Price “Gouging” and Political Opportunism

Kudos to Winthrop Quigley for his ABQ Journal article (subscription) about price “gouging.” I often complain about the economic ignorance of journalists, so now I am delighted to see one get it right. Well worth reading the whole thing.
Excerpt:
“While price gouging makes a great sound bite, it has virtually no economic meaning. As with most attempts to control prices, however well intentioned they might be, most economists will tell you pricing laws do little except create shortages.”
Quoting economists Walter Williams and Thomas Sowell, Quigley even gives us good insight into the misunderstood and under appreciatied roll of price as a coordinating mechanism: “if the legislature decides what the price of gasoline should be, two things will happen. Gasoline will flow out of the state to people willing to pay the market price, and the only people who get gasoline in New Mexico will be those who happen to be at the pumps before the fuel runs out.”
As far as political opportunism goes, Quigley points out that prominent federal and state politicians on both sides of the aisle are calling for investigations and possible control of the so-called “gouging.”

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