The Noncrime Known as “Price Gouging”
Thank goodness for the First Amendment and social media! The former has allowed amateur comedians to flourish and share their wares via the latter, mostly in the form of humorous memes. It’s come in handy by providing comic relief as concern about the coronavirus outbreak has swept the land.
I took a stab by offering a quip about the stash of wine bottle corks my wife and I have stockpiled over the last few years. I drew a link between that surplus and the baffling run on, and subsequent shortages of, toilet paper.
The reader can take it from there (depending on my comedic skills), but it offers a good lesson on the practice known as price “gouging.”
After Governor Greg Abbott “issued a statewide disaster declaration” Friday, March 13, Attorney General Ken Paxton reminded the public that it is against Texas law for “any person or business selling goods” to “unreasonably raise the cost of necessary supplies.” Similar laws exist in two-thirds of the other states.
In economic parlance, such laws are examples of price controls, these in particular being of the ceiling variety. (The minimum wage is a classic illustration of the opposite, a price floor.)
Prices are one of the most organic conveyors of information: is there a surplus of raw materials, pushing prices down? Is a tight labor market driving up the cost of that input? Is transporting the final product to market easy and inexpensive? Is demand outs
Article from Mises Wire