Woke up this morning and prepared for the show as I always do. Today I came across an announcement from the Monmouth County Freeholders. Now full disclosure, I’ve known Serena DiMaso for many years and highly respect her as an outstanding public servant. That said, the message in this announcement is damaging, disingenuous and inappropriate. The term “Price Gouging” is often thrown around by politicians as a way of exerting their influence over the private market to intimidate businesses into the submission of price controls. This was especially prevalent during the aftermath of Superstorm Sandy.
There are two points that are critical here.
First, it’s outrageous to attack local merchants potentially facing a loss of business when the largest tax increase since the 1990’s takes effect in two weeks from trying to head off some of the revenue loss by raising prices now. After all, the real gouging offense is from the Governor and the Republican legislators who went along with the bipartisan plan to take money from the working and middle class to cover decades of incompetence and mismanagement in Trenton.
Second, there’s an economic lesson from excessive profiteering that actually makes it a positive thing for the consumer. After the Southern California earthquake in 1994, prices skyrocketed with water and milk hitting prices of $6-8 per gallon. Gas prices doubled in some cases and the cost of wood shot through the roof. Government of course moved in to enact legislation to “protect the consumer” similar to Chris Christie’s bluster and grand standing after Sandy. What the pols missed however is due to the spike in prices, the practical result was an influx of more supply to meet the demand of the ravaged customers recovering from the quake. This could have also happened during Sandy opening up a supply of fuel that would’ve met the demand for NJ drivers trying to get to work and homeowners trying to fill their generators. Instead, thanks to ignorant, self-serving politicians like Governor Christie, we all scrambled for days trying to find gas stations with enough supply to fill our tanks. That search often meant waiting hours on line and sometimes being turned away as the supply ran out. It’s a simply economic reality of supply and demand that is ignored by politicians who only have their own interests in mind.
As far as the Monmouth county freeholder board, perhaps a better use of the time it took to write the useless announcement painting retailers as bad guys, would’ve been to address regime in Trenton and the continued policy making moving NJ further down the road of unaffordability. Maybe they could now get behind the repeal effort for the onerous burden of the gas tax that will begin to gouge commuters on November 1st.