably the supply cannot adjust quickly to bring the price down.
Note: I do think that in life threatening situations such as Sandy people are charitable on their own and no govt. decree is needed but that doesnt answer the question above. Also supply from other states is not possible due to problems of travel.
the argument is simple, if the price remains the same then it will be those first in who will buy the lot whether they actually need it or not then there will be nothing for those who come after, rich or poor. Raising the price asks the buyer to consider if he actually needs to spend X on Y, considering supplies will be back to normal, given a free market, in a while.
ReplyDeleteFor one thing, a LOT of people move to "hoard" (for lack of a better term) supplies/provisions before and during a catastrophe. There is nothing wrong with this, and in many cases it is a wise choice. The flip side of hoarding however, is that only a few people end up carrying the majority of supplies - most of which will go unused during the acute phase of any catastrophe. Thus, adjusting the price upward will result in people only purchasing those items that they truly feel that they need, thus leaving some supply for others to buy what they need.
ReplyDeleteFor example, if we all need to drink 2 quarts of water / day to survive, and water will be out for 3 day, each person needs 6 quarts of water. If the price / quart is raised to $50, people will only buy what they suspect they will need until the acute phase of catastrophe is over and the water service will be restored. If the price however is only $1 / quart, then a few people will be able to purchase hundreds of quarts for their own use (just in case), which is fine, but then many people will be left with no ability to purchase water at any price, and thus will die. If you vote for price controls you are voting for death.
Perfect! I applaud your concise description and clarity!
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