The conservative National Review Online writes this:

Gouge On
A defense of gas profiteering.
By Jerry Taylor
[How] should we ration our limited pool of gasoline? In a free market, scarce goods are typically rationed by price. People who value gasoline most are willing to pay higher prices than those who value it less. The former get the gasoline – the latter to some extent go without. Allocating resources to those who value them most is one very important reason why our economy outperforms economies where resources are allocated by political action.

It all sounds reasonable from libertarian point of view. But what happened to the argument that gas prices are crucial to the economy? In particular, that they are vital for small businesses and consumers? This argument suddenly disappeared… May suddenly troubled businesses and consumers drop dead?

Price controls, however, come at a cost. Lower prices result in more demand for fuel than do higher prices. That’s why the first thing we notice about price controls is that they lead to shortages. Price to the left of the intersection of the supply-and-demand curve and you are guaranteed to vaporize whatever you are attempting to keep inexpensive. It happened in 1973 when President Nixon imposed price controls on oil – gasoline lines were the result. It happened in 2000/2001 when California Governor Gray Davis refused to lift retail price controls on electricity – blackouts soon followed. Empty shelves are the defining feature of markets where price controls are in place.

We may argue about blame proportions in the cited energy crises. For example, one may reasonably say that pure free market is not sufficiently good in anticipating or preparing for these crisises.

Once a crisis happens, we have a choice: do we try to control or influence the reigning chaos, or do we leave everything and everyone to fate’s mercy.

On the long term, it is best to let the free market determine prices, there is no doubt here. But under sudden emergency, is it the most crucial thing to defend opportunities of the few disproportionally lucky? What is wrong in giving numerous people and enterprises a better chance to survive and adopt to new circumstances? Would it be the end of the world if we would have long queues for a week? Is temporarily shortage more terrible than ruined “American dream” lives?

We may not control all intentions and economic eagerness at critical moments, but it certainly seems tolerable to make moral appeal for solidarity from all sides, the vital supply side included. That may save many better lives, and may keep the economy more stable.

The “price control” issue has also the other side of keeping prices above the “natural” level. Then we have precisely the same arguments (“People who value gasoline most are willing to pay higher prices than those who value it less. The former get the gasoline – the latter to some extent go without, etc“) that nothing is horribly wrong, even better, there are no terrible shocks. Or is the something horrible?

Of course, libertarians then probably get back to the “non-efficient economy” litany. But the efficiency has the price of short-sightness. It is even very ironic to require most efficient conduct and impulses from a “good” government when the same ideology says that no government can regulate economy efficiently. Perhaps we may agree that government should not worry about marginal efficiency. But government should have responsibility for anticipating, preparing and dealing with harsh crisises.

[Crossposted at European Tribune and dKos.]

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