Coming October 7th: More Government Gouging

We are speeding down the road to denying reality. We will be there on October 7th when the special session is supposed to end. Governor Richardson actually said this (subscription) to help speed us down the road:
“I don’t believe that these profits that are being generated are being done without some kind of manipulation,” he said.
While he couldn’t articulate during a news conference on Monday how New Mexico might quantify exploitation, the governor reiterated that most residents are feeling the pain of high gasoline prices.
“It’s hurting consumers, it’s hurting kids, schools, agriculture,” Richardson said. “In essence, the first step has to be, let’s have a law that protects our consumers, and the state does not have a law.”
But the Guv is going to insure that we suffer the unintended consequences of this phantom menace based on his “belief.” No one can deny that we are harmed when the price of something (such as gasoline) goes up. When that happens we have to give up more of other things to get that something. That hurts.
What is not well understood, however, is how the higher price acts as a signal that will mitigate the suffering. In response to the higher price consumers immediately begin to reduce their consumption of gasoline. Firms immediately begin to bring more gasoline to where it is needed. As the late, great Professor Hayek said here:
The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; i.e., they move in the right direction. This is enough of a marvel even if, in a constantly changing world, not all will hit it off so perfectly that their profit rates will always be maintained at the same constant or “normal” level.
I have deliberately used the word “marvel” to shock the reader out of the complacency with which we often take the working of this mechanism for granted. I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind. Its misfortune is the double one that it is not the product of human design and that the people guided by it usually do not know why they are made to do what they do. But those who clamor for “conscious direction”—and who cannot believe that anything which has evolved without design (and even without our understanding it) should solve problems which we should not be able to solve consciously—should remember this: The problem is precisely how to extend the span of out utilization of resources beyond the span of the control of any one mind; and therefore, how to dispense with the need of conscious control, and how to provide inducements which will make the individuals do the desirable things without anyone having to tell them what to do.”

Of course, in the recent case of rising gasoline prices many people may think they know the cause. But they don’t. And the only thing they will have to “marvel” at is how the government further gouges us by not letting price signals guide our behavior.

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