Roll On, Empire, Roll On

Price Gouging Laws

Ike disrupts gas flow in WNC
Asheville Citizen-Times | September 13, 2008 . . .

The above article states that, "[NC Gov.] Easley said consumers should not be seeing prices increase much more than 20 cents per gallon."

How does a government official know what the price of gasoline should be?

The article further states that, “’The run on gas is creating a crisis before there is a crisis,’ AAA spokeswoman Carol Gifford said."

This is exactly correct. Panic is making a temporary resource shortage worse and is causing pumps to dry up.

The price should be able to fluctuate freely to direct these resources to where they are most needed. “Price gouging” laws are exactly the wrong thing to do.

The gas stations that are running out of gasoline did not raise their prices high enough. And why? The natural economy is now against the law.

Sorry: fire trucks, ambulances, police, buses. We ran out of gas because the prices were too low. What caused prices to remain lower than they would have in a natural economy?: the government.

Gov. Mike Easley declared a state of “abnormal market disruption,” a move charging Attorney General Roy Cooper with enforcing the state’s price gouging law.

Thanks, all-knowing government for once again interfering in the marketplace and for once again getting it wrong.

Triple-A says some North Carolina stations have placed restrictions on the number of gallons people can buy, but cautions the worst thing drivers can do is flock to filling stations to top off their tanks.

True.

One important function of prices is to signal to the consuming public the available supply of a valuable product or resource. When the true picture of that availability is skewed by government intervention, the consumer cannot get an accurate picture. This causes malinvestment and false scarcity.

When panic is in the air and the government forces businesses to fake reality and keep prices low, then this is a recipe for a real disaster.

**UPDATE** from Mountain Xpress:

bobaloo wrote: “‘How does a government official know what the price of gasoline should be?’ Because that’s part of their job. You know, economics.”

Economics is not the proper job of the government. Government interference in economics is improper. Moreover, it is unconstitutional. The proper role of government is the protection of individual rights—and no more.

ashevillerock wrote: “i’d be terrified if i saw an ambulance at a bp”

I have not mentioned BP or any other commercial or noncommercial outlets for local gasoline supply. Besides, there are other non-emergency activities where critical resources should be diverted. Prices help drive those resources to their best, most important uses. A city-dweller topping off two cars and a lawnmower ain’t it.

zen wrote: “I think you’ve romanticed free market capitalism and confused the freedom of the individual with the rights of people with money to do whatever the f*ck they want because they have the power to do so.”

No, I have not confused these things. Capitalism is a social system of freedom. Freedom is supported by limited government and a rule of law. The Declaration of Independence makes this case and so do I. Any social system that is not circumscribed by a rule-of-law that protects individual rights is not free.

PatD wrote: "Unbridled capitalism leads to the ridiculous mess we are in today. "

This is not correct. It is government interventionism that has led to the "mess we're in today." The Federal Reserve is a private bank sponsored by the U.S. government. The Federal Reserve Act was signed into law in 1913 and allows this central bank to print money (look at a dollar) and control the economy. Lobbyists curry favor among elected officials. Insolvent corporations do not bail themselves out.

Rob Close wrote: "I do see how all the businesses raising their prices equally at once is in clear violation of Anti-monopoly laws. Those laws are there to keep Capitalism working smoothly"

Anti-trust laws are there to allow one business to use the coercive force of the government to eliminate competition in the free market.

ashevillerock wrote: "Did i read this right? So you don’t think that the government should be interfering in this situation but you think we need our individual rights circumscribed by laws? Are these price gouging laws not the circumscribing laws you’re speaking of? If these laws were not in place we’d be less free? Yet they’re still wrong? "

This is not what I said. The government is (and should be) instituted to protect individual rights. Price gouging laws violate a property owner's right to trade freely in a natural economy.

ashevillerock wrote: "is raising gas prices an effective and reasonable deterrent from buying gas in a time of panic (apparently there’s no shortage, just a panic)?? "

Yes. This is the free market solution to scarcity. One important function of prices is to signal to the consuming public the available supply of a valuable product or resource. When the true picture of that availability is skewed by government intervention, the consumer cannot get an accurate picture. This causes malinvestment and false scarcity. When panic is in the air and the government forces businesses to fake reality and keep prices low, then this is a recipe for a real disaster.

Cheshire wrote: "Without government intervention via laws passed, the 'true free market' would have been dominated by monopolies long ago."

Monopolies are not possible in a 'true free market.' A free market would be open to competition but protected from predation.

Only the government can establish a coercive monopoly. Government intervention, or corporations using government, use force to eliminate competition.

Molton wrote:


Molton perpetuates the fallacy of “price gouging.” I echo the comments of Thunder Pig: “There is no such thing as price gouging.” However, Molton inadvertently makes an unintended point: no consumers have to shop at his fictitious gas station selling gas at very high prices. Individual retailer’s raising prices above market opens the door for entrepreneurs to enter the market and under-sell competitors for a profit.

**UPDATE** from Scrutiny Hooligans weblog:

Clarence Young: Too bad, “gouging” was not allowed. We would have the availability of gas. The government has caused this problem by clamping down on gouging. If some gasoline dealer priced his gasoline at $8 per gallon or more, he would likely have gas. The customers would come in and buy the least amount possible–not the most they could cart away to hoard. Yours in hoped for liberty!

Gordon Smith: Right! Then the people with expendable income could drive to work, and the poor could just suck it up and deal with it. Libertarianism is fun! (if you have some money)

Clarence Young is quite right.

Gordon, everyone has expendable income — even the poor (like meeeee-eeeeee). Sometimes discretionary funds can be found in cash or debt, sometimes in physical assets, or just in time and effort. Even charitable efforts can help the poor surmount difficulties.

The important aspect is that the natural economy should be able to provide important economic information to the community to its greatest possible benefit. And this information should be honest.

The function of price should be allowed to operate freely and without government interference to give consumers an accurate picture of the supply of a value and the varieties of demand being placed on that value over time.

Instead, what we have is the government forcing business owners to falsify the true picture of gas supplies by keeping prices low. Forcing prices to be too low allows for the full range of non-essential consumption that has led directly to gas outages across the region.

Gas stations should have been able to raise prices by calculating current supplies, changes in demand, and anticipation of renewed supplies. Ideally, a station should raise prices to ensure that there is still a gallon left when the tankers arrive.

$8.00 per gallon for a few days is far better than free gas that ain’t there.

Yes, libertarianism is fun.

bobaloo says: Clarence, the market could still self-regulate by not allowing people to buy unlimited gas. Doesn’t this make as much sense?

Rationing can make sense in certain instances, such as concert ticket sales. But it is a poor substitute for the effectiveness of pricing in a free commodities market.

The key problem with rationing is that it is arbitrary: Who will use what formula to determine which consumers deserve how much gas for which uses and for how long? No one has this information. These are all functions of a free market that are circumvented by an arbitrary, coercive and ultimately unfair contrivance.

Rationing takes away the decision-making power of individuals. With freely fluctuating prices, individuals remain free to make economic decisions that best suit their conditions and abilities. Individuals are the better decision-makers in this case, not central planners.

**UPDATE** from Scrutiny Hooligans weblog:

Thunder Pig: The Press Conference yesterday was a total waste of time.

Among other things, I was especially disappointed in the comments made by Rep. Charles Thomas, who has in the past held better public policy views. He was, in a somewhat mean-spirited manner, essentially threatening honest and struggling business-people with oppressive and punitive government legislation; which type of intervention is already responsible for exacerbating a mild, short-term tightening of supply.

His focus is entirely misguided. He should pivot and take a look at the myriad interferences by governments that set in motion the domino effect of economic error.

---

RELATED

What to Do About Gasoline Prices
by Alex Epstein | ARI Media | March 27, 2007
In response to recent rises in gas prices, we are once again hearing calls for the government to "do something" to force prices lower. But no matter what the price of gasoline is, such calls are wrong. All market fluctuations in the price of gasoline, up or down, are a good thing—and none of the government's business.

How Katrina Turned Off the Oil
Platts Oilgram News | August 31, 2005
An on-the-ground look at where Gulf Coast refiners and pipeline operators stand in the aftermath. For some, it isn't pretty.

N.C. price-gouging law promotes gas lines, shortages
Dr. Roy Cordato | John Locke Foundation | September 15, 2008
Consumers can blame North Carolina's price-gouging law for the gas lines and shortages appearing in the wake of Hurricane Ike. That's the assessment of a John Locke Foundation analyst who has studied the unintended consequences of price-gouging legislation.

Do Hurricanes Cause Shortages?
Art Carden | Mises Institute | 9/15/2008
Hurricanes don't cause shortages, however. Price controls do.

How To Solve This Atlanta Gas Shortage
Neal Boortz | Sep 27, 2008 (no permalink)
So, how do you stop the panic buying? Easy. You let the market do what the market does.

Politically Contrived Gasoline Shortage
Craig S. Marxsen | The Independent Review | Spring 2008
Regulatory obstruction of investments in gasoline refineries is probably a more significant threat to the affordability of gasoline than any approaching exhaustion of oil reserves. Reestablishment of refiners’ reasonable property rights and adoption of strict liability as the major instrument for controlling carbon dioxide and refinery pollution might end what otherwise may become an ever-worsening, regulatory-induce “energy crisis.”

Gas sellers accused of gouging will repay drivers
Jordan Schrader | Asheville Citizen-Times | October 21, 2008
Gas stations in Western North Carolina will repay motorists $2,320 that Attorney General Roy Cooper says they overcharged, according to a legal settlement filed Monday.

How The Price System Works [video]
Jörg Guido Hülsmann | Mises Institute | October 07, 2008
Recorded during the 2008 Mises University, Jeffrey Tucker interviews leading Austrian Economists on the topic of Henry Hazlitt's classic book "Economics in One Lesson." (Interview 9 of 12) [27:38]

Mumpower on Drugs

With a federal (or any other) war on drugs, the government creates crime where there was none.

Crimes associated with the black-market illicit drug trade are a consequence of prohibition coercively imposed by the government on an otherwise free people.

However, the essential immorality of prohibition does not absolve violent criminals of their responsibility for their crimes, in so far as they cause injury to others. Drug lords, in the private or public sector, do in fact cause harm to others through threats, intimidation, and force and compel many to live in an atmosphere of violence and fear. Those criminals must be held to account for violating another person’s individual rights regardless of the political errors that led to their underground trade. Innocent individuals, and others, are negatively effected by the criminal culture attending prohibition.

Dr. Mumpower’s personal opinion of drug abuse notwithstanding, in his official capacity he sees the drug problem primarily as a public safety issue and has taken active steps to address this aspect of the problem.

He has also over-reached in his zeal. I have complained about that and found Dr. Mumpower open to persuasion.

As a local public official he cannot repeal prohibition, but he can promote solutions to some crime problems resulting from making certain peaceable, voluntary personal behavior illegal. This is a tough position for a public official to be in; that is, personally opposing bad laws they are nonetheless sworn to uphold.

Dr. Mumpower shares Dr. Ron Paul’s view of the federal war on drugs: both believe that this war should be ended.

Godspeed, good doctors.



RELATED

Federal Drug War Rethought
Bob Barr | Huffington Post | September 10, 2008
"As both a U.S. Attorney and Member of Congress, I defended drug prohibition. But it has become increasingly clear to me, after much study, that our current strategy has not worked and will not work. The other candidates for president prefer not to address this issue, but ignoring the failure of existing policy exhibits both a poverty of thought and an absence of political courage. The federal government must turn the decision on drug policy back to the states and the citizens themselves..."

Living Wage

Minimum wage increase gets passed on to consumers
Scott Clifton | Asheville Citizen-Times | September 10, 2008...

"The first thing that happens when a price is raised on a good or service is that consumers will not buy it as much — or at all. And the first thing that happens when the minimum wage is raised, say, to $8 an hour, is that no employer who believes an employee is not worth his “price” of $8 an hour will be employed at all. It is impossible to make someone worth a certain amount by making it illegal for anyone to offer him less."

COMMENT ON LTE:

The writer makes excellent comments and shows how this government interference in the natural economy is not wrong because it's impractical, but impractical because it's wrong.

RELATED

Minimum Wage Causes Maximum Pain
Burton W. Folsom | Jun. 1, 1998
Sixty years ago on June 25, 1938, President Franklin Roosevelt signed into law America’s first minimum wage: 25 cents an hour, rising to 40 cents an hour over the next seven years, which is equivalent to almost $5.00 in 1998 dollars. Today, many increases later, Senator Ted Kennedy of Massachusetts is pushing for yet another hike in the minimum wage. Now is a good time to reexamine the origins of this important law and its impact on the job market...

McBama

RELATED

McBama vs. America
by Craig Biddle | Objective Standard | Fall 2008
As the 2008 presidential election nears, and while John McCain and Barack Obama struggle to distinguish themselves from each other in terms of particular promises and goals, it is instructive to observe that these candidates are indistinguishable in terms of fundamentals.

When did the idea of freedom become a political orphan?
Steve Chapman | Chicago Tribune | September 7, 2008
Forty-four years after Goldwater's declaration, it's clear that collectivism, not individualism, is the reigning creed of Republicans as well as Democrats. Individuals are not valuable and precious in their own right but as a means for those in power to achieve their grand ambitions...[The idea of freedom] got lost somewhere between Thomas Jefferson and John McCain.

Abortion Politics

LETTER TO THE EDITOR:

Obama too pro-choice to receive vote for president
by Andrew Dunn | Asheville Citizen-Times | August 21, 2008

As a Roman Catholic, it is unfathomable to even think about voting for Barack Obama. Not only is Obama the most pro-abortion member of the Senate, earning an A-plus from the likes of Planned Parenthood and NARAL, his record has proven his support for the heinous act of partial-birth abortion — a gruesome, torturous procedure where a scissorslike contraption punctures and collapses a third-trimester child’s skull. Sounds like something Dr. Mengele would have performed at Auschwitz.

ONLINE COMMENT TO LTE:

1. The writer wants to use the coercive power of government to impose his own peculiar moral and religious views on all others. This is the movement toward theocracy and it is antithetical to America's purpose and significance in world history.

2. His lurid descriptions of surgery are an appeal to emotion. It is intended to gain sympathy for a wider religion-based abortion ban movement. This movement must be opposed vigorously; as all such religious-based political tendencies must.

3. The writer also says,

Obama promised that if elected president he would sign the Freedom of Choice Act, which would cancel every federal, state and local regulation on abortion, as well as abolish all restrictions on taxpayer-funded abortions.

This is precisely what should happen. I oppose interference in these matters by the federal government. This is not a constitutionally mandated function. These, and many more issues besides, should be resolved by the individual states. This can be achieved by "canceling every federal, state and local regulation on abortion" and beginning again where the founders left off: with extra-constitutional legislation originating in the sovereign and independent states.

If the "Freedom of Choice Act" does anything to reverse the loathsome encroachments of religionists into the domain of secular politics and governance in a pluralistic society, then I heartily support the Act.

FURTHER READING

Purpose-Driven Politics
by Kathleen Parker | August 20, 2008. At the risk of heresy, let it be said that setting up the two presidential candidates for religious interrogation by an evangelical minister -- no matter how beloved -- is supremely wrong.

More Americans Question Religion's Role in Politics
Pew Research Center | August 21, 2008. Some Americans are having a change of heart about mixing religion and politics. A new survey finds a narrow majority of the public saying that churches and other houses of worship should keep out of political matters and not express their views on day-to-day social and political matters.

Religion vs. America
by Leonard Peikoff. "A specter is haunting America--the specter of religion..."

Amendment 48 Is Anti-Life
by Ari Armstrong and Diana Hsieh | Coalition for Secular Government. Amendment 48, the ballot measure that would define a fertilized egg as a person with full legal rights in the Colorado constitution, is profoundly anti-life. It would obliterate basic reproductive rights in Colorado based solely on the faith-based fiction that a fertilized egg is the moral equal of a born infant. The biological facts show just the opposite: that only the pregnant woman, and then the born infant, are persons with rights.

The Tragedy of Theology: How Religion Caused and Extended the Dark Ages
Andrew Bernstein | The Objective Standard | Winter 2006–2007

Offshore Drilling

LETTER TO THE EDITOR:

Offshore drilling: short-term fix, not a solution
by Benjamin Ossoff | Asheville Citizen-Times | August 20, 2008

. . . drilling off our shores is not a solution but a futile short-term action to no benefit.

ONLINE COMMENT TO LTE:

Straw man argument.

Offshore drilling is not intended to be a "solution." It is one of many means of increasing domestic oil supply. This is a positive value and the marketplace should be unleashed to pursue it. Increases in supply help to satisfy demand and lower prices.

If offshore drilling was indeed a "short-term action" with no prospect of any benefit to any parties, then a free market would take pains to avoid that and any other similar action.

FURTHER READING

Investigate Big Congress, Not Big Oil
by Alex Epstein. "With gasoline prices exceeding $4 a gallon in some states, politicians are responding as usual: Blame Big Oil First..."

Open ANWR Already!
by Jon Basil Utley | Reason Magazine | August 14, 2008. The media constantly repeat the claim that it would take a decade to get the Arctic National Wildlife Refuge (ANWR) into oil production and about as long for offshore continental oil to start flowing. Most accounts promote the views of extreme environmentalists to make the issue appear so hopeless that we must instead "change our way of life" rather than tap into proven oil reserves. In July, CNN repeatedly reported that offshore drilling would take "seven to 10 years" to get into production. Yet Brazil's Petrobras expects its new finds in extraordinarily deep waters to already be producing 100,000 barrels per day in just two years. What is wrong with American oil companies that they would take so long?...

Time for Liberty

It's time.

Ron Paul Rally

Ron Paul Revolution Rally
Washington, DC
July 12, 2008

These are a few photographs that I took during the march and rally. (Click the center of the photograph to enlarge the slide show.)



FURTHER READING

The Ron Paul Revolution March Experience | by Marc Gallagher | July 13th, 2008

VIDEO

Ron Paul Rally | Ron Paul for President 2008

Naomi Wolf at the Revolution March (with blog post)

Introduction to Economics

Video: Introduction to Economics

by Jorge Besada

Introduction, in four short videos, that helps show how individual freedom and privatization are the keys to a prosperous social order regardless of what our intuition and fears might have us believe. Introduces viewers to "the market process" and how this economic process is what creates a prosperous social order and how government bureaucracies and regulations do great damage to society. The concepts mentioned here are discussed in more detail in my book "Economics, the Social Order, and the Ron Paul Revolution."

CONTENTS

1. Wealth, Production, Action, Value, Trade. This video begins the introduction to economics and explain basic building blocks like the nature of wealth, society's continuous cycle of production and consumption, human action, value and trade. The concepts mentioned here are discussed in more detail in my book "Economics, the Social Order, and the Ron Paul Revolution" which can be purchased from amazon.com here:

2. Economic Growth = Prosperity; Competition. This video provides an example that shows how the concepts of production, consumption, human action, value and trade all work together to shape the social order. Then it shows how we should be concerned about economic growth and realize that as the economic pie grows everyone will inevitably get a bigger slice of prosperity. Finally it introduces the concept of economic competition.

3. The Interest Rate and Savings. This video discusses the role that the interest rate and savings play in the economy.

4. Government Bureaucracies and Regulation. This video discusses the inherent inefficiencies in government as well as the disastrous effects of government regulation. Special attention is paid to the health care sector's Food and Drug Administration and American Medical Association.

Video Playlist

AUDIO

"What Has Government Done to Our Money" by Murray Rothbard, as read by Jeff Riggenbach.