Dan McLaughlin

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To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	© 2006 Daniel J. McLaughlin Price Gouging Citrus Growers The nerve of those farmers in California. One series of disastrous frosts and they think they can jack up the price of my orange juice to sky high levels. Recently, the far west got hit by a string of subfreezing nights, and a marketing company representative said “If you bought an orange at the supermarket for 50 cents, expect to pay a dollar to $1.49 for it.” And there was not even a major hurricane. Obviously, the greedy farmers are price gouging. They are raising their prices to us, the poor consumers, who depend on OJ to start us up in the morning, to power us through the day and to keep the common cold at bay. With all of the highly touted economists and Attorneys General that showered us with their wisdom during the high energy prices, someone needs to educate those farmers that the market has nothing to do with prices. It is only their greed that takes advantage of mishaps of nature to rape us defenseless consumers. I am sure that most readers will recognize that this is tongue in cheek. For those who might not catch the drift, I make the following disclaimer – this is sarcasm. Obviously, the market has something to do with prices. In fact, it has everything to do with prices, at least in a free market. While there hasn’t been a truly free market in this country for many decades, it has been free enough for the basic mechanisms of the market to function. When the supply of oranges is drastically cut, the price will automatically and uncontrollably rise. Everyone knows that and expects it. It is entirely appropriate and good for that to happen. It is the only way for the market to allocate those scarce resources to those who value them the most, and prevent more severe shortages. When major production facilities are damaged and the supply of gasoline is reduced by devastating hurricanes, the price will just as inevitably go up. Attorneys General who think they are putting on the white hat to rescue consumers with charges of price gouging are actually putting on dunce caps. They are proving their ignorance of economics and their lack of concern for the constitutional principles of individual freedom and government restraint they were elected to uphold. What all interventionist politicians, self-important, ivory tower academics and would-be dictators ignore is that the market will function, whether they like it or not, whether they think their way is better, and even if they have a thousand studies to prove that it will not work. For every intervention they impose, the market reacts in inconvenient but predictable ways. It has to because human action is based on human logic. Humans react to impositions like they always have. A market is individual people making individual decisions, not some homogenous aggregate or social conscience of moldable clay. Legislated price floors above the market cause surpluses for marginal goods, in every instance, whether for apples, automobiles or burger flipping teenagers. Price ceilings below the market cause shortages, whether for oranges, gasoline or San Francisco apartments. Every controlled economy has what is euphemistically called an informal economy, a black market. What the consumers cannot get from the official market because of distortions and restrictions by government, they get through the black market. The black market is very efficient because it operates without the official barriers that the formal economy has to deal with. Most economic dictators are aware of black markets, but put up with them because they cannot do without them. Even in America, there are thriving black markets, because people do what it takes to get what they want. Social engineers fool themselves and their gullible followers into believing that they can craft a “good society” based on their own concept of good. They seek to coerce people to follow their footsteps, even though the path leads over the cliff. What is good for the social engineer is not what is good for the rest of society. Only individuals can decide what is good for themselves. In the case of our orange growers and orange buyers, they will decide for themselves what price is the right price, based on their own judgment and values, just the way it should be in every case. Price gouging is only a term to justify the actions of hyperactive government, and has no place in the vocabulary of a free society.
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Daniel Mclaughlin Copyright © 2006 [Daniel McLaughlin]. All rights reserved. Revised: 03/18/08

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Price Gouging Citrus Growers

The nerve of those farmers in California. One series of disastrous frosts and they think they can jack up the price of my orange juice to sky high levels. Recently, the far west got hit by a string of subfreezing nights, and a marketing company representative said “If you bought an orange at the supermarket for 50 cents, expect to pay a dollar to $1.49 for it.” And there was not even a major hurricane.

Obviously, the greedy farmers are price gouging. They are raising their prices to us, the poor consumers, who depend on OJ to start us up in the morning, to power us through the day and to keep the common cold at bay.

With all of the highly touted economists and Attorneys General that showered us with their wisdom during the high energy prices, someone needs to educate those farmers that the market has nothing to do with prices. It is only their greed that takes advantage of mishaps of nature to rape us defenseless consumers.

I am sure that most readers will recognize that this is tongue in cheek. For those who might not catch the drift, I make the following disclaimer – this is sarcasm.

Obviously, the market has something to do with prices. In fact, it has everything to do with prices, at least in a free market. While there hasn’t been a truly free market in this country for many decades, it has been free enough for the basic mechanisms of the market to function. When the supply of oranges is drastically cut, the price will automatically and uncontrollably rise. Everyone knows that and expects it. It is entirely appropriate and good for that to happen. It is the only way for the market to allocate those scarce resources to those who value them the most, and prevent more severe shortages.

When major production facilities are damaged and the supply of gasoline is reduced by devastating hurricanes, the price will just as inevitably go up. Attorneys General who think they are putting on the white hat to rescue consumers with charges of price gouging are actually putting on dunce caps. They are proving their ignorance of economics and their lack of concern for the constitutional principles of individual freedom and government restraint they were elected to uphold.

What all interventionist politicians, self-important, ivory tower academics and would-be dictators ignore is that the market will function, whether they like it or not, whether they think their way is better, and even if they have a thousand studies to prove that it will not work. For every intervention they impose, the market reacts in inconvenient but predictable ways. It has to because human action is based on human logic. Humans react to impositions like they always have. A market is individual people making individual decisions, not some homogenous aggregate or social conscience of moldable clay.

Legislated price floors above the market cause surpluses for marginal goods, in every instance, whether for apples, automobiles or burger flipping teenagers. Price ceilings below the market cause shortages, whether for oranges, gasoline or San Francisco apartments.

Every controlled economy has what is euphemistically called an informal economy, a black market. What the consumers cannot get from the official market because of distortions and restrictions by government, they get through the black market. The black market is very efficient because it operates without the official barriers that the formal economy has to deal with. Most economic dictators are aware of black markets, but put up with them because they cannot do without them. Even in America, there are thriving black markets, because people do what it takes to get what they want.

Social engineers fool themselves and their gullible followers into believing that they can craft a “good society” based on their own concept of good. They seek to coerce people to follow their footsteps, even though the path leads over the cliff. What is good for the social engineer is not what is good for the rest of society. Only individuals can decide what is good for themselves.

In the case of our orange growers and orange buyers, they will decide for themselves what price is the right price, based on their own judgment and values, just the way it should be in every case. Price gouging is only a term to justify the actions of hyperactive government, and has no place in the vocabulary of a free society.

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