Gaar, When have "they' ever failed to raise prices during an actual shortage?
On Sep 22, 4:39 am, Gaar <[EMAIL PROTECTED]> wrote: > So when they don't raise prices during shortages, they are being > irresponsible. > > But when they do raise prices during such things, then they are > gouging... > > They can't Win for Losing. > > On Sep 21, 9:30 pm, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > > > > > The Truth About Gasoline Shortagesby Gary North > > On Saturday afternoon, September 20, my daughter, who lives in Nashville, > > called my wife, who was visiting in Atlanta. She knew that my wife had > > planned to return to the Memphis area by way of Nashville. She told my wife > > to be sure to fill up her gas tank in Atlanta, because there was a major > > gasoline shortage in Nashville. > > My wife went out to fill her gas tank, and she found that she could not > > find a gas station with gas for sale. She called me to warn me. I > > immediately went to the local gas station. They had no premium gas, but > > they did have unleaded regular. I filled up my tank. > > I came home and did a search on the web, and I found a story about the > > shortage in Nashville. The story said that a rumor of an imminent shortage > > had swept Nashville, and people lined up their cars to fill up their tanks. > > My daughter said that she had been in a long line herself. She was able to > > fill her gas tank, but shortly thereafter, the gasoline station manager > > placed "empty" signs on the pumps. > > Here we have a classic example of rationing by lining up. A week before, > > there had been a regional gasoline shortage as a result of fears regarding > > Hurricane Ike and the possibility that gasoline refineries in Texas would > > be shut down for months. Some gas stations raised prices, but others > > refused. The ones that refused ran out of gas. People sat in their cars for > > half an hour or longer in the hope of getting to a pump, and filled up > > their tanks. > > Before the weekend was over, President Bush went on national television and > > warned against gasoline stations that gouged consumers. He said that there > > would be an investigation regarding accusations of gasoline stations that > > raised prices on Friday. > > The message got through this weekend. Instead of raising prices, in an > > attempt to reduce demand for gasoline, thereby allocating gasoline that was > > in short supply by means of price, station managers simply let people fill > > up their tanks until the pumps were empty. Anyone who wanted gasoline after > > that was out of luck. > > This is rationing by lining up. It is the alternative to rationing by > > price. Rationing by lining up creates no financial incentive for suppliers > > of the item in short supply to allocate new supplies to the region of the > > country which is experiencing a shortage. Instead, delivery schedules > > remain the same as they did prior to the shortage. This continues the > > shortage. > > Whenever there are complaints about price gouging during a period of a > > shortage, sellers get the message. The next time there is a shortage, they > > hesitate to raise prices. They shift to the other allocation system: first > > come, first served. This subsidizes people who have a low value on their > > time. People who place a high value on their time prefer to pay extra money > > in order to attain their goals. But this is made illegal by the state. So, > > the shortage lasts longer than it would otherwise have lasted. > > The official goal of the government is to make certain that everyone has > > access to the item in short supply. The government says that raising prices > > during a shortage is unfair. So, the result is the opposite of what the > > government's official justification was for holding prices down. There is > > an even greater shortage, because people buy more of the item than they > > need immediately. They have no incentive to reduce their consumption, > > thereby making available applies to those who were at the end of the line. > > There is no incentive for anyone at the front of the line to refrain from > > filling his gasoline tank. So, gasoline runs out before the line runs out. > > This happens with regularity. All it takes is a rumor to create massive > > demand for the item that is believed to be in short supply. There is no > > pricing arrangement that alerts people to the crisis. Instead, long lines > > appear in the front of gasoline stations. As soon as the long lines appear, > > people panic, and line up to get gasoline even though they do not have > > empty tanks. This is exactly what I did as soon as I heard about the > > shortage. I had half a tank, but I went to my local gasoline station and > > filled up. I found that there was no premium gasoline available. That was > > not a problem, since I use unleaded regular. But I did note that there was > > a shortage of premium, and this encouraged me to fill up my tank. > > The public refuses to learn. The public is incensed against people who > > raise prices in a crisis, that is, people who respond to increasing demand > > by large numbers of buyers. The critics do not like the principle of the > > auction: high bid wins. The critics prefer another principle: first come, > > first served. The second principle offers no incentives for suppliers to > > increase production. > > Once again, we learn that the free-market principles of open competition > > and high bid wins cannot be thwarted without negative > > repercussions.http://www.lewrockwell.com/north/north655.html- Hide quoted > > text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
