|
| Price fixing causes shortages... | | Date Created: Nov 08, 2005, 10:35 PM |
 There are some truisms that are true -- simple rules that are really simple. The situation is complex but the underlying principles are not.
Welfare results in dependency
Discrimination for is as bad as discrimination against
Power and money corrupt
and Price fixing causes shortages
Here's Paul Jacob's Common Sense:
"When the state of Hawaii set up a gasoline price control scheme last month, I predicted the usual results of government price controls: shortages. Now I've been proven right.
What Hawaii does is set a new legal wholesale ceiling price each week -- to take effect the next week. When the state forces the ceiling lower than the market rate? Chaos. In the form of shortages.
According to the Honolulu Advertiser, a number of gas stations have run out of gas -- repeatedly. Barney Robinson, a Chevron station owner, said this was like "a newspaper running out of ink." The week-ahead price notifications make speculators of consumers, who tend to bunch up their gasoline purchases. Causing runs. Causing stations to run out. Before price controls, one runout per month was considered unacceptable. Since the price caps, Robinson's station's suffered FORTY "runouts."
Consumers, seeking the best deals, tend to wait for each price drop, running on fumes through the weekends. In another fascinating article, we read that the number of drivers getting stranded because they've run out of gas has skyrocketed. Talk about the ultimate in "gas shortage" -- if not quite one that I predicted. Still, a shortage is a shortage, at the gas station, or in your car's tank.
You see, prices are signals. They help us plan. Fiddle with the signals, like controls do, and our planning goes all out of whack.
For being right on this, don't award me a Nobel. This is really basic stuff.
Indeed, it's Common Sense." |
|
|
|
|
|
